Productivity and the pandemic

This is a collection of essays that does what it says in the title, Productivity and the Pandemic. The book has a UK focus and, as an output of the Productivity Insights Network, a strong interest in the geographic impact of the pandemic shock to the economy. The chapters range from the future of cities to mental health, from housing markets to entrepreneurship. As always with an edited volume the contributions vary, and few people will want to read cover to cover rather than picking out the chapters of interest to them. Another issue of course is that the pandemic isn’t over so it is quite early to be trying to evaluate its impact.

Nevertheless, there are some interesting chapters. I enjoyed the chapters on global supply chains and on firm strategies under uncertainty, although neither of them offer definitive answers about pandemic impacts. But clearly the questions of resilience and uncertainty will figure in policy debates from now on. Such tightly coupled production and distribution networks might not be the thing in future. (I write as food distribution seems to be in question again in the UK because of ‘pinged’ workers needing to isolate, and a threatened haulage strike, and Brexit.)

I also particularly liked a later chapter on ‘The Paradox of Efficiency’ by Ekkehard Ernst, about hedging risk in uncertain times. This is clearly a related issue but goes beyond supply chain issues to mention ‘over-provision’ of robust public services rather than running them hot. This is a conclusion I drew with some colleagues, looking at NHS hospital productivity in 2020. Ernst writes: “The countries that provided relatively abundant public services managed to fare significantly better in containing and managing the pandemic.”

This is an assertion – there is no evidence provided here to support it – but one well worth testing. More broadly, we need to start thinking about risk-adjusted productivity measures: what’s the climate risk impact on agricultural productivity for example?

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Divisions

I devoured Amartya Sen’s wonderful memoir, Home in the World. It covers his early years growing up in what is now Bangladesh, his schooling in Santiniketan (attending the school established by Rabindranath Tagore, to whom his family was close), college in Calcutta and then at Trinity College, Cambridge. The book ends at the early part of his academic career, in Cambridge and visiting posts in California and Massachussetts.

It’s a beautifully-written book and illuminates Sen’s intellectual formation. Clearly his family and Tagore played an enormously influential role, and so too the intellectual ferment in Calcutta in the early 1950s. Tagore’s school sounds remarkable in the freedoms it gave students and its emphasis on the role of reason, in unreasonable times. The political upheavals of the British withdrawal and partition play a relatively low key role in this story; but it has a lot to say criticising the religious and caste divisions in the sub-continent then and now, with many excursions into its history. Needless to say, the British don’t come out of this well.

The account intertwines the history of Bengal with Sen’s personal history and his intellectual development – particularly why he became interested in social choice theory at a time when few other economists were working on it, and his Cambridge colleagues warned him against pursuing it. There are interesting sections on Buddhism, and on Marx – in effect what each contributed to Sen’s reaction to the Arrow Impossibility Theorem (the possibility of agreement in restricted domains even if not about fundamental metaphysical views of the universe in the former case, and “a pioneering contribution to the understanding of the epistemic implications of observations” in the latter.)

Among all this, a personal history, with the most gripping episode being early treatment with radiation therapy for oral cancer as a new student in Calcutta. Thank goodness he survived. Anyway, highly recommended.

I also read this week The Northern Question: A History of a Divided Country by Tom Hazeldine. The divided country in this case is England, and the book traces modern divisions pretty much back to the Dark Ages (it is nevertheless quite short!). It essentially portrays the northern (and south western) regions as colonised by the capital, and repeatedly sacrificed for the sake of the financial sector. The book argues that it is not surprising the Conservatives should always favour southern financial interests: “The Conservatives are first and foremost creatures of the South,” (although they have won more Northern English seats more of the time than I had realised). Hazledine’s quarrel is with Labour Governments that tilted the same way, from Macdonald and Snowden, to Wilson, to Callaghan and Healey, to Blair and Brown. This is the main point of the book. It concludes, “[Labour] has routinely swallowed a definition of the national interest that puts sterling and the City ahead of manufacturing and the North.” Looking at the trajectory of sterling over time it is hard to believe many of our governments have really wanted a strong currency, but I’m easily persuaded that City interests have generally dominated. Or at least a Southern governing class perspective that sees all the rest of the country as uncouth provinces. Brexit may prove the exception – we will see. Not that damage to the City in this case will do anything to influence the North-South divide.

Then this weekend in the garden Kazuo Ishiguro’s very fine novel Klara and the Sun. More than any other novelist I can think of, he presents the world comprehensively through the perspective of one character – in this case, a humanoid AI. Very thought-provoking, and a page turner, finished it in a day.

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A batch of books

A clutch of books to report on. Why Trust Matters: An economist’s guide to the ties that bind us by Benjamin Ho is a nice synoptic view of the economics of trust/social capital. One point that particularly struck me was the link between trust and patience: “co-operative behavior is easier to maintain when people value the future more – which is just another way of saying that they are more patient.” Perhaps it should be obvious but I hadn’t made the link. I also like the idea of a sort of Goldilocks level of the strength of contracts: not too weak or it becomes to risky to engage in the economic relationship; but also not too strong because trust can’t grow if there’s no opportunity to demonstrate trustworthiness. After all, trust is only needed because there is risk. This would be a nice book to introduce students to a wide literature on trust, social capital, game theory and contracting under uncertainty and asymmetric information. It braids bits of the literature together with a light touch.

