Not bowling alone

The UK economy is growing at a decent clip now, but the consequences of the long downturn linger on. The distinguishing feature of the post-2008 economic landscape in most western economies is how long growth has been so weak, how long it has taken for GDP to regain its previous peak. The final chapter of Hard Times: The Divisive Toll of the Economic Slump by Tom Clark with Anthony Heath describes the book’s suggestions for tackling the consequences of lengthy economic weakness as “wearyingly familiar.” That doesn’t make it any the less important to be reminded by this book of the social impact of the seven lean years since the Great Financial Crisis. Too often, discussions about the economic issues and the social issues proceed separately, but they are tightly linked.

The book is the product of a five-year research programme conducted by the University of Manchester (my new home as Professor of Economics from 1 September) and Harvard University, directed by Robert Putnam, famously author of Bowling Alone and its fascinating precursor Making Democracy Work: Civic Traditions in Modern Italy. The presentation of those depressingly familiar economic statistics is accompanied by interviews with a range of people affected by unemployment, or precarious employment, or benefit cuts since 2008. It humanizes the – well, “wearyingly familiar” -  statistics and charts.

The human stuff – the social capital – really matters. Hard Times begins by citing a classic (1933) sociological study of the effects of mass unemployment, Marienthal: the sociography of an unemployed community. In this small Austrian town whose mill closed, people were asked to keep diaries, which recorded the loss of energy and social activity. Unemployment brought lethargy and isolation. The alternative in other places during the 1930s was rage.

Other sociologists have demonstrated the importance of social ties in other contexts. One of my all-time favourites is Eric Klinenberg’s Heatwave, which documents the clear impact of different family structures on ‘excess’ death rates during a Chicago heatwave: Hispanic families and neighbourhoods, more cohesive than equally poor African-American neighbourhoods, saw fewer fatalities. Another recent book has pointed to the psychological debilitation caused by poverty, Scarcity by Sendhil Mullainaithan and Eldar Shafir.

It seems, though, that a reminder is needed that money (lack of) matters as much because of the social as well as the economic consequences. Hard Times argues that the roots of a lack of social resilience stretch back before the crisis. “For all the riches of the millennial years, we found swathes of society that were already sorely exposed by that time.” Rising poverty rates before 2008, declining volunteering, drops in marriage rates (in the US) among some disadvantaged groups and of course rising inequality, all “worked to leave more of the vulnerable braving the storm in effective isolation.”

What to do? Well, it is indeed “wearyingly familiar”. Although the book supports the argument made for example by David Clark and Richard Layard in Thrive for additional mental health support, its point is that fundamentally money matters – jobs, a duly enforced minimum wage and decent working conditions, and an adequate safety net. Without an adequate income, and beset by anxiety about financial insecurity, people become isolated. Isolation damages their health and well-being, and causes a vicious cycle of vulnerability and still more insecurity. People with not enough money are not bowling alone, they are just alone.

The economic dilemmas involved in any job market interventions or social security are familiar too, the incentive effects and the trade-offs. But it’s good to be reminded that social consequences should form part of the calculation.


Advice for madmen

Madmen, Intellectuals and Academic Scribblers: The Economic Engine of Political Change by Wayne Leighton and Edward López has been out for a while but I’ve just read it. The Madmen are politicians or policy makers, the Scribblers are academics, scholars, generating new ideas, and the Intellectuals are those who translate ideas into politically digestible form, journalists, think-tankers, consultants. (I’d have found it more intuitive to reverse those last two labels, but there we are.)

The over-arching aim of the book is to explain why bad economic policies are implemented, why they last so long, and why they are sometimes overcome. The transmission mechanism runs from Scribblers’ ideas to decisions by Madmen, mediated by the competitive marketplace of ideas and entrepreneurs among the Intellectuals and junior Madmen.

