Monthly Archives: September 2012

Look on the bright side of life

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One of the highlights of the Olympics closing ceremony was Eric Idle getting the 80,000 crowd in the stadium to singalong to ‘Always Look on the Bright Side of Life’:

A natural optimist

This cheerful song was brought to mind by [amazon_link id=”1451614217″ target=”_blank” ]Abdundance: The Future is Better than You Think[/amazon_link] by Peter Diamandis and Steven Kotler. Diamandis is one of the founders of the Singularity University and so clearly a techno-optimist. It struck me that there’s a whole optimism genre, and one I generally greatly enjoy. There’s Mark Stevenson’s excellent [amazon_link id=”1846683564″ target=”_blank” ]An Optimist’s Tour of the Future[/amazon_link] and Matt Ridley’s [amazon_link id=”0007267126″ target=”_blank” ]The Rational Optimist[/amazon_link]. Mark Lynas tried to debunk conventional eco-gloom with [amazon_link id=”000731342X” target=”_blank” ]The God Species[/amazon_link]. In a way, my [amazon_link id=”1587990822″ target=”_blank” ]Paradoxes of Prosperity[/amazon_link] from 2001 riffs on the same theme, that technology is a powerful lever for increasing prosperity ad solving problems, and that its power often takes us completely by surprise.

[amazon_image id=”1451614217″ link=”true” target=”_blank” size=”medium” ]Abundance: The Future Is Better Than You Think[/amazon_image]

Abundance has the slightly breathless eagerness of a New York Times bestseller, not entirely to my taste, but it’s a highly readable summary of several areas of important technical progress. It starts with an interesting discussion of the characteristics of how our brains evolved to make us natural pessimists, and also touches on the speed with which successful new technologies can spread (although it doesn’t acknowledge the many techno-failures that therefore spread with zero speed – there’s too much determinism in this account).

The book also looks at forces that might bring about the technological nirvana humans have the capability to create – the possibility of ‘DIY’ or entrepreneurial innovation in many fields, philanthropic activity by rich technology entrepreneurs, and the large and growing market in developing countries with great unmet needs. While these are perfectly valid, this is obviously only part of the story. I wish the book had looked more closely at the economic and social forces acting for and against the embodiment of new technologies in people’s lives. This – as Paul David has so brilliantly pointed out – is the hard, and slow, part. Invention is easy by comparison. In short, I wish Abundance had been a bit less excited and more nuanced. But I enjoyed reading it – an ideal airport purchase.

Economists, sociologists and the crisis

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Oh dear. Oh dear. I’m going to have to say unkind things about a book I’d been rather looking forward to reading. The book is [amazon_link id=”0199658412″ target=”_blank” ]Aftermath: The Cultures of the Economic Crisis[/amazon_link], edited by Manuel Castells, Joao Caraca and Gustavo Cardoso.

[amazon_image id=”0199658412″ link=”true” target=”_blank” size=”medium” ]Aftermath: The Cultures of the Economic Crisis[/amazon_image]

When they first came out, I read eagerly Castells’ three books in The Information Age trilogy and found them enlightening (if quite heavy-going)  – my copies still have lots of bookmarks sticking out of the pages. I’ve also been keen to find some good sociological analysis of the financial markets. Gillian Tett, an anthropologist by training, wrote the terrific [amazon_link id=”0349121893″ target=”_blank” ]Fool’s Gold[/amazon_link]. John Lanchester, a novelist, gave us [amazon_link id=”014104571X” target=”_blank” ]Whoops! [/amazon_link] But (like Aditya Chakrabortty in The Guardian) I’ve been wondering about the absence of careful sociological study of the markets (in fact, Mark Granovetter was asking long before the crisis why sociologists left important domains of study to economists).

[amazon_image id=”1405196866″ link=”true” target=”_blank” size=”medium” ]The Rise of the Network Society: Information Age: Economy, Society, and Culture v. 1 (Information Age Series): The Information Age: Economy, Society, and Culture Volume I[/amazon_image]

So, I was pleased when Aftermath arrived. But I’ve given up part way through. The introduction is just a summary of the main events since 2008. The first chapter is about budget cutting and protests at Berkeley, mildly interesting but a touch navel-gazing. Subsequent chapters are unexpectedly abstract. This is a typical passage:

“The key analytical observation is that the current crisis has produced strong resistance identities against not only the measures used to treat the crisis but more deeply against the development model that led to the crisis and from which the current attempts to rectify the situation derive. Therefore, there is an explicit tension between identity and the global network society as it is expressed in its currently dominating form. …. We can make a further argument: the root of the current crisis is the fact that the generally dominant model for development has been based on systematic debt-taking.” (p159)

In other words, a statement of the the unintelligible followed by a statement of the obvious. Now, I do know that every discipline has its own jargon so ‘resistance identities’ may well be a piece of it. But I don’t know what the first bit of the quotation means.

