Author Archives: Diane Coyle

Gross Domestic Problem

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Here’s a book title that wears its heart on its cover. Lorenzo Fioramonti’s[amazon_link id=”1780322739″ target=”_blank” ] Gross Domestic Problem: the politics behind the world’s most powerful number[/amazon_link] gives you the essence of the argument upfront. If I had to sum it up as an elevator pitch, it would be Tim Jackson’s [amazon_link id=”1849713235″ target=”_blank” ]Prosperity Without Growth[/amazon_link] view (that economic growth is environmentally unaffordable and unnecessary for welfare) meets the left-wing belief that the military-industrial complex is in control of the economy for its own purposes. I don’t agree with either, although my disagreement is sympathetic.

[amazon_image id=”1780322739″ link=”true” target=”_blank” size=”medium” ]Gross Domestic Problem: The Politics Behind the World’s Most Powerful Number (Economic Controversies)[/amazon_image]

Start with growth and the environmental costs. It is surely obvious to all but a small minority that measuring better the impact of economic activity on the environment is vital. My preference is to monitor the depletion of natural assets of all kinds, a balance sheet approach automatically injecting the longer-term perspective necessary for sustainability – there is much on this in [amazon_link id=”0691145180″ target=”_blank” ]The Economics of Enough[/amazon_link]. But any kind of environmental dashboard would be welcome. What drives me to distraction is the persistent belief that we should just stop economic growth because it’s not making us happy. This is simply incorrect – this book cites no research on the question later than 1997. Subsequent research has clearly established a strong link between GDP per capita growth and measured ‘happiness’ – see for example this recent paper on happiness and GDP, and the references in it. Besides, just think – no growth means no innovation, no redistribution (it has never happened outside a rapidly growing economy), rising unemployment (unless companies are banned from improving their productivity ever). The misguided belief that growth won’t make people happier is dangerous because it will prevent any practical politics of sustainability.

On the book’s political arguments, it’s obvious post-crisis that conventional, mainstream economics has been wrong to ignore the politics of finance and the lobbying power of the banking industry. Brett Christophers’ new book, [amazon_link id=”1444338285″ target=”_blank” ]Banking Across Borders[/amazon_link], is a fascinating historical account of how that power developed – including its use of the mantra of GDP – in the post-war era. By contrast, Gross Domestic Problem offers some assertions: “GDP served the interests of political and economic elites for several decades”  – OK; “European member states came to accept that only if GDP went up could they afford to pay for schools, hospitals and social security” – er, the Stability and Growth Pact to which this refers aimed to cap government deficits, but raising taxes to pay for public services was never ruled out, certainly not by reference to GDP; “Between 1948 and 1989 American economic growth was largely dependent on military spending” – really? I agree the military budget is high but is it really true that every innovation in the post-war period had no impact on growth? Utterly implausible.

One particular confusion that many commentators on GDP make is muddling up this measure of economic activity with the measurement of economic welfare. Economics has always been clear about the distinction. Simon Kuznets, one of the creators of GDP and the national accounts, advocated a measure of welfare instead but lost the argument – this book presents his work as criticism of the definition of GDP, but the quotes here date from a 1937 book in which he was pitching for a welfare approach instead. The production demands of the war – when the military-industrial complex was indeed powerful – swung it in favour of GDP instead.

I do think these seemingly dry questions of measurement are important, and that measurement choices affect the way people behave. However, Gross Domestic Problem is an unsubtle and confused take on the question of GDP. GDP is one measure of economic growth – there could be others, and economic growth is highly desirable, in my view, subject to the huge challenge of moving towards sustainability. Measuring the economy’s size differs from measuring society’s welfare, but they are linked. It’s high time political economy was revived, but understanding how elites acquire economic power deserves some serious social science research rather than conventional assertions.

 

Lincoln-mania

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My plan to go and see Daniel Day-Lewis as Lincoln on 12th February, Lincoln’s birthday, has been overturned by the landing in my diary of a flock of meetings that day. At least I can now find an earlier date. I’m a bit of a Lincoln groupie and the film has had fantastic reviews. If there’s anybody out there who hasn’t yet read Doris Kearns Goodwin’s [amazon_link id=”0141043725″ target=”_blank” ]Team of Rivals: The Political Genius of Abraham Lincoln[/amazon_link], an important inspiration for Tony Kushner’s screenplay, now you really have no excuse. It’s a fascinating book – and there is a [amazon_link id=”0241966086″ target=”_blank” ]film tie-in edition[/amazon_link]. The main lesson I took from it concerns Lincoln’s ability to think strategically, by which I really mean keeping focused on the ultimate outcome and having the patience to stitch together meanwhile the many actions and conversations it takes to achieve a difficult goal. That ability to be strategic, to be anything other than ultra-short term, has vanished from modern public life and I suppose was rare in the 19th century too.

