[amazon_link id=”0230392547″ target=”_blank” ]Going South: Why Britain Will Have A Third World Economy by 2014[/amazon_link], by Larry Elliott and Dan Atkinson, is a rattling good read.

The authors, veteran journalists on the economics and finance beat, are the Statler and Waldorf of the field. This book is a follow-up to 2007’s [amazon_link id=”1845296052″ target=”_blank” ]Fantasy Island[/amazon_link] – the new book has the same gloom about Britain’s economic prospects seasoned with a sense of satisfaction that events seem to have proven these  pessimists right.

[amazon_image id=”0230392547″ link=”true” target=”_blank” size=”medium” ]Going South: Why Britain will have a Third World Economy by 2014[/amazon_image]

The thesis is straightforward: the UK is de-developing. Just as Argentina, which would have been in the G7 in 1945, has dropped down the world economic league table, so is the UK. The roots of the decline date back to at least 1914, although at some points the book seems to trace them to 1815 or even – I thought at one point – 1530. Young workers have inadequate skills, thanks to the failings of the school and training system, there is too little manufacturing industry, the infrastructure is decaying, finance has unbalanced the economy, living standards are declining and will do so for years more.

Interestingly, the authors focus on the malign role of the state in shaping this grim economic future. They describe the proliferation of rules and intrusive petty officialdom (a 600,000 increase in state sector employment between 1997 and 2010) as “enormously wasteful and inefficient” (p97) and speak of the “hostility by practitioners to public choice and involvement” (p112). The result is that “the state’s own enforcers are increasingly treated with the greatest suspicion.” (p117) and most people aim to avoid the attention of officialdom in all its manifestations. This, they argue, is undermining the rule of law in favour of the rule of personal connections. Hmmm, echoes of Good Italy, Bad Italy. Their prescription? Shed our illusions, stop daydreaming of a golden age (Downton Abbey, Call the Midwife), and recognise that the economic policy needed is a development policy.

Now, of course this is overstated – especially the decline of manufacturing –  and the recent books [amazon_link id=”1408703300″ target=”_blank” ]Made in Britain[/amazon_link] by Evan Davis and [amazon_link id=”0300117779″ target=”_blank” ]The New Industrial Revolution[/amazon_link] by Peter Marsh offer useful balance. (Although it should be acknowledged that Elliott and Atkinson are in the distinguished tradition of [amazon_link id=”0333197720″ target=”_blank” ]Britain’s Economic Problem: Too Few Producers[/amazon_link] by Bacon and Eltis, which was big in my student days.)

Still, this is mischievous of me, but reading the book so soon after listening to Niall Ferguson give this year’s BBC Reith Lectures, the areas of agreement seemed striking. Although both contributions to the debate, Ferguson on The Rule of Law and Its Enemies, Elliott and Atkinson in Going South, overstate their case, both make some important points. The economic and political system as a whole is not working. This book exaggerates wildly – and very entertaining it is too – but they’re on to something.

Elliott and Atkinson

As somebody who has never worked as an academic economist but still has all the passion for the subject that drove me to get a PhD, it was with a real sense of recognition that I read this article by Alexandra Lord in the Chronicle of Higher Education. It contains this call:

“If our profession is to thrive in or outside of the academy, we need to encourage and train new scholars to write accessibly. We also need to use new media to connect with the public. Fundamentally, we must provide more opportunities for graduate students to engage with the public, and we must better reward tenure-track and tenured faculty members for seeking to reach a general audience.”

She is writing about historians here, and the disconnect between academic historians and the massively enthusiastic amateurs who read popular history books, trace family trees, track down historical mysteries, re-enact events and so on. But the slight disdain academic historians feel for popularisers described in this article is shared with other academics, including of course economists.

The disconnect is far more troubling in the case of economics, for two reasons. One is that the academic discipline is in general disrepute because of the crisis, and while some economists in the universities are painfully aware of the need for change, I would say many others are either in denial or just can’t be bothered. The other reason is that economics has such a direct role in public policy and that makes public legitimacy essential if policies are to have the consent of the governed.

The gap between academic and popular economics should not be overstated, especially as more of the academics engage via blogs and social networks. Neither should the fact that there is a gap, not only between the ivory tower and people in general but between the university economists and professional economists in government and business.

I applaud Ms Lord’s efforts on the history front. I do my bit for popular economics, along with heroes like Tim Harford and John Kay, and all the excellent economic journalists we have. There is other post-crisis movement too, as Sara Ledwith reported in her recent Reuters special feature. Planning for a pilot UK Festival of Economics in late November is under way, inspired by the Trento Festival of Economics. A book, [amazon_link id=”1907994041″ target=”_blank” ]What’s the Use of Economics[/amazon_link] (following up the February conference on teaching economics at the Bank of England) will be out in mid-September. The need for better communication by scholars, highlighted by Ms Jones in the case of historians, was emphasised by almost every contributor to the conference and book.

So I think the gap is narrowing – but then it needs to.

The Financial Times has a lot for Amazon-watchers today. Part 1 of a series on its business, and a separate story about ‘robo-pricing’ by retailers on the Amazon platform. Increasingly, retailers are using algorithms similar to those used by high-frequency traders in the financial markets to adjust their prices dynamically – say, to stay $1 below a close competitor, or to wage a high-speed price war. According to the report:

“Last year, out-of-control algorithms inflated the price of [amazon_link id=”0632030488″ target=”_blank” ]The Making of a Fly[/amazon_link], a genetics book, to more than $23m, according to Michael Eisen, a biologist who blogged about it.”

[amazon_image id=”0632030488″ link=”true” target=”_blank” size=”medium” ]The Making of a Fly: The Genetics of Animal Design[/amazon_image]

There are evidently firms specialising in the development of online pricing algorithms – the story name-checks Feedvisor but no doubt there are others. (Imagine explaining to your mum what your job is if you work for a company which is “the leading fully automated repricing solution for e-commerce marketplaces.”)

Eisen’s blog post is interesting. He watched the pricing arms race over a number of days, and inferred that one of the sellers did not in fact have a copy of a book. This means that in effect, it was an options trader, and pricing accordingly. Not so much a bookseller as a book arbitrageur.

High-frequency trading in financial markets has some alarming results (I talked about these in my Tanner Lectures), creating a fundamental indeterminacy in prices and turning the markets from markets into something more like an online game. What are the implications of high-frequency bookselling? Maybe Yanis Varoufakis at Valve will have an answer. Meanwhile, although none of us can touch anything tangible in the financial markets any more, we can still pop out to a favourite bookstore and breathe in the scent of paper and ink, and coffee.

Daunts in Marylebone High Street