Book Review: Rebel

With a goal of better understanding the appeal of Brexit, I recently read UKIP politician Douglas Carswell’s latest book: Rebel: How to Overthrow the Emerging Oligarchy.  

I enjoyed the book and found it a lot less controversial than I expected; it had a lot more in common with ideas of Bernie Sanders than anything I’d expect from Trump or Farage.  The most enlightening and enjoyable part of the book for me was his historical illustrations of his points, using examples of successful periods and failures from Ancient Greece and Rome, Venice, Holland, Germany, France, Britain, America and China, and discussion of the influence of different philosophers.

Carswell’s primary argument is that societies can only thrive when they maintain both independence and connectivity (internally and with other societies) and are able to prevent parasitic behaviour by members and outsiders.  I’m very much inclined to agree with his argument, though I’m not sure how helpful it is: just about any political action could claim to be improving either independence or connectivity.  Similarly, while we all do seem to think parasitic behaviour has become more widespread, it seems impossible to agree on whether particular policies will prevent or rather increase it.

He makes a classically conservative argument against excessive faith in ‘facts’, ‘evidence’ and ‘experts’.  I acknowledge that this faith may be misplaced, or exploited by those that wish to seize power, and scepticism is sometimes appropriate.  But I felt he was wrong to ignore how often a refusal to accept scientific evidence is itself parasitic behaviour, for example where people refuse vaccinations or refuse to reduce their carbon footprint, expecting others to wear the cost.

I’m more sympathetic to Carswell’s criticism of unsustainable debt-issuance by governments, which he likens to debasement of currency.  I agree that we can’t keep borrowing increasing amounts and forcing future generations to pay for it.  But the costs of making our our existence sustainable have to be shared fairly, which is why I don’t support austerity as it is typically practiced.  

Carswell had a lot to criticise about the UK’s political system (what he refers to as the Oligarchy) – where political parties, the media and the establishment conspire to maintain power and keep things from changing.  He also warned against excessive faith in overly populist leaders on the left and the right, who would inevitably lead to chaos and disappointment and a rush back to the parasitic establishment.  As with so much of this book, it was a worthwhile point, but unhelpful as a prescription.

I wouldn’t recommend the book if you’re looking to understand Brexit: Carswell had virtually nothing to say about how Brexit would actually put the UK in a better position, and seemed almost as critical of Westminster as he was of Brussels.  

But all in all, and despite those criticisms, I did enjoy this book as a general political and philosophical commentary.

What’s wrong with our job markets?

Worry about the lack of ‘good jobs’ is growing, with a widely held perception that our job markets aren’t working.

While I agree the job markets have problems, I disagree with some of the diagnosis, or proposed solutions.  I am concerned that expecting the government to take action to ensure good jobs risks taking us away from what the job market should be doing: incentivizing people to make and do the things people want made and done.

In what follows, I will outline what I think is wrong with our job markets, and what could be done better.   In particular, I see four fundamental problems:

  • Ignorance: people don’t know what their choices are
  • Externalities: people don’t experience all the repercussions their actions
  • Lack of Capacity: some people don’t have the ability to engage in free markets
  • Injustice: free markets lead to an outcome we consider unjust

I believe there is a lot that can be done to address each of these, strengthening the power of job markets to deliver the work that should done.

Ignorance

I acknowledge ignorance is a problem, particularly in an interconnected and fast-changing world.  We will all, on occasion, display preferences and make decisions that we probably shouldn’t.

The challenge of working out what we want, can tempt us to make simplifying assumptions that we only care about ourselves and our own wealth (economic models frequently do this).  While I’m not going to claim that everyone is perfectly altruistic, the vast majority of us do genuinely care about others and about things other than wealth, and it seems genuinely irrational to ignore that when deciding what work we want to do.

Another unhelpful simplifying assumption is that only paid work done for an employer, is justified as work and valuable.  I would argue that any activity that creates value for others, that improves people’s lives and improves the world, should be considered a worthwhile activity – for example caring for others or enriching our culture.

We will never have certainty, but I do believe that both education and reflection can help us improve our knowledge of the likely outcomes of our various choices.  In particular, I’d argue that the temptation to believe that some group or institution knows better than us what is in our best interest.  I’d argue that this rarely goes well.

Externalities

Our actions have consequences for others, good and bad, that we ignore when making decisions as they don’t affect us.