To be fair, a couple of later chapters (on Catalonia, on China) look more empirical so I’ll give them a go. But what I’d really hoped for was some insight into questions like: Why did it become normal for so many people to take on debts they would never repay to buy cars and clothes and houses? What was it about our societies and governments that mean the only way many people could find a home of acceptable standard by lying about their incomes to a dodgy mortgage broker? Why or how did people working in the financial markets lose all their sense of everyday ethics, their connections to the rest of society? Who are the people who went into flogging sub-prime mortgages?  How did it come about that regulators were content to take hundreds of pages of complicated and unread documentation as proof of adequate risk-management? And many more.

Now, I certainly am not going to get on my high horse about how wonderful economics is – having written so much about economists’ need to acknowledge its flaws and fix them (see eg [amazon_link id=”1907994041″ target=”_blank” ]What’s The Use of Economics[/amazon_link]) – and as sociology is not my discipline, maybe there are new pieces of research into such questions by sociologists and other social scientists, and I’d be grateful for the references. But I have a sneaking suspicion that it isn’t the kind of work sociologists have been doing.

The Enlightened Economist Prize, 2012

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It’s a month since I posted the shortlist for this entirely personal prize for the best economics book I’ve read in the previous 12 months. So the time has come to announce the winner. It has been a difficult choice – I was about to write that getting it down to a final four was relatively straightforward, but then I started arguing with myself about the titles I’d eliminated. Anyway, on the criteria of (a) contains serious economic argument, (b) accessible to a wider readership than professional economists, (c) I thoroughly enjoyed reading it, the winner is:

[amazon_link id=”1906924775″ target=”_blank” ]Economic Fables[/amazon_link] by Ariel Rubinstein

[amazon_image id=”1906924775″ link=”true” target=”_blank” size=”medium” ]Economic Fables[/amazon_image]

The prize is mainly the honour, of course – unlike the FT’s book prize, I don’t have the financial heft of Goldman Sachs backing this. However, I will be delighted to take Ariel and his publisher out for a celebratory meal if we can arrange all to be in the same city some time.

Fast or slow, rich or poor?

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As part of my thinking about a book I’m currently working on, I started to re-read a book by Jonathan Gershuny, [amazon_link id=”019926189X” target=”_blank” ]Changing Times: Work and Leisure in Post-Industrial Society[/amazon_link] (2000). He has led the way in work on time-use studies, as well as some key longitudinal data sets. It’s the first time I’ve read this book since it was published, and I’d forgotten how interesting it is. As he points out, “Change in time use patterns is not a mere indicator of social change; it is itself part of the essence of socio-economic development. A ‘poor’ society is one which must devote the bulk of its time to low value-added activities which go to satisfy basic wants or needs.” Low value added activities are those where the ratio of paid work per minute of consumption time is low – many hours are needed to deliver the consumption experience.

[amazon_image id=”019926189X” link=”true” target=”_blank” size=”medium” ]Changing Times: Work and Leisure in Postindustrial Society[/amazon_image]

All eras of technological progress have brought complaints about things speeding up and being short of time. I was reflecting on how the recent ‘[amazon_link id=”0847829456″ target=”_blank” ]slow food[/amazon_link]’ movement fits into Gershuny’s framework. It seems to be a regression in economic development yet its advocates see ‘slow’ as the most sustainable future for the economy. They are also quite likely to be high- rather than low-income members of the community (as are the buyers of organic foods). Maybe these slow fooders are sufficiently affluent that their time spent providing for the basic need of eating is effectively leisure rather than work, a hobby not a necessity. Anyway, I shall carry on reading and see if I’m further enlightened on this question.

[amazon_image id=”0847829456″ link=”true” target=”_blank” size=”medium” ]Slow Food Nation: Why Our Food Should Be Good, Clean, and Fair[/amazon_image]

What’s The Use of Economics?

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Today – the fourth anniversary of the Lehman’s collapse and the fifth of the run on Northern Rock – is the official publication date of [amazon_link id=”1907994041″ target=”_blank” ]What’s The Use of Economics? Teaching the Dismal Science after the Crisis.[/amazon_link] The idea behind the conference and essays was to get a start on reforming economics by going straight to the way future generations of economists are taught.

There are lots of good contributions in the book, including from Andrew Lo, Andy Haldane, John Kay, Alan Kirman, Bridget Osborne, Paul Seabright, Ben Friedman…. (I wrote the intro). There are links to reviews and also a comment I wrote in Research Fortnight on the book’s web page. The common underlying theme from a wide range of contributors (based in the US, UK and France) is that the crisis will not and cannot leave economics itself unchanged – although there are obviously quite a few economists, especially in the academic world, still heavily in denial about this.

[amazon_image id=”1907994041″ link=”true” target=”_blank” size=”medium” ]What’s the Use of Economics?: Teaching the Dismal Science After the Crisis[/amazon_image]

If readers of this blog do read the book, I would love to get feedback, and suggestions for next steps, as we have a working group aiming to report next year.