Author Archives: Diane Coyle

Civilising money

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I’m enjoying William Goetzmann’s [amazon_link id=”0691143781″ target=”_blank” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_link]. So far I’ve gone through pre-history and early Chinese financial innovation and am embarking on mediaeval and early modern Europe. The book’s general theme is that financial innovations enabled civilisation to progress, starting with the origins of writing in ancient Mesopotamia because of the need to record financial transactions including the payment of tribute to the temple. It is stuffed full of the kinds of new information I love to accumulate. For example, in 386 BCE a group of Athenian grain traders were put on trial for price fixing and hoarding. They faced the death penalty, rather stiffer than the fines facing cartels these days. Who knew the Athenians had competition policy?

[amazon_image id=”B017MVYMSA” link=”true” target=”_blank” size=”medium” ]Money Changes Everything: How Finance Made Civilization Possible[/amazon_image]

The book argues that ancient Greece also originated the mentality that wealth could be intangible, abstract. Finance was decoupled from physical assets such as land or grain. What’s more, because hundreds of Athenian citizens acted as jurors in trials, often concerning financial matters such as compound interest or cost-benefit calculations, financial literacy was widespread: “Athenian numeracy was not simply a skill required for a successful business. It was a trait on which the democratic process fundamentally relied. …. The monetization of Athens was not only important to the emergence of democracy, it was also a factor in the development of Greek philosophy. … Monetization led to abstract thought.”

Sadly, we now seem to have the financialization without the widespread numeracy and capacty for abstract thought. Seems like the ancient Greeks were ahead of 21st century democracies on that front. For new technologies – including financial innovations – to bring progress, surely they need to be widely understood. A populace that doesn’t understand can’t ensure they share in the benefits.

The moral consequences of economic decline?

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In his FT column today, the ever-thoughtful Tim Harford has written about the dangers of moving into a zero-sum world, with the economy heading into a post-Brexit recesssion and in a political atmosphere which is already a game of grievances and blame. The column cites a wonderful book, Benjamin Friedman’s (2005) [amazon_link id=”1400095719″ target=”_blank” ]The Moral Consequences of Economic Growth[/amazon_link]. I’m biased, as Ben was my thesis adviser, but I do believe it to be a truly important book, especially for anyone also concerned about sustainability.

The book asks whether economists are right to care about economic growth, and finds the affirmative answer in political economy and the inter-relationship between growth and institutions. I wrote briefly about the book in 2012, worrying then about the rise of political extremism. Looking at the book again today, I am struck by its warning about the adverse consequences of withdrawing the state from social support, and its concern about the distribution of the benefits of economic growth. This now looks very prescient.

“Broadly distributed economic growth creates the private attitudes and public institutions that foster, not undermine, a society’s moral qualities,” Ben writes. “At the outset of the twenty first century, America’s problem is not unemployment. It is the slow pace of advance in the living standards or the majority of the nation’s citizens.” Rising living standards – for all – make societies more open and democratic. Unfortunately we in the UK seem likely to be testing what happens when living standards are falling, and the already-have-nots find they have even less.

[amazon_image id=”1400095719″ link=”true” target=”_blank” size=”medium” ]The Moral Consequences of Economic Growth[/amazon_image]

Transport policy? It would be a good idea

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It’s always a pleasure when a new Perspectives title arrives in hard copy, and this morning it was [amazon_link id=”1907994599″ target=”_blank” ]Travel Fast or Smart? A manifesto for an intelligent transport policy[/amazon_link] by David Metz – not quite out yet but [amazon_link id=”1907994599″ target=”_blank” ]available for pre-order[/amazon_link].

A Perspective on transport policy

A Perspective on transport policy

As he begins: “Britain does not have a coherent transport policy. And conventional transport economics has reached a dead end.” The essence of his plea is for joining up of planning transport investments with thinking about the geography of economic development, which sounds obvious but has never been done. A big part of the reason, David argues, is that the value of a transport investment is calculated in isolation largely on the basis of supposed savings in travel time. “But these time savings are not real. What is real and readily observed are the changes in how land is used and valued when transport investments make such land more accessible – which the economists disregard.”

