Righteous anger

I polished off in a couple of days Paul Johnson’s new book Follow the Money: How Much Does Britain Cost? The hugely-respected Director of the Institute for Fiscal Studies (who is a friend, to be transparent) has written a crystal-clear account of how the UK government raises revenues and how it spends them. Government expenditure is over £1 trillion, raising just over £900m in taxes, or four pounds in every ten earned. The big swallowers of money are health, social care and pensions. So this book (published later this month) is a huge service to citizens as we head towards the next general election within a couple of years.

Although a calm, even forensic, account of the unavoidable trade-offs and complexities in providing these facets of social insurance against the uncertainties of life, the book left me furious. It cites the wonderful The Blunders of Our Governments by Anthony King & Ivor Crewe, and could equally have cited the more recent Why Governments Get It Wrong by my colleague Dennis Grube. We know – don’t we – that governments do a lot of stupid things, badly. We’ve certainly had a run of these stupidities here in the UK: Brexit on the worst possible terms for internal party reasons, Liz Truss… Even so, to see collected in one place all the bad decisions concerning the fundamental well-being of citizens is angry-making. Any unavoidable choice that could be postponed has been, even at substantial long term cost. There have been obfuscations and lies. And it has been going on for years.

So here we are with an economy whose long term potential growth is heading down toward zero (1% a year for the next couple of years, the Bank of England reckons, down from 1.7% in 2010-1019). The extent of inequality is shocking. As Simon Tilford noted in a recent essay, most of the people taking decisions have no idea about the lives of those they exercise control over, about how badly off most of their compatriots are. The over-burdened welfare state is not quite coping with people suffering from what (I learned here) doctors describe as “Shit Life Syndrome” when they go to their GPs for help with depression or other mental ill-health conditions. And there will not be enough money to fix any of this unless growth picks up. But that would require a competent, effective government able to take clear decisions, build cross-party consensus, devolve money and powers, and stick with the plan without changing ministers and policies every 18 months.

Here’s hoping – but it’s been decades since we had that. And for another couple of years this corrupt, internally-riven, and ineffective government is likely to cling on. Meanwhile, read the book, which urges us not to despair, but ends: “We can, and must, do better.”


Economics in fiction

For relaxation this week, I read two novels featuring economics. One was Don Delillo’s (2003) Cosmopolis, which I spotted in the (new?) fiction section of the Marshall Library here in Cambridge. The capsule description that comes to mind is J.G. Ballard for the era of FinTech squillionaires – vastly excessive wealth, cars and gadgets, sex and violence. An enjoyable romp with an uncomfortable edge of plausibility.

31SX+HU5wkL._AC_UY436_QL65_The other is the new installment of E.J.Barnes’ fictionalised life of Keynes, Mr Keynes’ Dance (a follow up to Mr Keynes’ Revolution). These are excellent novels, bringing to life the personalities (Lydia Lopokova is central in this one, alongside various members of the Bloomsbury Group), and also the feel of the times and the intellectual debates in economics. This is surely the only work of fiction featuring Richard Kahn’s development of the concept of the multiplier. They would be very good enrichment reading for students who will get too little history of thought in their formal courses, illuminating the way ideas in economics are shaped by events rather than universal truths. And also a terrific read for anybody else: Mr Keynes’ Dance stands up firmly in its own right as a novel.




Metaphysical struggles

I really enjoyed reading Metaphysical Animals: How Four Women Brought Philosophy Back to Life by Clare Mac Cumhaill and Rachel Wiseman. It’s one of two recent books about the quartet Elizabeth Anscombe, Philippa Foot, Mary Midgley and Iris Murdoch, all philosophy students at Oxford just before and during World War Two, and remaining close in the postwar years as they began their scholarly and writing careers. (The other is The Women Are Up To Something by Benjamin Lipscomb, which I haven’t read yet.)

Unsurprisingly, the book is about philosophy rather than economics. I did PPE at Oxford and felt pretty hopeless at the philosophy despite doing ok in exams. We were taught the British tradition – Locke and Hume – and modern linguistic and analytic philosophy – Ayer and Hare. The four women didn’t feature; I’d heard of Irisl Murdoch only, and only for her novels. So I think this implies that the subtitle is perhaps wrong: at least from my perspective, the four might have halted the onward march of reductive positivism in philosophy, but they lost the war.

I was particularly struck by the description of how the shockingly male and misogynist Oxford philosophy establishment reclaimed territory when the men returned from war. “If undergraduate classes before the war had been full of ‘clever young men who liked winning arguments,’ … graduate classes were now led by such men and full of others who were being specifically trained in modern methods and hothoused for a profession that would reward cleverness, quickness and agression.”

