I picked up Graeme Maxton’s [amazon_link id=”0470829982″ target=”_blank” ]The End of Progress: How Modern Economics Failed Us [/amazon_link] with a dutiful sigh, expecting one of the now-standard rants about my profession having caused the financial crisis. I mean, it’s obvious to all but a few diehards that standard macroeconomics has been demonstrated to have serious flaws, and will have to change. But a new consensus doesn’t emerge overnight. Hence at the moment we have the Punch and Judy show amongst macroeconomists about deficit reduction that is an action replay of the monetarist vs Keynesian battles of my student days. So yet another book pointing out the flaws of macroeconomics wouldn’t be adding much.

Then I started reading and was, briefly, pleasantly surprised. The book zeroes in on exactly the same set of long-term economic challenges that I wrote about myself, namely financial crisis, environmental sustainability, and the damage unfairness is doing to the social fabric. So of course I agree with Maxton that these are serious and important issues, as anyone would. These concerns are very much in the air, and widely shared. I settled down to enjoy the rest of the book.

The rest was a disappointment. I like the author’s passion about these issues but was driven to distraction by his apparently not having read directly any of the recent economic literature on them (the notes to each chapter typically cite one official report and several media articles). Worse, there are some really bizarre claims. For example he defines externalities as “variables that were not obvious at the time” (?) and says: “Modern economic thinking encourages us to price the world’s natural resources incorrectly.” I suppose this is meant to be accessible to a general, non-expert audience. But of course, environmental economics, a huge field of research, is all about externalities and I don’t know an economist who doesn’t recommend a carbon tax or carbon pricing mechanisms to correct for them.

Some chapters were clearly better informed and therefore more informative, such as one about Chinese attitudes to the rest of the world (although, on China’s African investments, I’d recommend Deborah Brautigam’s more detailed and nuanced view in [amazon_link id=”0199606293″ target=”_blank” ]The Dragon’s Gift: The Real Story of China in Africa[/amazon_link]).

But although the author’s heart is in the right place, I found the book simply too full of infelicities and bizarre interpretations. I do also think that  people who are going to criticize wholesale all of modern economics should actually read and cite some economists. After all, nobody would think it acceptable to rail against the hopeless state of modern physics (string theory? Higgs bosons? parallel universes? Be serious!) without actually knowing a reasonable amount about the physics they were criticising. And – as I said – there is definitely something to criticise about macroeconomics, as lots of thoughtful economists recognise.

Other readers, less kindly disposed than I am to economists, and just as concerned about the state of the world, might nevertheless find this an enjoyable airport bookstore rant, with lots of one ‘punchy’ sentence paragraphs and a seasoning of hyperbole.

[amazon_image id=”0470829982″ link=”true” target=”_blank” size=”medium” ]The End of Progress: How Modern Economics Has Failed Us[/amazon_image]

One of the benefits of long haul travel is having a lot of reading time, and one of the books I devoured on the way from London to Denver was Rebecca Solnit’s marvellous [amazon_link id=”1841957453″ target=”_blank” ]A Field Guide to Getting Lost[/amazon_link]. Now, there is close to zero economics in it, but I was much taken with her distinction between lost meaning something familiar that has disappeared and lost meaning the realisation that what has appeared around you is unfamiliar.

Solnit offers a quotation from Edgar Allan Poe, referring to wider things but perfectly applicable to economic forecasting: “All experience, in matters of philosophical discovery, teaches us that … It is the unforeseen upon which we must calculate most largely.” The art of forecasting lies in not paying too much attention to the familiar, but rather acknowledging that one is lost in an unknown landscape. I hear the sound of [amazon_link id=”0141034599″ target=”_blank” ]The Black Swan[/amazon_link] flapping….
[amazon_image id=”1841957453″ link=”true” target=”_blank” size=”medium” ]A Field Guide to Getting Lost[/amazon_image]

It isn’t often that I indulge in a diversion into academic papers rather than books, but this one is an exception, and it isn’t even an economics paper: “Evidence for a Collective Intelligence Factor in the Performance of Human Groups” (pdf). The five authors present the results of experimental evidence on the performance of small groups of people, randomly assigned, in carrying out a range of tasks such as visual puzzles, brainstorming, negotiations.

To the surprise of the psychologists, the success of the groups bore little relation to either the average intelligence (measured by standard tests) of their individual members, nor to that of the most intelligent individual in each group. Instead, successful outcomes were best explained by a collective intelligence factor, which seems to be positively related to the social sensitivity of the group’s members (also measured by standard ‘looking in the eyes’ tests), and to both the proportion of women in the group and the extent to which group members all participated in conversation (which must be related to the female quotient).

Collective intelligence dominates individual intelligence

To which cynical female readers will respond, tell me something I don’t know. But if taken seriously, such findings have profound implications for institution-building in a society where so many important groups from company boards to union executives to the Cabinet are assemblages of alpha males. Ours is also a society where the focus on individual achievement has gone too far, as manifested in obscene ‘performance pay’ and bonuses for people whose apparent success actually depends more on the team around them than on their individual merit. For example, Boris Groysberg’s book [amazon_link id=”0691127204″ target=”_blank” ]Chasing Stars[/amazon_link] demonstrated convincingly for Wall Street ‘star’ analysts that in fact the institution, not the individual’s talent, explained successful results, as when these ‘stars’ are poached, the success stays with the bank they have left.

