Books to look forward to in 2014

A New Year Resolution to read more books about economics?

It’s time for a browse through the publishers’ catalogues to see what enticing economics and business books will be out in the next few months (this is of course a non-exhaustive list – I’m happy to update this if anybody knows of others coming out in the first half of 2014).

I have to indulge myself in putting my own new book first: [amazon_link id=”0691156794″ target=”_blank” ]GDP: A Brief But Affectionate History[/amazon_link] is published on 23rd February.

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

Also from my publisher Princeton University Press, I like the look of the history title [amazon_link id=”B00H5ZN2Z8″ target=”_blank” ]The Transformation of the World: A Global History of the 19th century[/amazon_link] by Jurgen Osterhammel. Greg Clark’s [amazon_link id=”0691162549″ target=”_blank” ]The Son Also Rises: Surnames and the History of Social Mobility[/amazon_link] looks like a highly distinctive take on the mobility question. Other new economics titles are [amazon_link id=”0691161127″ target=”_blank” ]The Dollar Trap[/amazon_link] by Eswar Prasad, [amazon_link id=”0691155240″ target=”_blank” ]Fragile By Design[/amazon_link] (on banking crises) by Charles Calomiris and Stephen Haber, and T[amazon_link id=”0691154708″ target=”_blank” ]he Butterfly Defect: How globalization creates systemic risks and what to do about it[/amazon_link] by Ian Goldin and Mike Mariathasan. The best title in the catalogue could be [amazon_link id=”0691160120″ target=”_blank” ]Count Like An Egyptian[/amazon_link] by David Reimer – a guide to ancient maths.

At Harvard University Press, there is Thomas Piketty’s [amazon_link id=”067443000X” target=”_blank” ]Capital in the 21st Century[/amazon_link], which I posted about recently. Also coming up, [amazon_link id=”0674049772″ target=”_blank” ]Immigration Economics [/amazon_link]by George Borjas

MIT Press has several I like the look of: [amazon_link id=”0262019922″ target=”_blank” ]Production in the Innovation Economy[/amazon_link], edited by Richard M. Locke and Rachel Wellhausen; [amazon_link id=”0262026910″ target=”_blank” ]In 100 Years: Leading Economists Predict the Future[/amazon_link], Edited by Ignacio Palacios-Huerta; [amazon_link id=”0262027259″ target=”_blank” ]Virtual Economies – Design and Analysis[/amazon_link] by Vili Lehdonvirta and Edward Castronova; and [amazon_link id=”0262026872″ target=”_blank” ]Making Democracy Fun[/amazon_link] by Josh Lerner (“drawing on the tools of game design to fix democracy.”)

[amazon_image id=”0262026910″ link=”true” target=”_blank” size=”medium” ]In 100 Years: Leading Economists Predict the Future[/amazon_image]

 

Basic has Bill Easterly’s [amazon_link id=”0465031250″ target=”_blank” ]The Tyranny of Experts: Economists, Dictators and the Forgotten Rights of the Poor [/amazon_link]out in March.

On Penguin’s forthcoming list: [amazon_link id=”B00FXH3FZC” target=”_blank” ]The Secret Club That Runs the World: Inside the Fraternity of Commodities Traders[/amazon_link] by Kate Kelly; [amazon_link id=”1846147611″ target=”_blank” ]An Uncertain Glory[/amazon_link] by Amartya Sen; [amazon_link id=”1846147158″ target=”_blank” ]All That is Solid: The Great Housing Disaster[/amazon_link] by Danny Dorling.
[amazon_image id=”1846147611″ link=”true” target=”_blank” size=”medium” ]An Uncertain Glory: India and its Contradictions[/amazon_image]
From Faber in April, Gerard Lyons, now advising Boris Johnson on economics, [amazon_link id=”0571307787″ target=”_blank” ]The Consolations of Economics: How We Will All Benefit from the New World Order.[/amazon_link]

