Archive for November 2013
GDP is perhaps the most popular and influential measure in Economics. Everyone from presidents to plebs use it to show that ‘the economy’ is ‘doing well’, ‘recovering’, ‘accelerating’, and what we economists consult to identify a country’s ‘growth’, ‘development’, ‘progress’. It’s universally accepted (at least by economists) that higher economic growth is good for a country, and for an obvious reason: those countries that have experienced high growth rates have managed to achieve goals that are universally accepted as good: reducing poverty, and increasing the living standards of people. In short, a higher GDP (per capita) is an excellent indication that people are better-off than before.
But GDP is not panoptic. It measures the Gross Domestic Product, meaning the total value of all goods and services produced within the borders of a country for a year. Thus the more stuff we produce, the higher the GDP. Divide all that stuff by the number of people that live in a country, and you get GDP per capita. Each person in the Central African Republic, for example, ‘produced’ $272 in 2012. Compare that to Norway, a country with about the same number of people and rich in resources, where each person ‘produced’ $99558, more than 200 times more. Or think of it this way, for each yearly salary of a Norwegian, an inhabitant of CAR had to work 210 years to earn an equivalent income. (Numbers from the World Bank.)
Yet is this average Norwegian 210 times ‘better-off’ than the average CAR citizen? This of course depends on what you mean by ‘better-off’. Economists have developed a fuzzy concept called utility to address this concept of what best can be described as a combination of satisfaction and happiness. But there is no standard measure of ‘utility’. The United Nations have developed the Human Development Index which not only considers income (GDP) but also other standards of living, including education, health and inequality. The correlation to GDP remains high, as is indicated by our example: Norway is not only the second most affluent country on earth (after Luxembourg) but also receives the highest score on the UN HDI. In short, if you could choose your place of birth, you should choose Norway. The CAR, however, ranks 180th of 187 countries. A more recent measure, the Happy Planet Index, aims to include ‘sustainability’ as a criterion; sustainability is here measured as the ecological footprint. Here, Norway is ranked 29th and CAR 137th. The correlation between GDP, then, and other measures of living standards seems high, which is the reason for its popularity.
It helps to note, however, that GDP hasn’t always been pervasive. I listened to Dan Hirschman present a paper ‘Inventing the economy’ in Chicago last week. Hirschman, a PhD candidate in Sociology at Michigan, noted that the concept of national income did not exist before the 1930s, when the need arose to measure the impact of the Great Depression. While earlier economists, notably Smith, had written about the ‘wealth of nations’ implying the capacity of a country to produce output, the technical challenge of measuring such production (of goods and services) was not overcome before the middle of the twentieth century. The measurement of GDP as we know it today was only standardised in the 1940s, and many African countries only adopted it after independence in the 1960s. (See Google’s Ngram viewer above of the phrase ‘Gross Domestic Product’ appearing in English-language books. It’s really only the 1950s that the phrase is popularised.) This also explains why using historical data series of GDP are fraught with difficulties. Morten Jerven has shown the inconsistencies between data banks in earlier GDP estimates for twentieth-century African countries: compare, for example, the CAR 1960 GDP estimates in the Penn World Tables, the IMF statistics and Angus Maddison’s historical estimates.
Yet while Jerven’s point has important implications for scholars who use historical data series in regression analyses, for example, we should be careful to equate the past with the present. Most African countries have significantly improved their capacity in collecting and analysing data. Hirschman, in his presentation, referred to Jerven’s work and mentioned that several African countries’ GDP data is still poor. I would be hesitant to jump to this conclusion, mostly because GDP estimates are subject to all sorts of political influence and biases, even in the developed world, which means that the ‘accuracy’ of these estimates is not ‘good’ or ‘bad’ but rather somewhere along a continuum with many dimensions. Caution, also, because such pronouncements suggests a whiff of first-world arrogance.
The trouble with measuring GDP in Africa and elsewhere today is that the nature of economies are changing rapidly. The issue of whether to include, for example, housework, has always plagued economists. (As Hirschman noted in his talk, Norway, for example, did include it for several years before the standardisation of national income statistics where it was excluded.) But because of the continued technological changes – and the movement to digital production and cross-border trade-in-services – what qualifies for ‘value-added’ is not always clear. (Take the 3D printer: if I print my own toys at home, would this be added to GDP? It should, but who cares about toys, right? Well, what if I print my own house?)
That is why I’m so excited to read Diane Coyle’s new book, GDP: A Brief but Affectionate History. She promises to explain how and why the difference between current estimates of GDP and what we hope to measure – living standards, utility, welfare – might be growing. Perhaps it’s time for a new measure?
