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Be happy! (Or else…)

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It has been a busy and dyspeptic week. [amazon_link id=”1781688451″ target=”_blank” ]The Happiness Industry: How the Government and Big Business Sold Us Well-Being[/amazon_link] by William Davies has been the perfect accompanying reading material. The enthusiasm of many of my fellow economists for behavioural economics has made me increasingly uneasy. This is, after all, a profession strongly  inclined towards social engineering, and I’ve written here before about the likelihood that nudges are seen as an exciting new tool for this job. After all, they seem to work, and as even the status quo is a nudge, why wouldn’t you design better nudges to deliver better outcomes?

[amazon_image id=”1781688451″ link=”true” target=”_blank” size=”medium” ]The Happiness Industry: How the Government and Big Business Sold us Well-Being[/amazon_image]

[amazon_link id=”1781688451″ target=”_blank” ]The Happiness Industry[/amazon_link] eloquently reinforces my suspicions. It locates the fashion for “well-being” in the long tradition of making the internal world measurable and reducing questions of morality and political choices to scientific decisions. Economics, rooted in [amazon_link id=”1508738734″ target=”_blank” ]Bentham’s utilitarian calculus[/amazon_link], plays a leading role in the story, as do the successive waves of management science from Taylorism on. Indeed, in management, the growing surveillance of employees’ ‘well-being’ by wearable devices is the latest version.

Davies points out there is an inconsistency at the heart of this: “Workplaces put a growing emphasis on community and psychological commitment, but against longer term trends towards atomization and insecurity. We have an economic model which mitigates against precisely the psychological attributes it depends upon.” Yet the emphasis on resilience or mindfulness puts all the onus on the individual to adjust: “one progressive route would involve changing [the] context. But another equivalent would be to focus on changing the way it is experienced.”

He is also critical of the economists’ use of the idea of revealed preference: that you can infer somebody’s inner preferences or desires from their choices, usually their choices about what to spend their money on. Shopping speaks louder than words. Perhaps wearables that can measure heart rate or sweat will replace money as the best revealed preference metric, but meanwhile what someone spends is a readily-measurable indicator, easier to count and compare than what people say about their emotions. “This granted money an exceptional psychological status, as it allowed others to peep into people’s private desires.”

Disliking money as a metric, Davies is therefore also critical, as many people have been, of using the technique of contingent valuation to put monetary values on, say, the impact of an environmental disaster. “What we witness in this sort of example is economics becoming used as a basis for broad public agreement well beyond the limits of the market place,” Davies writes. He’s in good company. [amazon_link id=”B007IO1X5C” target=”_blank” ]Michael Sandel[/amazon_link] and [amazon_link id=”014197558X” target=”_blank” ]George Monbiot[/amazon_link] are among those who dislike the use of money as a measure of non-monetary values, such as nature, or relationhips, or civic virtue.

However, this seems to me distinct from the reductionism of the behavioural economists and psychologists. It is one answer to the question of how you resolve conflicts when there is no market: if you have to make interpersonal comparisons, how should you go about it? Or, in the words of a well known survey article, is some number better than no number? If you want to calculate compensation after an oil spill, how else could you go about it? So I am far more comfortable with these valuation techniques than I am with the happiness tendency.

On the latter, my instincts are with Davies: ” Behaviourism stretches Bentham’s dream of a scientific politics to its limit, imagining that beneath the illusion of individual freedom lie the cold mechanics of cause and effect, observable only to the expert eye.” When I teach my students behavioural economics – and they’re very interested in it – I ask them to look at this Adam Curtis blog, From Pigeon to Superman and Back Again. While not dismissing the policy sense of some nudges, beware economists who know how to make you happy and beware even more bosses demanding it of you.

Talking proper

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Oliver Kamm’s book [amazon_link id=”0297871935″ target=”_blank” ]Accidence Will Happen: The non-pedantic guide to English usage[/amazon_link] is a treat. I’ve always tried to write clearly about economics, a field strewn with jargon used in proper (as shorthand) and improper (as obfuscation) ways. I believe clear writing is a pretty reliable guide to clear thinking on the part of the author, and always liked George Orwell’s famous essay [amazon_link id=”B00AZQTM5I” target=”_blank” ]Politics and the English Language[/amazon_link].

