Holiday reading

I’ve spent the past few weeks absorbed in preparing a book manuscript (out next year I hope…), so here is an all-in-one round-up of recent books read (non-fiction – a few Maigrets and also Smoke and Ashes by Abhir Mukherjee slipped in too).

Uncanny Valley by Anna Weiner is a readable memoir of a young non-tech woman’s experience of moving from the publishing industry in New York to marketing in Silicon Valley. Her account confirms expectations & she seems to me to capture that tech world culture pretty well. The book doesn’t name names of companies (or people) but describes them well enough that it’s clear who they are – which is a bit annoying. Other than that, I enjoyed it.

51LYiW243TL._SX323_BO1,204,203,200_

Twilight of Democracy by Anne Applebaum is a terrific book, also with elements of memoir (the subtitle explains – the parting of friends). It’s a short account of how the respectable right in a number of countries – Poland, Hungary, US, UK – turned into the authoritarian-heading-toward-fascism right. She essentially tells a tale of second-rate people grabbing opportunities to dethrone those at the top – “the elite” – so they can enjoy the spoils themselves. Looking at the US in the days since I read this book, it’s hard to feel any optimism about where it’s heading. As for us, ominshambles with menaces seems to have become a constant.

41qq7t10-WL._SX309_BO1,204,203,200_

96,196 Words: Essays by Emmanuel Carrere. A random purchase – I’d never heard of this French journalist. Perfectly readable essays, albeit with more about his sex life than I was really interested in.

517lJJBuKRL._SX323_BO1,204,203,200_

The Code by Margaret O’Mara is a terrific history of Silicon Valley exploring the reasons tech happened there, having started much stronger around Boston. If you’ve read a lot of history of tech (I have) some bits of this are very familiar. But she puts together a persuasive story of how several factors combine – happenstance, Stanford’s presence, defence spending helping other local firms like Lockheed, a few investors to seed the VC scene, and networks of people who know people developing and becoming embedded over time. It thoroughly undermines the idea that any one intervention – set a mission! create a DARPA! – will create an extraordinary burst of innovation. It’s a much more contingent story.

41t-dK49L+L._SY344_BO1,204,203,200_

And non-economics books: Diary of a Young Naturalist by Dara McAnulty and House of Glass by Hadley Freeman.

Of all of these, the Applebaum and O’Mara books would be my top recommendations.

 

Share

Assetization, economists and others

Assetization edited by Kean Birch and Fabian Muniesa (a geographer and a sociologist) is an intriguing book. Given that we have the Wealth Economy project at the Bennett Institute, I wanted to understand why they and the authors included in the collection see assetization of the economy – distinct from marketization, financialization and commodification  – as a Bad Thing.
I must confess that I still don’t really understand these distinctions made between different aspects of the neoliberal capitalism being critiqued. There are some differences among the authors in the volume in how they understand assetization. The introduction sets out seven features of assetization: the creation of property rights; new kinds of property rights for intangibles; ability to extract rents; uniqueness of the asset making for monopoly power; valuations that depend on the actions of the owners; and that depend too on institutions and politics. While this is fine as a definition of an asset, albeit slightly different from the focus in economics on investment in something that exists as a stock and can give a flow return in the future, it isn’t obvious why assetization is inherently bad.
So I think the objection boils down to the classic one of putting a monetary value at all on things with intrinsic value, plus the dimension of power of the asset owner over those renting it. The time dimension of assets, and potential for better stewardship, doesn’t really feature in the book, or only as a way for the economic advantage of asset owners to be sustained rather than one-off; yet our project is interested in thinking about the economy in terms of assets or wealth because it will help embed sustainability, a concern for the future, more effectively in business and policy decisions.
The book has some very interesting chapters. My favourite was the one on the market for seeds in Germany, which is packed with institutional detail about how it operates, and the tensions between the interests of seed breeders and farmers – seeds with distinctive features enabling the breeder to charge a higher price get turned into corn which has to be a standardised commodity to trade on the market. It reminded me of one of my favourite books, John McMillan’s Reinventing the Bazaar. The chapter on natural capital seemed to consider the debate about natural capital accounting in the measurement and environmental economics communities as being concerned with assigning property rights to nature, which is not the case. The chapters in the first section concern intangible property rights, a very interesting area. It was a bit surprising not to see reference to cases like John Deere, whose tractors farmers think they are buying, but John Deere’s claims of IP over the software has turned these transactions into rentals rather than transfers of ownership.
So on balance, having found it a very interesting read, I conclude that we are speaking different disciplinary languages. However, the language choices we economists make are delicate if we want to engage in a good debate with those who see economics simply as the handmaiden of actually-existing capitalism: I’ve been mulling over the standard economists’ use of ‘human capital’ in the light of BLM: Jacob Mincer, an originator of the concept, was apparently uneasy about the term and many people, reasonably, find it offensive. But is there a neutral (shorthand) way of talking about putting resources now into people’s future opportunities?
The concept of an asset whose value inheres over time, and depends now on what kind of future we create, is fundamental to building a sustainable economy. But are there other words for things you can invest (either time or money) in for both the present and the future? If there were, it would help economists have a better conversation with other disciplines and the public about what we value (not just money!), how and why.
71eRdqt+gML._AC_UY218_
Share

