Author Archives: Diane Coyle

The quantified (Victorian) life

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The next of my holiday reads deserves a couple of posts. It was Tristram Hunt’s [amazon_link id=”075381983X” target=”_blank” ]Building Jerusalem: The Rise and Fall of the Victorian City[/amazon_link]. As someone who believes the UK economy is over-centralised around London, to the detriment of the whole economy including the capital, the era from the early 19th to early 20th centuries when many other major cities were growing rapidly is obviously intriguing. The UK stands out globally now for the extreme degree to which the economy depends on the capital – see for example the maps at the Geographically-based Economic Data website. France used to compete but there has been a significant devolution of both political power and economic growth (they go hand in hand of course) since the 1980s.

[amazon_image id=”075381983X” link=”true” target=”_blank” size=”medium” ]Building Jerusalem: The Rise and Fall of the Victorian City[/amazon_image]

Tomorrow’s post will discuss the economics. Today is for philosophy.

Hunt has a fascinating section about the intellectual currents of the 19th century, and in particular the romantic reaction against industrialisation and the growing dominance of what Thomas Carlyle described as the cash nexus. Carlyle wrote: “We call it a Society, and go about professing openly the totalest separation, isolation. Our life is not a mutual helpfulness; but rather, cloaked under due laws-of-war named “fair competition” and so forth, it is a mutual hostility. We have profoundly forgotten everywhere that Cash payment is not the sole relation of human beings.” He was one among many – prominent among the other anti-market, anti-economics intellectuals of the day was John Ruskin, whose [amazon_link id=”0140432116″ target=”_blank” ]Unto This Last[/amazon_link] is one of the books I love to hate. And this tradition continues today, the charge led by Michael Sandel’s [amazon_link id=”0241954487″ target=”_blank” ]What Money Can’t Buy.[/amazon_link]

I was interested to read in Hunt’s account that the Utilitarians, particularly Bentham, were held to blame for the spread of market (im)morality. That’s not too surprising – after all, the utilitarian calculus was about counting and calculating, as caricatured by Dickens in the person of Mr Gradgrind in [amazon_link id=”014143967X” target=”_blank” ]Hard Times[/amazon_link]. Sandel is no fan of utilitarianism either, whereas modern economics still rests in principle on the notion of ‘utility curves’.

There is, though, a paradox in the fact that today’s ‘well-being’ or ‘happiness’ economics, which makes much of the idea that money and markets should not be the sole drivers of public policy, is rooted in a version of utilitarianism. Here is Richard Layard in 2009 making this explicit:

“[E]very human being wants to be happy, and everybody counts equally. It follows that progress is measured by the overall scale of human happiness and misery. And the right action is the one that produces the greatest happiness in the world and (especially) the least misery.”

This is the utilitarian calculus, measured in quanta of happiness rather than money. For all that its advocates do not believe economic growth is the path to progress, the happiness approach would certainly fall foul of the belief of Carlyle and the other Romantics in the pre-eminence of emotions, institutions and tradition in society.

Mortgages, mayhem and murder

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As I admitted yesterday, the books I took on holiday were non-economics related. Some were even thrillers. One of those, however, drew its plot from the financial crisis – or rather, the avalanche of foreclosures that have been taking place around the US. It was Michael Connolly’s [amazon_link id=”B004TL0J5M” target=”_blank” ]The Fifth Witness[/amazon_link], a terrific page turner. The frauds that took place during the housing boom, and the unconscionable attitude of some banks since the crash, provide the backdrop to this book – and apparently the motive for murder.

[amazon_image id=”B004TL0J5M” link=”true” target=”_blank” size=”medium” ]The Fifth Witness[/amazon_image]

Coincidentally, as I was reading it, I spotted this FT story about US bankers suing to prevent a new initiative, Mortgage Resolution Partners, from helping financially troubled home-buyers reduce their mortgage payments. The reason for the suit is that the plan gets municipal authorities to use eminent domain law to take over the collateral underpinning the mortgages. The anxiety of the financial industry about this tool is understandable – but as a member of the City Council of Richmond, California, said to the FT: “The banks caused the whole financial meltdown that resulted in the Great Recession …. They all got bailed out by the government. For them to come back and try to attack a very well thought out and very creative scheme to try to bail out some of the people who were their victims is extremely cynical and extremely hypocritical.”

After all, it’s not as if the banks are falling over themselves to help troubled borrowers avoid foreclosure any other way. Thankfully, foreclosure-related murder is fictional, but the emotional and financial mayhem caused by the continuing after-effects of the housing boom is all too real.

 

Economics and authoritarianism

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After a two-week reading fest on holiday in the Italian countryside, I’m back with a fistful of reviews. As it was a holiday, the books I took with me were not as directly economics-related as my everyday reading, but of course there’s economics in everything.

The first two I happened to read were [amazon_link id=”0713998687″ target=”_blank” ]Iron Curtain: The Crushing of Eastern Europe 1944-56[/amazon_link] by Anne Applebaum and [amazon_link id=”0857208861″ target=”_blank” ]The Arab Uprisings: The People Want the Fall of the Regime[/amazon_link] by Jeremy Bowen.

