Economies and economics

As part of the preparation for the new course I’m teaching at the University of Manchester this autumn, Economics for Public Policy, I’ve been looking again at Microeconomics: Behavior, Institutions and Evolution by Sam Bowles. It’s a decade old now but still pretty unique in its approach, which is rooted in social interactions and institutions rather than the atomised individuals of the standard micro course. In other words, it’s about economies, and not ‘economics’.

It’s a graduate level text, but I’ve also started looking at a brand new undergraduate micro text, Microeconomics: A Fresh Start by Peter Dorman. It starts with some history of thought and then the assumptions of economic models, and the values and objectives of economics, before going on to institutions – of which markets are one example. Demand and supply and market structure come later, followed by bargaining power and market failures. There is a final section on applied economics challenges, such as poverty, ecological questions, financial markets. Although I’ve not worked through any of it in detail, it is hugely more appealing than the standard textbooks. I’m not teaching micro per se, nor have I worked through this in any detail, but would recommend anyone who is teaching the core undergraduate courses to take a look at this. There’s also a macro volume I’ve not yet looked at.

Sam Bowles is one of the leading lights of the CORE curriculum reform project, in which I’m also involved, and its Intro to Economics goes into the pilot phase soon. There are lots of different barriers to reform of the economics curriculum, the availability of better (ie. non-standard) textbooks being only one of them. It’s so encouraging, though, to see – only 2 years on from What’s the Use of Economics – several more realistic and humane approaches to economics being developed for use where it really matters, in the education of future generations of economists – and policy-makers, and bankers, and accountants, or whatever they go on to be from their undergraduate degree.


Some light holiday reading

The past week I was in West Wales with next to no connectivity, so it was a good week for reading but not for blogging. One of the books I read was the new paperback of Eric Schlosser’s Command and Control.

It’s the story of America’s nuclear weapons; not so much the diplomacy and strategy of the Cold War, although there’s a bit of that for background, but rather how many accidents there have been. It’s a terrifying book because of the sheer number of explosions and leaks, and it seems only luck that has prevented there being a more serious disaster. And then it’s doubly terrifying when you close it and realise that this was the US only, and there are plenty of other countries with nukes, including a number with far less sophisticated scientists and management systems. Heaven only knows how many accidents there have been involving warheads in the USSR or North Korea, or what’s rattling around the FSU countries now. Still, as Schlosser points out, of the 70,000 nuclear warheads (70,000!!!) built by the US since 1945, none has detonated by accident or without proper authorization. “The technological and administrative controls on those weapons have worked.”

Having nuclear weapons involves one central dilemma, Schlosser explains. There is an engineering trade-off between making them ultra-safe to store and transport, and making them work every time if they need to be fired – because the whole logic of deterrence depends on there not being any dud ICBMs. The complexity of the weapons and the safety procedures developed around them – albeit often ignored by maintenance teams – also militates against the strict command and control hierarchy of the military. You can see why the top brass insisted that all instructions in case of accident had to come from them. After all, it seems mad to allow any improvisation where nuclear warheads are concerned. However, in a fast-moving, confused, uncertain environment when a serious accident is under way and an explosion could detonate a warhead, it also seems mad not to allow the men on the ground to make their own decisions – especially in the pre-web, pre-mobile days when communications from command posts were slow, and easily disrupted. Nuclear weaponry is really the opposite of the kind of engineering project described in Tim Harford’s Adapt. He argues that freedom to fail is a vital part of successful innovation. You don’t want freedom to fail when it comes to the H-bomb.

Command and Control has lots of fascinating detail. One bit I enjoyed was that the underground bunker created in Britain (described in Peter Hennessey’s The Secret State as well) had accommodation, a gold vault for the Bank of England’s reserves, a BBC studio – and a pub called the Rose and Crown. I will certainly follow up the reference to an article by Langdon Winner, ‘Do Artifacts Have Politics?’, which apparently asks whether certain technologies can only operate in specific political contexts:

“I shall offer outlines and illustrations of two ways in which artifacts can contain political properties. First are instances in which the invention, design, or arrangement of a specific technical device or system becomes a way of settling an issue in a particular community. Seen in the proper light, examples of this kind are fairly straightforward and easily understood. Second are cases of what can be called inherently political technologies, man-made systems that appear to require, or to be strongly compatible with, particular kinds of political relationships.”

So, overall, C&C is a gripping read, but I want to carp as well. Schlosser is a terrific writer, but this book really needed an editor. No character, no matter how minor, is introduced without his cv. There is so much technical detail that it derails the story. Most bizarrely, there is one particular accident that starts and ends the book, such an edge-of-the-seat tale that I’m sure Hollywood is already working on the film – but rather than simply presenting it as the opening and closing chapters, framing the meat of the book, it is woven in throughout the other chapters, and pops up at seemingly random points.

Still, well worth reading, and go and see the movie when it’s out, too.

Can’t do without Jane Jacobs

I’m sure I once had a copy of The Economy of Cities by Jane Jacobs, but when my son asked to borrow it, I couldn’t find it. So I ordered a 2nd hand one from Abe and it just arrived – can’t do without one on the bookshelf. (No doubt the other copy will turn up soon….)

