Author Archives: Diane Coyle

Inside shipping

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I’ve loved reading Deep Sea and Foreign Going by Rose George. It’s been out a while – this was the new paperback. It’s a superb piece of reportage by somebody who is obviously a very thorough and careful researcher. The shipping industry fascinates me – it has at least since I read the now-classic The Box when it was first published, and realised how interesting and complicated this industry, the circulatory system of the global economy, actually is. As this book’s subtitle puts it, it’s the invisible industry that brings you 90% of everything.

   

George covers issues ranging from the economics of freight shipping in general, the flagging out system, the race to the bottom in the workers’ pay and conditions, the surge in piracy in the Indian Ocean and its economics, the damage done to sea life especially whales by the big ships, the rubbish in the oceans,the the carbon footprint of the shipping industry, and more.The piracy chapter is particularly fascinating as a piece of economic analysis, including the bargaining that goes on over hostages – and there are many more of these than you realise, it’s just that a high proportion are Chinese or Indian seafarers.

It includes masses of detail, the sign of a true observer. Why is it still a tradition to knit woolly hats for seamen’s missions? What do marines do on the naval vessels patrolling the Indian Ocean when they’re not doing fighting stuff? How do you spend empty days at sea out of range of mobile masts and the internet? Who needs bribing with what as the vessel makes its way through the Suez Canal? What languages are used in on-board announcements when the crew is as globalised as can be?

Highly recommended, especially as a holiday read, and even more so if you’re off on a boat somewhere.

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Well-being and development

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Yesterday I attended the London launch of the annual UNDP Human Development Report – the title this year is Sustaining Human Progress: Reducing vulnerabilities and building resilience. The report notes the combination of advances in human development over the years – for most people in most countries – with a strong sense of precariousness in many places. This is not only because of economic uncertainty but also the risk of natural disasters, violence, corruption, ill health, industrial accidents. Poverty leaves people ill-equipped to respond to any of these shocks, and some groups such as the very old or young, or women or minorities, are particularly vulnerable.

One of the panellists was Richard Layard, talking about his new co-authored book Thrive, which emphasises mental health as an over-looked but vital issue for people’s well-being. In his comments he said mental ill-health was responsible for more misery than unemployment or poverty in the rich countries, and possibly in poor countries too (although I think they are correlated). He described Maslow’s hierarchy of needs as “an appalling concept”: a sense of meaning in life is more fundamental than material needs, according to Lord Layard.

He went on to claim that recent well-being research in China shows that the least happy people are those who move from countryside to town, and seemed to be saying this should call into question China’s emphasis on economic growth. While China has certainly paid a high environmental price for industrial growth, and is characterised by great inequality and authoritarian politics, I would certainly challenge the Layard argument at this point. As Khalid Malik, the Director of the HDR pointed out, those discontents who move from countryside to town, to those grim-seeming jobs in factories, don’t want to return to the village.

What’s more, traditional rural societies usually have a gender hierarchy that makes towns far more attractive for women. This point emerged in the recent thoughtful BBC2 programme on garment manufacture in Bangladesh, Clothes to DIe For. Despite the Rana Plaza tragedy, young women still wanted factory jobs.

So why the higher self-reported dissatisfaction by Chinese urban migrants? I don’t know whether the research was able to rule out causality issues like whether the individuals were more dissatisfied and restless to start with, or whether there is something subtle going on with their answers to survey questions.

Of course one of the key attractions of the HDR is that the Human Development Index is exactly a measure that reduces the focus on GDP in favour of an indicator based on Amartya Sen’s concept of ‘capabilities’, the resources and attributes needed to live a fulfilling life. The top five countries this year are Norway, Australia, Switzerland, Netherlands and the US. If you adjust for income inequality, the US slips 23 places and Germany becomes number 5. The expected quintet of sub-Saharan African countries (Niger, DRC, CAR, Chad and Sierra Leone) are ranked bottom. (Somalia, South Sudan and North Korea would be down there if there were data available.)

Mathematical economics

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An intriguing-looking book has just arrived: Finding Equilibrium: Arrow, Debreu, McKenzie and the problem of scientific credit by Till Düppe and Roy Weintraub.

OK, this is a specialist interest, but it’s about the history of the mathematisation of economics via general equilibrium theory from the mid-20th century. The book looks blessedly free of equations too. I did somewhere write a review of Roy Weintraub’s 2002 book, How Economics Became a Mathematical Science and got a rather severe note from him pointing out that I’d made a mistake, so I’m slightly trepidatious about tackling this new one. But the mathematical turn in economics is important to understand. I’m in favour of using mathematical models in economics – indeed, some of the interesting new approaches such as the application if complexity science in macroeconomics would involve more rather than less of it -  but not in favour of only using maths and ignoring institutional and historical detail.

