I’ve started reading William Rosen’s history of how innovation came to be, [amazon_link id=”1845951352″ target=”_blank” ]The Most Powerful Idea in the World: The Story of Steam, Industry and invention.[/amazon_link] It’s a readable canter through the history of the science of steam, culminating in the steam engines of Savery, Newcomen, and James Watt – and through that specific story, a history as well of the invention of invention. Having grown up in Lancashire, with parents and aunties and uncles working in what was left (by the 1970s) of the traditional cotton industry, I’m a complete addict when it comes to anything about the Industrial Revolution.

This being an English summer’s day, it’s bucketing with rain in London. I was particularly struck by a quotation early in the book from Evangelista Torricelli, a Florentine scientist of the 17th century, and discoverer of atmospheric pressure. No, I’d never heard of him before either.

Anyway, he said: “We live submerged at the bottom of an ocean of air.” What a fantastic image – especially now we know what the Earth looks like from space.

[amazon_image id=”1845951352″ link=”true” target=”_blank” size=”medium” ]The Most Powerful Idea in the World: A Story of Steam, Industry and Invention[/amazon_image]

Machiavelli’s [amazon_link id=”0140449159″ target=”_blank” ]The Prince[/amazon_link] has a new rival. It’s The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics by Bruce Bueno De Mesquita and Alastair Smith, to be published in October. Public spirit has no place in politics for these two eminent political scientists: “Our starting point is that any leader worth her salt wants as much power as she can get, and to keep it for as long as possible.” There is no clear distinction between dictators and democrats, they argue, only a difference of degree. And that is the size of the coalition on which they rely to stay in power.

The authors categorize the population of any entity – nation state, city, corporation, university – into three groups: all those who have a nominal say in selecting a leader (the whole adult population in both the UK and North Korea); those whose vote actually counts (the whole adult population in a democracy but only Communist Party members in China); and the minimum coalition needed to win the vote in this latter group (‘the essentials’). The key determinant of the form of governance is the size of these groups. And the key political task of the leader is to reward the essentials enough to keep them loyal. This is why democratic governments spend on public goods: it is too expensive to give private rewards to a large electorate. But dictators will reward their supporters directly, and never mind the people.

This obviously seems a highly cynical analysis, and after finishing the book it hadn’t changed my view that democratic politicians are usually motivated by genuinely high motives as well as low politics. However, the book does a good job of demonstrating how well the three-dimensional framework explains governance and outcomes in a wide range of organisations. Just think about executive pay and banking bonuses for example. Individual shareholders are nominal owners but have no real influence. Big shareholders have some say over boardroom decisions. But the real power lies with just a handful of board members. Surprise, surprise, CEOs keep them sweet with rocketing pay and bonuses. Another neat example is provided by the IOC and FIFA. An IOC vote on the location of the Olympics depends on just 58 votes (a winning number out of the 115 person body); FIFA decisions on just 13. The book notes estimates that buying an IOC vote costs about $100,000-200,000, and a FIFA vote $800,000.

The authors draw some firm conclusions from their analysis. For example, aid donors should never give money, or forgive debts, in advance of democratization; it will only go straight into the bank accounts or pet projects of the corrupt few. Comparing countries similar in key ways – income per capita, geography, culture, size – they show convincingly that the democrats spend on public goods but the dictators spend on their cronies. This conclusion obviously ties in with an increasingly prominent theme in the development economics literature.

Less persuasive is the book’s argument that sooner or later every society will get to a point where the number of essential supporters becomes large enough to move its governance from the dictatorship towards the democracy end of the spectrum. It doesn’t set out these dynamics clearly, although sometimes a disastrous economy which is becoming too poor to plunder can be the trigger for reform. Change depends on increasing the number of ‘essentials’. To continue with the IOC example, the authors’ suggestion for reform is that all former Olympic athletes should be allowed to vote on decisions about future games. That would obviously make a huge difference – but how is the IOC to be persuaded to do so?

There is an intriguing hint that new technologies – much hyped for their part in the Arab Spring – could make a big difference. The book dismisses the formality of elections as a democratic tool, because they are so easy to rig. More important is free speech and assembly. I would have liked to see the later chapters explore in more detail how the process works, and why Twitter revolutions have succeeded in some polities but not others.

However, wanting more rather than less of a book is a good sign. This is a fantastically thought-provoking read. I found myself not wanting to agree but actually, for the most part, being convinced that the cynical analysis is the true one.

The Eastern Europe sales representative for university presses including Chicago, Harvard and Yale, Ewa Ledóchowicz, has written a terrific post on the Yale University Press blog about the mixed blessings of the increasingly borderless world – and specifically the effect of e-books on the retailing of scholarly works. How are people deciding what they want to read? Are specialist bookshops viable? More questions than answers – but a great post nonetheless.

