Author Archives: Diane Coyle

Where did summer go?

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Already September 1st, and a tang of autumn in the morning air. I had a two-week holiday with no laptop or emails, and lots of reading. Then a two-week scramble to catch up with the accumulated email and work. So here is a summary of the books I got through.

A couple were directly about AI: I, Warbot: The dawn of artificially intelligent combat by Kenneth Payne and The Age of AI by Henry Kissinger, Eric Schmidt and Daniel Huttenlocher. This is not at all my territory but it seemed a good idea to learn something about AI and conflict as we have a relevant project at the Bennett Institute. Both left me pretty terrified, particularly the former: “The warbot doesn’t want anything and it isn’t troubled by our moral dilemmas,” writes Payne. The delegation of decisions from the localized (is that person spotted by facial recognition a valid target?) to the global (is it time to launch a major attack) to AI seems inevitable; the book ends calling for serious reflection. Indeed. As for the other, I certainly know less about geopolitics than do the authors, but some of the claims on which the geopolitical analysis is constructed seem over the top. The book suggests AI is changning the human relationship with reason, challenging the possibility of a free society and free will, and that we will be letting AI decide for us when we have ambiguous contexts or goals. “The boundary between AI and humans is strikingly porous,” they write. The book concludes AI is significantly changing human consciousness and moving us “close to knowing reality beyond the confines of our own perception.” Hm. It’s doing all sorts of things but I’m not sure about this kind of claim. I like better my colleague Neil Lawrence’s reflections in The Atomic Human on humanity in the light of AI.

Screenshot 2024-09-01 at 15.02.03My favourite read about tech was Scott Shapiro’s Fancy Bear Goes Phishing: The dark history of the information age in five extraordinary hacks. The book pulls off the impressive feat of being a cracking good read with compelling stories and a super-clear technical explanation of why the internet is so easy to hack. (Incidentally, the name Fancy Bear for the notorious Russian state hackers was devised by the co-funder of CrowdStrike, the company that became famous for triggering Microsoft’s global Blue Screen of death meltdown while I was away. And ironically, the book explains that Microsoft had already improved its safeguards so that developers accessing the kernel would be far less likely to trigger a Blue Screen event.)  One thing I particularly liked about the book was its designation of ‘downcode’ and ‘upcode’, the former being the computer code of all the various types, the latter the societal laws, regulations and norms within which the internet operates. “Change the upcode and you will change the kind of downcode produced.” Highly recommended.
Screenshot 2024-09-01 at 15.04.40I also enjoyed Shane O’Mara’s Talking Heads: How Conversation Shapes Us, which the publisher kindly sent to me. A book about neuroscience, it argues that thinking requires memories, and memories are collectively constructed through conversation. Our individual memory systems contribute to a cultural memory repository. “A society without memory has no capacity to repair itself, it has no capacity to evolve, it has no capacity to adapt, it has no capacity to remember or learn.” There is a two-way process of individual thoughts shaping the collective and in turn being shaped by them. Conversations or narratives or other cognitive artefacts enable co-ordination and collective action. (This reminded me of my friend Celia Heyes’ concept of Cognitive Gadgets.) Thus nationalism is a cognitive concept and needs a psychological understanding. The book doesn’t discuss social media directly but clearly the way we have conversations about the world has changed as a result, and not in a good way.

On with the gloomy theme. I was looking forward to Abby Innes’s book Late Soviet Britain: Why materialist utopias fail not least because the title is so brilliant. It has three parts. The first argues that central planning and the neoclassical competitive economy are equivalent – as indeed formally they are, one where quantities adjust and one prices. Francis Spufford’s superb book Red Plenty dramatizes this equivalence. (This isn’t cited here – I think the author would enjoy it.) I was mildly annoyed by the book’s referring to the ‘materialism’ of both – the former Soviet bloc certainly measured material product but the western metric of domestic product is 80% non-material. But maybe there’s a technical meaning of materialism I don’t know.

The second part of the book describes the growing dysfunctions of neoliberal regimes in the west, whereby the concepts of neoclassical economics and market primacy were translated into political practice. For instance, New Public Management, the book argues, has failed just as central planning failed in practice, by incentivising individuals to deliver to target rather than the genuine aim (and just as machine learning systems fail due to their ‘alignment problem’, automated New Public Management if we’re not careful). The third, short, section is a brief history of Britain’s political evolution – why we did Brexit and why the Conservatives are in a mess.

