Economic booms in space, not time

All economic growth has occured through urbanisation, but modern industrial capitalism dramatically so. Robert Hall once drew a parallel between economic booms in time (business cycles) and space (cities). This is a preamble to saying I’ve always enjoyed books about cities, or perhaps it’s an excuse for my interest. Recently I polished off The Ghosts of Berlin by Brian Ladd, a sort of history through architecture and urban form. This week it was Why Cities Look the Way They Do by Richard Williams. It argues that cities are the result of the interaction of many different processes occuring through time, and the chapters each explore some of these – culture, war, sex – and also money, work and power. In other words, there’s nothing intentional about how cities look, for all the efforts of the planners. Different cities are used as examples; the book’s focus is mainly big global cities but others such as Liverpool and Portland and San Paolo feature too.

I particularly liked the money chapter’s observations on real estate. It points out that some iconic supposedly residential towers such as 432 Park Avenue in New York are only half occupied and that this is intended. For they are not homes but investment assets, whose owners don’t care if they’re never occupied. Money buys space, and the emptiness is a store of value in the context of economic agglomeration. Of course there’s a poignant contrast with a city like Detroit, which is emptying, but whose spaces mark depreciation, not appreciation, of the asset. The chapter about the culture industry and its self-contradictions is nicely spiky, as is the one about the hipsterisation of industrial buildings in the modern world of work. As someone who grew up in an old-fashioned industrial place, I’m happy with the hipsterisation process; Manchester now is a better urban environment for its humans now than it was in the early 80s even though it’s lost the gritty culture/music scene of that era. But I can understand the regrets for lost authenticity.

Why Cities… has loads of pictures, too. The author is an art historian, so reading it prompts one to look. Very enjoyable.

[easyazon_link identifier=”0745691811″ locale=”UK” tag=”enlighteconom-21″]Why Cities Look the Way They Do[/easyazon_link]

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The limits of technocracy in competition policy

For reasons I needn’t go into, I spent much of today reading The Anti-trust Paradigm: Restoring a Competitive Economy by Jonathan Baker. It’s a very lawyerly in style and US-focused book. With that caveat, it’s actually a good overview of the current debate about competition policy, and the Chicago School versus neo-structuralist (aka ‘hipster’) clash going on in the US at the moment. One of its strengths is that it’s pretty even-handed. Although the book argues for sticking with an economics-based anti-trust policy, focused on consumer welfare, it also argues that the Chicago School goes too far beyond this with its set of presumptions (for instance, that vertical mergers are basically always fine, or that false positives preventing mergers that are not anti-competitive are far more costly than false negatives that let anti-competitive mergers go ahead).

The book sets the scene with the evidence on increasing concentration in US markets, and the adverse implications decreasingly vigorous competition has for the economy. What I particularly like about the book though is that it sets competition policy in its political context, making the case for a technocratic approach – to avoid the dangers of political capture and cronyism – but within the boundaries of a broader political settlement. Baker argues that for much of the post-war period, US anti-trust policy was shaped by the consensus about the form of American capitalism, delivering widely shared benefits including through the welfare system. Never explicit, this nevertheless set the climate for the decisions made by regulators and judges. He portrays the crumbling of this settlement, the growth of market power across the economy, as the backdrop for the decreasing consensus about anti-trust policy. In this situation, technocratic enforcement cannot function.

There is a section on digital markets, which I was interested in of course; it essentially briefly sums up the state of debate in a growing literature. And a final chapter advocating a more forceful American anti-trust policy (the US gets compared unfavourably to Europe) but one that abandons the cul-de-sac of the pure Chicago School. Although the application of anti-trust policy in America has diverged considerably from Europe, despite being underpinned by the same economic analysis, this is a useful book to understand the present US debate – and also why its conclusions are not very relevant to this side of the Atlantic.

41VXxLuHKSL._SX327_BO1,204,203,200_[easyazon_link identifier=”B07NT7KT36″ locale=”UK” tag=”enlighteconom-21″]The Antitrust Paradigm: Restoring a Competitive Economy[/easyazon_link]

 

Houses for the people

I’m way behind in posting about what I’ve been reading, not least because I’m mid-prrofreading my next book (Market, State and People: Economics for Public Policy, out in early 2020 from Princeton University Press, since you all ask….). One of the recent reads was John Boughton’s Municipal Dreams: The rise and fall of council housing. It’s a particularly timely book as the UK is in the midst of its most severe housing crisis since the post-war years when the populaiton was growing and much of the already poor quality housing stock in cities had been damaged or destroyed. The context is different now of course, but there is nevertheless significant excess demand and huge generational injustice – not to mention that the UK housing market serves a special role of macroeconomic dysfunction.

The book is more or less chronological, telling the story of housing provision at increasing scale by local authorities from the late 19th century to the Thatcher government and then the sale of housing and turn to housing associations as (partial) replacements for council provision. It covers the debate about the architecture of big estates – the controversies about brutalist 1960s tower blocks, the role of that architecture and the giant estates in emerging social problems. Above all, it highlights a key conflict of purpose: was council housing housing for all, or housing for those most in need? If the latter, as governments increasingly came to consider, then perhaps the emergence of “problem” estates was about the wider economic problems rather than the estates or their inhabitants.

