Monthly Archives: November 2013

Situation vacant: global hegemon

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Serendipitously, I started reading this week a book that has been sitting in my office for a while, [amazon_link id=”069115743X” target=”_blank” ]The Leaderless Economy: Why the world economic system fell apart and how to fix it[/amazon_link] by Peter Temin and David Vines. Serendipitously because this follows on from just having read Jonathan Fenby’s excellent overview of China, [amazon_link id=”1847394116″ target=”_blank” ]Tiger Head, Snake Tails[/amazon_link], which has a big chunk on China’s global position, and also the forthcoming [amazon_link id=”1907994130″ target=”_blank” ]The BRIC Road to Growth[/amazon_link] by Jim O’Neill.

[amazon_image id=”069115743X” link=”true” target=”_blank” size=”medium” ]The Leaderless Economy: Why the World Economic System Fell Apart and How to Fix It[/amazon_image]

All three raise the question of global economic governance. The word is unappealing, but it’s a vital issue. And Temin and Vines, a distinguished combo of economic historian and international economist, do a very interesting compare and contrast exercise between the 1930s and the present global economic crisis (I’m one of those who thinks it isn’t nearly over yet, despite signs of recovering growth). Others have of course drawn parallels with the 30s, but the focus here is on international governance – and also on the political consequences of an ailing global order. I knew I was going to like the book when the introductory chapter kicked off with David Hume’s price-specie flow mechanism. They write: “The price-specie flow model connects internal and external balances.” The two need to be considered together to find a solution to global disorder, they argue (Michael Pettis, in his excellent [amazon_link id=”0691158681″ target=”_blank” ]The Great Rebalancing[/amazon_link] would agree.) One thing that has changed since Hume’s time is the development of an asymmetric response between prices/wages and output/employment, but even so deflationary pressures are still evident in some countries.

The book characterises the current state of affairs as an ‘end of regime’ crisis, and argues that the resolution will depend on the emergence of a hegemonic country in the global economy, just as the 1930s crisis was not fully resolved until the US took that role. The ‘how to fix it’ of the subtitle is to have some leadership. “Continued neglect of international imbalances will lead to conditions reminiscent of the 1930s and possibly even to military conflicts like those of the 1940s,” they write. Scary thought. They note that it took decades for the switch from Britain to America to occur – from 1918 until the late 1940s really.

I suppose it is true that a single hegemon is necessary to orchestrate the co-operation needed to resolve the interaction of internal and external balances around the world. However, this is a depressing conclusion because my sense from my China reading (and I’m not at all an expert) is that the only candidate is far from ready to step into that role, while America’s decline is increasingly apparent with every news story about its bizarre, internally-obsessive politics – it can’t co-operate with itself, never mind other nations. Like Pettis, Temin and Vines see the economic solution as obvious – an expansion of domestic demand in China and Germany.

“The world …needs both co-operation and a way to make durable bargains among nations. … The absence of an obvious hegemonic leader makes it easy to be pessimistic that such co-operation will not be forthcoming.” Maybe, they suggest, the G20 could get its act together. Jim O’Neill’s [amazon_link id=”1907994130″ target=”_blank” ]The BRIC Road to Growth[/amazon_link] is a bit more optimistic about the scope for leadership to come from the fast-growing large emerging economies but also forsees governance change as likely to be too slow. Temin and Vines are pessimists: “Alas, politics in America and Europe seems to be aimed at repeating the mistakes of the 20th century in the first global crisis of the 21st.” A sobering thought as the 100th anniversary of World War I hoves into view.

I would make all political leaders read this book over the holidays – whether in December or a bit later for Chinese New Year – and hope that it prompts them to make a New Year resolution to show true leadership. A globalized world without global leadership is a pretty terrifying prospect.

Google, books and public value

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Already much has been written about the American court’s ruling in favour of Google being able to digitize millions of books without express permission from the copyright holder. The EFF warmly welcomed the ruling, other commentators have some reservations, and the Authors Guild has said it will appeal. Judge Denny Chin was absolutely clear, writing:

“In my view, Google Books provides significant public benefits,” the ruling reads. “It advances the progress of the arts and sciences, while maintaining respectful consideration for the rights of authors and other creative individuals, and without adversely impacting the rights of copyright holders.”

The judgement suggests Google Books will act like a store allowing people to browse before they go ahead and buy the book – that it will be an unusual example, in other words, of a monopoly in the public interest.

Hmm. There is obvious potential for researchers and readers to benefit from increased access to books. It is possible that authors will benefit if searchability increases rather than decreases their sales – this is plausible but it is an empirical issue, so we will see.

However, the ruling (on a quick read) ignores other potential side-effects. Google is a commercial company, not a public library, and the architecture it uses to present search results will not be based on the same kind of criteria. It may well divert people away from libraries, which are important social and cultural institutions. It may have a market impact in bookselling depending on the links given alongside search results – can retailers buy those slots? I don’t know. The e-book link is a solo link in the examples I looked at, taking you to pay in Google Play with Google Wallet. There will be other unintended consequences I’ve not thought of yet.

If there is an appeal, it isn’t quite the end of the saga, but I think it is clear the game is probably over for the Authors Guild. However, the remaining delay gives Google time to reflect on how it implements Google Books – what are the principles, and what role does public service play in this initiative?