Later in the year Oxford University Press is bringing out [amazon_link id=”0198716087″ target=”_blank” ]Reconceptualizing Development in the Global Information Age[/amazon_link], Edited by Manuel Castells and Pekka Himanen; [amazon_link id=”0195373847″ target=”_blank” ]The System Worked: How the World Stopped Another Great Depression[/amazon_link] by Daniel W. Drezner; [amazon_link id=”0198702132″ target=”_blank” ]The Euro Trap: On Bursting Bubbles, Budgets, and Beliefs[/amazon_link] by Hans-Werner Sinn;  and [amazon_link id=”0199330107″ target=”_blank” ]After Occupy: Economic Democracy for the 21st Century[/amazon_link] by Tom Malleson looks quite interesting too.

[amazon_image id=”0199330107″ link=”true” target=”_blank” size=”medium” ]After Occupy: Economic Democracy for the 21st Century[/amazon_image]

Finally, I’m also looking forward to Philosophy at 3am: Questions and Answers with 25 top philosophers by Richard Marshall, who does the Friday morning philosophy interviews in 3am Magazine – always quirky, always interesting.

 

The challenge of doing what’s obvious

Naturally I was very interested when the LSE’s Growth Commission report on the UK economy was published back in September. I’ve just looked through the book of the report, [amazon_link id=”1909890022″ target=”_blank” ]Investing for Prosperity: A Manifesto for Growth[/amazon_link], edited by Tim Besley and John Van Reenen. It’s a very impressive publication, summing up concisely a vast amount of evidence on the long-term weaknesses of the UK economy.

[amazon_image id=”1909890022″ link=”true” target=”_blank” size=”medium” ]Investing for Prosperity: A Manifesto for Growth[/amazon_image]

As the preface underlines, the report is not about the demand side issues and short-term growth, but rather about the supply side and the UK’s long term potential. The problems are hardly unknown. The individual chapters cover three main areas: infrastructure, skills, and private investment and innovation. The policy recommendations correspond to these, including a shopping list of proposals to improve primary and secondary schooling; an independent infrastructure infrastructure – a strategy board, a planning commission to deliver the strategy and a bank to finance it; and measures to support investment in innovation by the private sector centred on increasing competition in the banking sector.The chapters give a very useful summary of the state of the evidence in each of these areas, very handy for students – there are terrific lists of references too.

The recommendations are all deeply sensible. However, I think the book serves to underline two problems with the task the Growth Commission set itself. One is that any policy measures to address an area of concern are either rather motherhood and apple pie – ‘improve standards of primary education’ – or extremely detailed, because once you get down to thinking about actual measures to implement, they have to be. The report is surely right on the big picture, but patchier on the detail – inevitably in a 300 page book. The infrastructure sections are the strongest, the education ones the least persuasive – but maybe that’s because I’ve been closely involved in primary education as a governor helping turn around a school.

The other problem is that the book does not, for me, meet the challenge it describes in the preface: ‘If your ideas are so good, why haven’t they already been done?’ It is excellent on the economic analysts but doesn’t really tackle the difficulties of political implementation of “structural reforms”.

Take transport infrastructure. We surely know the London area needs more airport capacity; but a political decision on location is needed. However, early on the current government kicked this can down the road beyond the next election to wait for a later government. Yet any decision taken now would be much better than further delay – so argues Bridget Rosewell persuasively in her book [amazon_link id=”1907994149″ target=”_blank” ]Reinventing London[/amazon_link], and she writes as a firm supporter of a new airport to the east of London.

[amazon_image id=”1907994149″ link=”true” target=”_blank” size=”medium” ]Reinventing London (Perspectives)[/amazon_image]

Or take HS2. [amazon_link id=”1909890022″ target=”_blank” ]Investing for Prosperity[/amazon_link] does not have a view on this, perhaps because economists are divided on this issue as they are not on airport capacity. It’s not at all clear how an Infrastructure Strategy Board would navigate the politics of this project, although it’s plain as daylight that the amount of investment in infrastructure in general has been too low over a long period.

