Ethics *and* dirty realism in public policy

Ethan Bueno de Mesquita’s new book, Political Economy for Public Policy, has just landed at Enlightenment towers. I’m excited about this book, which I read at the proof stage. As I say in the blurb I provided, “This book brings some much-needed clarity and rigor to the analysis of public policy: What are the aims of policy, what are the inescapable dilemmas and trade-offs, and what are the pitfalls in government action? Above all, its essential message is that effective policy analysis is impossible without taking account of the political realities and the difficulties of implementation.” And as one of the other comments puts it, there is no other book like it.

Why so? Well, it’s a mildly technical textbook – nothing too alarming – combining the rigour of economics in approaching public policy (voting rules, game theory, Arrow etc) with the philosophical foundations and politics of implementation. It aims for a consistent synthesis, and largely succeeds. I like the way it starts with the ethical issues, and puts questions of trade-offs and distributional issues up front. And I like just as much the fact that it is so clear about the incentives faced by policymakers and the dirty realism of political constraints.

As a bonus, there’s also a super-clear appendix explaining game theory for students who haven’t come across it elsewhere.

Well worth a look if you teach political economy or public policy. There are exercises at the end of each chapter, and further reading. I will set some chapters for my course.

Containing multitudes

The blog has been down for a few days, for which apologies.

Twitter pointed me to the fantastic visualisation of container shipping below. It’s a good excuse to revisit this obsession of mine. The ur-book on this subject is Marc Levinson’s The Box, a fascinating account of both the industry itself and the general role of standards, and the wide and permanent social consequences of technological innovations. A more recent title on the same subject is also excellent, The Container Principle by Alexander Klose – more of a cultural studies perspective on the subject. I also enjoyed Rose Geroge’s account of life on a container ship, Deep Sea and Foreign Going.

I’m immensely looking forward to reading Richard Baldwin’s new book, The Great Convergence: Informaiton Technology and the New Globalization, on what he describes as the second great unbundling, the post-1980 reorganisation of production on a global scale, splitting up supply chains to take ever-greater advantage of specialisation through trade. It couldn’t have happened without the containers.

  Deep Sea and Foreign Going: Inside Shipping, the Invisible Industry That Brings You 90% of Everything

 

More holiday reading

One of my other holiday books was Orhan Pamuk’s A Strangeness in My Mind. I love all his books – his ability to make real the characters of people so very different from the reader is extraordinary. Given the context of what’s happening now in Turkey, all the more reason to read this saga of family life from a village in Anatolia in the 1960s to Istanbul now. This is a love story, a reflection on family, but it sheds much light on the rural to urban shift, the clash of cultures, the effects of the deracination caused by migration, the corrosiveness of poverty, the tension between secular modernism and Islamic traditions.

A Strangeness in My Mind

And I *loved* China Mieville’s The City and The City, a random title picked for Son 2, who ignored it. I’ve read a couple of his others. This one is pure genius, an apt read for these increasingly nationalistic times.

The City & The City

As well as a few thrillers, of varying quality, I read Brooke Harrington’s Capital Without Borders and Ryan Avent’s The Wealth of Humans and will post reviews closer to their publication date.

Summer murder

One of the joys of being on holiday is of course the extra reading time. Among the thrillers and novels, I read Jill Leovy’s Ghettoside: A True Story of Murder in America. It’s a brilliant piece of reportage about the many murders of young black men in southern Los Angeles, mainly killed by other young black men.

The book mixes in a gripping narrative a few individual cases – the dead youths and their families, the immediate events, the detectives working on the case – along with a wider analysis of both the sorry history of the high murder rate and the structures of society and policing that (she argues) largely account for it. Leovy’s fundamental point is that the apparent lawlessness of the ghetto is in fact the law of the streets filling the vacuum left by the absence of ‘normal’ law, and the state’s abdication of its monopoly of violence in such territories. She, like her few heroic detectives working hard to solve every case like any other murder, sees the absence of genuine law enforcement as the root problem.