Well, hello. Isn’t this the story of economics too? Both disciplines have painfully low proportions of women (and others from backgrounds where people are not automatically taught the confidence needed to put on a show of clever, quick and aggressive). Both are still like this. The culture and make-up are mutually reinforcing. There won’t be a quick solution if any, but the struggle of these four philosophers is inspiring. As is that of all the women of their era who fought to be able to wear trousers if they felt like it, and above all get the same education and scholarly opportunities as the men.



Internet empires – their rise and decline?

Has the American Empire simply moved online? That’s the argument made in an enjoyable polemic by Sean Ennis, World War 3.0: The Hidden Internet War. It’s a book with two strands. One about wars and empires through history: what motivates conflict, how empires grab territory when the economic advantages outweigh the costs of maintinaing the colonies, why empires either collapse or survive.

This is braided with an account of how the US (and, thanks to protection of its domestic market, China) won near-global dominance of the internet and the money to be made from the internet for its own companies. Marvellous technology, an economic system favouring enterprise and investment, and active policy support from successive US governments have created the market-dominant players who shape modern life.

Hence, “The core thesis of this book is that the modern-day internet structure is economically equivalent to what, in prior times, would have been an empire acquired through aggression into new territories.” The aggression this time has involved weapons such as effective lobbying/political blackmail over tax and trade policies, control of domain names, non-enforcement of antitrust policies to enable the giants to grow, and so on. It’s an interesting analogy although I’m not persuaded that commercial and actual conflict/conquest are really similar.

The US succeeded where France’s earlier Minitel system did not, the book argues, because Minitel was a closed interface system run by a state-owned incumbent telco – whereas in the US, AOL tried this approach in the early internet days but dropped this when the attractions of the open internet to users became both evident and available through browsers and the web. “The unquestionable French lead in the release of digital technology was squandered by the country.”

This prompts two reflections. One is that the book – in asking with Europe has no internet giants – ignores the advantage of scale. When there are high fixed costs and netwrok effects, the bigger the addressable market the better.

The other is that if open beats closed in the end, are the current internet giants undermining their own success? For what they are trying to do is tie users in ever-more tightly, and exploiting this captive market to degrade their services – just think how much search results have deteriorated on Google or Amazon. Meanwhile Mr Musk is similarly degrading the attractiveness of Twitter. The width of the open goal they are presenting to newcomers with their own great technology is increasing by the day. Regulators and competition authorities can help by mandating more, much more, open data and interoperability – as the Bundeskartellamt seems to be doing.

Still, as the book concludes, we can all do something. It ends with a list of To Dos: use multiple platforms – click away from Google. Buy direct from sellers even if it’s a bit less convenient. Go to the local high street to shop. Pay for a newspaper. In short, give up just a bit of the convenience and cost-saving to keep the digital giants on their toes and maybe open the way for new ones to come along. I’m sceptical individual action will make a big difference although happy to encourage the use of Hirschman’s Exit and Voice disciplines. It’s going to take policy choices, and almost certainly by the EU, to reshape digital markets.91D594otuiL._AC_UY436_QL65_


Against social media?

Anti-social Media: How Facebook Disconnects Us and Undermines Democracy by Siva Vaidhyanathan was published in 2018; I can’t remember how it came to be in the in-pile. Anyway, it’s an interesting analysis that does what it says in the subtitle, and does so far better than the massively over-hyped and underwhelming Surveillance Capitalism by Shoshan Zuboff the following year. The chapter each focus on a theme: surveillance, attention, privacy, protest etc.

Despite the title – and indeed the conclusion – each is quite measured and nuanced. For instance, I like his definition of privacy: “The word more accurately describes the ways we manage our reputations within and among various contexts,” rather than the all-or-nothing way it’s usually discussed. I’ve been using a similar concept, of “privacy in public,” the wish to reveal specific information to specific people for a purpose. Similarly his co-ordination problem argument for regulating social media rather than leaving it to companies themselves. Or his masterly debunking of the Cambridge Analytica claim to being all-effective at winning the Trump election.

So there’s a lot to like in the book. It doesn’t quite add up though. Although it’s mostly about Facebook, other Big Tech firms slip in as miscreants – so why were they left out in the first place? I suppose attention has turned now to the Musk-ing of Twitter so we’re less focused on Facebook than was the case in 2018, and that doesn’t mean the issues have gone away.

More than that, the regulators and politicians should be part of the story. It has taken until late 2022 for competition authorities to start to get tough, and in the UK the patchy Online Safety Bill is still chugging through the legislative process. Why was the policy world so slow to act? I sometimes wonder what would have happened if social media companies had been regulated as publishers right from the start – an option that was discussed and rejected back in the day. Now there’s an alternative history.