Monthly Archives: January 2016

Food, glorious food

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I’ve been reading [amazon_link id=”0691163871″ target=”_blank” ]Hamburgers in Paradise: The Stories Behind the Food We Eat[/amazon_link] by Louise Fresco – slowly, in the (brief) window between going to bed and falling asleep because although a gorgeously produced and fascinating book, it’s too heavy to carry around.

[amazon_image id=”0691163871″ link=”true” target=”_blank” size=”medium” ]Hamburgers in Paradise: The Stories behind the Food We Eat[/amazon_image]

The book is stuffed full of fascinating stories and facts. It isn’t a history although it contains much history. The chapters take themes, starting with accounts of (food in) Paradise and the fall, with others covering subjects such as biodiversity, scarcity, plenty, bread, fish, obesity. The broad arc of the narrative, though, is the eventual escape from a Malthusian world via the progressive industrialisation of food production, and the questions now about sustainability and the quality of our food and our well-being. Can we return from the hamburgerized modernity to a paradise of moderation in abundance? I haven’t quite finished so don’t yet know her answer.

And the facts! I had no idea that yields in the Netherlands were 10 tons of wheat per hectare, compared with 1-2 tons in Portugal, while rice yields are 7-8 tons per hectare in China and just 4-5 tons in the most fertile parts of India. Who knew you could develop a fatal anaemia from eating broad beans – which on the other hand offer some protection against malaria? But the book is no nerdy tome on farming; its main theme is the culture of food, of growing it and eating it – I’m just picking out examples that appeal to my nerdiness. A lovely book.

 

Sharing the economic growth

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Thanks to a recommendation from Martin Wolf, I’ve just read [amazon_link id=”0521094461″ target=”_blank” ]Theoretical Welfare Economics[/amazon_link] by J de V Graaff, a 1971 reprint of a 1957 primer on this subject – Martin told me it had been his university text. While in my undergraduate course we certainly covered welfare economics, it was as a settled body of knowledge, and I don’t recall reading anything like this on the earlier debates.

[amazon_image id=”0521094461″ link=”true” target=”_blank” size=”medium” ]Theoretical Welfare Economics[/amazon_image]

It’s a very clear and interesting discussion – succinct too, at about 150 pages. One of the most interesting aspects is how comprehensively the author demolishes the idea that questions about the size of the economic pie and its distribution can be separated. He lost the argument in later economics of course – economists assume, and often state, that these are separable. However, the strength of Graaff’s counter-argument is evident. At the formal level, he covers the inconsistency of the Kaldor/Hicks notion that losers from a change in allocation can (potentially) be compensated – Skitovsky originally showed that the (potential) Pareto optimality of any change depended on the initial distribution. (Here is a good Interfluidity explanation.) But the book also explains it far more intuitively:

“In a one commodity world some definite meaning could be attached to a phrase like ‘the size of national income’; and we could legitimately  say that welfare depended on the size and the distribution of this one commodity. But as soon as we leave a one-commodity world this ceases to be true. There is no unambiguous meaning we can attach to ‘the size of national income’ when we have a heterogeneous collection of goods and services. How can we combine the various goods into a single quantity that can be said to have a ‘size’? By weighting them and striking an average? This is certainly a possibility. But we can only get the relevant weights from a welfare function; and if we have the usual Paretian one … it will only tell us what weights to use when the distribution of goods among members of the community is given. Only in a very limited sense can welfare be said to depend on ‘size’ and ‘distribution’ – for the two elements are no longer independent and cannot be separated out.” [my italics]

He adds that the index numbers usd in constructing national income cannot be an indicator of change in welfare – they simply provide information relevant to a balanced judgement. “Index numbers of aggregate output or consumption should always be supplemented with information about the distribution of income and wealth – and also with separate indexes of investment, personal and collective savings, and expenditure on collective goods like defence. The more informatio made available, the more likely it is that a balanced judgement will be obtained.”

So here I think we have one of the earliest arguments for the ‘dashboard’ approach to measuring economic progress. But also an irrefutable case – with as many singing and dancing cross-partial derivatives as you like – for never leaving income distribution out of an assessment of how the economy is doing.

Reading Keynes, modernising macro, and modelling

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Geoff Tily has done me the honour of a blog post responding to my brief review here of Randall Wray’s new book, [amazon_link id=”0691159122″ target=”_blank” ]Why Minsky Matters. [/amazon_link]Geoff likes it that I criticise modern macroeconomics (he doesn’t perhaps realise that I’ve been in trouble before from macro friends like Simon Wren-Lewis for being so sceptical about the state of scientific knowledge about the aggregate economy; I want to criticise a wider range of modern macro than they do).

Geoff doesn’t like my statement that arguments over how to interpret Keynes are not interesting, which had as a by-the-way an observation that precision about meaning is an advantage of mathematical modelling. Reading my post back, it comes across as unnecessarily dismissive of Keynes. Of course he is an important figure, who did have things to say of relevance to the crisis if only people had remembered in time.

Having said that, his imprecision was exactly what opened the door for subsequent economists to interpret what he said and give it traction by formalising it. So I stick my argument that formal models are important even though one will always need words AS WELL to say the things that can’t be modelled.

[amazon_image id=”0691159122″ link=”true” target=”_blank” size=”medium” ]Why Minsky Matters: An Introduction to the Work of a Maverick Economist[/amazon_image]

And actually – sorry Geoff – it isn’t debating what Keynes really meant that is of interest, but the contrasting economic arguments and the evidence that can be brought to bear. This might seem like nitpicking but there is a tendency to scholasticism if the debates are conducted in terms of what somebody (no matter how significant a figure) really meant or not. Reading Keynes is important, modernising macro is essential, and economists need both maths and words – an interior solution is definitely better here than a corner solution.