As societies have grown in size and interconnectedness, our action are more likely to affect others.  Examples come to mind easily, for example someone else polluting near us, or painting their house which improves my neighbourhood.  We should also bear relative position in mind – for example, someone else cannot gain status without us losing it.

I would argue that we need to increase awareness of externalities, and understanding of how each person’s actions affect others in the world (and the planet itself).

While we can punish those that hurt others, or reward those that help others, there is a cost to this monitoring.  (Indeed, bearing this cost is often itself an externality, something done by an individual to help the group.)  I accept that as society has grown and become more open, it has become less good at performing this function, but I’m certain there was never an age of complete justice.

The goal here is to design better incentives to reflect externalities.  This involves challenging trade-offs, between the cost of monitoring and punishing, our value of compassion, and how completely externalities are reflected in individual incentives.  I believe we can do it better than we do now.  

For example, charitable foundations could play a larger role in recognising and rewarding individuals and groups that promote the wider good.  And, though there are definite dangers in public-minded vigilantism, public media does a lot of good in raising awareness of those that benefit at the expense of others.

Lack of Capacity

At present, financial insecurity limits the capacity of a small but growing population to freely engage in labour markets (described by Guy Standing’s book The Precariat).  When you are desperate, it is difficult to make sensible decisions.

Social welfare programmes should work to address this, however our current system makes the problem worse, reducing individual agency and creating perverse and distortive incentives (for example, low or even negative marginal return from working).  

I believe a universal basic income would go a long way to improving such people’s capacity to engage in a free market.

Injustice

Economics suggests that free markets will lead to ‘pareto optimal’ outcomes (those in which no one can be made better off without others being worse off).  Contrary to what some people believe, it makes no claim that these will be outcomes that we’d necessarily consider just or desirable.  For example, we may consider it unjust that someone benefits from a large inheritance; a free market will not correct for that.

People sometime highlight the post-war period as one when labour got its fair share of the profit (in contrast to 2000-2015).  I would argue that while it is good when markets do lead to fair outcomes, we shouldn’t count on this in general.  Rather than blaming markets for this, I believe we should accept this limitation of markets, and use other tools for achieving justice, for example redistribution or social care.

Why I support Corbyn

Friends of mine are often surprised that I could support Jeremy Corbyn, given socialism’s track record.  

It is a difficult question to respond to, for several reasons:

  • Socialism as a label is ill-defined: critics can invoke Stalin and Pol Pot, while apologists describe it as mere concern for others.  
  • It is impossible to know what Corbyn and his party would do, if in power.  I can easily imagine dreadful decisions, but also decisions that are brave and much-needed.  Also, no one knows how some of his policies would turn out in practice.  If I’m honest, I have to recognise that outcomes from decisions will differ from my expectations, for better and for worse.
  • It is also impossible to know how the future will pan out in a world if we stick with the status quo.  It may lead to major social and environmental disaster, but it may not: small changes may lead to a better, or at least tolerable outcomes.

So, despite those caveats, what do I think?

Am I a socialist?

Firstly, I wouldn’t define myself as a socialist, but mainly because I feel it suggests too many ideas that I don’t support.  In particular, I don’t believe that states, institutions, principles and abstract concepts (like class or nation) should ever be given priority over individual people.  

Having said that, I don’t believe that genuine individual well-being can or should be optimised as individuals; we clearly derive happiness and meaning from our relationships and our communities, and also benefit from markets. Individuals would be very much worse off without any government with powers of enforcement, but is easy to see how some actions of such a government could hurt individual well-being.  As a result I accept tradeoffs, but believe they should be made in such a way that promotes sustainable individual well-being.

When it comes to individual ownership of property, I do feel that allowing property rights enhances overall well-being.  But I don’t see how these property rights can be absolute; after all, they depends on others to recognise and enforce them.  In practice, this means I support property rights, but also laws that ensure those property rights remain in the general public interest.

From this mix of views, I don’t think I fit neatly into any other political label either, but I can live with that.

Do we need political change?

Firstly, I believe the status quo is unsustainable, both from an environmental and a social perspective.  I believe that the majority have their heads in their sand, choosing not to recognise just how much our well-being is vulnerable to the Earth’s whims and to the actions of its populations.  

In many ways, our current political system, being fundamentally driven by markets and democracy, is compatible with a greater awareness of the factors that drive genuine individual well-being, and the need to ensure environmental and social sustainability. Indeed, many people are already doing this, individually and within their communities.  I do believe that this will increasingly occur, even without major political change.