This account, not particularly new (indeed, the title is drawn partly from the famous Keynes quotation about madmen in authority), is wrapped around some useful central chapters. These give a clear and concise history of thought that starts with the political philosophy of government (Plato, Aristotle, Cicero, through to Locke, Hume, Marx, and (as it’s an American book) the US Constitution and Pragmatism. This is followed by a chapter on the marginalism revolution in economics and the Pigouvian approach to social welfare as an allocation problem codified by Samuelson, which is contrasted with the Hayekian view of the economy as an organic entity concerned with exchange rather than allocation. It then sets out clearly Coase’s argument about the symmetry of ‘externalities’ and moves on to the start of the public choice revolution. (Including this sentence about James Buchanan: “He was determined to translate Wicksell’s forgotten book [from German] for the English-speaking world.” How marvellous to hear of such a well-rounded economist.)

The book comments: “For all its precision, the great vice of the new welfare economics [of externalities, second best theorem and so on] was to crowd out politics and philosophy. … Economists at mid-century were preoccupied with the pure theory of households and firms and busied themselves with proving equilibrium and devising optimal conditions for allocating scarce resources. Interestingly, the main problem was that many of those optimal conditions included very specific policy choices, like taxing polluters, subsidizing education and deficit spending during recessions. But the people making these policy choices – the madmen in authority – are not part of the economic model.”

A full chapter on public choice theory, voting theorems, Olson’s interest group analysis and the economics of regulation follows. The final chapters set out in more detail the argument about how ideas get turned into policies, and a description of four US examples: radio spectrum, air traffic control, welfare reform and the housing bubble and sub-prime crisis. Of these, the first example generalises most easily to other countries.

The book is very clearly written and an accessible introduction to an important strand of the history of economic thought that is still highly relevant to policy debates today. The three core chapters and the examples make it an extremely useful introductory or background resource for students, and I’ll certainly add them to my reading list for next semester. The final chapter does also end with good advice for wannabee policy entrepreneurs: “Improving the human condition should start with recognising that people respond to incentives, and that incentives are part of institutions that neither rise nor fall overnight, and that the slow emergence of both good and bad ideas can change these institutions and thus have an enduring impact on the human condition. … Ideas indeed can have consequences.”

Life, leaving, and existentialism

The Boxer and the Goalkeeper: Sartre vs Camus by Andy Martin was recommended to me by somebody commenting on this blog, I remember not when. It’s a thoroughly enjoyable book, using the soap opera of French intellectual life in the mid-20th century to illustrate the philosophical debates.

I particularly liked the personal touch here. Andy Martin writes about his own intellectual discovery, starting out as an alienated small town teenager who happens upon a copy of Sartre’s L’Etre et le Néant (in fact, he shoplifts it), and from there progresses to university, the Ecole Normale Supérieure, and academic life. I grew up in the 1960s and 1970s in a small town (Ramsbottom) in Lancashire where many people, including my dad and aunts and uncles, then worked in the cotton mills. Occasionally we visited Manchester  – once, I went to London. Our holidays were spent in Blackpool or Filey. From an early age, though, I dreamed of leaving and leading an entirely more glamorous life. Many small town young people do of course, but for in my mind glamour involved philosophy and abroad.

I particularly fixed on philosophy after our French teacher (Mme Sandler, I salute you) started us on Sartre’s Les Mains Sales and told us to read up on existentialism. My entire being came to be focused on becoming a philosopher and spending my career writing books while sitting in a Parisian café. Then I read Simone De Beauvoir’s The Second Sex, which was an enlightenment.

Initially, Sartre and Beauvoir seemed more enticing, but before long it was obvious that Camus was more appealing as a person and as a philosopher. The Boxer and the Goalkeeper reinforces that. In particular, Sartre’s political calls post-war look highly morally dubious and I for one am all with Camus as their friendship turned to antagonism. But make your own mind up – read the book. There are some taster extracts here.

A footnote: an entirely different story about leaving behind the north of England, this column by Adnan Sarwar in this weekend’s Financial Times is absolutely beautifully written and thoughtful.

