Author Archives: Diane Coyle

DIY history for autocrats

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Wishing a Happy New Year to all readers of this blog – thank you for reading.

It has been a depressing 2022 and the omens for 2023 don’t look great. I’m not completely convinced about the polycrisis notion, but for somebody in the UK the impact of events (the war), the cyclical downturn and the structural weaknesses of our economy and society (where to start?) make for a bleak start to the year.

So how better to begin my reading, amid the relaxing mayhem and death of detective fiction (and a quick re-read of The Wealth of Nations to decide whether I have anything to say in an upcoming Adam Smith workshop), than Katie Stallard’s Dancing on Bones? A journalist, the author has reported for years from Russia, China and North Korea. The book was published just as Russia invaded Ukraine, so doesn’t reflect the most recent events, but it starts in Ukraine in 2014, with the initial invasion of Crimea. The book is a reflection on how these autocrats – Xi , Putin and the Kims – use history (I should write ‘history’) to cement their hold on power. In particular, it describes how in each case history has been rewritten into myth, with a specific conflict turned into a regime founding story. I hadn’t known that the USSR used not to make such a big deal of World War 2, that China’s memorial days were even more recently introduced, or indeed that the successive Kims simply invented the account of the Korean war that is taught to all North Korean subjects from kindergarten on.

It is a bit disconcerting to read of the events of 1989 told as distant history – I’m old enough to have super-clear memories of watching the TV reports from East Germany, from Prague, from Romania in late 1989, and in one of my jobs immersed myself in the detail of perestroika to interpret the USSR economy.

The most engaging parts of the book are those told from direct experience, the reportage, not surprisingly. Even so, I learned things I hadn’t known – especially about N Korea – and it’s very well written. It’s a good complement to the excellent Strongmen by Ruth Ben-Ghiat (I haven’t read Gideon Rachman’s The Age of the Strongman). Let’s hope 2023 turns into a bad year for autocrats.

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Hayek, in two tomes

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Christmas has passed in the usual blur of social over-eating, but I’ve found time to retreat and finish Hayek: A Life 1899-1950 by Bruce Caldwell and Hansjoerg Klausinger. As the authors state, they intended this to be the definitive biography and they have achieved this ambition. Not only do these 700+ pages (plus references etc) constitute only the first part of Hayek’s life, up to his move to the US, the account is based on deep research and familiarity with the mass of sources, primary and secondary, available.

Now ‘definitive’ also has its downsides, only one of which is mustering the strength to hold the book up to read it. Another is that parts of it just aren’t all that interesting: I was held by the story of Hayek’s late-Austro-Hungarian empire childhood but really not at all by his love life. This unfortunately includes his dreadful behaviour in divorcing his first wife after the second world war in favour of his childhood sweetheart, which – as it’s the final chapter of this volume – leaves one with a very negative impression of Hayek the human being. Still, it’s easy enough to skip these chapters.

However, the other downside – at least for one not deeply immersed in Hayek or Austrian School economics – is that it’s quite hard to follow the thread of the intellectual narrative. While ‘The Use of Knowledge in Society‘ is one of my all-time favourite economics articles, and I read ‘The Road to Serfdom‘ back in my undergraduate days, this isn’t my background. So while I did enjoy reading this biography –  particularly the section about Hayek’s intellectual formation in the early 20th century Vienna of logical positivism, and those about his presonal/intellectual rivalries particularly with Keynes during his years in England –  I’d be hard pushed to give a capsule description of what I’ve learned. So I will look forward to Volume 2, the Chicago years, but also to the eventual concise one-volume version of this definitive work.   81Ooi2SOinL._AC_UY436_QL65_

 

Webs of money

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A 2016 book that was an eye-opener for me was Brooke Harrington’s Capital Without Borders: Wealth Managers and the One Percent. A sociologist, she had trained as a private client wealth manager and worked among/for the global elite – the Ultra High Net Worth Individuals (UHNWIs).  The rich really are different…. and among her striking findings was their deep-seated belief they have that the money is theirs, or their family’s, and governments truly have no legitimate right to take any of it away from them in taxes.