[amazon_image id=”0297871935″ link=”true” target=”_blank” size=”medium” ]Accidence Will Happen: The Non-Pedantic Guide to English Usage[/amazon_image]  [amazon_image id=”B00AZQTM5I” link=”true” target=”_blank” size=”medium” ]Politics and the English Language[/amazon_image]

[amazon_link id=”0297871935″ target=”_blank” ]Accidence Will Happen[/amazon_link] is a heartfelt plea to respect the vitality of English as a living language whose usage changes. It scorns the “shibboleths” of grammar pedants and usage sticklers. (Orwell too argued against the tyranny of ‘standard English’, although his rules for writing are over-rigid in their turn.)

I largely agree with Oliver Kamm, even though I have a fondness for using ‘whom’ in the ‘right’ places and considering ‘data’ to be a plural. And this observation in the book strikes me as true and to the point: “Shibboleths are not rules of grammar, let alone marks of civilisation: they are a means of keeping divisions sharp. …. The sticklers’ clause is not about culture but about class.”

As an observer of teens who attended the local school, this class distinction is evident in the way the kids from middle-class families readily switch between standard English at home and the local London street dialect with their friends. And growing up myself in a working-class household in north west England, it was all too clear that losing one’s regional accent was a requirement for upward mobility.

The moral is: pause before you sneer at the greengrocer’s stray apostrophes.

Enlightenment values

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I’ve been slowly reading [amazon_link id=”0691150648″ target=”_blank” ]The Shape of the New: Four Big Ideas and How They Made the Modern World[/amazon_link] by Scott Montgomery and Daniel Chirot. Slowly because it’s too big to carry in my bag on the tube. It’s an intriguing history of the modern world as shaped by – yes – Big Ideas. The authors’ argument is that: “Ideas have been among the primary forces behind modern history during the past three centuries.”

[amazon_image id=”0691150648″ link=”true” target=”_blank” size=”medium” ]The Shape of the New: Four Big Ideas and How They Made the Modern World[/amazon_image]

This isn’t a new argument in itself. In the context of economic history, Joel Mokyr’s [amazon_link id=”0691120137″ target=”_blank” ]The Gifts of Athena[/amazon_link] and his [amazon_link id=”0140278176″ target=”_blank” ]The Enlightened Economy[/amazon_link] give pride of place to ideas, then embodied in innovations.

[amazon_image id=”0691120137″ link=”true” target=”_blank” size=”medium” ]The Gifts of Athena: Historical Origins of the Knowledge Economy[/amazon_image]  [amazon_image id=”0140278176″ link=”true” target=”_blank” size=”medium” ]The Enlightened Economy: Britain and the Industrial Revolution, 1700-1850[/amazon_image]

And as Keynes famously said at the close of [amazon_link id=”B00N47UOI4″ target=”_blank” ]The General Theory[/amazon_link]:

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil.” (The quotation is usually shortened but it’s better in full.)

[amazon_image id=”B00N47UOI4″ link=”true” target=”_blank” size=”medium” ]The General Theory of Employment, Interest, and Money[/amazon_image]

The Shape of The New does though have a distinctive version of the ideas that created our world. The first four chapters cover Adam Smith (morality and self-interest in political economy), Karl Marx (the desire for revolutionary redemption), Charles Darwin (embedding humanity in nature, the scientific method turned on ourselves) and the Jefferson-Hamilton debates (the nature and meaning of democracy). I knew the least about the last of these, so found it particularly interesting. The second half turns to the backlashes: the counter-Enlightenment all the way through to Fascism; and Christian and Muslim counter-reactions to modernity.

As the book concludes, the debates are still live, although of course taking new forms constantly. Those of us who hold Enlightenment values dear have to fight for them.

However, it ends with a bit of a damp squib, the conclusion being that the humanities are essential in higher education, and one of the most important aspects of study should be the history of ideas. I do happen to agree (even in economics), but it’s a rather low key ending to an ambitious and interesting book.

 

Economics of empire – then and now

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I’ve enjoyed reading Tristram Hunt’s T[amazon_link id=”014104778X” target=”_blank” ]en Cities that made an Empire[/amazon_link], out now in paperback. It’s a clever prism on British imperialism, taking a tour of major colonial cities and using a period in their history to explore the wider politics and economics of colonialism, and the cultural relations between the “mother country” and her colonies as expressed in architecture and urban design in particular.