[amazon_image id=”0713998687″ link=”true” target=”_blank” size=”medium” ]Iron Curtain: The Crushing of Eastern Europe 1944-56[/amazon_image]

[amazon_image id=”0857208861″ link=”true” target=”_blank” size=”medium” ]The Arab Uprisings: The People Want the Fall of the Regime[/amazon_image]

The latter is reportage by the BBC’s distinguished Middle East editor, and it combines his clearly extensive knowledge of the region with the edge-of-seat quality of reportage from the extraordinary events that started in Tunisia – it already seems a long time ago. The subtitle is a slogan that has appeared frequently in the countries where uprisings have occurred. However, the hope of the early ‘Arab Spring’ has given way to the horror of civil war in Syria and increasing violence in Egypt; of course, no book can keep up to the minute. I can’t say it left me feeling optimistic.

On the face of it, Anne Applebaum’s detailed and authoritative work on the descent of the Iron Curtain on Europe in the post-World War 2 years is entirely different. But one commonality struck me between the two books, namely the way that apparently endless and powerful authoritarian regimes are hollowed out by economic stagnation, no matter how violent they are. One day, it seems nothing can ever change, and the next day the whole edifice has collapsed. Sometimes, when it’s the secret police versus the economy, the economic forces win. This brought to mind Ben Friedman’s powerful arguments in [amazon_link id=”1400095719″ target=”_blank” ]The Moral Consequences of Economic Growth[/amazon_link].

The main part of Applebaum’s superb book is not, though, the collapse of Soviet-dominated Communism but rather its construction in the first place. It is going to be a standard reference on this time and place in history, a companion volume to Tony Judt’s [amazon_link id=”009954203X” target=”_blank” ]Postwar: A History of Europe Since 1945[/amazon_link]. She details the methods by which communist parties –  assisted by Soviet military dominion in the post-war years, and by the collapse of order after the Nazi defeat – systematically destroyed all institutions and aspects of society that were not part of the state apparatus, even extending into family life as the years went by.

The violence and inhumanity documented are simply horrifying. So is the ‘total’ in totalitarianism: “No-one could be apolitical: the system demanded that all citizens sing its praises, however reluctantly. And so the vast majority of East Europeans did not make a pact with the devil or sell their souls to become informers, but rather succumbed to constant, all-encompassing everyday psychological and economic pressure. The Stalinist system excelled at creating large groups of people who felt nevertheless compelled by circumstances to go along with it.” The idea of there being no private space even inside one’s own mind is intolerable.

If I have one complaint about the book, it is that there isn’t more of it: Applebaum has spent years interviewing people around Eastern Europe and I would have liked to hear more from those interviews. Although the book does not cover the post-1956 or post-1989 periods, it is an essential read for anybody interested in the shadows East European history continue to cast.

Carbonised?

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Energy seems bound to stay in the news one way or another, whether it’s bills and competition policy, or fracking, or energy market reform, or the climate change debate. So anybody who didn’t read Dieter Helm’s [amazon_link id=”0300186592″ target=”_blank” ]The Carbon Crunch[/amazon_link] when it was first out can now pick up the paperback. I reviewed it at the time. It’s a clear and well-argued read, as you would expect from a doyen of energy economics. Dieter also has an interesting article on infrastructure and the state due out in the Oxford Review of Economic Policy – it will be available in early August via his website, links on the right hand side.

[amazon_image id=”0300186592″ link=”true” target=”_blank” size=”medium” ]The Carbon Crunch: How We’re Getting Climate Change Wrong – and How to Fix it[/amazon_image]

Also, next year the edited volume by Dieter Helm and Cameron Hepburn (a future doyen),
[amazon_link id=”0199676887″ target=”_blank” ]Nature in the Balance[/amazon_link]  will be published by Oxford University Press.

Summer sustenance

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It’s not too long until I down tools and take two or three weeks off. This time last year I was starting to write my next book (A Brief and Affectionate History of GDP, out in January). So I’m looking forward to reading a lot this summer. Here is the leisure pile – Orhan Pamuk’s novel [amazon_link id=”0571275958″ target=”_blank” ]Silent House[/amazon_link] is on the way too. I have a couple of new economics books to review as well – hardbacks so they’ll wait until later in August. They’re Tim Harford’s [amazon_link id=”1408704242″ target=”_blank” ]The Undercover Economist Strikes Back[/amazon_link] and Philip Mirowski’s [amazon_link id=”1781680795″ target=”_blank” ]Never Let A Serious Crisis Go To Waste[/amazon_link].

Summertime fun

I already started another summer book, Anne Applebaum’s [amazon_link id=”0713998687″ target=”_blank” ]Iron Curtain: The Crushing of Eastern Europe[/amazon_link].

[amazon_image id=”0713998687″ link=”true” target=”_blank” size=”medium” ]Iron Curtain: The Crushing of Eastern Europe 1944-56[/amazon_image]

It’s wonderful, deserving of comparison with Tony Judt’s [amazon_link id=”009954203X” target=”_blank” ]Postwar: A History of Europe Since 1945[/amazon_link]. Judt’s book makes clear the links between western and eastern Europe; our histories are intertwined. Appelbaum’s is both a detailed account of post-1945 events in countries about which many people (certainly including me) actually know very little, and a really moving testimony to the successive traumas inflicted on the people of central and eastern Europe in the 20th century. When I’ve finished I’ll write a proper review.

I do think anybody reflecting on the future of the whole of Europe should read these two books.