Spiderweb Capitalism: How Global Elites Exploit Frontier Markets by Kimberly Kay Hoang is a sort of companion or follow-up volume. She is also a sociologist, but in this case conducted academic research as a clear outsider. Her focus is also different: her interest is in the ploys the UHNWIs and their delegated High Net Worth Individuals (professional lawyers and PRs etc who act for them, making pretty vast amounts of money themselves but bearing some legal risk) devise to distance themselves from “playing in the gray” – that is on the borders of legality or beyond – in emerging markets Vietnam and Myanmar. These ploys generally involve complex structures with holding companies in the Caymans, Samoa, British Virgin Islands etc, multiple Special Purpose Vehicles to make investments, professional advisers in Hong Kong or Singapore, and local fixers.

More academic (ie. slightly clunky) in style than the earlier Harrington book, it is nevertheless a fascinating read, reflecting five years of interviewing the different categories of people involved in these global money flows, and following some around on their extensive travels. Again, avoiding – or evading – tax is a regular theme. The book documents the various mechanisms involved, from the on-the-ground bribery (including attempts at mutually assured destruction deterrence such as sharing compromising social events with bribed officials) to the setting up of bank accounts and pitching investments to UHNWIs in the US. The scope of the fieldwork involved is impressive.

What to do about the spider’s web of global money flows? That’s less clear. Each individual (whether dominant or subordinate spider) is one element in a system that ultimately traps all. Although an optimistic note I took from the book is that US legislation does seem to be inhibiting some of the practices documented. In any case, it’s super-valuable to have htis kind of rigorous evidence about how the web operates, and how its inhabitants are motivated and incentivised. This is a very impressive book.

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Facts about facts

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There’s something wonderful about a book titled All The Facts. Ambitious or what? The subtitle narrows it down, a bit, to “A History of Information in the United States since 1870.” One country, one and a half centuries. Needless to say, it’s still ambitious in its scope, embracing not just the technologies of information management – from account books and filing cabinets to punch cards and the Internet – but also how information has been created and used across all aspects of life: housework, healthcare, factory work, national security, you name it. Boxes have headings such as “The car salesman as a knowledge worker in the 1980s” and “Growth in Medical Information in America: evolution in a doctor’s training 1870-1940”.

It’s a hefty tome, whose basic point is the central role information plays in modern society. I’m with the programme; for example, agreeing with such statements: “A company’s success, is based on its experiences, what knowledge or information it and its employees posess … what a company knows is the source of all potential, and indeed actual, increases in productivity.” (p94) Information ecosystems structure markets and the economy as a whole (p282).

Although I did read it through, it might be more appealing to some readers as a book to dip in to, or to refer to for some specific issues (such as information in medicine or in houeshold management). I found it to be – yes – stuffed with facts, and a mixture of enjoyable and excessive detail, depending on how interested I was in the specific examples. It brought to mind the scale and ambition of Vaclav Smil’s books on energy & other matters, which are similarly both engrossing and challenging reads.

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Keeping models in their place

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The increasing use of algorithmic decision making raises some challenging questions, from bias due to societal biases being baked in to training data, to the loss of the space for compromise (due to the need to codify a loss or reward function in a machine learning system) that is so important in addressing conflicting aims and values in democratic societies. The broader role of models as a means of both understanding and shaping societys is one of the themes of my most recent book, Cogs and Monsters, in the domain of economics. In particular, I wanted to expose in economic modelling the reflexivity involved in being a member of a society analysing the society in order to try to change the society – when its other members may well alter (in often-unanticipated ways) the behaviour that was analysed – because they are subjects, not objects.

Well, all of this is the subject of Erica Thompson’s excellent book Escape from Model Land: how matehmatical models lead us astray and what we can do about it. It focuses on the use of algorithmic models, and has a wide range of examples, from health and epidemiological modelling to climate projections to financial markets. It covers as well as the reflexivity some familiar challenges such as performativity, non-linear dynamics, complex systems, structural breaks and risk vs ‘radical’ uncertainty. The ultimate conclusion is the need to be duly humble about what models can achieve. Alas, people – ‘experts’ – seem to all too often get caught up in the excitement about technical possibilities without the thoughtfulness needed to make decisions that will affect people’s lives in important ways.

So this is a much-needed and welcome book, and I’m looking forward to taking part in an event with the author at the LSE in January.

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