[amazon_link id=”0231160755″ target=”_blank” ]The Best Business Writing 2013[/amazon_link] has some fantastic long reads on business stories – very US-focused but that doesn’t matter. There are reports on the mortgage scandals and finance, but also on healthcare, marketing, the United-Continental airline merger and much more.

[amazon_image id=”0231160755″ link=”true” target=”_blank” size=”medium” ]The Best Business Writing 2013 (Columbia Journalism Review Books)[/amazon_image]

Not all are tales of scandal. But many are. Some of the reports left me astonished at how people justified their behaviour and choices to themselves.

The healthcare scandals are particularly American. One anaemia medication was given at unsafe levels to an estimated 80% of dialysis patients on Medicare, because doctors made thousands of dollars from administering the heavily marketed drug. It was used on cancer patients too, despite increasing their mortality rate – oncologists could make $100,000 to $300,000 a year from prescribing it. Nor did I know that prescription painkiller overdoses are the most common form of accidental death in the US now, killing more than 15,000 people a year, more than all illegal drugs combined. The US spends $15 billion a year fighting illegal drugs but subsidizes opioid painkillers. They’re naturally very profitable for the pharma companies. As in the case of the finance industry, lobbying of Congress plays a key role in these tales too.

I’ve not read the new Levitt and Dubner book, [amazon_link id=”1846147557″ target=”_blank” ]Think Like A Freak[/amazon_link], but apparently it starts with this proposal for the NHS, which Steven Levitt pitched to the Prime Minister. Many people think the NHS could do with a bit more pressure from market forces, although of course opinions differ. But Levitt – who got short shrift from David Cameron – appears to have absolutely no idea what proportion of GDP the UK (or any other OECD country) spends on healthcare compared to the US. And, as the reports in [amazon_link id=”0231160755″ target=”_blank” ]Best Business Writing 2013[/amazon_link] demonstrate, market forces, brilliant as they can be at allocating resources to their best uses and satisfying the varied needs and preferences of many people, are never the whole story.

All spending on health as % of GDP, OECD countries, 2011 (source: OECD)

Joseph Stiglitz gave today’s Jean-Jacques Laffont lecture at the Toulouse School of Economics’ Tiger forum, talking about his new book, [amazon_link id=”0231152140″ target=”_blank” ]Creating a Learning Society: A New Approach to Growth, Development and Social Progress. [/amazon_link] The two themes of the lecture were that sustained growth needs a ‘learning society’, and that markets alone can’t create this.

Stiglitz argued that the social changes around 1800 were more important than allocative efficiency or capital accumulation, consisting of the learning how to learn or diffusion of knowledge. The idea that technological change is the most important determinant of growth encompasses the diffusion of knowledge. He linked this to Schumpeter, but the idea is obviously part of endogenous growth theory too.

[amazon_image id=”B00IHGTW5I” link=”true” target=”_blank” size=”medium” ]Creating a Learning Society: A New Approach to Growth, Development, and Social Progress (Kenneth Arrow Lecture Series)[/amazon_image]

The lecture focused on developing countries, and the transfer of knowledge and know-how from the developed countries. This, Stiglitz said, was more important than the transfer of resources.

Market failures are pervasive in this arena, he said. Knowledge is a public good. Markets alone do not produce and spread knowledge efficiently and do not promote innovation efficiently. Government interventions are needed. He highlighted intellectual property regimes, arguing that these need to be ‘developmentally orient’ – and also that the WTO’s TRIPS regime is very much not so, imposing costs that are not outweighed by the dynamic benefits of protecting innovations.

He went on to discuss the relationship between globalization and growth, suggesting that growth drives trade as much as trade drives growth (the orthodoxy). Indeed, there is an argument that trade liberalization has reduced growth in the developing world.

The task of government is not picking winners – although he said en passant that governments in general are quite good at doing so, getting a good return on average in research and development – but in identifying externalities. however, the WTO regime has made it hard for governments to engage in industrial policy – in contrast to examples like Korea in the past. An alternative, and one that avoids the ‘picking winners’ argument too, is to reduce the exchange rate. This would tend to give them sustained current account surpluses, with the result that the poorer countries will be lending to the richer countries, but this is worthwhile because of the ‘learning’ benefits.

As soon as we are talking about innovation, he concluded, we’re in the world of ‘second best’ or Schumpeterian rather than neoclassical economics, and especially not in the world of the Washington Consensus when it comes to development. Finally, he argued that governments need to direct innovation away from labour-saving innovations; markets not only under-invest in innovation, but also are inefficient in what kind of innovation they deliver because the social and private costs differ. What is the point of allocating scarce capital and knowledge in order to create more unemployment? he asked.

I must say that the rather superficial summary of the book in the lecture left me with many questions, but it sounds like it offers an intriguing perspective on development. If you take modern growth theory (or Schumpeter) seriously, knowledge is a central issue. And Stiglitz after all is a titan when it comes to understanding the implications of information asymmetries.

It’s rather tall again. Some of these won’t get read until the summer:

At the moment I’m on [amazon_link id=”0231160755″ target=”_blank” ]The Best Business Writing of 2013[/amazon_link] from the Columbia Journalism Review – the first two articles are terrific. With a couple of flights coming up (to and from the Tiger Forum at the Toulouse School of Economics, where I’m chairing a discussion on globalization with Hélène Rey, Dani Rodrik and Joe Stiglitz), I should finish it this week.

[amazon_image id=”0231160755″ link=”true” target=”_blank” size=”medium” ]The Best Business Writing 2013 (Columbia Journalism Review Books)[/amazon_image]

Yesterday I received an email from Rafael Galvão de Almeida, a graduate student who is doing a research project on economists as fictional protagonists – believe it or not, there is such a sub-genre. Had I read [amazon_link id=”0552159336″ target=”_blank” ]Making Money[/amazon_link] from Terry Pratchett’s Discworld series? he asked, having read my post The Economist as Hero.

No, so I bustled upstairs to the teenage sons’ extensive Terry Pratchett library to retrieve it. Coincidentally, the new catalogue from my publisher, Princeton University Press, arrived with news of a new Marshall Jevons detective story, [amazon_link id=”0691164169″ target=”_blank” ]The Mystery of the Invisible Hand[/amazon_link]. The books in this series aim to bring economic theory to life by the plot – apparently it’s Coase and auction theory in this art market novel. Russ Roberts’ novels [amazon_link id=”0691143358″ target=”_blank” ]The Price of Everything[/amazon_link] and [amazon_link id=”0262681358″ target=”_blank” ]The Invisible Heart[/amazon_link] are an alternative, enjoyable way to imbibe a little economics without even noticing.

Economic fiction

Update: here via @MikeBenchCapon is James Andow’s fantastic list of philosophers in fiction – far, far more than the economists: https://www.academia.edu/5590924/Philosophers_in_Fiction