As she writes: “Gangs could seem pointlessly self destructive, but the reason they existed was no mystery. Boys and men always tend to group together for protection. They seek advantage in numbers. Unchecked by a state monopoly on violence, such groupings fight, commit crimes, and ascend to factional dominance as conditions permit. Fundamentally, gangs are a consequence of lawlessness, not a cause.”

One of the eye-opening aspects of the book lies in its descriptions of how little resource the homicide divisions in the south of LA have been allocated, compared to policing fads such as visibly patrolling streets, or preventive schemes. This extended to under-manning, overtime bans (on murder cases!), not allowing detectives to take their cars home, and even stationery shortages.

Interestingly, the epilogue describes a recent steep reduction in the murder rate, albeit remaining many times higher than other parts of the city and state. Leovy argues that there have been a number of contributory factors including demographic change (fewer blacks and more Hispanics in the city itself) but highlights in particular a significant increase in social security payments to poor black people, specially men, and especially to people coming out of prison. Supplemental Security Income payments give individuals a crucially different set of incentives: “Money translates to autonomy. Economic autonomy is like legal autonomy. It helps break apart homicidal enclaves by reducing interdependence and lowering the stakes in conflicts.” It is easier to walk away from the calling in of tit for tat favours by other gang members. Leovy suggests the Affordable Care Act will reinforce this autonomy. The section briefly notes the high rate of imprisonment too – David Skarbek’s The Social Order of the Underworld is a great complement to this book, looking specifically at the interactions between gangs and the US penal system.

Still, Leovy concludes, it is important not to lose sight of the key lesson that too little policing and enforcement of the law is corrosive. Every desperately sad story in this book underlines the message.

Money and civilization: it’s complicated

William Goetzmann’s Money Changes Everything: How Finance Made Civilization Possible is exactly the kind of book I find relaxing to read before going to sleep. Apart from the fact that it’s too chunky to carry around, it is a panoramic historical sweep packed with interesting nuggets.

Money is hardly my Mastermind special subject, and I certainly don’t get emotional about it as so many commentators do. So I have no view about the criticism of the book by people like this reviewer, whose point seems to be that Goetzmann doesn’t agree with every word of David Graeber’s Debt . I’m certainly not going to opine about pre-history. However, Goetzmann is making a far more general argument, rather than a specific case about the role of debt in ancient society (& anyway I think that particular dyspeptic reviewer significantly misrepresents the book’s argument).

Goetzmann’s point is that there is an intimate inter-relationship between financial arrangements and instruments and other economic and social institutions. Indeed, he argues that this is causal and financial innovations made ‘civilisation’ (in the sense of social and political changes observed through history) possible. Intellectual innovations like writing or probability theory, and social innovations like the intermediation of individual savings into investment at scale, were driven by finance. Of course, the causality runs the other way round too: certain economic and social institutions were necessary for financial innovations to occur. “The joint development of financial tools and complex society was a process of give and take on many levels.” It’s complicated, folks! Simple accounts are probably wrong.

Goetzmann is certainly not a financial determinist. He writes: “Necessity is the mother of invention. … Financial technology is redundant, adaptive, and sometimes mercurial. The institutions we take to be sacrosanct, inevitable and indispensable probably are not. Given the random outcome of historical events, another set of institutions might have emerged to serve the same financial problems. Financial innovation is thus a series of accidents of history – the caprice of time, location and opportunity.” This seems absolutely convincing to me, rather than any Graeber-like projection of ideology onto the past. And – as Goetzmann notes – “In times of financial crises, society has tended to express a collective nostalgia for a pre-financial world.”

The book is broadly chronological, starting in ancient Mesopotamia, visiting China, mediaeval Europe, 18th century France and western Europe, back via Marx to China, then the 1920s, Keynes and the war, and a final short section on modern finance. There are all kinds of examples I didn’t know about – the Templars as bankers, the early example of corporate structure in the shape of Toulouse’s Honor del Bazacle. Like Jared Diamond through a different lens, Goetzmann sees the fragmentation and political competition of western Europe in mediaeval and early modern times as an important contribution to its subsequent reliance on capital markets. All very enjoyable, and I’d say essential for anyone interested in financial history.