I guess I am not alone in living with a big mismatch between the amount of reading-around-my-field I would like or ought to do and what I actually fit in. Perhaps I’m also not the only sad person for whom holidays serve as an opportunity to address the gap. But having thus subverted my beach-time, can I actually remember anything of what I read? Here are some first-day back in the office thoughts on three excellent books on global development issues.
Top of the list is “The Worldly Philosopher” – Adelman’s massive biography of Albert Hirschman. Fortunately, much of the first part of it reads like a novel. What other economist fled three countries (Germany, France, Italy), volunteered to fight for three armies (Republican Spain, independent France and the US), became fluent in five languages, helped run a dicey escape route for political refugees, AND got his PhD before he was thirty? Hirschman’s roller-coaster start helps to explain what made him so unique as an academic economist in later life: learning from past experience, but not dwelling on it; striving not to let beautiful or clever ideas cloud his perception of what was actually happening around him; brilliantly lobbing new ideas into current debates without ever deluding himself that they could capture more than fragments of what was happening.
These traits string together a brilliant row of books, including reflections on global politics and trade manipulation, his attack on development planners (in praise of unbalanced growth and policy opportunism), his classic treatise on the governance of states and firms (exit, loyalty and voice), a pithy discussion of the political tolerance of inequality (including the tunnel effect), an anatomy of why collective action often happens (despite Mancur Olsen’s sad free-riding logic), a scholarly exploration of how early commentators justified capitalism as a displacement activity in which to channel dangerous passions… the list goes on and on. Hirschman reaffirms the case for messy pragmatism: a sharp critic of rational choice and positivist fundamentalism, but equally impatient with post-modernists and trendy lefties, for example. His favourite authors included Montaigne, Machiavelli and Kafka; he was in the Washington engine room of the Marshall Plan and flitted between Ivy League chairs, yet fell foul of McCarthyite suspicion and was a friend and ally to a generation of reforming Latin American thinkers and politicians.
Book No.2 is “The haves and have-nots: a brief and idiosyncratic history of global inequality” by World Bank economist Branko Milanovic. This is also wonderfully readable, and he claims very easy and enjoyable to write. Doubtless less so was the task of making himself an international authority on household income and expenditure surveys, and developing his skills as a statistical whiz and pioneer of the slightly dodgy art of splicing databases together through history and across the globe. This background enables him to answer quirky questions like whether top ancient Roman tycoon, Marcus Crassus, was richer than all-time no.1 US capitalist John Rockefeller (answer, no). But the book also drives home some core facts – above all that more than three quarters of global inequality can be attributed to differences between countries, rather than differences within them. This is chiefly because while all countries boast very rich people, they are relatively tiny in number, whereas the global middle class (carefully defined) is still overwhelmingly located in Europe and North America. Milanovic is very clear about Rawls (perhaps even clearer than Rawls himself) in exploring how far inequality can be justified on the grounds that it helps the very poorest. But I found his arguments against the extreme inequality of our age more convincing: particularly the consequences of a system within which more than 80 percent of global income variation can be attributed to circumstances given at birth.
Book No.3 is “Carbon Crunch” by Oxford professor of Economics, Dieter Helm. He starts by reaffirming the view of the Intergovernmental Panel on Climate Change that anything more than a 2°C average global temperature rise should be avoided at almost any cost, and then fulminates against our collective failure to achieve very much at all to prevent this happening. He notes that while the UK and Europe may have reduced greenhouse gas emission, in production, this is more than offset by rising emissions in consumption thanks to imports, much of it from coal-guzzling China. While wind and solar can contribute to decarbonisation of the global economy eventually, he argues that they are simply too expensive to compete with oil, coal and gas in the short term. This is partly because he believes talk of peak oil is exaggerated (again), while coal and gas remain abundant; hence rising fossil fuel prices cannot be relied upon to incentivise the switch to cleaner energy. Meanwhile, he observes that capacity utilisation of wind farms in the UK is less than 25%, which means they have to be covered by alternative generation capacity, which greatly increases their unit cost. Meanwhile nuclear is politically stalled in Europe, America and Japan, while politicians and NGOs have overstated the scope for energy consumption savings in housing. And to add to the gloom, the Kyoto process has mostly served as a platform for empty EU posturing, leaving China and the US to squabble bilaterally over the more serious numbers. His alternative strategy comprises (a) moving from carbon quotas to a carbon tax (b) massive investment in gas – including fracking – as the only realistic transitional substitute to disastrous further growth in coal consumption; (c) higher and more diversified investment in energy R&D (including smarter grid management) incentivised by cumulative tightening of carbon taxes.
Helm writes lucidly, and is quick to explain what we don’t know and can’t know, thereby rubbishing most model-based forecasting, including that underpinning the Stern report. He writes wonderfully in Hirschman’s tradition of messy pragmatism and cross-disciplinary trespass, while at the same time sharing with Milanovic the ability to build his argument inductively from simply presented empirical evidence through a judicious mix of stylised facts, back-of-an-envelope analysis and clear logic. Lastly, they have allowed their publishers to help make their work highly readable (even on the beach) – and hopefully more influential as a result.