However, I do worry that it may not happen fast enough.  Political and environmental changes, both negative ones and positive efforts to mitigate, take time, and are impossible to model accurately.  By the time the problem is sufficiently serious that enough people are convinced to act, it may be too late.

It also seems unfair to reward those who happen not to recognise the risks, letting them reap the last remaining benefits of an unsustainable system, while others incur the costs.

As a result, I do support political changes to move us to a more sustainable future in a faster and fairer way that would occur if left entirely to individual choice.

Do I believe Corbyn and his policies are the answer?

To be honest, I don’t know.   

I support the thrust of most of the policies as stated in Labour 2017 Manifesto.  

An obvious point I disagree with his support of Brexit, but this hardly seems a reason to support the Conservatives instead!

I’m ambivalent about its approach to workplace rights. I would prefer an approach that involved creating more freedom and genuine flexibility (say with a basic income), rather than more rules. But I do accept that something has to be done.

The most socialist component of his policies is that of nationalisation.  While I do believe that private property make people generally better off, I am less convinced when it comes to  ‘utility’ industries like rail and energy.  As a result, I am supportive of these returning to public ownership, though this shouldn’t be seen as a guaranteed solution; governments are also capable of running organisations contrary to the public interest.  Also, I’d note that nationalisation doesn’t have to mean centralisation – there have been some great programmes involving local groups running utilities and transport.

I would worry if I thought Corbyn intended to bring all industry within government control, but I don’t get that sense.  Likewise, I don’t think he believes that a government has all the answers or can solve all problems.   Instead, he seems to show an awareness that there’s a tradeoff between freedom and rules that allow individual well-being, and I’m not convinced his position is a million miles away from my own.

There’s a temptation for the left to paint politics as class war, where the goal is to destroy those that are successful.  I prefer a more inclusive approach, where all are given opportunities, and all who support the public interest are welcomed.  Others may disagree, but I found Corbyn’s campaign pleasingly inclusive.

That said, I do have other concerns.  Firstly, understandable as it is (given how many people have been ignored by our political system), I am worried by the tendency of a small minority in the party towards change by undemocratic means.

But more critically, I’m not convinced Corbyn will be able to work with other parties and convince sceptics to deliver his policies (I don’t believe major political changes should occur without widespread support – say over 60%).  Logically, this isn’t a reason to not support him, or to prefer another five years of the same.  But I do worry that he won’t deliver, and then people might use this as proof that progressive, sustainable policies don’t work in politics.

 

Overall, though, given my conviction that we do need changes like these, I feel justified in supporting Corbyn and his policies.  And I’m not worried about him wanting to bring about a totalitarian state.

Six months of reading

The last six months has been a particularly enjoyable and productive time in terms of reading, though I think my ‘to read’ list has still grown rather than shrunk.  A lot of the books are aimed towards getting me ready to go back to University in September, and I certainly wouldn’t recommend all of these to everyone I know, but I still thought some people might be interested in what I’ve read so far this year (in chronological order).

 

Leaving Alexandria, by Richard Holloway (UK) (US)

I enjoyed this thought-provoking memoir by the former Bishop of Edinburgh – it didn’t shy away from difficult questions of imperfect faith in an imperfect world.  

Think Like a Freak: Secrets of the Rogue Economist, by Levitt and Dubner (UK) (US)

An easy read which gave me a few interesting insights, though I’ve possibly read enough of these kinds of books that I’ve started to find this kind of thinking normal rather than freakish.

The Unseen World, by Liz Moore (UK) (US)

A surprisingly emotional novel about a girl, Ada Sibelius, struggling to understand the world and how she fits into it.  

Doing Good Better, by William MacAskill (UK) (US)

This was a great book on effective altruism and how best to make good decisions in your career and in life.  I blogged about it here.

The Rage against God, by Peter Hitchins (UK) (US)

Journalist Peter Hitchins, brother (and opponent) of atheist Christopher Hitchins, writes of the harm that arises when humans attempt to destroy God, with particular reference to the Soviet example.

Algorithms to Live By, by Brian Christian (UK) (US)

This book, subtitled The Computer Science of Human Decisions, highlights the parallels between the decisions computers make and those that we make.  