The whole didn’t quite come together for me because I couldn’t follow the step from the formal theoretical equivalence of the two ‘ideal’ economic models to the argument that “actually existing neoliberalism” was as doomed to failure as central planning. Neither system in practice was very similar to the theoretical ideal. For instance, New Public Management was arguably a quantity-planning mechanism rather than a market mechanism. But the book’s central construct is a stimulating idea and I enjoyed reading it.

Screenshot 2024-09-01 at 15.07.08Finally in the non-fiction, Anne Applebaum’s short and compelling

, pointing out the emergence of autocracy as a global, internet-enabled business model. Time to pull the plug on the enabling industry of lawyers, accountants and bankers. What will it take to get other nation-state governments to stop supporting hostile autocrats by permitting their business interests to carry on unimpeded?

Screenshot 2024-09-01 at 15.09.05Along with all these I read a ton of fiction, from detective novels (Elly Griffiths, Donna Leon, C.J. Sansom) to Sarah Perry’s terrific Enlightenment, Atsuhiro Yoshida’s sweet Goodnight Tokyo (a taxi driver version of my favourite TV programme Midnight Diner*) all the way to the seriously serious Solenoid by Mircea Cartarescu (a gift from a Romanian former student).

* A good illustration of why Netflix is a poor substitute for domestically-produced programmes, if you compare the 1st series with the Netflixed later ones.

 

Standards

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Colleen Dunlavy’s Small, Medium, Large is an interesting and thought provoking read – and relevant to today’s debate on industrial policy. It’s a relatively short book, a history of the emergence of standards in US goods in the 1910s and 1920s. For example, in 1918-21 there were 78 different mattress sizes on the market and in 1922 the industry agreed to bring this down to 4 standard sizes, the ones we still use in the US and UK (apart from Ikea’s!). I write ’emergence’ but the book tells the fascinating history of the way industry agreements were brokered by the US government. During the years of US participation on World War 1 this was for reasons of prioritising production capacity and materials for the war effort. In the 1920s and beyond it continued at the behest of Herbert Hoover as Commerce Secretary in a drive to improve the productivity of US manufacturing. This took places under the auspices of a division ofhte Department with the wonderful name of Division of Simplified Practice (‘Simplified Practice’ sounded less socialist than ‘standardisation’.) Making multiple models in short production runs meant US firms could not capture economies of scale. Meanwhile in the UK and Germany separate standardisation drives were under way.

Of course, this meant not giving customers what they had wanted in terms of variety and choice – it was the Henry Ford approach of any colour you like as long as it’s black. A Ford executive is quoted as saying, “We standardized the customers.”  Officials railed against the “excessive mulitiplicity of styles” as wasteful.  The customers got mass production and lower prices in return, but they were kept out of the government-organisaed co-ordination between producers. Of course, another word for this might be ‘collusion’ and the book notes the obvious tension with anti-trust policy. By definition, if competition occurs over price rather than variety or attributes, this kills small producers.

Anyway, the history was new to me, and the book set me thinking about the role of standards. There has been a proliferation of variety and personalisation of goods because the technological possibilities have made this cheap enough to do without losing the benefits of flexible and rapid manufacturing. Yet as the well-known Marc Levinson book The Box pointed out, some standards have transformative productivity effects – the GSM mobile phone standard would be another example. This seems a highly relevant question now as we continue the ‘war on carbon’ – when is avoiding waste a good rationale for enforced co-operation over technical standards? At what level of the production or technology stack should governments want standardisation – requiring collaboration – so as to enable competition and variety at higher levels – for example in generative AI now? The dimensions along which firms compete are to some extent a social choice variable.

 

Industrial policy – the long and the short of it.

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I’ve been dipping into the proofs of a substantial book, Industrial Policy for the United States by Marc Fasteau and Ian Fletcher, due out in September. It will prove a significant resource for anybody interested in the issue. The book starts with the economic case for strategic government interventions in the supply side structure, arguments that have been gaining traction recently as the utlra-free marketism paradigm fades in the US and elsewhere. The authors focus particularly on increasing returns and technological innovation.They bring a certain zero sum mentality to the analysis – the US must win, other countries must lose – which I don’t share; the technological frontier is broad and granular. But the demolition of the idea that a ‘free’ market is the way to organise the economy at a time of significant structural change is spot on.