Still, it’s not the job of economists to deliver the politics, but rather to point out the uncomfortable realities. I ended the report feeling rather optimistic because, as it argues, the UK has a lot of assets that will support a stronger potential growth rate and future prosperity. The Commission argues for measuring progress in terms of median income rather than GDP per capita, to take account of the distribution of the gains, which seems entirely sensible. The economy’s problems may be long-standing but the counterpart of that is that we know what to concentrate our reform energies on.

Most popular posts of 2013

It’s close enough to the year end to reveal which posts on this blog have been most read this year. The list tells you mainly that (1) there has been a continuing upward trend in the number of visitors to this blog (thank you!), so there are more from later months of 2013; and (2) lists are very popular. So there is limited information in the ranking. Still, the posts are:

1. How to create a blockbuster

[amazon_image id=”0571309224″ link=”true” target=”_blank” size=”medium” ]Blockbusters: Why Big Hits – and Big Risks – are the Future of the Entertainment Business[/amazon_image]

2. That time of year

3. Back to the future in economics

4. Poverty, fear and loathing

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty? (Perspectives)[/amazon_image]

5. Democracy, the El Farol Bar and Captain Kirk

[amazon_image id=”0691148686″ link=”true” target=”_blank” size=”medium” ]The Confidence Trap: A History of Democracy in Crisis from World War I to the Present[/amazon_image]

6. Unicorns, Higgs Bosons and the State of Macroeconomics (a 2012 post still popular in 2013….)

7. Where to start learning about economics

8. Not average at all

9. Those 21st century inequality blues

10. The Enlightenment Economics Book Prize Shortlist 2013

[amazon_image id=”0691155674″ link=”true” target=”_blank” size=”medium” ]Worldly Philosopher: The Odyssey of Albert O. Hirschman[/amazon_image]

 

Shambles, from mini to omni

[amazon_link id=”1780742665″ target=”_blank” ]The Blunders of our Governments[/amazon_link] by the distinguished academics Anthony King and Ivor Crewe is a deeply fascinating, compelling book, one that deserves to be widely read by politicians, officials, policy wonks, journalists, students and for that matter citizens).

[amazon_image id=”1780742665″ link=”true” target=”_blank” size=”medium” ]The Blunders of Our Governments[/amazon_image]

Its claim is that the system of government in the UK (by which they explicitly mean that centred in Whitehall and Westminster) is so flawed that successive administrations preside over policy blunder after policy blunder, to an extent far beyond the experience either of pre-1980 UK governments or many overseas governments. By ‘blunder’ they mean cock-ups that fall far short of the objectives, and greatly over-run the intended cost or fail to deliver expected savings, but they exclude both judgement calls that went wrong and scandals. Examples in the book range from the huge and prominent (the poll tax, Britain’s ERM entry and exit, the Millennium Dome, the infamous NHS IT project) to the smaller and/or less well-known (Individual Learning Accounts, the Asset Recovery Agency, the London Underground ‘public-private partnership’).

The longest section of the book is a series of case studies covering a a dozen blunders from 1979 on. These occurred in both the Thatcher and Blair/Brown governments. The accounts are based on extensive reading and also personal interviews with participants conducted by the authors. It is both highly authoritative and absolutely jaw-dropping. “How could they have been so stupid?” you think.

The final two parts of the book try to answer that question, dividing the explanation into ‘human errors’ and ‘system failures’.

The former include the fact that people in the world of policy making – as any other world – bring their prejudices to their decisions. They are as prone as anybody to group think. Importantly, there is a ‘cultural disconnect’ between people in policy and politics and many other citizens, especially in the field of welfare policy. The clever middle class folk who go to university, read books, take foreign holidays, manage their money, and lead reasonably orderly and law-abiding lives, have no conception of other ways of life in their own land. This is certainly true: I have come across this innocence fairly frequently in my brushes with the policy world, and it is extraordinary that it is possible for people to spend a career in politics or the civil service with no other experience at all. This also helps explain another of the book’s list of  typical errors, namely the absence of any experience relevant to implementing policies, which are developed in an abstract, analytical way with no thought given to how they might be put into practice, in an ‘operational disconnect.’ Implementation is, it seems, scarcely thought of in policy debate. In addition, for various reasons, symbolism and spin have come to play a big part in modern politics.