100% Christianity, by Jago Wynne (UK) (US)

This is aimed at Christians, particularly those who may be struggling to see why Christianity matters and how it can change our lives today, even in a city like London.  

The Econocracy, by Joe Earle and Cahal Moran (UK) (US)

I really enjoyed this analysis of how economics has become the preserve of experts, taught to unquestionably accept assumptions that are wrong, and how we might make economics better reflect our values.  I blogged about it here.

Building the New American Economy, Jeffrey Sachs (UK) (US)

I read this after attending a talk by the author and found it good, if a bit light on detail – it talks about the potential to make the US economy smarter, fairer and more sustainable.  

Honesty, by Seth King (UK) (US)

Although quite depressing, I enjoyed this novel of two young men coming to terms with themselves and first love in the southern states of America.

Gay, Straight and the Reason Why, by Simon LeVay (UK) (US)

Many people (both conservative and progressive) hold their views on sexual orientation (and gender) as a matter of faith, but in reality it is something that science is learning more and more about, and I was keen to learn what we actually know and what we’re still finding out.

Different Eyes: The Art of Living Beautifully, by Steve Chalke and Alan Mann (UK) (US)

A short book on Christian ethics, but I ultimately found it a bit forgettable.

The Boy made of Blocks, by Keith Stuart (UK) (US)

A beautiful story from the point of view of a father, struggling to cope with a son with autism.

Dear Lupin, by Roger Mortimer (UK) (US)

For several years I had been meaning to read this collection of letters from a father to his son, but I found it quite disappointing – hard to relate to either the father or the son.

Rethinking the Economics of Housing and Land, by Ryan Collins, Lloyd and MacFarlane (UK) (US)

An excellent book on one of the biggest challenges to society – why standard economic approaches fail to lead to good outcomes.  I blogged about it here.

The Philosopher’s Toolkit, by Julian Baggini (UK) (US)

This book from my pre-course reading list was good for learning some of the terms and approaches used in philosophy.

A Brief Inquiry into the Meaning of Sin and Faith, by John Rawls (UK) (US)

20th century philosopher John Rawls is most famous for his Theory of Justice, which I confess I haven’t yet read, but I found his final undergraduate dissertation thought-provoking, particularly his contrast between the natural/objective and the personal perspectives on relationships.  I disagreed with some of the logic and conclusions (as subsequently did Rawls), but it has shaped my thinking.

From Bacteria to Bach and Back, by Daniel Dennett (UK) (US)

This is a very recent book which gave me a good overview of biological, cultural and technological evolution, and the helps inoculate the reader against the overly simplistic perspectives that can easily entice thinkers in this field.

Free Will, by Sam Harris (UK) (US)

This is a very short book, and ultimately quite disappointing – much more focussed on criticising other viewpoints than providing a clear alternative.

Doughnut Economics, by Kate Raworth (UK) (US)

The best book of the list – it considers how many assumptions of standard economic are increasingly harmful, and how we could do better in the 21st century. I blogged about it here.

Conversations on Ethics, by Alex Voorhoeve (UK) (US)

This was another book of my university pre-reading list.  It is presented as a set of conservations with quite a broad range of contemporary philosophers.  Some I had read of, some were new to me, but I enjoyed seeing the range of perspectives.

The Zero Marginal Cost Society, by Jeremy Rifkin (UK) (US)

This book optimistically describes how technology and collaboration will lead to a transformation of capitalism.  The start was a bit of a struggle, but it got much better.

Natural Justice, by Kenneth Binmore (UK) (US)

I was introduced to Binmore by Conversations on Ethics, and he is definitely my kind of philosopher – pragmatic, rational and aware of the limitations of any model.  In this book he proposes that much of what we consider ethics arises from societal coordination problems, allowing us to analyse it using game-theory approaches.  I blogged about this book here.

Debating Religious Liberty and Discrimination, by Corvino, Anderson and Girgis (UK) (US)

The news these days is full of stories highlighting the tension between maximising liberty and minimising harm to individuals, particularly with respect to free speech and discrimination.  I found this book helpful in directing my thinking, though ultimately I have come to quite different conclusions than either the position proposed by Corvino, or that proposed by Anderson and Girgis.

The Precariat, by Guy Standing (UK) (US)

If The Zero Marginal Cost Society was a touch optimistic, the Precariat makes much more depressing reading; it describes a world in which a majority lack hope and genuine opportunity, for too many reasons to hope for a simple solution.  

