Knowledge that Transforms

Documenting and explaining economic events in the past is the central task of economic history. This activity needs no more justification than any other type of pure economic research. But economic history can also provide useful perspective when events in the past share commonalities with events in the present, thereby rendering current economic change less mysterious or forbidding. This paper describes a long-term research project aimed at documenting certain aspects of the economic history of labor in the United States before the Civil War. Although the labor history of the antebellum period seems remote from modern concerns, there are, perhaps surprisingly, numerous parallels-for example, changes in wage inequality, realwage stagnation, high rates of unskilled inimigration, the effects of labor-market conditions on welfare usage, wage rigidity and macroeconomic fluctuations, and convergence of geographically distinct labor markets.

There is little argument that early investment in computing and communications (CC guidance for future research policy can come from an examination of history. Whereas a vigorous industry has been visible for decades, many outside observers who question the need for federal C&C research support are often ignorant of the continuing exploitation by industry of science and technologies developed decades ago via past support and how such support has complemented industrial activities. This paper outlines how the organization of federal funding for C&C R&D has helped to make such funding so fertile, noting dimensions that may be of enduring value even as circumstances change. It focuses on the High Performance Computing and Communications Initiative of the 1980's and early 1990's, which evolved from earlier funding programs and influences current programs and prospects.' By design (and reflecting space limitations), the paper emphasizes positive aspects that may be relevant for the future.

The Family Support Act of 1988 called for a scientific review of the official U.S. measure of poverty, reflecting a general dissatisfaction with the current measure, which has not been revised since the mid-1960's. A National Research Council (NRC) Panel of the National Academy of Sciences undertook that review and called for a new approach to poverty measurement.' The NRC Panel criticized the current Census Bureau methodology because the current measure of poverty has failed to reflect important economic trends or policies aimed to alleviate the condition it attempts to measure, economic poverty. This paper presents estimates of how the Panel's recommendations would alter the picture of the number and composition of the poor in the United States over the time period from 1979 to 1994, focusing on trends in poverty among children and the elderly. The current official series shows that the relative gap in poverty rates between children and the elderly has grown since 1979. We present evidence that the poverty gap between children and the elderly is narrowing, not widening, when the Panel's measure of family resources is employed.

Although the past 20 years have witnessed increasing sophistication in dealing with environmental externalities, existing programs of pollution abatement remain well behind the state of the art. One major problem is that program objectives are typically specified in terms of reductions in emissions, not in terms of attained ambient conditions.' But, even when from localized sources, emissions can have spatially differentiated effects; hence, emissions reductions often do not translate in a straightforward manner into improvements in environmental quality. With multiple sources of airborne contaminants, efficient achievement of ambient air quality objectives will depend generally not only on the cost structures of abatement at the various sources, but also on the ways in which emissions from those sources disperse into the receptor regions of interest. What is more, different geographic regions may fall under different national jurisdictions. When program objectives are formulated in terms of ambient air quality, that multijurisdictional (or 'transboundary) character may become an important feature of both the problem and its solution. Efforts to achieve domestic objectives using autarkic controls may often not even be feasible. Even when feasible, autarkic programs are likely to be inefficient when compared to multijurisdictional efforts. In this paper I exploit a recent, comprehensive inventory of North American sources of acid rain precursors, developed under the auspices of the U.S. Environmental Protection Agency (EPA), to study a program of sulfurous oxide abatement2 in the northeastern United States and eastern Canada devoted to controlling ambient levels of pollution. North American acid rain is a multijurisdictional problem characterized technically by complex relationships between emissions of acid rain precursors and ambient pollution, involving bi-directional transboundary flows. The abatement of North American acid rain thus offers an opportunity to investigate the pursuit of efficiently implemented ambient levels of pollution in a multisource, multireceptor, multijurisdictional setting. A priori one would expect, in a setting like this, opportunities for possibly significant gains from joint action. But it has proved generally difficult to arrive at international agreements for the control of transboundary pollution. In particular, despite 20 years of effort, the UJnited States and Canada have been unable to conclude an agreement for the joint abatement of North American acid rain. The resulting inefficiencies have never been quantified, and the reasons for the inability to agree are not clear. The only accounts are anecdotal: they attribute the absence of agreement, said to be desired by Canada, to U.S. apprehensions that the costs of any coordinated solution * Department of Economics, Boston University, 270 Bay State Road, Boston, MA 02215. The author would like to thank the Public Finance seminar group at MIT, seminar participants at Boston University, the University of Michigan and the University of Virginia, and Peter Diamond, Jerry Hausman, Edgar Olsen, and James Poterba for helpful comments along the way. A special thanks to the three anonymous referees for their extremely constructive suggestions, and to T. S. Sims, L. G. Sims, and S. W. Salant for guidance throughout the paper. Financial support from the Center for Energy Policy Research for obtaining the data is gratefully acknowledged. Any errors are solely the author's. ' Program objectives would ideally be specified in terms of optimized levels of ambient pollution, which would require better data about the costs of environmental externalities than in general we currently have. We are, however, developing data with which we might pursue efficient attainment of exogenously specified ambient environmental objectives, taking into account the relationships among sources of emissions and resulting ambient conditions. That is what the study reported here is about. 2 Sulfurous and nitrous oxides are the two primary precursors to acid rain, but the former historically have been of greater concern, and I focus only on sulphurous oxide emissions here.