Among the ‘system failures’ are: the lack of common purpose between Whitehall departments and excessive influence of the Treasury in distorting policies from elsewhere; the massively under-resourced role of the Prime Minister (I hadn’t realised how much of an outlier the UK is in not having a prime minister’s department); the extreme frequency with which ministers change jobs (the Federal Republic of Germany has had 15 ministers of economics since 1949; the UK has had 35); the related absence ways to hold specific invividuals accountable for what happens when policies go wrong; the lack of relevant expertise in Whitehall on project management; no genuine scrutiny role for parliament, and undue speed without proper deliberation of major policy initiatives.

The overall diagnosis is of a government system populated by people who lack relevant expertise, have dysfunctional relationships (especially between civil servants and ministers), where there are no proper checks and balances, and where an extreme fear of being seen to do a u-turn paralyses sensible changes. “The truth is that, looked at close up, British government turns out to be more chaotic than dictatorial,” the authors conclude. The burdens on ministers’ time are intense; they are doing constantly. This makes the loss of trust between ministers and civil servants, on whom they used to lean, all the more damaging.

The book has some suggestions. On the ‘human errors’, there are some obvious steps. People who fancy going into politics could do another job first, in between student politics and their first think tank job or between their think tank and their first constituency. Civil servants could be required to work in local government or the health service or the private sector for several years if they want to get to the top jobs. Ministers could chair their meetings using known techniques for overcoming group think and bias – for example, creating a formal ‘devil’s advocate’ moment when the group is asked to critique a decision. Profs King and Crewe suggest greatly expanding the role for parliamentary scrutiny, especially at the pre-legislative stage. The Project Manager should become a key figure in Whitehall (and many other organisations, public and private, for that matter).

The postscript indicates that the systemic failures continue with the present government. Although the Olympics and Paralympics avoided the errors of the Millennium Dome, we have had the pasty tax and ‘omnishambles’ budget of 2012, and the Universal Credit is showing every sign of shaping up to be a blunder, the authors write.

The thing about system failures is that nobody has a strong incentive to do anything about them. The risks are high, the potential rewards minimal. They are hard to sort out because it takes a long time and involves getting a lot of people to agree to change things in ways that make their lives a bit more difficult. There is no personal risk in continuing with things they way they are now.

British political culture is not conducive to reasoned reform: Punch and Judy are the role models for debate, any sensible change of mind is pilloried as a ‘u-turn’, policy pilots and experiments have to get past the hurdle of accusations of ‘postcode lottery’ and the demand for instant results.  For all that every policy looks like a shambles, whether mini or omni, it is also hard for diligent ministers to get anything done at all – see Chris Mullin’s superb account in the first volume of his diary ([amazon_link id=”1846682304″ target=”_blank” ]A View from the Foothills[/amazon_link]) of his repeated failure as a junior minister to introduce a modest measure tackling the suburban blight of overgrown leylandii.

So it would be easy to read [amazon_link id=”1780742665″ target=”_blank” ]The Blunders of Our Governments[/amazon_link] and despair. And yet the latest survey evidence suggests that Britons are divided between anger and boredom (47% fury, 25% boredom, 16% respect, 2% inspiration) when they think about politics. Surely Something Must Be Done? I take some hope from the fact that most of the politicians and officials I’ve met over many years have been sincere in their sense of public service, no matter how clueless or ambitious or plain unpleasant they’ve been. That means there is potential for a coalition for system reform.

Another ray of hope comes from the universal lip service paid to the idea of “what works” or “evidence-based policy.” (This does of course make you wonder what previous policies were based on.) I predict some tumult ahead when politicians discover that the evidence does not in fact support their prejudices, but meanwhile, the system has created some machinery for pointing out when policy proposals are blunders in the making.

