Out in paperback!

As  The Economics of Enough is out in paperback next Tuesday, it seemed a good moment to reflect on how it looks in the light of events since it was first published in February 2011.

The Economics of Enough: How to Run the Economy as If the Future Matters

I don’t know about other authors, but as soon as I’ve sent off the file with the last fiddly bits of proofreading done, I put a book out of my mind. When the bound copies arrive, it’s a joy to handle them and see how they look, but I can only bear to peep briefly inside at the words. It’s always possible to spot things that could be improved, and anyway I find it faintly embarrassing to look at my own work with the kind of external perspective having a physical book in hand seems to bring – it makes it ‘official’, somehow. Like looking at a photo of yourself, which I hate as well.

So although I’ve been giving many talks about the book, it is only this week that I’ve re-read most of it. It’s a relief to find it stands up pretty well. When I was still writing, and even during the gap between writing and publication, neither I nor many other people expected the economic situation to remain as weak as it has. The already sharp debate between deficit cutters and advocates of stimulus has grown even sharper as a result of another 18 months of at best weak growth, at worst continuing recession. The Eurozone crisis does not feature in the book, but the structural and demographic challenges faced by Europeans do.

I probably understated the political challenges of delivering any kind of long-term policies addressing structural economic change – events have made me more pessimistic. Since publication, I’ve thought some more about inequality, its causes and solutions. This was the subject of my Joseph Rowntree Foundation lecture at the University of York in February 2012. Great inequality at a time of economic recession/depression certainly contributes to the bitter political atmosphere, and at present I find it hard to predict what the results will be. On a good day, I remain optimistic about the scope for social and institutional innovation to start reversing the inequality trend, but on a bad day, I think it will get played out in the political arena, nastily.

As for fiscal sustainability, I hesitate to dip once again into the macroeconomic debate. Although I can’t see how the transmission mechanisms of either more expansionary monetary policy (with billions of unacknowledged bad debts remaining on banks’ balance sheets) or an infrastructure-geared fiscal stimulus (when it will take two years or more to happen) can boost growth quickly, the macroeconomists I know are mainly advocates of an urgent government spending boost. Additional current government spending would by definition boost GDP growth in the short term (C+I+G+X-M) and there seems to be a consensus that the multiplier is (probably) greater than one. Higher long-term growth is a supply-side issue, though; and the long-term fiscal arithmetic that I discuss in the book makes it clear that a bigger deficit now will require a smaller deficit/bigger surplus later, unless growth potential improves more than currently seems likely. At any rate, I defer to others on the short-term stimulus vs austerity debate, on which I have nothing to add; but there’s definitely no quick fix for the longer term problem.

So, overall, The Economics of Enough more than stands the test of time, I think. The trouble is that genuinely sustainable growth, in all its dimensions, involves difficult choices, trade-offs. Events have made those less palatable, not more, while the challenges of sustainability have grown.


Enough, and what to do about it

As I started to write this post, I looked up the URL for a review by Giles Fraser (the former Canon of St Paul’s Cathedral who departed that job over the Occupy issue) of Michael Sandel’s What Money Can’t Buy and How Much is Enough? by Robert and Edward Skidelsky. The Observer’s website promptly served me with an ad for insights into growth markets in the global economy from Goldman Sachs. There’s hardly any need to say more.

I’ve read Michael Sandel’s book, and reviewed it for The Independent, and debated it with him on Start The Week, so won’t repeat myself. I haven’t read the Skidelskys’ book yet, although I can’t resist wondering whether they have read yet my own The Economics of Enough from last year. The review concludes that the Sandel and Skidelsky books are worth reading together and: “form a part of a much broader picture about the multiple failures of free-market fundamentalism and the moral vacuum in which it has trapped us.”

If I may indulge again in praise of Spitalfields Life, the book has a moving essay called ‘At Stephen Walters & Sons Ltd, Silk Weavers. This business, now in Suffolk but founded in Spitalfields in 1720, is run by a ninth generation silk weaver in the Walters family. The present Mr Walters says:

“With eight generations behind you, it changes the way you approach your life. It’s not just about this year, it’s about managing the company from one generation to the next, so you deal with your employees and your customers differently.”

Master Weaver Joseph Walters

We all have eight generations behind us, and, we hope, ahead of us. The issue is weaving an awareness of our responsibilities to past and future into the institutions and organisations we participate in.

Niall Ferguson, as a conservative historian, is on the same point in his first BBC Reith Lecture, summarised here. He refers to Edmund Burke, who wrote in his Reflections on the Revolution in France:

“Society is indeed a contract. ….. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”

As the Greeks file into their polling stations today to vote for chaos, I think the broader picture Giles Fraser speaks of is now widely accepted and it’s time to move into a discussion about what to do.

How Much Is Enough?: Money and the Good Life


A fishy tale of monopoly power

There’s a fascinating article in The Washington Monthly about a kind of fish, the menhaden. The stocks are in precipitous decline, and as the fish is at the bottom of the food chain, other fish and birds are dying as a result, and the coastal waters near the shore are becoming increasingly covered in algae. Author Alison Fairbrother writes:

“Pound for pound, more menhaden are pulled from the sea than any other fish species in the continental United States, and 80 percent of the menhaden netted from the Atlantic are the property of a single company.”

The fish are used for feed pellets, cosmetics, fertilizer and many other products, including now Omega-3 fish oil for foods, so they are factory-fished. The business is more or less a monopoly – the company fishing menhaden out of the Atlantic is Omega Protein, coincidentally a significant donor to political campaigns.

The menhaden story isn’t new to me. In 2007 I read a marvellous and terrifying book about their decline, The Most Important Fish in the Sea by H Bruce Franklin.

 The Most Important Fish in the Sea: Menhaden and America

Omega Protein is a renamed and merged corporate descendant of Zapata Oil, founded in 1952 by the future President George H.W. Bush – conspiracy theory material about it abounds. Omega Protein’s website mentions just a little about conservation of the fish stocks in its sustainability section. It claims:

“STATEMENT: Both the Atlantic and Gulf menhaden populations are overfished.
FICTON: Though this statement is often heard, it is not true. Both the Atlantic and Gulf menhaden are subject to regular stock assessments (a method to estimate the status of the population) conducted by the National Marine Fisheries Service. The most recent assessments (2010 for the Atlantic and 2006 for the Gulf) show that menhaden are not overfished and overfishing is not occurring.”

The Washington Monthly article is about exactly these official stock assessments – it’s well worth a read, as is the book.

Just like the banking industry, the story is one of how monopoly always subverts effective regulation (market power always turns into political political power); competition is important for multiple reasons. It’s also always illuminating to see how complex the modern economy is. One of the zillions of components of everyday products turns out to be an unimpressive fish you’ve never heard of.

Most importantly, with menhaden, as with other resources, having accurate data on the stocks is essential to make sure we are using enough – but not too much – to improve our own prosperity and leave at least as much for the next generation.

You probably haven't heard of the menhaden