Corruption and consumption

Teju Cole’s Every Day Is For The Thief is an absolutely terrific book – his Open City is now on my wish list. It is a portrait of Nigeria – Lagos, rather – by a returned Nigerian. One of his main preoccupations is the absolutely pervasive bribery, which he tries to resist but rarely successfully; another the texture of institutional failure and what that means for the country – and how it is linked to the absence of a sense of why history is important. Highly relevant reading for anybody interested in development economics, not to mention a wonderfully written, moving, fascinating book.

Cole writes: “For many Nigerians, the giving and receiving of bribes, tips, extortion money or alms – the categories are fluid – is not thought of in moral terms. It is either seen as a mild irritant, or as an opportunity. It is a way of getting things done, neither more nor less than what money is there for.”  This is subtly different from Katherine Boo’s explanation for corruption in her book in life in an Indian slum, Behind the Beautiful Forevers, where she shows that people are too poor to give up any opportunity to make some money.

Other snippets from Every Day is for the Thief: “One goes to the market to participate in the world. As with all things that concern the world, being in the market requires caution. The market – as the essence of the city – is always alive with possibility and danger. Strangers encounter each other in the world’s infinite variety, vigilance is needed. Everyone is there not merely to buy or sell but because it is a duty.”

“The oil and gas business rakes in lurid profits, there has been a great increase in cellphone use, and the banking sector is frenetic. The newspapers are full of mergers and acquisitions. These are the limits of the boom. It is good news in the sense that increased commerce is creating jobs, that the economy is active, and certain practical needs of the people are being met. Things are not as stagnant as they were in the dark days of the early and mid-90s. But there are now mores erious discrepancies in income levels, even among people with comparable educational qualifications. There is little incentive for people to go into professions that are not lucrative. Consumption, among those who can afford it, is conspicuous.”

And you ask, as I suppose you are meant to, who are the thieves.

Technology in history

I’ll collate the economic history suggestions another time. Meanwhile, though, seeing a recommendation for David Edgerton‘s influential The Shock of the Old: Technology and Global History since 1900 sent me to both that – which insists that there is too much cheerleading about invention and not enough focus on the implementation of technologies in specific historical contexts – and to his subsequent book, Britain’s War Machine: Weapons, Resources and Experts in the Second World War.

The latter makes some contrarian arguments about the war. Edgerton argues that (a) Britain was the richest and most powerful combatant thanks to its imperial resources – it is a mistake to think of it as a beleagured nation standing alone begging for American charity, and Germany would (and did) struggle to combat it; and (b) the ‘declinist’ histories about Britain after the war (notably Corelli Barnett in The Audit of War and  The Lost Victory etc) are mistaken, as relative decline was due largely to strong growth in other countries.

Edgerton’s argument is pinned on a materialist account of the resources and technology developed and used by Britain. Some of this evidence is very striking. One example is a graphic showing the vastly, vastly greater tonnage of bombs the UK dropped on Germany compared with German bombing of the UK – the horrors of the firestorms and mythology of the Blitz notwithstanding. It’s all very interesting. Britain’s early defeats led to a huge emphasis on increasing production, he writes, saying there was a “powerful sense that the war was a war of production,” with contemporary debate focusing on industrial efficiency, or the lack of it.

The importance of scientific advance in the conflict is obviously a well-known part of the story, from codebreaking (my favourite account is R.V Jones’s Most Secret War) to the Manhattan Project. Edgerton adds to this the sense of Imperial power and the availability of material resources.

His reinterpretation is certainly interesting, and it must always be fruitful to test received wisdom. His claim that postwar decline is misinterpreted is less convincing, however. Surely the loss of Empire is a decline, whether you think it was a good thing or not? And the transition to US superpowerdom postwar is clear.

I see from his website that Prof Edgerton is working on currently working on Capitalism, Empire and Nation: a new history of twentieth-century Britain, a forthcoming book for Penguin. That will be an essential read.