In August we’re going to have a week’s holiday, and I’ll also be declining all but the most absolutely urgent online meetings, so am looking forward to some reading. The pile of books to read is very satisfying.

Meanwhile, this week I’ve enjoyed the newly-published Boom and Bust: A Global History of Financial Bubbles by William Quinn and John Turner. The book recounts the history of 10 bubbles in history, some well known – the South Sea Bubble, Wall Street in the 20s – others less so – I for one had never heard of the British Bicycle Mania of the late 1890s. It also ranges from 19th century Australia to modern China.

Each episode is set in the context of a framework described in the first chapter, the Bubble Triangle. These are the three necessary conditions for a bubble to take off: good marketability of the assets involved; abundant money & credit; and large numbers of speculators. With these in place, they argue there are two potential sparks: technology (radio in the 1920s, bicycle innovations in the 1890s) or politics (often, governments seeking to engineer higher asset prices to meet a policy goal, such as encourgang home ownership (the early to mid 2000s) or reducing government debt (John Law in France in the 1760s).

This is a very nice framework, and the book is an enjoyable read, its large array of references kept unobtrusive while testimony to the amount of research that has gone into it. There are some interesting points along the way. For example, the authors argue that the form of railway network shaped by the railway mania of 1848 locked in inefficiencies “which have plagued British railways down to the present day.” Other, less laissez faire, countries invested in a better planned and less duplicative network at lower cost. In Britain, they argue, politicians were too accomodating to constituency interests rather than able to plan a national network.

However, they also highlight the distinction between bubbles sparked by technology and those sparked by politics: “Technology bubbles often involve large sums of money flowing into extremely innovative sectors of the economy, which might otherwise have trouble getting off the ground.” During political bubbles, the money flows into sectors where there are few positive externalities.

The book ends by returning to the Bubble Triangle as a means of predicting when a bubble might occur and some discussion of policy choices – to avert the bubble (hard, with the political ones), or clean up afer it? The final chapter includes a discussion of the role of the media, whose role during bubbles has not always been blameless.

All in all, a great read and a great addition to the literature on financial bubbles.

41yrZCLRr-L._SX327_BO1,204,203,200_

 

Share

Time and times

I went into my office on Friday to pick up some books out of their quarantine, mainly things i need to get papers written, but I also rescued Changing Times: Economics, Policies and Resource Allocation in Britain Since 1951 by Martin Chick. I’ve torn through it, a very interesting book.