Not bowling alone

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The UK economy is growing at a decent clip now, but the consequences of the long downturn linger on. The distinguishing feature of the post-2008 economic landscape in most western economies is how long growth has been so weak, how long it has taken for GDP to regain its previous peak. The final chapter of Hard Times: The Divisive Toll of the Economic Slump by Tom Clark with Anthony Heath describes the book’s suggestions for tackling the consequences of lengthy economic weakness as “wearyingly familiar.” That doesn’t make it any the less important to be reminded by this book of the social impact of the seven lean years since the Great Financial Crisis. Too often, discussions about the economic issues and the social issues proceed separately, but they are tightly linked.

The book is the product of a five-year research programme conducted by the University of Manchester (my new home as Professor of Economics from 1 September) and Harvard University, directed by Robert Putnam, famously author of Bowling Alone and its fascinating precursor Making Democracy Work: Civic Traditions in Modern Italy. The presentation of those depressingly familiar economic statistics is accompanied by interviews with a range of people affected by unemployment, or precarious employment, or benefit cuts since 2008. It humanizes the – well, “wearyingly familiar” -  statistics and charts.

The human stuff – the social capital – really matters. Hard Times begins by citing a classic (1933) sociological study of the effects of mass unemployment, Marienthal: the sociography of an unemployed community. In this small Austrian town whose mill closed, people were asked to keep diaries, which recorded the loss of energy and social activity. Unemployment brought lethargy and isolation. The alternative in other places during the 1930s was rage.

Other sociologists have demonstrated the importance of social ties in other contexts. One of my all-time favourites is Eric Klinenberg’s Heatwave, which documents the clear impact of different family structures on ‘excess’ death rates during a Chicago heatwave: Hispanic families and neighbourhoods, more cohesive than equally poor African-American neighbourhoods, saw fewer fatalities. Another recent book has pointed to the psychological debilitation caused by poverty, Scarcity by Sendhil Mullainaithan and Eldar Shafir.

It seems, though, that a reminder is needed that money (lack of) matters as much because of the social as well as the economic consequences. Hard Times argues that the roots of a lack of social resilience stretch back before the crisis. “For all the riches of the millennial years, we found swathes of society that were already sorely exposed by that time.” Rising poverty rates before 2008, declining volunteering, drops in marriage rates (in the US) among some disadvantaged groups and of course rising inequality, all “worked to leave more of the vulnerable braving the storm in effective isolation.”

What to do? Well, it is indeed “wearyingly familiar”. Although the book supports the argument made for example by David Clark and Richard Layard in Thrive for additional mental health support, its point is that fundamentally money matters – jobs, a duly enforced minimum wage and decent working conditions, and an adequate safety net. Without an adequate income, and beset by anxiety about financial insecurity, people become isolated. Isolation damages their health and well-being, and causes a vicious cycle of vulnerability and still more insecurity. People with not enough money are not bowling alone, they are just alone.

The economic dilemmas involved in any job market interventions or social security are familiar too, the incentive effects and the trade-offs. But it’s good to be reminded that social consequences should form part of the calculation.

Novelist of the squeezed middle

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There’s an interesting feature by Anthony Quinn in today’s Guardian about George Gissing’s New Grub Street, linked to the difficulty authors have today of making a living from their writing. I’m not sure there was ever an intervening stage when all that many people wrote for a living, although digital technology is clearly disintermediating the newspapers and magazines that employed journalists during the 20th century. I don’t know of a data source for total employment by writing, still less income earned.

Anyway, Gissing has long been one of my favourite of the great Victorian novelists, although less well known now than predecessors like Charles Dickens and George Eliot. George Orwell described Gissing as one of the best English novelists, and I think that might be because he shared the same preoccupations, the essentially economic ones of work and income at a time when industrial change is bringing about tremendous economic and social upheaval. Orwell was more concerned with the poorest people, in books like The Road to Wigan Pier and Down and Out in Paris and London, although his novels (Keep the Aspidistra Flying) moved up the income scale. Gissing was a novelist of the squeezed middle.

Writers like New Grub Street – The Guardian likes it so much that they had another feature about it (by Robert McCrum) just a few months ago. The Odd Women and The Whirlpool are my favourites.