I would hope that devolution in the UK could offer another perspective on the system failures. The book notes that officials in Scotland challenged the poll tax, on the basis of how impractical it would be to implement, as their counterparts in England did not – and were ignored. In the devolved arrangements we now have a variety of experience and some natural experiments. Of course, the devolved powers vary in different areas of policy, and the social, cultural and political context of each nation is different; but if comparable officials from each of the four nations could meet to discuss policy problems, what a great forum that could be for testing proposals and sharing experience.

It also seems to me worth thinking about the training we give our politicians and officials. I don’t know how many degree courses in government or economics or public policy contain modules on policy assessment and implementation, or project management skills, but suspect the answer is not enough.

A modest start would be to put this book on all relevant reading lists.

How to create a blockbuster

Anita Elberse’s [amazon_link id=”0571309224″ target=”_blank” ]Blockbusters: Why Big Hits and Big Risks are the Future of the Entertainment Business[/amazon_link] is published in the UK in January (it was out in the US earlier in 2013). It’s a clear and well-written series of case studies in how various branches of the entertainment business – movies, pop music, TV shows, books, sport – rely on a ‘blockbuster’ strategy as a business model.

[amazon_image id=”0571309224″ link=”true” target=”_blank” size=”medium” ]Blockbusters: Why Big Hits – and Big Risks – are the Future of the Entertainment Business[/amazon_image]

The economic analysis underlying the argument is not new. It can be traced back to Sherwin Rosen’s 1981 paper on the Economics of Superstars. I wrote about the way digital technologies were amplifying the superstar effect in my 1996 book, The Weightless World (pdf). However, Blockbusters provides plenty of examples of how the analysis translates to the real world. There are many interesting case studies in the book, albeit all American. Elberse also shows very convincingly how the blockbuster business model stacks up, based on her research experience talking to many of the firms she describes – she cites the revenue and cost data for specific movie releases, for example. A Harvard Business School professor, she clearly has terrific experience across a range of entertainment industries, and the details are fascinating. If you can afford to market a new release or title at scale, you’d be an idiot not too.

This means the [amazon_link id=”184413850X” target=”_blank” ]Long Tail[/amazon_link] idea is largely wishful thinking. The profit margins from the handful of blockbusters might support the production of a long tail but it isn’t even the case that there will always be a long tail because producers don’t know which will become hits. For although there is indeed great risk involved in releasing a possible blockbuster, few films or books or albums become blockbusters without a deliberate marketing effort. And scale in marketing is almost always decisive; the book cites a few grassroots successes, such as Lady Gaga’s first album, but they are obviously exceptional. So this means there is little prospect of Hollywood moving away from the model of putting resource including marketing into successful franchises, and most of what will be on offer will be of the same ilk as Harry Potter I to VII, The Hunger Games I to N, etc. Celebrities will only grow larger and more monstrous.

The book ends on the suggestion that the blockbuster strategy is going to have to be adopted by a growing range of businesses. Elberse gives the examples of Apple and Victoria’s Secret for their successful deployment of spectacle around a few products. “Apple releases fewer products and product variations than virtually all its competitors in computer hardware,” she writes. It makes just a few bets, in both production and marketing, in contrast to its competitors.

If I were an executive in any of the entertainment businesses, I’d regard this book as a must-read and consider its lessons very seriously. As a citizen, and a non-American, I found it a bit depressing. As a non-American because the US economic advantage of the scale of the domestic market is becoming even more pronounced than ever; the benefits of that scale are often overlooked anyway. They are even greater in digital markets where fixed costs (including or especially marketing) are high, and marginal cost is low to zero. As a citizen because –  although it would be overstating things to say everything is becoming Hollywoodised and dominated by celebrity – there is something in this.

It is obviously possible to declare independence from popular US-originated or US-inflected celebrity culture, and graze around the vast steppes of the internet for other cultural products. Other countries do succeed in different ways in supporting their own culture. There are different kinds of celebrity – Professor Brian Cox as well as Lady Gaga. Still, it seems it will have to be an increasingly active decision to opt out of Celeb-land. [amazon_link id=”0099518473″ target=”_blank” ]Brave New World[/amazon_link]?