So – I would say this – an excellent and concise demolition of the policy vacuum and a set of principles for a different approach. Worth reading alongside our previous title, Christian Wolmar’s [amazon_link id=”1907994564″ target=”_blank” ]Are Trams Socialist?[/amazon_link]

[amazon_image id=”1907994564″ link=”true” target=”_blank” size=”medium” ]Are Trams Socialist?: Why Britain Has No Transport Policy (Perspectives)[/amazon_image]

Interestingly, I just recently took part in a workshop on infrastructure investment in Manchester, organised by my colleague Graham Winch over at the business school. Among both academics and practitioners, there was a consensus that current appraisal methods are wholly inadequate – they are designed for marginal changes and don’t take account of system effects, non-linearities or spillovers –  and this needs to be a big part of the research agenda.

Different and alone

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Courtesy of striking French air traffic controllers, I had a longer journey back from Toulouse than I’d expected today, and managed to read the whole of Olivia Laing’s thought-provoking book [amazon_link id=”1782111239″ target=”_blank” ]The Lonely City: Adventures in the Art of Being Alone[/amazon_link].

[amazon_image id=”1782111239″ link=”true” target=”_blank” size=”medium” ]The Lonely City: Adventures in the Art of Being Alone[/amazon_image]

It wasn’t what I’d expected from the reviews, which made it seem like a kind of travelogue about her having some time alone in New York and reflecting on modern urban life; I’m a sucker for books about sitting in foreign cafes feeling a sense of anomie while writing in one’s notebook. Instead, [amazon_link id=”1782111239″ target=”_blank” ]The Lonely City[/amazon_link] is more a sort of successor to Susan Sontag’s [amazon_link id=”0141187123″ target=”_blank” ]Illness as Metaphor[/amazon_link] with a soupcon of Patti Smith’s [amazon_link id=”0747568766″ target=”_blank” ]Just Kids[/amazon_link]. Through her research into the work and lives of four artists who engaged with and battled with loneliness, but also with poverty, rejection, AIDS, Laing actually gives us a profound discussion of society’s inability to tolerate difference.

She also reflects on the role of our use of digital contact through social media and always being online – using it as a shield against human contact and at the same time a means of human contact. Laing notes the trajectory of Sherry Turkle’s assessment of digital tech through her trilogy, [amazon_link id=”0262701111″ target=”_blank” ]The Second Self[/amazon_link] (1984), [amazon_link id=”0684803534″ target=”_blank” ]Life on the Screen[/amazon_link] (1995) and the far more pessimistic [amazon_link id=”0465031463″ target=”_blank” ]Alone Together[/amazon_link] (2011).

Andy Warhol, one of the artists discussed by Laing, predates Twitter and Facebook. What would he have done with them, I wonder?

Digital and democracy

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I’ve been dipping into [amazon_link id=”0691167346″ target=”_blank” ]Digital Keywords[/amazon_link] edited by Benjamin Peters. This is in the chapter ‘Democracy’ by Rasmus Kleis Nielsen: “Attempts to assess the effects of digital technology use on political participation have again and again found only modest effects and often a ‘reinforcement’ tendency whereby the digital technology use may correlate with political participation, but mostly in ways where already-engaged groups are even more engaged and less-engaged groups are no more engaged. Digital technologies offer easier access than anything else, but for many, apparently, access is less of a barrier to political participation than inclination (or confidence that even trying is worth one’s while).”

[amazon_image id=”0691167346″ link=”true” target=”_blank” size=”medium” ]Digital Keywords: A Vocabulary of Information Society and Culture (Princeton Studies in Culture and Technology)[/amazon_image]

The circumstances in which click-ability leads to a reduction in transactions costs or barriers, and those in which it doesn’t, is surely worth some research. But while the above argument is plausible, it does seem worth worrying about the way the filter bubble can reinforce social and political chasms. This by Tom Steinberg puts it eloquently.