I Was told to Come Alone, by Souad Mekhennet (UK) (US)

This got a good review in The Economist, and I wasn’t disappointed – German-born journalist Mekhennet describes her life experiences and efforts to understand the rise of Jihadism in the Middle East and in Europe.  

The Retreat of Western Liberalism, by Edward Luce (UK) (US)

Also picked up based on a review in The Economist, this consideration of the challenges the world is going through (eg Brexit, Trump, fake news) had some interesting thoughts, but I struggled to get a clear message from it.

Natural Justice

I finished a book a couple of weeks ago that I suspect is going to be very significant in my thinking over the coming years: Binmore’s Natural Justice.  Kenneth Binmore is my kind of thinker (Keynes is another) – a mathematician turned economist, equally at home with philosophy and the real world (Binmore’s team designed the UK’s 3G spectrum auctions which raised £22bn).  

Natural Justice uses technical game theory to explore the way in which our need to coordinate within groups leads (through biological and cultural evolution) to our tendency towards justice and morality.  (Please don’t interpret this as suggesting that morality isn’t real or important in its own right.)  

At the heart of any coordination problem is the Nash equilibrium.  John Nash (portrayed by Russell Crowe in A Beautiful Mind) proposed this idea of any situation where no agent had any incentive to unilaterally change their behaviour.

The most famous example of a Nash equilibrium is the prisoner’s dilemma, but a more practical example is driving: if all drivers drive on the left of the road, it generally makes sense to drive on the left.

This example points to the insight that there may be multiple Nash equilibria, and not all equally good or stable.  Everyone driving on the right is also a stable equilibrium.  Everyone choosing randomly is also an equilibrium, although a clearly inferior one and unstable (any bias will tend to reinforce itself, leading to a new equilibrium).  Another insight from is that societies can be guided towards equilibria, for example, with traffic laws.

Binmore will appeal to many conservatives/economists when he claims that societies should not aim for coordination utopias that are not Nash equilibriums – these are unstable and unlikely to persist.  However, in a challenge to many conservatives/economists, he reminds readers that there is no good reason to assume that we are in nash equilibrium at any time, or that the equilibrium we are closest to is the only or best one.  Far from suggesting we should be laissez-faire, he endorses a big role for thinkers to help us discern the best Nash equilibria, and ways to achieve them.

This compromise appealed resonated with how I think.  While I recognise that a huge amount of good in the world is done out of altruism, I never want my society to be reliant on it, or to be able to be gamed.  And I’m far more interested in helping people see what is in their interest, than by trying to convince them to act against their interest.  

Many treatments of game theory ignore questions of enforcement; Natural Justice argues availability of enforcement is pivotal to which situations are equilibria.  For example, me working for payment on completion only makes sense if I believe the outcome can be enforced.  Trust or social norms may be a replacement for enforcement in the short term, but they are likely to be insufficient in the long run.  

The book ties this distinction into the argument between utilitarianism (that things should arranged to maximise overall utility) vs egalitarianism (that things should be arranged to improve the position of the person with least utility).  Binmore suggests that with the ability to enforce contracts, we will end up with utilitarianism, but without it we will end up with egalitarianism.

Another significant contribution of the book is its consideration of what economists call Interpersonal Comparison of Utility.  I clearly value outcomes for myself, though I don’t ignore the value of outcomes to others.  Some economists argue that we cannot objectively compare other people’s utility to our own.  The book argues, more pragmatically, not only that we do take others’ utility into account, but that this is a useful evolved mechanism.  I’m sure my understanding of this idea would benefit from a second reading of the book.

I’ve got a couple of other books on social contract and game theory to get through, so I am certain that my thinking will evolve, but I felt this introduction was a good start.

Some Thoughts on the Election

I am convinced that the path we’re currently on isn’t socially or environmentally sustainable.  My primary objective in taking an interest in politics, is the hope that my vote and my interest can help get us onto a more sustainable path, one that maximises people’s chances to flourish, both now and in future generations.  

Many of you will be thinking that this wish directly implies that I should vote for Labour or the Greens.  I’m much less convinced.  Though many Green and Labour policies naturally appeal to me, I believe that all parties are capable of recognising the benefits of making the system more sustainable.  Indeed, I wouldn’t be surprised if many of the changes I’d like to see are ultimately made by the Conservatives.