Don’t bet against GDP though. It’s popular because it tracks, crudely and inadequately but ultimately helpfully, how we’ve progressed over the last 200 years. And economic historians are continually expanding our understanding of the economic past; my own work with Jan Luiten van Zanden has attempted to measure South Africa’s GDP since 1700. Others have begun work on even earlier periods in Europe.
How we measure economic progress is important. It tells us about the progress countries have made, and allows us to compare, fairly accurately, differences in income between peoples, both between and within countries. Gross Domestic Product, to misquote Winston Churchill on democracy, is perhaps the worst way to measure progress, except for all those other ways that have been tried from time to time.
Yesterday our stay in Tucson came to end. It’s been a great experience; Tucson, a mid-size city in southern Arizona, is an eclectic mix of university town, military base and hippie culture. It’s also close to the Mexican border, which means that you will find excellent Mexican food, a welcome alternative to typical American fast-food diet. (How is Chipotle not yet a global franchise?) Oh yes, and Tucson is also in the desert, which means you’ll encounter saguaros, javelinas, ocotillos and fantastic autumn weather.
I was there to visit the University of Arizona’s Department of Economics. I presented the day after my arrival, which allowed a quick introduction to the faculty and students. First observations (of the US system in general): math ability is effectively the only criterion used for entry into the PhD programme. A significant proportion of students fail their first year (of five). A high proportion, often more than 50% of the graduate student body, is Asian-American, especially within the University of California system. In Tucson, foreign students from countries as diverse as Iran, Korea, Uruguay, Kazakhstan and China make up a large proportion of graduate students (in Economics). There are very few African students, at least at the universities I’ve visited. (I’m not referring to African-American students, although they are also underrepresented, as are Hispanic Americans.)
(Perhaps this warrants another post, but by considering the proportion of Indian and Chinese students at US universities, it’s easy to understand why these countries can be optimistic of their economic future. In contrast, even though some African economies are growing at rapid rates, it’s clear that the skills shortage will soon dampen this growth if these countries do not actively import skills from abroad.)
Our stay in Tucson was especially enjoyable thanks to the generosity of our Airbnb host, Ross, my host at the Department, Price Fishback, his colleague, Tiemen Woutersen, as well as that of Taylor Jaworksi (who is on the job market this year). Price treated us to a visit to the Desert Museum (where I snapped the above picture), and tickets to attend two college basketball games, a college football game (with more than 50000 spectators, close to 100 players per team and a show so professional I’d give them a World Cup to host any day of the week) and several lovely dinners. Arizona is mining country, so Helanya and I also visited Bisbee, a quirky mining town close to the Mexican border. We even took a tour of the old copper mine, which I am embarrassed to say was my first experience of an actual mine (discounting Gold Reef City). While here, I read Bill Carter’s Boom Bust Boom. As a resident of Bisbee, Bill explores the ways in which mining affects his own town, but also copper’s pervasiveness in our everyday lives.
Helanya and I also flew to San Francisco where we rented a car to visit Stanford (distinguished, high-tech, Asian), the Google campus (expectant, powerful, hipster) and UC Berkeley (classy, affable, under construction). The next day, I presented at UC Davis, their Economics department has a strong emphasis on economic history. Greg Clark submitted the final manuscripts of a book that morning which, in typical Greg Clark-style, promises to challenge prevailing ideas of social mobility.
This was my first extensive visit to the States, and I’ve made several observations. Helanya and I lived close to the university in a place we rented through Airbnb. The great advantage of the apartment was that my office was a 10 minute walk. The bad thing about Tucson (and the US in general), though, is that you need a car to get pretty much anywhere. Even though public transport is available in Tucson and they are building a new tram system linking campus to downtown, the differences between European university towns and the US are stark. I guess the US is more like South Africa (or South Africa more like the States); cars are ubiquitous and central to how Americans work and play. This culture of the car is both expensive and time-consuming, a consequence of the American Dream and subsidized home-ownership which created vast suburban areas resistant to public transport. Reducing this dependence on cars – or transforming this car into something more efficient – will be the greatest challenges (and opportunities) of the future.
Americans are known to be extroverted and self-assured, and our experience largely supports this generalization. The upside of this is that they are overtly friendly, sometimes irritatingly so, like when Helanya ended up next to a guy on the two-hour San Francisco flight who wanted to be her non-stop tour guide and personal councillor. (Do you really ask someone whether they are happy in their relationship ten minutes after you’ve met them – when their husband is sitting across the aisle?) This is, for someone used to the diffidence of Europe, both refreshing and awkward.
