Economics for a moral end

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I’ve read Pigou’s Economics of Welfare, and I talk to students about Pigouvian taxes and subsidies, but never known anything about the man. So I enjoyed The First Serious Optimist by Ian Kumekawa. The author is a Harvard PhD history student (so kudos to him for having a book published so early in his career!), and this is definitely a historical biography rather than an economics book.

As an economist, and one getting specifically interested in welfare economics, I’d have preferred more about the economic ideas. But for less nerdy readers, there is plenty here on the intellectual trends. And the wider intellectual and political context of Edwardian England, the terrible decades of war, depression and war in the early 20th century, and the post-war swing to Labour and the welfare state, is portrayed very well.

At the end of the book, I decided Pigou the man was still a bit of an enigma, but perhaps someone from a privileged Edwardian milieu, who spent his entire adult life at Cambridge, is just a bit too alien. But the arc of his thinking from classical liberalism to active sympathy for the Labour government of 1945 is fascinating. And the tale is quite sad in the end, Pigou seen as a surly recluse, his star not only waning but utterly shot out of the sky by Keynesianism (and, as so often, Keynes comes across here as a brilliant but not very nice man).

(One is also left wondering how scholars of the future will ever write biographies now we don’t write letters to each other any more? Email exchanges, with their more telegraphic form, or skype conversations – these are how we discuss ideas with colleagues. I suppose conferences are recorded so the video of those formal occasions will be available. That, and the Twitter record? )

I like very much the way the book ends: ” His justification for his career, maybe for his very existence, was to serve a moral end. Perhaps it is this part of Pigou’s systematic framework – its self-conscious motivation – that present-day economists would do best to revisit.. …. It would mean accepting what Pigou had declared in 1908 that, ‘Ethics and economics are mutually dependent’ and that ‘Economics cannot stand alone’.”

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The responsibility of the public

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It isn’t an economics book but it is about technology: I’ve just finished A Crack in Creation: The New Power to Control Evolution by Jennifer Doudna and Samuel Sternberg. It’s a terrific book, really well-written and compelling. Despite knowing nothing at all about biology or genetics, and finding some of the more technical bits quite hard going, I could follow the tale: every point is illustrated with illuminating metaphors and diagrams. And this – CRISPR and associated techniques – is such an important and far-reaching technology, I do think we should all be eager to understand it and think about the consequences. Indeed, we have a responsibility to do so.

By the time you get to the end of the book, it’s clear that this is Doudna’s aim (although co-authored, the book is written as if in her voice): she wants a public debate about CRISPR before it starts to be used to edit the human germline. She would like the debate to avoid the chasm between scientists and public opinion that afflicted GMOs, which became ‘Frankenfoods’ before the public understood that technology at all. But also to acknowledge the significance of CRISPR, with all its potential benefits to tackle diseases.

So I recommend this as a summer read. One final thought: if only Robert Gordon had appreciated that there is more to new technology than playing Angry Birds on smartphones (I exaggerate a little, but he does say the new tech frontier is all about digital entertainment), he might have seen some potential for social welfare in the future as well as in the past.

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Mobile contradictions

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It’s surprising that there are not more books about mobile communications in general and smartphones in particular. Having been involved since 12 years ago on a strand of work on the economic and social impact of mobiles in low-income economies, when there was already evidence that the effects of the technology were going to be profound, you’d have thought researchers and authors would be all over the territory. Of course, the literature has grown substantially since, but is dwarfed by the work looking at digital in general, or net neutrality, for instance. It’s similar to the strange analytical gap concerning another very powerful technology with huge social effects, the spread of satellite TV in low-income countries from the mid-1990s. And while there is a burgeoning literature looking at social media, I hunger for a big picture synthesis of the social and economic impacts of the set of technologies it relies on, the smartphone and mobile broadband.

