What a 150-Year Old Indian Railway System Tells Us About Trade

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Joe Weisenthal (0:15)

We want to take a quick moment to let you know about something really new that's cool from Bloomberg. Starting right now, you can use our iOS app or Google Chrome extension to scan the news, look at any story on any website, and instantly bring up news and information from Bloomberg relevant to what you're reading about.

Tracy Alloway (0:35)

Yeah, it's pretty cool. So it means that no matter where you're reading the news, you can basically bring all the data and information that's on the Bloomberg with you.

It's kind of fun to test out, right, Joe?

Joe Weisenthal (0:48)

Right. So if you're reading a story about Tesla or Microsoft or Apple or Facebook, you can immediately bring up news and data from Bloomberg. And of course, we have all the news and data in the world.

It's really awesome. You should check it out by downloading the iOS app or search the Bloomberg extension on the Chrome Store to try it out. Yeah.

Tracy Alloway (1:07)

And it's called Lens. We should probably say what it's called, right?

Joe Weisenthal (1:11)

Oh, right, right. It's called Lens. Learn more at bloomberg.com/lens.

Tracy Alloway (1:30)

Hello, and welcome to another edition of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (1:35)

And I'm Joe Weisenthal.

Tracy Alloway (1:37)

So Joe, I'm trying to think, have we ever had a Nobel Prize winner on the show? Can you remember?

Joe Weisenthal (1:44)

I don't think so.

Tracy Alloway (1:46)

I don't think we have.

Yeah, I don't think we have either. And not to get your hopes up, we don't have one for this episode either.

Joe Weisenthal (1:54)

Oh shoot.

Tracy Alloway (1:55)

Yeah.

Joe Weisenthal (1:56)

Very disappointing.

Tracy Alloway (1:57)

We do have someone who has a really good shot at eventually getting one. We actually have the recent winner of the latest John Bates Clark Medal. It's a medal that's given by the American Economics Association to economists under 40 who make big contributions to the field of economics.

Joe Weisenthal (2:17)

Isn't it also true that among economists, the John Bates Clark Medal is actually considered to be more impressive and prestigious than the Nobel Prize?

Tracy Alloway (2:25)

You're probably right. I mean, statistically, I think 40% of the recipients go on to win a Nobel. And of course, the John Bates one is confined to young economists, so that's pretty impressive.

Joe Weisenthal (2:37)

Another thing that sort of will make today's episode distinct is it's kind of timely. So I kind of like the fact that on our podcast, we usually talk about things that aren't really in the news. We sort of give people a respite from the top stories of the day and just let them explore something completely out there. But this one might actually be a little bit sort of on the news.

Tracy Alloway (3:01)

Yeah, so we are definitely huge fans of financial and markets and economic history. And the guy that won this medal, I should just go ahead and say his name. It's David Donaldson.

He's an associate professor of economics at Stanford. But Professor Donaldson is basically famous for being a sort of trade economic historian. And he's famous for one paper in particular. It's called Railroads of the Raj. And it basically went back and looked at the railway network that was built up by the British in the late 1800s, early 1900s in India.

And he used that to check what impact building that infrastructure has on trade and general incomes in India. So, I mean, imagine putting that paper together, right?

Joe Weisenthal (3:52)

It definitely sounds like it would be quite a task.

Tracy Alloway (3:55)

All right. Well, should we just go ahead and ask him?

Joe Weisenthal (3:58)

Let's bring him in.

Tracy Alloway (4:09)

David, thank you so much for joining us today.

David Donaldson (4:11)

Hey, guys, thanks for having me.

Tracy Alloway (4:13)

You know, we just mentioned probably your most famous paper on Railroads of the Raj, and that was a paper you started, I think, when you were a grad student, but you worked on it for years and years and years. And if I'm right, it still actually hasn't been published. It's still forthcoming, right?

David Donaldson (4:32)

Yeah, I've been very slow in many ways.

But yeah, it's something that has occupied my interest for a long time. It struck me as, among other episodes in world history, one of the great episodes that integrated economies made it easier for one market to trade with another market. And that trade, that integration happens obviously internationally. Things like the Panama Canal or the Suez Canal or the invention of the steamship did that across oceans. And then the railroad sort of did that within countries like India and of course famously also the United States.