Coincidentally, I spent this morning at a fascinating conference on public value organised by Channel 4 (talking about how the BBC Trust thinks about public value – here is a link to our publication on it, Public value in Practice). I believe commercial organisations can have a public purpose, that this has a large overlap with the profit motive, rather than conflicting with it. But it behoves Google as a massive commercial entity providing one of the most important public goods – knowledge – to tell us more about the principles by which it will run Google Books.

Innovation in publishing, continued

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As a reader and an [amazon_link id=”0691156794″ target=”_blank” ]author of books[/amazon_link], and now dabbling in publishing, albeit in partnership with some grown-ups, I’m endlessly fascinated by the effects of digital technology on the industry. While not in denial about the challenges facing publishers or booksellers, I think the sector as a whole has responded far better than the record industry with a series of innovations that serve consumers.

Two things caught my eye this week. The first is Kevin Kelly on the economics of self-publishing (courtesy of Storythings), spelling out the financials as well as some practical issues. John Kay is another author who has self-published some books. The technologies, combined with the sales platform provided by Amazon, have clearly brought down entry barriers in publishing to the point where individuals can have a go. The main barrier now is marketing, grabbing readers’ attention. (I also like the link in Kelly’s column to another post about the joy of physical books.)

The second was a blog post by the University of Minnesota Press (courtesy of the Princeton University Press blog) about a new series they are publishing, capturing the the faster and more engaged nature of scholarly debate in these days of blogging and social media. Here’s the core of the idea:

“Forerunners will publish timely, innovative works of between 15,000 and 25,000 words, written for a broader audience of serious readers. These could be original writing or adapted from more ephemeral conversations already happening. We’re leveraging agile publishing tools and ebook technology to make works available quickly and widely at an affordable price. This means ebooks available from all the major retailers, like Amazon, as well as print-on-demand editions for those who still prefer a more tactile reading experience. And, I’m talking a few months from submission to publication—not a few years, which would be the typical timeline for a scholarly monograph. You submit your work in January; we have it out in April.”

It isn’t all roses in the book world. Some bookstores earn 25% of their annual revenue in the month before the Christmas holiday, and most of what they sell will be ghosted celebrity biographies and cook books. But for those of us interested in ideas and enamoured of books, these are exciting times.

 

Injecting nuance into the debate about China

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It wasn’t until reading Jonathan Fenby’s [amazon_link id=”1847394116″ target=”_blank” ]Tiger Head, Snake Tails[/amazon_link] that I realised how polarised some of my previous reading on China had been. While I’ve read some superb reportage/analysis such as Leslie Chang’s [amazon_link id=”033044736X” target=”_blank” ]Factory Girls[/amazon_link] and Richard McGregor’s [amazon_link id=”0141975555″ target=”_blank” ]The Party[/amazon_link], there is definitely a strain of the literature that is either ‘China will conquer the world’ (eg Martin Jacques in [amazon_link id=”0140276041″ target=”_blank” ]When China Rules The World)[/amazon_link] or ‘China is doomed’. Mr Fenby is an experienced journalist – a former editor of the South China Morning Post – and the extent of his knowledge about the country is clear on every page.

[amazon_image id=”1847394116″ link=”true” target=”_blank” size=”medium” ]Tiger Head, Snake Tails: China Today, How it Got There and Why it Has to Change[/amazon_image]

As always, the scale of anything about China is staggering – to give just one example from the book, China’s foreign exchange reserves in 2011 were enough to buy Italy; or all of the sovereign debt of Portugal, Ireland, Greece plus Spain, and also Google, Apple, IBM and Microsoft and all of the real estate in Washington and Manhattan, and the world’s 50 most valuable sports franchises. There are lots of fascinating insights too. I was struck by the information on market structure – many markets have a few state giants but are otherwise highly fragmented and regionalised. There are 121 very large state firms, another 114,400 smaller state owned enterprises, and a vibrant competitive fringe. In retail, the very biggest firms have less than 6% of the market each. Rare earth mining – surely somewhat capital intensive? – is carried out by small family-owned enterprises. Of the half million food producers, 80 per cent have fewer than 10 employees. The book has other interesting insights. For instance, China excels at individual sports – golf, table tennis, gymnastics – but fares poorly at team sports.

Like many commentators, Fenby highlights the enormous challenges facing China as it makes the transition from relying on cheap, abundant labour to drive rapid export growth and infrastructure (often debt funded) at home. These include the political conundrum of how the Communist Party will try to keep control – and whether it will succeed – and the enormous demographic challenge. He writes about the endemic corruption and absence of trust, the environmental horrors, the need for better social welfare including ending the distortions created by the ‘hukou’ system of residence permits. However, the book does not despair. All countries face difficult transitions at various points in their history, and China also has great resources for addressing the challenges. Tiger Head, Snake Tails is a cracking read, and I really like its injection of nuance into the debate we in the west have about China.

Who cares about GDP?

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My new book is due out in March and it’s starting to feel real. Bound copies of the proofs arrived here this week, and now it’s in the Princeton University Press spring 2014 catalogue! You can even pre-order from Amazon – the title is [amazon_link id=”0691156794″ target=”_blank” ]GDP: A Brief but Affectionate History.[/amazon_link]

[amazon_image id=”0691156794″ link=”true” target=”_blank” size=”medium” ]GDP: A Brief but Affectionate History[/amazon_image]

I gather that foreign rights sales are already going very well, too.

OK, it’s about GDP, something I find more interesting than do many other people. But I think it’s a jolly good read, and the subject is certainly important.