In this respect, I was pleased that both the Labour and Conservative manifestos went further towards recognising the social sustainability challenges that we face than they had before.  The Conservatives didn’t go far enough, and quite a few policies in both manifestos could have done with some more thought and discussion. Both had some proposals that I disagree with.  The environment was largely ignored.  But I do praise them for trying, and I do believe that these views are genuine.

My hopes were raised, and then came the response from their opponents and the media – highlighting the ‘losers’ from any change, ignoring any benefits.  Yes, I get that this is politics, and I get that is what gets readers engaged.  But when I’m looking at who I want to be governing, and who I want to be representing me in Parliament, particularly with such big challenges ahead, I want it to be a party that shows a willingness to listen and to talk honestly to the whole country.  And no party is filling me with overwhelming confidence.

I get why Theresa May is promoting ‘strong and stable’ leadership – I don’t like chaos any more than anyone else.  But in a complex world, it is often difficult to tell the difference between ‘strong’ and ‘brittle’.  I have moments when I’m convinced that May could be a good strong leader if she gets a decent majority, and other moments when it fills me with dread.  But I am similarly unsure how strong or good a leader Corbyn would be.

The Conservatives, Lib Dems and SNP wanted to make this election all about Brexit, but Labour seem to have ensured attention was on everything except Brexit.  I wish that by voting a certain way I could undo last year’s referendum, but can’t.  The only way I can see of avoiding Brexit is the government negotiate a truly dreadful deal, and I’m not prepared to hope for that. Intriguingly, the financial markets (ie the pound) seem to have decided that the best bet for the closest relationship with Europe is a comfortable Conservative majority (eg https://www.theguardian.com/business/2017/may/26/ftse-reaches-record-high-as-uk-opinion-poll-spooks-sterling ).

Probably the one area where I do have strongly partisan views is on austerity and social spending.  I am not alone in thinking that the austerity of the past 7 years has been a failure.  I believe the bulk of the cuts will have far bigger long term costs than they’ve saved us.  in the Health portfolio, I realise that there are difficult decisions to be made, but I don’t recall ever seeing such mismanagement as we’ve seen over the past 2 years.  My take on it is that it is ideological – a desire to cut costs without considering evidence or consequences, and without recognising that the system cannot work without the goodwill of doctors and nurses.  I’m not totally convinced that Labour would have run things wonderfully or efficiently, but I can’t believe they could have done a worse job than the current government.  

Obviously it is much easier to argue for more spending than to say where it should come from.  We need to make our government sustainable over the longer term.  But at the moment most people (including those at the top) feel the tax system is unfair.  We’re going to need to do more talking about how tax and redistribution should work.  Blindly raising taxes on those that already feel things are unfair will just create resentment and them to feel justified in restructuring their affairs.  We need to ensure we’re doing it in a way that the majority of people feel that their contributions are necessary to ensure a country that they want to live in.  

In these uncertain times, I’ve come to appreciate the importance of having good people in parliament, and I think it is even more important than which party they’re in.  Assuming that all members of a party are as bad as each other doesn’t make sense, and over the past year some of the most effective opposition to the government’s worst policies has come from Conservative MPs.  So if you’ve got a good candidate, I’d encourage you to consider supporting them irrespective of their party.

Finally, I’d like to make a comment on how we talk about our politicians.  After the tragic shooting of MP Jo Cox last year, there was a bit of a move towards treating politicians with a bit more respect and understanding (eg http://www.telegraph.co.uk/news/2016/06/17/jo-cox-was-brave-so-are-most-mps-lets-show-them-more-respect/) .  Unfortunately, it doesn’t seem to have lasted.  I shouldn’t have to point out that politicians are people, not perfect or altruistic, but mostly hard-working people who want the best for their constituents, and indeed for the whole country.  I wish we could stop demonising and abusing them (in particular, sexist or racist abuse towards politicians is still unacceptable), and be more thoughtful in our criticisms – otherwise we shouldn’t be surprised if we get the politicians we deserve.

Doughnut Economics

I came across Kate Raworth’s Doughnut Economics – 7 ways to think like a 21st century economist (UK) (US) in a Guardian review last month, and have now finished it.

I’d recommend it to just about anyone as a very readable overview of the economic challenges facing the world, why economics has struggled and will increasingly struggle with these challenges, and how our thinking can adapt to tackle these challenges.