[amazon_image id=”014104778X” link=”true” target=”_blank” size=”medium” ]Ten Cities that Made an Empire[/amazon_image]

The geographic and historical tour starts in Boston in the late 18th century (the Revolutionary War), then Bridgetown, Barbados (looking at slavery and the triangular Atlantic trade), Dublin (and the painful relationship between the two countries), Cape Town (as the base for the extension of Empire), Calcutta (early Indian adventurism by the East India Company), Hong Kong (the opium wars), Bombay (the apogee of Victorian Empire), Melbourne (and the distinctive characteristics of an Anglo-Saxon colony), New Delhi (and the independence movement) and Liverpool (where Empire ended on 22 April 1981 when Tate & Lyle closed its refinery and the docks stood empty, Tate & Lyle blaming EU membership and the change in trading patterns that involved).

The wide perspective makes very clear the commercial interests driving the politics of imperialism, from the slave trade to the exploitation of Indian cotton supplies and the market it provided for cheap Lancashire textiles, and the eastern triangular trade of Indian opium to China, Chinese luxuries to Britain and British manufactures to India. I can’t read anough about the Lancashire cotton industry for obvious reasons & have [amazon_link id=”024101171X” target=”_blank” ]The Empire of Cotton: A New History of Global Capitalism[/amazon_link] on my wish-list.

[amazon_image id=”B00PYY1AQU” link=”true” target=”_blank” size=”medium” ]Empire of Cotton: A New History of Global Capitalism[/amazon_image]

There was also a *fabulous* In Our Time recently about the Lancashire weavers standing (at great cost to themselves) with the Union and the slaves during the American Civil War – Abraham Lincoln presented a statue to Manchester afterwards, in recognition of the support.

Lincoln in Manchester

Lincoln in Manchester

Modern globalization is driven just as much by drugs, arms and slavery, or people trafficking as we now call it; but these are veiled and never discussed in policy conversations, although of course the financial and professional support these trades require is big business. Nor do economists analyse it much; after all, you can’t download the data from the internet and run it through Stata. I often think we should take this illicit global economy far more seriously.

Economics meets physics – literally

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By chance, two books about the intersection of economics and the physical world have landed recently here at Enlightenment Towers recently, [amazon_link id=”113744200X” target=”_blank” ]The Remaking of the Mining Industry[/amazon_link] by David Humphreys and [amazon_link id=”0262029146″ target=”_blank” ]Power Density: A key to understanding energy sources and uses[/amazon_link] by Vaclav Smil.

[amazon_image id=”113744200X” link=”true” target=”_blank” size=”medium” ]The Remaking of the Mining Industry[/amazon_image] [amazon_image id=”0262029146″ link=”true” target=”_blank” size=”medium” ]Power Density: A Key to Understanding Energy Sources and Uses[/amazon_image]

I love business histories, with all their detail about how decisions get made with no reference at all to marginal cost=marginal revenue, and David Humphreys used to be chief economist of Rio Tinto and then Norislk Nickel in Russia. He knows more than probably anyone about the economics of the mining industry, so this book promises to be full of interesting nuggets (so to speak). Paging through, one of his main themes looks to be the importance of geopolitics for the industry, and the role of government in creating a stable legal framework that will enable investment with a decades-long payoff to occur. He concludes: “The world does not have a resource problem. It cannot be ruled out, however, that it may face an investment problem.”

I also like Vaclav Smil’s previous books, [amazon_link id=”B00EI26DUM” target=”_blank” ]Made in the USA: the rise and retreat of American manufacturing[/amazon_link] and [amazon_link id=”B00FNWQJOQ” target=”_blank” ]Making the Modern World: Materials and Dematerialization[/amazon_link] (well of course I’d like that one!), packed full of engineering insight. This one tells me that power density is “the rate of energy flux per unit of area” – huh? – and that moving to low power density renewable fuels will require “a profound spatial restructuring of the energy system.” My guess is that it means new transmission and distribution grids, but I’ll have to read it to be sure. The final sentence, in bold italics reads: “New energy arrangements are both inevitable and desirable, but without any doubt, if they are to be based on large scale conversions of renewable energy resources, then the societies dominated by megacities and concentrated industrial production will require a profound spatial restructuring of the energy system, a process with many major environmental and socioeconomic consequences.”