Causal Inference: The Mixtape by Scott Cunningham is an excellent text book. It joins both the Angrist and Pischke duo of books (Mostly Harmless Econometrics and Mastering Metrics) and Judea Pearl’s Book of Why in the recent mini-wave of excellent introductions to causal inference. ‘Mixtape’ has as much statistical theory as you need and also includes both Stata and R code for student exercises.

And an utterly brilliant non-econ book I just read is Karl Deisseroth’s Connections: A Story of Human Feeling. He is both a neuroscientist running a lab at Stanford, famous for inventing optogenetics (no, me neither) and a practising psychiatrist. The book moves between the scientific insights and the human stories, showing how they illuminate each other. It’s also beautifully written. One of my books of 2021 so far.

 

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Populism, technocracy and politics

It’s possible to feel gloomy about the prospects for democracy, even with Joe Biden safely in the White House and a few regional or local elections that have gone against the extreme right, in Germany and France. The current UK government, for example, gives rather alarmingly frequent Trumpist signs of wanting to tear down some of the protections for the institutions of democracy (IDs to vote when there is next to no voter fraud, rigging public appointments, attacking independent institutions). So Jan-Werner Müller’s Democracy Rules is timely. As he puts it: “Farage did not bring Brexit about all by himself: he needed his Michael Gove… and his Boris Johnson.” Populism is an elitist game; on both sides of the Atlantic established conservative elites are at the heart of the trend. It is also anti-democratic, including in defining some groups (immigrants, asylum seekers, minorities) as outsiders by their nature.

The first chapter sets the scene by diagnosing recent political trends. The middle section of the book discusses the necessary conditions for democracy. One thing that very much struck me is that uncertainty is inherent in democracy. “On a very basic level democracy makes no sense without the possibility of people at least sometimes changing their minds.” Identity, of any kind, “is not political destiny.” Opinion polls do not reveal eternal truths. Politics is not a matter of fixing problems. “The point is that claims about conflicts in a society can be presented in different ways and there is a creative element in how major political choices are put together and offered to voters.” The institutions of democracy need to embed uncertainty – and so, for example, Müller argues that the domain of algorithmic decision making in policy needs to be curtailed.

This section ends with an interesting discussion of the relationship between technocracy and populism: techno-populism. The argument is that the will of the ‘ordinary’ person is proclaimed while at the same time technocrats are charged with implementing the ‘will of the people’ in the interests of the common good – Italy’s 5 Star movement is the example. “Technocracy and populism are both anti-pluralist or even anti-political, if one takes politics to mean that the solutions are never just given by either expertise or the fiction of a uniform popular will.”

The book ends by emphasizing the importance of intermediary institutions: parties and the media – which are of course the targets populists go for, parasitically hollowing out their host party, gerrymandering, attacking electoral watchdogs, undermining independent journalism. There is a coda offering reasons for “hope but not optimism.” As with some other excellent recent books about the assault on democracy (eg this or this), I ended up feeling rather glum, but agreed very much with the closing shot: democracy is not about hope but rather about effort.

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Philosophy for humans (and Humeans)

I’ve thoroughly enjoyed Julian Baggini’s The Great Guide: What David Hume Can Teach Us about Being Human and Living Well. It took me back in a Proustian way to the late 1970s, when I was reading Hume in my PPE course and struggling with the ideas-impressions discussion while relishing his essay on the price-specie flow mechanism. But then I was always much better at the E than either of the Ps. And despite my struggles with philosophy, I’ve always been a Hume fan. The pragmatism, empiricism, moderation all appealed. Of course, Hume like so many of our forebears held views we see as unacceptable – the book discusses them in an early chapter. But I hold to my generally high opinion of him, feeling we could share a motto: Well, it’s a bit more complicated than that.

The Great Guide takes a chronological approach through Hume’s life, using the pleasing device of visiting the places he lived and including photos by the author. The key ideas are pegged to different chapters as Hume published his books and essays. There’s an excellent discussion of induction, and the role of experience as opposed to a priori reasoning in understanding causality. As Baggini summarises, it logic is algorithmic but, “There is no algorithm for good reaosning.” There is also an interesting section on the social character of reasoning: reasoning needs not to be something that inheres in us as individuals. “Although there is a sense in which we have to be the ultimate judge of what seems most rational to us, in order to reach such a judgement we have to argue with others and hear conrtdictory viewpoints.”

I also liked the discussion of Hume’s idea of personal identity as an aggregate of feelings, perceptions, ideas etc, which Baggini tells me is close to the Buddhist concept of anatta. And thoroughly agree with him that, “Hume shows us that the best writing combines rigor of thought with clarity of expression, difficulty of substance with ease of style.”

Maxims like these are dotted through the book and collected at the end, to live up to the promise of the subtitle. They reinforce Hume’s position as my favourite philosopher.

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