The book’s central idea is that economic activity should neither be minimised or maximised – there is a sweet territory (the doughnut) below which society will not sustain and above which the planet will not sustain.  At present we suffer risks on both sides.

2360

(Source: Kate Raworth and Christian Guthier/The Lancet Planetary Health via the Guardian)

The seven changes in thinking that the book proposes are:

  1. Change the goal – from GDP to the Doughnut (genuine sustainability)
  2. See the big picture – from a stand-alone market to an embedded economy
  3. Nurture human nature – from rational economic man to socially adaptable humans
  4. Get savvy with systems – from mechanical equilibrium to dynamic complexity
  5. Design to distribute – from ‘growth will even it up again’ to distributive by design
  6. Create to regenerate – from ‘growth will clean it up again’ to regenerative by design
  7. Be agnostic about growth – from growth addicted to the right level and kind of growth

Obviously none of these are crazy, and most people would fundamentally agree with them, but Raworth does a great job of talking through the implications of these assumptions.

The book was full of interesting history of how economics came to be the way it is, how many of the standard assumptions have been acknowledged as questionable even by their original authors, and why they’ve continued to be held – this is helpful to understand if we want to change our thinking.

Overall I really enjoyed the book, and found it very reasonable, acknowledging the many uncertainties and willing to criticise views on the left as well as the right.  I can see it appealing to many of my friends with more conservative as well as those with more progressive views, so highly recommended.

Doughnut Economics – 7 ways to think like a 21st century economist can be found on Amazon (UK) (US) and no doubt many other bookshops.

Brexit – deal or no deal

One of my major frustrations when it comes to politics are the ambiguous statements – where both sides are arguing over different interpretations.  It feels so unnecessary – I wish we could make an effort to be a bit more specific, so that we can focus on where we actually disagree.  

For example:

No Brexit deal is better than a bad Brexit deal

Everyone seems convinced they know what it means – but they don’t agree.  Here are a few interpretations that I’ve heard people make:

    • Leaving the EU without an alternative to the default WTO terms is better than the technically worst possible deal – true, in my opinion, though they’d have to be almost inconceivably bad (maybe one where we agree to become slaves?)
    • Leaving the EU without an alternative to the default WTO terms is better than the likely deal the EU would offer us (ie us not getting our way in negotiations) – questionable
    • Leaving the EU without any trading / movement rights is better than the technically worst possible deal  – again, technically true, but both are highly unlikely in my opinion
    • Leaving the EU without any trading / movement rights is better than the likely deal the EU would offer us (ie us not getting our way in negotiations)  – I believe untrue
    • In order to get a reasonable Brexit deal we have to be able to ensure we could survive no Brexit deal  – I’m really not sure, sometimes negotiating from a position of strength helps and sometimes it hurts
    • It doesn’t really matter if we get a deal or not –  clearly untrue
    • We shouldn’t make much effort to get a deal – clearly untrue
    • We shouldn’t (literally) kill ourselves trying to get a deal – clearly true (I haven’t actually heard anyone arguing this meaning, but thought I’d include it for completeness).

So next time you’re going to argue over whether no Brexit deal is better than a bad Brexit deal, please make clear which one you mean.  And if you’re going to disagree with someone, it might be worth checking that they actually mean something you disagree with.

Hypocrisy

I have started attending some of the talks organised by The Forum for European Philosophy, and last Tuesday attended a panel on “Hypocrisy”.  If I’m honest, hypocrisy isn’t a topic I had given too much thought to, but it does seem to be a criticism that is increasingly made of those in leadership, so it is worth thinking about.

Talking to a handful of my friends shows that very few people have a working definition of hypocrisy, which in itself is interesting.  Dictionaries tend to define it along the lines of: “The practice of claiming to have higher standards or more noble beliefs than is the case”, but it is worth noting that in practice people tend to use it more broadly – for example not needing the individual to actually claim or even promote the higher standards.  

Based of the dictionary definitions, hypocrisy has two components:

  • the claim to have higher moral standards, or at least the promotion of particular standards
  • and the act which betrays those standards.  

Some people, tend to focus on the two separate components: criticising the moral arrogance, and the bad actions.  If I’m honest, this is my natural inclination – and the charge of hypocrisy itself is downplayed.  In particular, if someone claimed a standard that I didn’t agree with, and then didn’t follow it, I wouldn’t want them to change their behaviour to be in line with their ‘bad’ standard.