As the subtitle indicates, it’s a history of postwar economic policy in the UK, ranging over six decades and issues spanning industrial policy, macro and trade policies, environmental, labour market, health and education policies. It’s also only 400 pages, to give an indication of the quite long focal length it necessarily requires. Given this broad span, the structure of the book is provided by the theme of time. Time in two senses: how policies relate to the distribution of economic welfare between generations; and the importance of assets, stocks as well as flows, and in particular the state’s withdrawal from investment in the future over this period.

This doesn’t 100% work as a thematic structure but it is nevertheless extremely interesting to reflect on some familiar trends and episodes in postwar economic history through this lens. Chick also draws on a huge range of the economics literature in order to cover the various policy areas, and has obviously spent hours in the National Archives reading Treasury papers and other policy documents. (Indeed, by the <6 degrees of separation rule, he lodged with my in-laws while staying at Kew to do the archive work.)

My favourite chapter was the one on privatisation of state-owned industries, which politely eviscerates the rationale for the policy. As Chick writes: “What was perhaps under-appreciated at the time of privatisation was the historical novelty of trying to induce large sunk investment from utilities operating in competitive markets.” After all, profit rates in the utilities sector are never spectacular. He goes on to interpret nationalisation as being “preferred to regulation as a means of extracting for consumers the benefits of improvements in productivity.” Privatisation was introducing risk into areas “from which it had been absent for decades”, the risk of costly, lumpy investments not delivering an adequate return, and technological risk – as well as altering the distribution of returns.

However, there is loads of interest in every chapter even for someone who has read a lot of the economic and political history of this period. For instance, the London smog of 5-8th December 1952 is thought to have led to the deaths of 4000 Londoners, a staggering number. Yet it wasn’t until 7 months later that the government even appointed the Beaver Committee on Air Pollution. The same chapter on environmental policy is super-interesting on the relationship between stocks and flows of different types of natural asset – fish vs oil.

Chick concludes the book: “Considerations of time and space affect all of the major issues of concern today (housing, utility output, global warming, infrastructure, educational opportunities, access to healthcare, trade, the internet and so on).” I have quibbles about the book – for instance, it would have been nice to replace dense paragraphs describing data and trends with some charts. But in the end, what’s not to like about a book with references ranging from Derek Parfit and Frank Ramsey to articles about the Cod Wars of the 1970s or technical reports on council house sales?

511RSt2j1pL._SX324_BO1,204,203,200_

Share

Ultimate price

The weeks are speeding past in a blur of Zooms. However, I’ve found time to read – alongside the rivalry, gore, sex and drama of Tom Hollander’s RubiconUltimate Price: The Value We Place on Life by Howard Steven Friedman.

This is an unpromising subject in some ways: policies and regulations often place an implicit, or sometimes explicit, value on human life. How is that value determined? Is it consistent in different domains? What’s the fair and ethical way to make such judgments, which are inevitable when it comes to deciding which costly safety measures to enforce through regulation or whether to purchase an expensive drug for medical treatments, or how much to compensate crime or accident victims.

The short answers are that the value of life – even the dry-sounding Value of a Statistical Life – is inconsistently established and rarely debated. Monetary values and lives never feel like they belong in the same conversation. Rather, the issue is often the subject of industry lobbying and political horsetrading. Some regulations – eg environmental ones imposing costs on industry – are massively scrutinised. Others – eg extra airline security – are not. Some lives are valued at millions, others – including foreign civilians killed by drones, say – are not valued at all. Cost benefit analysis is sometimes uncomfortable, consistent cost benefit analysis even more so.

I picked up the book with a slight sense of duty as I do one lecture on this area, and can report that it’s very clear and well-informed. It has loads of thought-provoking examples. There is a US focus (health insurance) but the applications are wide. It will make a great supplementary read, giving students loads of examples to get them thinking and plenty of additional references. There isn’t as much as you might think giving an overview of these issues so I welcome this one and will add it to the reading list.

41u8lwg0maL._SX329_BO1,204,203,200_

Share