Anyway, Anindya Ghose’s Tap: Unlocking the Mobile Economy makes a welcome appearance in this somewhat sparse landscape. It’s a well-written introduction to the various ways US, European and Asian businesses are making use of mobile in developing their services. The book sets up a nice series of contradictions in consumer preferences:

  • people want spontaneity but are predictable and value certainty
  • people are annoyed by ads but don’t want to miss opportunities
  • people want choice but are also overwhelmed by it
  • people value their privacy, and also give away personal data for access to services

After an introductory descriptive section, the book turns to nine forces Ghose (a Professor at NYU’s Stern School of Business) argues are driving the mobile economy. This, the bulk of the book, is really aimed at business readers who want to think through the implications of pervasive smartphone use for their business model. There are lots of examples here of what others are already doing, and the book aregues that in many respects Asian businesses are ahead of US and European counterparts in the ways they have innovated.

The subtext throughout is essentially that too many businesses are sacrificing the long term creation of value – which would require navigating carefully through consumers’ contradictory attitudes – in favour of short-term profit or market share, for example by treating consumer data in a cavalier and exploitative manner. Businesses need to take data security far, far more seriously than they have to date, and also make sure that the service they deliver in return for data is truly of value to their customers.

In short, an accessible book with lots of colour, though definitely aimed at the business audience rather than economists.

 

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Do AIs drive autonomous vehicles?

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I’m late to Superintelligence: Paths, Dangers, Strategies by Nick Bostrom, so everybody already knows it’s a super-gloomy warning about the possibility and prospects of machine brains overtaking human brains, setting off on a trajectory we can’t control, and at best indifferent to the interests of humans. Even if the explosion of machine intelligence lies far into the future, Bostrom argues, we should be thinking strategically now about how to manage superintelligence – intellects that outperform the best human minds by a long way, and across a lot of cognitive domains – and ensure it is human-friendly.

The book starts with a warning: “I have tried to make it an easy book to read but I don’t think I have quite succeeded … I tried to produce a book I would have enjoyed reading. This could prove a narrow demographic.” Indeed it is rather a dense read, the author being an immensely knowledgable chap – so much so that I suspect it has been bought many more times than it has been read cover to cover.

The first few chapters describe in much detail the forms superintelligence might take (not just AI but ‘whole brain emulation’ ie building an artificial brain), and the various potential pathways and dynamics for its progress in multiple scenarios. The point, I think, is to establish that this is going to happen for sure at some stage. Slightly alarmingly in this section the book, written in 2014, predicts AI might beat the world Go champion ‘in about a decade’ – this happened in May of course with Deep Mind’s Alpha Go.

The second section is about what values machine superintelligence might have and what rules of morality might possibly be encoded. There are not very cheering sections about how getting this wrong in well-meaning ways could backfire disastrously – for instance if the superintelligences act to use as much resource as possible to achieve their objectives, without regard for the existence of other species or the planet. “The first superintelligence may shape the future of Earth-originating life, could easily have non-anthropomorphic final goals, and would be likely to have instrumental reasons to pursue open-ended resource acquisition.”

There is a short final section, with much less detail than the earlier chapters, urging ‘us’ to think strategically, and co-operate to ensure AI can be managed for human good. In fact, there are almost no specifics here. The book is super-scary without proposing any solutions.

For all the detail about machine intelligence and scenarios for its progress and behaviour, the book is silent on what seem to me to be a some key questions:

  1. Where do superintelligences get their data input? At present there are huge teams of humans putting sensors on the world to provide information to machines. The machines are clearly improving in their ability to read text and to ‘see’ images including in the world. But will this amount to sense perceptions which are so important for human cognition? And could humans fight back if necessary by removing sensors and RFID tags and so on?
  2. How are superintelligences going to be embodied? Will they be mobile physical entities able to, say, mine their own rare minerals or whatever it is they want to do for their own survival and reproduction? Will an AI drive its own autonomous car? If not embodied, could superintelligence actually become a runaway threat?
  3. In a similar vein, superintelligences would need a supporting infrastructure, such as wireless communications. Given that the major transport arteries in the UK don’t have 4G along much of their route, or even 3G in some parts, the superintelligences won’t be driving up the M6 very soon. Maybe the humans could escape to the Scottish highlands or West Wales if the machines run amok, as there is hardly any mobile or fast broadband there at all. Similarly, the power network will be pretty vital – machines (or their batteries) have to be plugged in. We will have to build the machines’ infrastructure. Could we fight back by unplugging them if they turn on us?

