Lord Grantham may think he can take arms against the slings and arrows of 1920s Britain that threaten Downton Abbey, but he faces a mighty adversary: the immutable laws of economics. • When Mrs. Patmore tussles with the new mixer, or Grantham frets over "death taxes," or "poor Molesley" loses his post and resorts to patching up the pavement, Downton Abbey is paying homage to economic forces that transcend early 20th century Britain and apply just as neatly to the 21st century world. • A primer in Downtonomics:
1 New technology demands adaptation — and not everyone can manage it.
Take the lowly mixer. It arrives in a modest brown box labeled "mixer-beater," with its shiny metal body and a pair of mixing heads. Ivy and Daisy are fascinated.
Patmore "sees this as the kiss of death, the nail in the coffin," as Lesley Nicol, the actor who plays her, says in the online special feature. The electric mixer will make it easier and faster to prepare food. And while bottom-rung scullery maids Ivy and Daisy adapt easily to the new gadget, as young people often do, Patmore can't quite master it; she breaks a bowl while trying to use it.
The mixer is only the beginning. Patmore is slow to adapt to a new sewing machine and refrigerator, which she is told will help reduce costly waste. Lady Grantham asks the reluctant Patmore, "isn't there any aspect of the present day you can accept without resistance?"
2 Workers who don't adapt slide down the economic ladder.
Molesley was trained as a butler, and a butler was a skilled position in those days, requiring someone who knew how to manage the staff. When Matthew Crawley died, however, Molesley lost his position as a valet and couldn't find another until the house's senior butler, Mr. Carson, offered him a job as footman, a position demanding fewer skills and offering less money.
"I have come down in the world, Mr. Carson," Molesley says. "I am a beggar and so, as the proverb tells us, I cannot be a chooser."
"I see Molesley as the 1920s counterpart of the contemporary highly skilled worker in manufacturing — left behind by changed circumstances," says Eric S. Maskin, a Nobel Prize-winning economist at Harvard. Today's Molesley might be a former printing press machinist now restocking shelves at Walmart.
3 Estate, or inheritance, taxes can be useful.
Patmore's battle pales next to the overarching theme of the show: the crushing tax burden that threatens Downton and forces Lord Grantham to consider extreme measures to save it. Most Americans call them estate or inheritance taxes, but like today's critics of the tax, Grantham calls them "death taxes."
He tells his accountant, "I refuse to be … the earl who dropped the torch and let the flame go out."
Britain imposed inheritance taxes in 1894 at a modest 8 percent top rate, but during World War I, Britain's public debt ballooned. So the Finance Act of 1919 raised the top rate to 40 percent on big estates, according to the Tax Foundation.
"We fans naturally root for the family to hold onto the estate,'' Maskin writes in an email. "But Lord Grantham's economic judgment is terrible, and so getting the place out of his control (through taxes or otherwise) might be the best outcome — not only for progressives but for proponents of efficiency."
4 The wealthy should do some estate planning.
Grantham's son-in-law Matthew Crawley wrote a note leaving his half-share of Downton to his wife, Mary. Today, that would be good planning, because a spouse does not have to pay inheritance taxes until his or her death. That wasn't the case in Britain back then; all Mary received was a 100-pound exemption. And it meant that Matthew's half of the estate would be taxed twice, once on Matthew's death and once on Mary's, before passing to their son, George.
"Seems odd, really," says Tom Branson, the Irish former chauffeur who married into the family, "that you have to pay just as much tax as if he'd left it to Mrs. Tiggywinkle down the road. "
According to the London Telegraph, the family living in the real-life estate of Highclere, where Downton is filmed, was forced to sell its extraordinary art collection in 1926 to save the property.
5 Beware of speculative bubbles fueled by cheap foreign capital.
Grantham might not be in such a fix if he hadn't been such an atrocious business manager and investor.
Faced with cash-flow problems for years, he married his rich American wife, Cora (a sort of corporate merger that only later grew more sentimental), to gain access to foreign investment, namely her family money.
Alas, Grantham violates the basic rules of financial management and fails to put Cora's injection of capital to good use. Instead of investing in his family business (the estate and its many tenant farmers) or diversifying his investments, Lord Grantham gets swept up in a speculative bubble, sinking virtually all of his wife's money into a Canadian railway scheme that goes bust. Had he been alive today, he'd have been buying subprime mortgages or giving all his money to Bernie Madoff.
More trouble is on the horizon. Cora's cousin Harold has written a letter about losing a lot of money in oil leases that Grantham says has something to do with a Senator Fall. That is undoubtedly Sen. Albert Fall, who as President Warren G. Harding's interior secretary took kickbacks for leases in what became the Teapot Dome scandal.
6 Invest in your company, don't suck it dry.
Downton in the early 1920s was a business that had been starved of investment for generations. It had introduced no mechanization, no new crops or livestock, and no new lines of business.
Luckily for Grantham, Matthew comes into another inheritance and Tom Branson persuades him to invest it in the estate, which has done little besides collect rents from its tenant farmers. The modernization details are sketchy, but it seems to have something to do with sheep and pigs. First Tom gets Matthew on board, and later Mary. And they fortunately ignore Grantham's urgings to invest with an American named Charles Ponzi. Yes, that Ponzi.
7 Treat workers well and they will repay your loyalty.
With Matthew gone, Tom and Mary want to reduce the number of tenant farmers and increase productivity. When one of the farmers dies, they decide to take over the lease. "The world moves on, and we must move with it," says Mary, sounding heartless.
At the funeral, the man's son begs to be given a chance, reminding the landowners that his family has farmed there since the Napoleonic wars. Mary says he has no legal rights. But he finds a sympathetic ear with Lord Grantham, who lends him the money to repay the delinquent rent his father ran up. Unlike most contemporary executives, who seem to feel little compunction about slashing the number of workers, Grantham feels a social and moral obligation toward the people working on his estate.
8 Can an old lumbering enterprise re-create itself for a new economy?
How it will all end is hard to say.
The British prime minister of the day, David Lloyd George, had long favored taxing the great estates, but he also was worried about the effect their collapse might have on the economy. Britain was a food importer, and shortages had pushed prices sharply higher after the war. By 1922, prices had dropped somewhat, but 20 percent of arable land went out of production over the course of the decade.
"The government is aware that up and down the country, estates are being sold in large numbers," a dour government official, Charles Blake, tells Mary, adding that the government wanted to know how it "will it affect food production and so on."
"You don't care about the owners, just about food supply," Mary says, adding that that seems "mean-spirited."
"Mr. Lloyd George is more concerned with feeding the population than rescuing the aristocracy," Blake replies. "That doesn't seem mean-spirited to me."