The second section explores brief country case studies (“Chapter 10, Britain: No Theory and Little Execution” puts it in a nutshell for the UK: “Britain has become a byword for ineffective industrial policy.”). These are for the most part short factual histories for readers who have no prior knowledge of the countries concerned, with an introductory commentary. The book is wholly US-focused.

The third section is a history of industrial policy in the US from colonial times and Hamilton onwards, while the fourth moves into the US innovation system. It paints a picture of government support for innovation as a de facto industrial policy even during periods when political rhetoric emphasised markets. And it describes the innovation system as the ultimate private-public partnership. The section argues the case for a shift to more active Federal government innovation programmes using both market-creating policies, innovations induced by regulatory requirements and a role for novel types of innovation organisation in the system – manufacturing institutes, for example.

The final two sections consist of industry case studies and regional case studies. In the former are the well-known semiconductor example, and also nanotechnology (“Is America Losing the Future?”, this one is titled. The regional examples are life sciences in Massachussetts and emiconductors in upstae New York.

The book ends with recommendations for the US. While welcoming the Biden policies, the CHIPS and the Inflation Reduction Act, the authors want more: “The challenge now is to maje industrial policy comprehensive, coherent, institutionalized, and a fixture of the policy consensus.” The US needs to focus on its most dynamic industries and develop them as oligopolies to enjoy economies of scale and the profitability for continuing innovation, they argue. They see a national security as well as an economic need for the US to stay at the frontier in multiple industries – just as the Cold War imperatives drove policy in the 1950s and 60s. The final chapter has a lengthy set of specific recommendations for different actors in the US political and industrial systems.

At 670 pages of text and 150 pages of notes and bibliography, has the obvious advantages and disadvantages of its sweep and scale – a superb place to start on any aspect of US industrial policy, but only a starting point for depth on any particular aspect. I found the parts I’ve read very interesting given my relative lack of knowledge about the institutional and historical details in the US. But I applaud the ambition and think the historical perspective suggests the authors are right in drawing a curtain on what – it turns out – is the aberrational period of policy free-marketism.Screenshot 2024-07-23 at 11.23.05

 

 

DIY electricity

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My student Aneesha gave me a book a few weeks ago before she headed off to do her PhD in energy systems at Berkeley, The Grid by Gretchen Bakke. OK, I thought, I’ll give it a try – but how well she knows me. I loved this book. It’s part history of how the electricity grid was built, part diagnosis of how it’s all going wrong, and part reflection about the net zero transition. What I loved about it was the way it links this fundamental infrastructure system to its social and cultural context.

I’ve always reckoned (eg around p 80 in here) that the provision of electricity is fundamentally social rather than technical, and the book illustrates that on every page. Who knew that Texas and Quebec have separate grids (in case they ever want to secede)? In a sign that the US is starting to become a failing state, it has”the highest number of outage minutes of any developed nation” – six hours a year compared with 11 minutes in Japan and even 51 minutes a year in Italy. Trees and squirrels account for much of this – or to put it another way, lack of maintenance.

Interestingly, the book pinpoints the separation of generation from transmission, and the arrival of wholesale electricity trading, as the start of the end. The margins in operating the grid itself are low, so maintenance got cut, while the arbitraging meant there was too much electricity trying to travel too far along the wires. Increasingly American companies, people and the military are setting up their own microgrids, including using renewables such as rooftop solar, and in the case of the military compost from kitchen waste and latrines. “They have all stopped expecting the state and the utilities to do their job.” Rugged individualism is the order of the day in getting stable access to electricity.

Highly recommended – I underlined something on pretty much every page. I’m thinking a lot about infrastructure these days. Thank you Aneesha!

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Private revolutions

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Yuan Yang’s Private Revolutions: Coming of Age in New China is quietly revelatory. One of the new intake of Labour MPs, the author was born in China, moved to the UK at age 4, and returned to China as an adult when working as a journalist for the FT. The book is a history of four women of her generation who became friends and contacts during that period. It’s a gripping read as the women have extraordinary stories. It’s also a powerful reminder of how much the country has changed within a generation – a rapid transformation that can’t help but have had an impact on people’s psyches. The word ‘revolution’ is not hyperbole. It reminded me a bit of a 1986 book I read decades ago by John Hooper about Spain, in which he pointed out the pyschological impact on young men from conservative villages of going to work as waiters or similar in the new resorts of hte Costa Brava. So I warmly recommend Private Revolutions, a fascinating read and a different perspective on a country we will have to learn more about in the years ahead.

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