So, with that response, I encourage those who haven’t to read [amazon_link id=”1502423588″ target=”_blank” ]The General Theory [/amazon_link] – and what a shame there is no high quality, reasonably priced paperback edition at present.

[amazon_image id=”1502423588″ link=”true” target=”_blank” size=”medium” ]The General Theory of Employment, Interest, and Money (Classic John Maynard Keynes)[/amazon_image] [amazon_image id=”1846148138″ link=”true” target=”_blank” size=”medium” ]The Essential Keynes (Penguin Classics)[/amazon_image]

Economics and evolutionary science

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I recommend this Evonomics post about economics post-2008, and the kind of re-evaluation that’s been going on among economists, citing somewhat critically Noah Smith and also Dani Rodrik’s excellent [amazon_link id=”0393246418″ target=”_blank” ]Economics Rules[/amazon_link]. Author David Sloan Wilson complains: “All good, but there is something missing from the internet links that I just provided—any discussion of evolutionary theory.”

[amazon_image id=”0393246418″ link=”true” target=”_blank” size=”medium” ]Economics Rules: The Rights and Wrongs of the Dismal Science[/amazon_image]

I couldn’t resist preening a little, for my 2007/2010 book [amazon_link id=”B004XCFI2Q” target=”_blank” ]The Soulful Science: What Economists Really Do and Why It Matters[/amazon_link], has a whole chapter, Murderous Apes and Entrepreneurs, about the importance of the links between economics and evolutionary biology. This also forms one strand of my 2012 Tanner Lectures. In other words, I wholly agree with the argument of the Evonomics post, but thhink there has been a little bit more progress than it acknowledges.

Of course, formal evolutionary theorising is not part of the conventional economics mainstream, although it has some distinguished practitioners; but having said that informally it widely informs much business economics. There are also some leading economists who have been thinking about the overlap between economics and evolution. The ‘murderous apes’ of the chapter title was inspired by Paul Seabright’s brilliant [amazon_link id=”0691146462″ target=”_blank” ]The Company of Strangers: A Natural History of Economic Life[/amazon_link]; Wilson cites Robert Frank’s [amazon_link id=”0691156689″ target=”_blank” ]The Darwin Economy[/amazon_link]. There is also an active strand of research on complexity theory, which [amazon_link id=”0571197264″ target=”_blank” ]Paul Ormerod[/amazon_link] and [amazon_link id=”0415568552″ target=”_blank” ]Alan Kirman[/amazon_link] among others have written about.

[amazon_image id=”B004XCFI2Q” link=”true” target=”_blank” size=”medium” ]The Soulful Science: What Economists Really Do and Why It Matters[/amazon_image] [amazon_image id=”0691146462″ link=”true” target=”_blank” size=”medium” ]The Company of Strangers: A Natural History of Economic Life[/amazon_image] [amazon_image id=”B008W4ASGC” link=”true” target=”_blank” size=”medium” ]The Darwin Economy: Liberty, Competition, and the Common Good[/amazon_image]

Economics will have to be consistent with what we learn about human behaviour and decisions from other human sciences, not just the other social sciences, but also evolutionary biology, cognitive science and psychology.

Public vs private – not

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I’ve been looking at a very handy little book [amazon_link id=”1785890581″ target=”_blank” ]The Public Sector Fox: Twelve Ways to become a brilliant Public Sector Manager[/amazon_link] by Marcial Boo and Alexander Stevenson. It is exactly what the subtitle suggests, a book of advice for people running public sector organisations, much of which would also apply to non-profits. The book divides the necessary skills into the personal (eg commitment, resilience), the basic (being strategic, gathering information) and the practical (finance, communication etc). Each chapter gives tons of straightforward, practical advice. It is also of our times – for example, it urges readers to regard being open with data and information as a strength and to do so as much as possible. I thoroughly approve. I’m not usually keen on anything self-helpy, but this is a very practical, useful book.

[amazon_image id=”1785890581″ link=”true” target=”_blank” size=”medium” ]The Public Sector Fox[/amazon_image]  [amazon_image id=”1849549826″ link=”true” target=”_blank” size=”medium” ]How to Be a Civil Servant[/amazon_image]

It’s interesting to compare this book with a previous excellent manual of advice, [amazon_link id=”1849549826″ target=”_blank” ]How to Be A Civil Servant[/amazon_link] by Martin Stanley. There is of course a distinction between the Whitehall civil service and everyday public sector management, between the analysis and giving of advice to ministers through the implementation of policies to the everyday management of public services.

But there are common threads as well. The thing that stands out is the emphasis in both books on commitment to the ideal of public service. “You care deeply about what you do, and about the people your work will help,” write Boo and Stevenson, describing their ideal public sector ‘fox’ (referring of course to Isaiah Berlin’s 1953 The Hedgehog and the Fox – “The fox knows many things…”).

For 25 years or more there has been a habit of looking down on civil servants and public sector managers, in contrast to the supposed efficiency of the private sector. But of course the contrast is a false one. There is lots of bad management in the private sector, lots of it  – in fact, many private sector folks would also benefit from reading these books. And managing in the public sector is far, far more complex than many private sector contexts, in a far, far less forgiving environment. So the jobs are more different than often supposed, and the level of performance more similar.