But enough others emphasise the combination that makes up hypocrisy, that it is important to try and understand this.  

I can think of a number of fundamental reasons to dislike hypocrisy (beyond our dislike of the separate components):

  • When practiced by leaders, hypocrisy often indicates the individual can’t be trusted and is undeserving of their position.
  • More generally, hypocrisy is a form of deception and cheating.  These undermine a functioning moral order.  By tolerating it, we ourselves weaken that system (and conversely, by condemning, it we are promoting that system).

I suspect that these reasons to condemn hypocrisy are deeply ingrained, and have arisen through evolution, along with our aversion to cheating (see for example Haidt’s book The Righteous Mind).  [One of my favourite experiments shows that in games, people will not only incur a cost to punish cheaters, but they will incur a cost to punish those that don’t themselves punish cheaters!]

I suspect there are some more pragmatic reasons that people care about hypocrisy (some a result of people’s innate aversion to it):

  • We may not like someone’s actions, but may feel unable to insist on them acting by our standards.  It does feel fairer to criticise them if they themselves have argued against for these standards.
  • Similarly, if someone is arguing for standards that we consider inappropriate, we can undermine them by highlighting that they don’t follow them.
  • Given the impossibility of anyone being entirely consistent, and the public’s deeply ingrained dislike of hypocrisy, it makes an easy accusation for leaders we dislike

While I do value a generally functioning moral system that allows us to cooperate within our society, and feel it is appropriate to condemn forms of cheating (including hypocrisy), this can be taken too far, particularly in today’s divisive political climate.  When criticising a leader we already dislike for some inconsistency, I do feel we would be wise to consider whether we’d feel so critical if a leader we liked acted similarly (or indeed do we share similar faults).  

And where possible, I believe we would be better to focus our attention on the inappropriate standard or the action.  And if neither of these are that bad, there is probably a better place to direct our anger.

Rethinking the economics of housing

You can’t exist long in London without being drawn into debates on house prices, and in the hope of having something coherent to say, I recently read “Rethinking the Economics of Land and Housing” by Ryan-Collins, Lloyd and MacFarlane (disclaimer: two of the authors work at the New Economics Foundation which I support).

The book is aimed at readers with an interest in economics, particularly those willing to question some of the prescriptions of the neoclassical framework.  That it discusses implications of competing theories on an example as practical as the housing market makes it particularly engaging (I enjoy highly abstract philosophical discussions – though I appreciate that most people don’t!).

The fundamental point the book makes is that neoclassical economics tends to treat land as just another capital input, ignoring its distinctive characteristics: that changes in value are seldom attributable to its owner (but rather to societal improvements, particularly the availability of jobs) and that supply of land does not increase in response to rises in price.  This should call into question the standard assumptions that the free market produce good outcomes and that landowners ‘deserve’ the majority of their gains.  

Instead, however, the past 50 years has seen a reduction in regulation.  Banks have been encouraged to increase mortgage lending, governments have scaled back on supply side interventions (eg building of social and affordable housing), and there has been a massive increase in wealth inequality as a result of transfer of wealth to home owners (mostly as a result of land value increases).  

The book provides a good theoretical justification for rethinking the underpinnings of this market, and our collective assessment of how a fair, and indeed economically rational property market might work.  The book makes some good practical suggestions, but is far more concerned about starting a dialogue than prescribing a political solution.

Then last week I attended a conference held by the Labour party on Fairer Housing within Westminster.  The key point raised was how badly Westminster Council and Local Housing Associations are addressing the housing needs of lower income residents: that the wrong people are profiting from the situation, that bad contracts are being entered into (including nowhere near enough social and genuinely affordable housing), and that the council is forcing residents to move out of London, destroying social ties.

Unfortunately, despite reading the book and attending the conference, I’m still not too sure I’ve got anything to coherent to conclude.  As a citizen of this great city, I do want a diverse and vibrant community, which requires genuinely affordable housing.  I do recognise that the free market doesn’t lead to collectively optimal outcomes, and rational economics dictates that we need policies to correct for this.  I do believe we need more community empowerment, but without it giving a substantial voice to those most reliant on social housing, we’re going to get decisions that prioritise existing home owners.  

I recognise that these kinds of policies are going to be a tough sell politically, particularly to those who have come to consider their gains from property entirely entirely appropriate.  But books like this one definitely help, along with the wider discussion that I hope they’ll spark.