These are very interesting questions. For all that it was slightly heavy going at times, I really enjoyed the book because it made me think. Above all, surely this is all too important to be left to technologists, and social scientists need to start thinking seriously about the implications of machine intelligence, so that whatever happens, there is some human design in the outcome.

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Agreeing about GDP, disagreeing about the beyond

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It’s always a pleasure for me to have a new book about GDP or economic statistics more generally to read (no surprise!) – and this is no longer such a niche taste as it once was. So I very much enjoyed Lorenzo Fioramonti’s The World After GDP: Politics, Business and Society in the Post-Growth Era, a sequel to his Gross Domestic Problem.

The book rightly points to the fact that the many known flaws with GDP as a measure of economic welfare are becoming still more severe. The environmental issues are obvious. There have been longstanding critiques of the omission of much ‘household production’ (although not, as the book seems to suggest, all informal economic activity as it is household services such as cleaning and childcare that are left out; household products such as food is included in the definition of GDP). Still, as the book observes, GDP conceives of firms and governments as productive and households as non-productive and while this has some logic in terms of transactions, it has none in terms of economic welfare.

The digital transformation of the economy is making measurement ever harder: “One of the crucial flaws of GDP is its inability to capture the dynamic value embedded in all sorts of innovations, especially when they reduce costs, distribute access and increase what economists call ‘consumer surplus’.”

Fioramonti also highlights the political economy of GDP – its role as a sole criterion for assessing success or failure, and the growing ‘administrative uses’ such as debt and deficit rules expressed as a percentage of GDP, distorting policies. Unlike Ehsan Masood (in The Great Invention), who argues for a replacement for GDP, Fioramonti favours a suite of indicators. I don’t know which I think is better – there is a strong argument for needing more than one dimension of measurement but there are too many dashboards and sets of goals already. And perhaps people can only pay attention to one summary statistic? Either way, as Fioramonti says here, economic transformations go hand in hand with transformed measurement frameworks.

He makes some points I hadn’t considered and will think about more. For instance, the switch from GNP (the total output of all nationally-owned entities) to GDP (the total output produced within the national territory) provided “an accounting system in support of neoliberal economic globalization,” he writes. That ‘in support of’ suggests intentionality – I don’t know what the historical process was but doubt this was the case. However, it’s an interesting question whether the switch enabled or encouraged globalization (I’ll overlook the n-word).

While there’s much I agree with, there are also points on which I disagree, sometimes strongly. For instance, there is a truly bizarre section on competition, which Fioramonti sees as a wholly negative phenomenon, creating negative externalities. He alludes to competition as ‘random, disorganized interactions’, and yet at the same time describes it as a top down, and centralized process. I’m not sure how he thinks the technological change he refers to elsewhere happens without rivalry between businesses, and clearly sees markets as centralized – but then, how does competition come in to it? He argues also for localized, co-operative production which seems to me a largely romantic dream, which is feasible for some kinds of business (including, perhaps ironically, some ‘sharing’ platforms), but does not scale to an economy capable of providing goods and services to the population as a whole. This section cites Eleanor Ostrom, whose work is indeed marvellous, highlighting the range of possible collective economic institutions, other than markets and centralized states. However, she also underlines that the institutions she explores cannot function beyond a certain scale. The idea that all or many of the products and services in modern economies could be produced at homespun scale is a nonsense. But then, I also think the idea of a post-growth era overlooks the intangible character of modern growth and anyway requires some honesty about what the politics of no-growth would be like – think 10 years of stagnant real earnings, not cosy homesteading.
Still, a certain amount of disagreement adds savour to the book. I really enjoyed reading it, and so will anyone interested in the GDP and measurement debates – and there are plenty of you out there.

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