[amazon_image id=”0241966086″ link=”true” target=”_blank” size=”medium” ]Team of Rivals: Lincoln Film Tie-in Edition: The Political Genius of Abraham Lincoln[/amazon_image]

Orwellian language

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It has been one of my life’s missions to try to communicate economics clearly, by writing accessible books. George Orwell’s Politics and the English Language was an early influence on my writing. This wonderful essay is also available as a [amazon_link id=”0141393068″ target=”_blank” ]Penguin pamphlet[/amazon_link].

[amazon_image id=”0141393068″ link=”true” target=”_blank” size=”medium” ]Politics and the English Language[/amazon_image]

Every writer, especially one “translating” jargon-based work like economics into English should follow his rules:

i. Never use a metaphor, simile or other figure of speech which you are used to seeing in print.

ii. Never use a long word where a short one will do.

iii. If it is possible to cut a word out, always cut it out.

iv. Never use the passive where you can use the active.

v. Never use a foreign phrase, a scientific word or a jargon word if you can think of an everyday English equivalent.

vi. Break any of these rules sooner than say anything outright barbarous.

I wholeheartedly agree as well with the claim in this essay that: “[The English language] becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts.” I’m always highly suspicious of books written so impenetrably that they’re hard to understand, including academic books.

Anyway, if you happen not to have read the essay, do – bearing in mind the irony that (because of [amazon_link id=”014118776X” target=”_blank” ]1984[/amazon_link]) ‘Orwellian’ has come to mean the opposite of the kind of writing Orwell champions here.

[amazon_image id=”0141393041″ link=”true” target=”_blank” size=”medium” ]Nineteen Eighty-Four[/amazon_image]

Update: I just found this Steve Poole column describing the Orwell essay as ‘wildly over-rated’. He underestimates how hard it is to follow the rules above, even if following them slavishly might be too extreme. Have a go yourself….

Those Imperial dudes

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I couldn’t resist another description of one of the first British parties to explore Everest in 1922, from the brilliant [amazon_link id=”0099563835″ target=”_blank” ]Into The Silence[/amazon_link] by Wade Davis. This time it’s Lieutenant F.M.Bailey:

“A brilliant naturalist, he discovered scores of new species, including the legendary Himalayan blue poppy that bears his name. He once saved his own life by using a butterfly net to self-arrest and thus escape a snow slide as it grew into an avalanche. Seriously wounded three times during the war, in France and at Gallipoli, he became a British spy, a master of a dozen disguises, traveling as a Buddhist priest, an Austrian soldier, and an Armenian prisoner of war, and causing the Bolsheviks in Tashkent and Samarkand such grief that he would live with a Soviet bounty on his head for the rest of his days.”

The intrepid explorer and spy later wrote some books himself including [amazon_link id=”0192803875″ target=”_blank” ]Mission to Tashkent[/amazon_link]. All of the characters on the early Everest missions are extraordinary.

[amazon_image id=”0099563835″ link=”true” target=”_blank” size=”medium” ]Into The Silence: The Great War, Mallory and the Conquest of Everest[/amazon_image]

[amazon_image id=”0192803875″ link=”true” target=”_blank” size=”medium” ]Mission to Tashkent[/amazon_image]

Davos reading

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Once, I went to Davos. Like Lewis Lapham, I didn’t have to pay as I was then a “prospective supplier of supportive adjectives” ie. a journalist. For those who haven’t read it, whether Davos attendees, wannabees, or refusniks, Lapham’s 1998 book [amazon_link id=”1859847102″ target=”_blank” ]The Agony Of Mammon: The Imperial Global Economy Explains itself to the Membership in Davos[/amazon_link] is an instructive perspective on the phenomenon. I like the Walter Bagehot quotation he opens with: “Poverty is an anomaly to rich people. It is very difficult to make out why people who want dinner do not ring the bell.”

[amazon_image id=”1859847102″ link=”true” target=”_blank” size=”medium” ]The Agony of Mammon: The Imperial Global Economy Explains Itself to the Membership in Davos, Switzerland[/amazon_image]

I’d certainly never pay to go back to the WEF-fest up the mountain, and have never since been offered the zero-price option. Perhaps I’d be vain enough to accept such an offer, but I hope not. There is something highly corrupting about it – more so, despite the interesting comparison John Gapper draws in today’s FT (Davos: Infotainment, Not A Conspiracy) – than is the case with other elite ‘clubs’ such as TED. I think it’s simply the sheer amount of money required to get there and concentrated there. Enough money to reflect real power.