The book advocates a return to housing provision at scale by local authorities, although it doesn’t get into policy design. I agree this will be needed. People are less and less able to work in the cities where economic activity of highest value is increasingly concentrating – agglomeration effects seem to be accelerating (see David Autor’s ASSA talk on this). The UK is hobbling its future productivity and ensuring the macroeconomy remains vulnerable to instabilty from house prices. The private market has no incentive to fix the problem as housbuilders and incumbent owners do not want price growth to halt. The state will have to step in & local authorities should be allowed once again to build homes at scale, borrowing against future rents to do so if need be.

Anyway, terrific book, really enjoyed it.

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How to write

I’ve been on my travels so have a stack of things to post about, but it will have to wait until I’ve waded through the backlog of emails. Meanwhile, though, I polished off Deirdre McCloskey’s Economical Writing: Thirty-five rules for clear and persuasive prose. You don’t have to be an economist to benefit from the book, but it will certainly help many economists – we are not famed for clarity and elegance of expression. I’m a big fan of McCloskey’s writing, although she is something of an acquired taste. But, importantly, she is always a model of clarity.

The book has, as it indicates, a series of short chapters/rules, all good advice. (It’s an update and expanded version of earlier books, with additions on presentations and charts, though advice about the latter is mainly ‘read Edward Tufte’s books’.) It refers to other works and classic advice from authors such as Orwell and Twain. I loved the latter’s: “Eschew surplusage.”

The section that had me cheering was Number 4, being clear. I have long believed that there is nothing in economics that can’t be explained clearly in words; it isn’t string theory after all. “Bad writing makes slow reading,” McCloskey writes. Your reader has to stop and puzzle over what on earth you mean. She quotes Quintilian: “One ought to take care to write not merely so that the reader can understand, but so that he canot possibly misunderstand.” This is harder than it sounds. As the author of several books, I’ve learned that many readers take out of a book whatever thoughts they took into it. Still, what else is worth aiming for if you want to communicate your ideas?

Highly recommended for all who write as part of their work or for pleasure. Pretty much everybody?

[easyazon_link identifier=”022644807X” locale=”UK” tag=”enlighteconom-21″]Economical Writing, Third Edition: Thirty-Five Rules for Clear and Persuasive Prose (Chicago Guides to Writing, Editing, and Publishing)[/easyazon_link]41d9kBQGVVL._SX321_BO1,204,203,200_

 

Stereotypes and (in)justice

I got very distracted by the list of econ & philosophy books I put together with the help of #econtwitter, so haven’t read much new stuff lately. The exception has been Shadows of Doubt: Stereotypes, Crime & the Pursuit of Justice by Brendan O’Flaherty & Rajiv Sethi, a fantastic and sobering book. The theme is the central role sterotyping plays in the criminal justice system. The dominant emotion in the context of crime and punishment is fear. People are making speedy and often high-profile decisions under conditions of great uncertainty, and often, great fear. In the courts there is inconclusive evidence and conflcting accounts. Stereotypes are in effect rules of thumb that enable people to come to judgments about how to act in the face of a possible crime, how to assume other people will behave, about what might have happened.

Most of the examples in the book are American, where dying while black in an encounter with law enforcement seems to happen all too often. Some are high-profile examples like the arrest of Harvard Professor Henry Louis Gates for trying to get into his own house. One of the arresting officers mused that the events might have gone differently if he, rather than his white colleague, had got to the scene first. It was ever thus, the book records – citing a 1944 Gunnar Myrdal 1book, for instance, which pointed out that most of the whites who killed blacks in the 1930s were police officers. Video recordings are making more the old, constant reality more apparent. As for the prison system, the incarceration for the US is the highest in the world per capita (more than five times higher than China’s and fallingĀ  disproportionately heavily on blacks and hispanics. “Such rates are unprecedented in world history,” the book observes.) However, for all that there are fewer guns and deaths involved elsewhere, and lower rates of imprisonment, there is obviously a racial aspect to policing and punishment in many countries.

The final chapter is called ‘Hope’, a virtue it suggests should be aspired to. I found this a compelling but depressing book, however. As it points out, although we can try to become more self-aware, stereotyping is an inescapable part of human psychology, like so many other psychological heuristics. It is a means of partitioning the complex environment into categories, to aid understanding and our ability to function effectively. My conclusion after reading Shadows of Doubt is two-fold. One, the US is truly exceptional, and not in a good way. I have no idea how that country can escape from its ‘cold’ civil war, which the current presidency is anyway heating up. After all, the injustice of the US ‘justice’ system has been often described.

Two, for the rest of us it is a question of constant vigilance if individuals are to be protected, or to win justice, difficult in fearful and uncertain times. And at this moment the police and criminal justice systems are widely adopting algorithmic decision processes, automating decisions we know to be flawed – both ineffective and unjust. It is not the algorithms that are biased, nor their technical creators, but the system into which they are being inserted. The system needs fixing before it gets automated.

 

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