The Enlightened Economist Prize 2021

It’s always a tough choice. Naturally, I enjoyed all the books on this year’s longlist. After mulling it over all week, I’ve opted for Amartya Sen’s Home in the World, as the one that ticks all the boxes: economic insights, distinctiveness, wonderful writing. If you want a book to curl up under the blankets with over the holidays, it won’t disappoint you.

41eXIWQcz-L._SX321_BO1,204,203,200_My own holiday reading in-pile is huge, as decorating our bedroom recently meant I had to excavate the mound of books under the bedside table & found plenty that I’d never got round to. At the moment I’m reading Harold Nicolson’s diaries – another epoch and so rather good as escapism from our own pretty rubbish times. Needless to say, I’m hoping Santa will bring me some more books too.

And if any of you are looking for a last-minute present for someone in your life interested in economics, I have to recommend my own Cogs and Monsters. I’m chuffed – looking this up just now to add a link – to discover the online reviews are all 5 stars! So you don’t just have to take my word for it.

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Essential white elephants?

I recently finished re-reading Brett Frischmann’s (2012) Infrastructure: The Social Value of Shared Resources. It’s very interesting although I don’t entirely agree with his conceptualisation. The reason for going back to it is a convergence of two issues I’ve been thinking about.

One is the idea of social infrastructure. This was centre stage in Eric Klinenberg’s book Palaces for the People, on which we had an excellent Bennett Institute event. A report on The Value of Social Infrastructure by my colleagues Michael Kenny and Tom Kelsey aroused a lot of impact across the UK government and beyond. I’ve been writing about the health system as social infrastructure – am currently writing a handbook chapter as a follow-up to this paper (revised version forthcoming in NIER). So the questions concern definition and measurement: what is social infrastructure, can it be intangible as well as tangible, how does it relate to the older concept of social capital? etc.

The second is the puzzle about infrastructure in general: what to invest in and what are its (spatial) economic impacts? Bent Flyjberg has amassed a great deal of evidence that major projects generally fail – they are over-budget, late and have disappointing impact. (See eg this paper on how far projects fail their cost benefit analysis assumptions.) And the examples of white elephant projects are legion. Yet the economy must have infrastructure to function at all. How to reconcile the paradox? And why has construction (which includes infrastructure) itself been so low productivity?

Frischmann’s book is helpful in thinking through the questions. One key point is that demand for infrastructure is derived: people want it to be able to carry out activities that feed into final demand. And infrastructure is a social good that will change context and social relations. It’s generic – can be used for many purposes. Spillovers are inherent, and large – and difficult to measure. Infrastructure also creates private and social option value.

He defines infrastructure as being identified by the following characteristics:

–Non-rival over certain portion of demand (although congestion possible)

–Provides stream of services over time

–Demand is derived, for infrastructure capital services as productive inputs into other activities

I think this omits universal service need/obligation as a key aspect. I find his classification of types of infrastructure (commercial, public, social) a bit odd too. That said, the book is very useful in thinking about the ‘essential white elephant’ paradox.

Resolution of the paradox will require finding a way for policymakers or investors to judge whether a project is a white elephant worth having. I was discussing this with David Cleevely, a successful Cambridge investor, in the context of a forthcoming paper of mine in an issue of the Oxford Review of Economic Policy on major projects. Why, I asked David, did the Victorians manage to build so much infrastructure that we in the UK are still using after 150 years? He made the powerful point that the advantage the Victorians had (compared to economists today deploying cost benefit analysis) was that they could imagine a future in which the infrastructure they were going to build would have transformative effects. Applying this thinking now, for example, we know the future will be renewable energy-based, so projects need to be evaluated in the light of this transformed world.

I don’t know how much infrastructure investment we need altogether in the UK, but definitely more, and social infrastructure definitely counts too. To be continued….

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The Enlightened Economist Prize 2021 – longlist

It’s the annual longlist moment. The rules are that any book I read this year is eligible, no matter when it was first published, that the decision is entirely mine, and that the prize is my taking the author(s) to lunch if and when we find ourselves in the same place.

I narrowed it down to 12 for the longlist. In no particular order:

Anthrovision – Gillian Tett. My review here.

Shutdown – Adam Tooze. My Democracy review here.

Home in the World – Amartya Sen. My review here.

Vaxxers – Sarah Gilbert & Catherine Green. My review here.

The Plague Cycle – Charles Kenny. My review here.

Man from the Future – Ananyo Bhattacharya. My review here.

Value(s) – Mark Carney. My FT review here.

What We Owe Each Other: A New Social Contract – Minouche Shafik. My FT review here.

Good Data – Sam Gilbert. My review here.

The Radical Potter – Tristram Hunt. I don’t seem to have reviewed it on the blog but say a bit about it here.

Mountain Tales – Saumya Roy. My review here.

End State – James Plunkett. My review here.

I’ll decide on my top choice next week.

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Sailing into the future

I’m not a big reader – or fan – of leadership-type books (see the previous post) but picked up Margaret Heffernan’s Uncharted: How to Map the Future because I’ve read her FT columns, met her a couple of times, and admire her. She’s also a great friend of the Bristol Festival of Economics, which alone is enough to warrant buying and reading her book.

The book was published early in 2020 so written before the pandemic and as a result qualifies as prescient. For the characteristics she identifies as important for effective strategic thought and action have become far more widely debated since then.They are the importance of resilience and trading off some efficiency for robustness; the role of decentralization and permission for people across an organisation to try and err; the importance of enough deliberation to elicit the preferences and the information held by a wide range of people or stakeholders; and the vital role of trust in effective organisations. I was nodding my head as I read along. Despite the title, there isn’t much about forecasting the future, mainly a scepticism about the usefulness of the exercise.

It isn’t a particularly analytical book – these are my categories, not hers. You could contrast this with Radical Uncertainty, which touches on the same themes in a highly analytical way. Rather, Uncharted assembles many examples to make these arguments. This does make it a good read – lost of stories, lots of her own experience. I enjoyed it. (Tim Harford did too.)

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State of the person & state of the nation

When I picked up Anne-Marie Slaughter’s book Renewal: From Crisis to Transformation in Our Lives, Work and Politics, I was expecting something big picture about the state of the world – why capitalism is failing, precarious work, inequality, populism and the like. After all, she’s a noted public servant and foreign policy expert. It’s not that at all. Indeed, it is a highly personal reflection on her own failings at a time (2017) when the organisation she led, New America, was plunged into a public crisis. The crisis was an allegation that the think tank had parted ways with an employee who had been critical of Google, a $20m donor to its coffers, to avoid offending the company. As always, the reality was more complicated, but as she explains, Slaughter mishandled the response. She goes on to diagnose her limitations as a leader and how she went about addressing them.

Through this lens, the book draws lessons about national political leadership – and it is very US focused, so while some of the challenges are common to all the leading industrial democracies, some are highly specific. As well as the personal focus, which is only partially successful to my economics-oriented mind, it also has a religious thread that left me completely cold. And it is indeed peculiarly American to have to make a declaration of religious faith to have the authority to comment on the state of the nation.

Anyway, ‘renewal’ lit is big in a number of countries now. This is a decent read and as a human being I found the personal story interesting. But I wasn’t convinced about the attempt to project the personal onto the political in this case.

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