There’s a great quote from Herodotus to start with:

“I will tell the story as I go along of small cities no less than of great. Most of those which were great once are small today; and those which in my own lifetime have grown to greatness, were small enough in the old days.”

Guest review of Lean In

This is a guest review by Ian Bright, @brighteconomist, of Lean In: Women, Work and the Will to Lead by Sheryl Sandberg

Behind every good book there is a mountain of research. It would be a mistake to dismiss this short book’s discussion of the problems women face in reaching senior management positions in business and public life simply because its story-telling approach is not to your liking. Its style was not to my taste but I read on regardless, drawn in by the footnotes that chronicle important research and details. The book’s strength is in this research, which naturally appeals to the economist in me.

There are 35 pages of small print footnotes accompanying 182 pages of text. These account for 19 per cent of the pages but add so much more of the content. I found myself continually flipping between the text and the notes. Anecdotes throughout are usually supported by academic research that indicates the problem is pervasive or that gives detail that would otherwise disturb the flow of the story being told.

Sandberg, currently Chief Operating Officer at Facebook, is one of the most senior and prominent women in global business. She holds a position of power and influence. It is appropriate that her stories provide the narrative for the text as they provide a way to shed light on the important issue of advancing women in the workplace and society. To her credit, she openly pays tribute to the contribution of Marianne Cooper, a sociologist at the Clayman Institute for Gender Research at Stanford University, as the book’s lead researcher.

The book covers various issues such as the ambition gap displayed by women, the tension that can exist between success and likeability that can affect women particularly, the role of fathers/partners/families in child rearing and the role of mentors. Many issues are approached with an anecdote from Sandberg’s or a friend’s experience, but a close reader will be drawn to the footnotes for details.

The book’s title comes from the advice to “lean in” to tables when at meeting rather than to sit back or stay at the side of the room and therefore not participate. The advice to others – both men and women – in positions of management and power appears to be to provide the environment to allow more women to contribute. Even simple things such as ensuring toilets are available for women as well as men at meeting venues can play a part.

When story-telling to highlight an important topic, there can be a fine line between trivialising and getting the main message across. For some, this line will be crossed at times and they may be thinking “too much information”. For example, I would never ask a woman of a newly-born child “Do you need to pump?” But Sandberg notes that her writing partner, Nell Scovell, “was insistent that we keep searching until we found the right way to talk about these complicated and emotional issues.” Sandberg and Scovell are right. The issue of advancing women in the workplace is complicated and emotional. If it takes a story from a powerful woman to make the issues more accessible, acceptable and understandable, so be it.

For economists, there is an interesting insight into the working relationship between Sandberg and Larry Summers. Sandberg was a research officer for Summers when he was Chief Economist at the World Bank. Sandberg did not know how to use Lotus 1-2-3 (an early version of Excel spreadsheets) to complete a task. Her colleagues appear to have been amazed at her lack of knowledge and apparent unsuitability for the job she had been given. Summers took a different tack. He taught her how to use the software.

Further, for the economics profession this book has great relevance. Women are under-represented in the profession. This is generally accepted and even highlighted by Nobel laureate Robert Shiller in a tweet of March 1 referencing an article by Claudia Goldin titled “Will more of our daughters grow up to be economists?” ( ).

Lean In won’t provide all the answers but it provides a way to think about this issue and how it can affect your working and family life.

Adventures in international finance

The Summit: The biggest battle of the Second World War by Ed Conway is a rattling good read. It is of course about the Bretton Woods conference in 1944, which laid the foundations for the post-war international economic arrangements, and the part they played in the stability and growth of that remarkable 30 years.

I picked it up expecting a book going over familiar territory. Only last year I read Benn Steil’s excellent  The Battle of Bretton Woods. However, The Summit is well worth a read even by Bretton Woods afficionados. It combines terrific storytelling with new archival material.

And what a story! You get a real sense of the physical location – the book starts and ends with the hotel – and the bustle of a huge international conference, meeting everywhere, people huddled in corners. Keynes called it a “monstrous monkeyhouse.” The hotel owner got so fed up with the delegates and the confusion that he threw everybody out before the treaty was entirely ready. Nobody had read every page and the stage was set for much further wrangling.

The characters are extraordinary, from Keynes (who comes across as more unlikeable the more one reads about him) to China’s H.H.Kung, the drunken Russians, the (probably) Soviet spy and chief American negotiator Harry Dexter White, and the obstreperous Indian delegation (some habits die hard…). The book quotes the then UK ambassador to the US commenting on Keynes’ manner: “He was really too offensive for words and I shall have to take measures.” Also amusing is the personality clash between Keynes and Lionel Robbins, another self-confident economist in the British delegation.

It’s always good to be reminded that alongside the debates about economic theory and practicalities, personalities, politics and the vagaries of history shape our institutions.

This would be a terrific introduction to international monetary matters for students, an enjoyable way to dip into some of the economic debate before getting started on it in earnest. And for everybody, it’s not only a good read but good background for reflecting on how international finance is ordered – or not – today, and what it took in 1944 to bring about a different kind of agreement.