I’m putting together a major conference early next year on the education of economists, prompted by a number of conversations with employers of economics graduates but also, notably, academics who teach economics. (UK-based employers and academics can e-mail me for more info.)

There is a general dissatisfaction, to varying degrees, with the undergraduate curriculum. This is most notable in macroeconomics, not surprisingly. The Great Moderation consensus in macro has fractured and the debate now is at least as polemical as when Keynesians and Monetarists slugged it out in the late 1970s and early 1980s. Yet undergraduates are still taught one workhorse model and DSGE. Almost nobody thinks this is satisfactory. Turning to microeconomics, here graduates are far better prepared for the kind of jobs non-academic economists do, and the subject is having a rich and successful period. Yet even here, academics know that what they are teaching is far narrower than the kinds of research they themselves are doing, and employers would like to have new graduates who are better able to step out of the narrow confines of specific models when faced with real world data, institutions and politics (small ‘p’).

The essence of the problem is that schools are now producing a much greater number of students with A level economics, engaged and eager to understand the extraordinary events in the world around them, and all the enthusiasm gets beaten out of them in their first term. John Sutton put it well in his book Marshall’s Tendencies. He says that new students all ask whether models over-simplify and whether people really maximise. He continues: “By the time that students have advanced a couple of years into their studies, both these questions are forgotten. Those students who remain troubled by them have quit the field; those who remain are socialized and no longer as about such things. Yet these are deep questions which cut to the very heart of the subject.” (p.xv)

Changing the content of the undergraduate curriculum is not easy, however. It involves shifting away from one focal point to another and therefore requires co-ordination. Hence the conference. It would also ideally be international, especially taking in the US universities. We have no budget for that but I’m planning to invite overseas economists to contribute to a pre-conference set of papers – ideas for contributors very welcome!

Meanwhile, here are some questions for this blog’s readers. Should undergraduates always be taught some economic history? History of economic thought? Methodology? Behavioural approaches? How would you produce economics graduates with adequate technical skills but a broader education in their subject than they have at present?

And of course, what books should they read? Interestingly, the history of thought is well-served. There is Robert Heilbroner’s classic [amazon_link id=”0140290060″ target=”_blank” ]The Worldly Philosophers[/amazon_link] (1953; 7th ed 1999). And a new text has just reached me, Agnar Sandmo’s Economics Evolving . It looks less accessible than the Heilbroner, which is a series of biographical sketches, but far more thorough. I’ll review it here in due course.

[amazon_image id=”0691148422″ link=”true” target=”_blank” size=”medium” ]Economics Evolving[/amazon_image]

In recent weeks I’ve been reading two distinct narratives about the status of women, neither encouraging.

One is the pattern of abortion or infanticide of girls in a number of Asian countries, including China and India. This morning’s Financial Times has a feature describing the potential adverse social consequences of this imbalance:

“[China’s] 2010 census showed 34m more men than women – comparable, says retired military officer Yao Cheng, who runs Huijiawang, a charity dedicated to rescuing abducted children, to the male population of France. “What if all the men of France did not get married?”

The article comes on the heels of a new book on the same subject noted on this blog, Unnatural Selection by Mara Hvistendahl.

[amazon_image id=”1586488503″ link=”true” target=”_blank” size=”medium” ]Unnatural Selection[/amazon_image]

The second narrative has been the dismal absence of many women on the boards of listed companies in the UK. The government would like to see the proportion rise to 25%. It’s less than half that currently. However, it would like not to have to legislate for a statutory quota. The outcome will be predictable. The proportion of female directors will edge up but will not get remotely close to a quarter of the total. And in another five years we can have the same debate with another government. Male chairmen and chief execs might think they want women on their boards but in the end will appoint people who are very similar to themselves. That is, men.

Women seem more vulnerable to redundancies at present – hard times are always harder on the least powerful. A number of high-achievers I know are giving up on the workplace struggle. To cap it all, a young friend at an excellent university told me yesterday that the ambition of her female housemate is to get married. Whatever happened to feminism?

These gloomy thoughts prompted me to dust off my copy of [amazon_link id=”0140034633″ target=”_blank” ]The Second Sex[/amazon_link] (bought in 1979). De Beauvoir writes: “The woman who is economically emancipated from man is not for all that in a moral, social and psychological situation identical with that of a man. The way she carries on her profession and her devotion to it depend on the context supplied by the total pattern of her life. She is not viewed by society in the same way; the universe presents itself to her in a different perspective.”

Having got the book off the shelf, I might re-read more of it. As far as feminism is concerned, I fear it’s deja vu all over again.