[amazon_image id=”0691127204″ link=”true” target=”_blank” size=”medium” ]Chasing Stars: The Myth of Talent and the Portability of Performance: The Myth of Talent and the Portability of Performace[/amazon_image]

Coincidentally, I’m part way through [amazon_link id=”B005LVN17C” target=”_blank” ]I’ll Have What She’s Having: Mapping Social Behavior[/amazon_link] by Alex Bentley, Mark Earls and Michael J O’Brien. The title refers to the famous fake orgasm scene in When Harry Met Sally, and the importance of imitation as a success strategy in life and business. The book’s theme also is the importance of collective intelligence – other people are where we store all the things we don’t know ourselves. It promises ‘how to’ advice in later chapters; I might report back.

[amazon_image id=”B005LVN17C” link=”true” target=”_blank” size=”medium” ]I’ll Have What She’s Having: Mapping Social Behavior (Simplicity: Design, Technology, Business, Life)[/amazon_image]

This weekend I’ve read a fascinating pamphlet published in 1983 by the BBC’s Education Department. Towards Computer Literacy (pdf) describes a 1982 TV series educating the general public about computers and programming, and the wider computer literacy project the BBC launched around the series.

The project included materials for schools; outreach to computer societies and clubs, further education colleges, and a host of other bodies; the establishment of a standard BBC version of the Basic programming language; and of course the development of the BBC Micro. This wildly successful home computer launched many a career in the industry, such as that of David Braben, who co-wrote Elite and is now behind the Raspberry Pi; and indeed a number of important companies including ARM Holdings (the descendant of Acorn which developed and manufactured the BBC Micro).

The people who made the BBC Micro happen, at a 2008 reunion (from Wikipedia)

The pamphlet is a fascinating read. There was a more colourful account in the BBC 4 programme The Micro Men but its focus was on Acorn. The striking thing about the project as a whole – in addition to its remarkable impact on the skills and enthusiasm of a whole generation, and on British industry – is what an extensive effort it was. It involved the co-ordination of a host of organisations and individuals, and all before we had email too. There’s an introduction by Aubrey Singer, then the Managing Director of BBC Television, which ends:

“This booklet tells the story of success in the beginning, but the real measure of it lies in the achievements of our audience in the years ahead.”

Twenty eight years later, it still looks like a story of success on this count too. Well worth a read.

PS One reason for my interest in BBC history is that I’m Vice-Chairman of the BBC Trust.

When I was a graduate student at Harvard in the early 1980s, Jeff Sachs was a relatively new assistant professor in the department, and although I never studied with him, he was an amiable and friendly figure around the Littauer Center. I’ve always had a soft spot for him as a result, while being reasonably sceptical about his recent work on development. Still, I would have read his latest book, [amazon_link id=”1847920926″ target=”_blank” ]The Price of Civilization: Economics and Ethics after the Fall[/amazon_link], without any hesitation were it not for a review of it by Robert Skidelsky. Actually, it’s a very favourable review. Skidelsky describes it as ‘one of the best’ books on the economic crisis. But he ends with a couple of criticisms. One concerns Sachs’s advocacy of a Gross Domestic Happiness target, and his praise for the Kingdom of Bhutan for introducing one.

Noooooooo!!!! Not again! Why do intelligent people insist on seeing as a policy model one of the world’s lowest Human Development Index and most authoritarian countries? The King of Bhutan has discovered in the pursuit of happiness policies a massively effective PR tool that distracts attention away from his failure to improve the lot of his subjects at all.

And besides, it just isn’t true that happiness isn’t related to economic growth. People are happier when they’re richer and have more to spend. Any claim to the contrary is based on a statistical error. See Chapter One of [amazon_link id=”0691145180″ target=”_blank” ]The Economics of Enough[/amazon_link] for more detail. We should hold politicians and central bankers to account for whether or not the GDP increases – they’re not doing all that well at the moment. It’s because GDP is no increasing that many of us are feeling pretty unhappy at the moment.

There are other problems with the fashion for ‘happiness’ as an economic guideline. As Skidelsky says: “[T]here are two problems with making happiness the ultimate goal of economic activity. First of all, we don’t actually know enough about what makes people happy. Perhaps everyone living to 90 will increase the sum of “life satisfaction”, perhaps not. Second, happiness is not the same as “wellbeing”, still less is it the same as “goodness”. The ancient Greek concept of eudaimonia, loosely translated as “happiness”, is an admirable and desirable state of being, not a subjective state of mind. So “clinical economics” cannot tell you either how to be happy, or why being happy is good. For the latter one needs a philosophy of the good life.”

Rant over, maybe I will still read Jeff’s book. Nonsense on happiness aside, there’s certainly a need for alternative policy ideas.

[amazon_image id=”1847920926″ link=”true” target=”_blank” size=”medium” ]The Price of Civilization: Economics and Ethics After the Fall[/amazon_image]