But America is also straddling a thin line between a country united and divided. Before any college sports game, the crowd falls silent and turns to the national flag that hangs prominently in the stadium. A trumpet plays the The Star-Spangled Banner and the crowd follows in song. It is an impressive display. The frequency of American flags (massive ones) that are visible across American towns, the regularity at which veterans and current soldiers are celebrated (at airports, on TV, at sports games), and the pervasiveness of American Culture, from fast food to news and movies and fashion, made us sympathetic and somehow part of this country built from an eclectic mix of migrants. (But that, of course, can easily lead to ignorance too: no, the World Series is not a world series.)
But just like South Africa, America is also a country divided along racial lines. As mentioned above, university entrance is highly disproportional to the population; Asian-Americans and whites are overrepresented, Hispanic and African-Americans are in the minority. (What happened to Native Americans, you might think? Aside from an excellent museum in Washington, they really are at the fringes of society.) There are affirmative action policies in place to redress these discrepancies, but they can have perverse outcomes. Francisca Antman, Assistant Professor in the Department of Economics and the University of Boulder Colorado, shows, for example, how people of mixed-race reclassify themselves depending on the type of affirmative action programmes. “Consistent with supporting evidence showing that individuals from underrepresented minority groups face an incentive to identify under affirmative action, we find that once affirmative action is outlawed, they are less likely to identify with their minority group. In contrast, we find that individuals from overrepresented minority groups who face a disincentive to identify under affirmative action are more likely to identify with their minority group once affirmative action is banned.”
Disunity is not only by race, but also by political affiliation. On our journey across America we’ve met staunch supporters of the Republican Party, outspoken Democrats and many who are critical of both. We’ve also endured the consequences of failure by the American government to reconcile differences across party lines. We’ve watched MSNBC and CNN but also FOX. We’ve heard debates about gun control, legalizing marijuana, Obamacare, the debt ceiling and the future of democracy. These are not easy issues in a country that is increasingly unequal. Those at the lower end feel their privileges eroding: immigration threatens their jobs, they believe, while gun control threatens their leisure. Those in South, or those in rural areas, feel more vulnerable, they argue, than those in the North, or those in cities. Obamacare’s intricacies make it an easy straw man for all the things wrong with government.
There are no easy answers, but Americans easily forget that they still live in one of the most remarkable countries on earth. Two days ago, someone asked me what my thoughts are on the future of the American economy. ‘Is it really going down?’
No, it’s not. Other countries may be doing better, but that’s a good thing. America is still the land of opportunity. It still provides the best platform for any entrepreneur – local or foreign – to turn their ideas into reality and ‘make it big’. Think about Google, now fifteen years old (and founded by an immigrant). Think about Facebook, who is only ten years old. Or Airbnb, who is only five. Its universities still draw the best of the global best to America’s shores, and many come to stay. Its politics may be perplexing and convoluted, but it is still the country that can elect a president from one of its smallest minorities.
Because of its promise, America will continue to be a country of migrants. (The political challenge is in supporting this, not inhibiting it.) Minorities will grow bigger; Spanish, which is already widely-spoken, might even become an official language. Americans of Asian heritage will increasingly be an economic elite, a consequence of their excellent tertiary education.
That means the American of the future might look very different, but she will continue to live in a country that inspires hope and belief in a better future.
A few weeks ago, a few hundred protesters marched through the Cape Town city-center demanding free housing, sanitation and other services. The boisterous crowd, spurred on a by a member of the ANC Youth League, then went on a pillaging spree, destroying cars and, notably, the livelihoods of some of the city’s poorest entrepreneurs.
While this event is not unique to Cape Town – as a quick Google search for the words ‘service delivery protests’ would show – the New York Times decided to publish an opinion piece by T.O. Molefe which use the Cape Town protests as setting to build a case against ‘the false doctrine of (economic) growth’:
Twenty years ago after this country was reborn after more than three centuries of rampant and institutionalized racial discrimination, it remains mired in economic disparities.
Unfortunately, despite evidence showing that the economy almost tripled in size over the past two decades and inequality worsened, pundits, business leaders and policy makers, including Ms. Zille’s party, continue to insist that growth heals all. It just needs to be made more inclusive, they say.
The solution, they say, lies in deregulating the labor market to get people into jobs — regardless of whether those jobs are secure or allow people to live with basic dignity — and relaxing exchange controls to give South African capital greater global mobility, because it will all trickle down to the poor in the end. They are wrong. The solutions they propose have been tried elsewhere and have failed. But such arguments are particularly infuriating because they relegate to a side show the goal of remedying the racial and economic inequality created by colonialism and apartheid — those same forces that pushed Ms. Boltney and millions of others to the city’s periphery — out of sight.
Since its rebirth, South Africa’s has had in place the moral and constitutional basis for ending inequality and poverty in the most direct and equitable manner possible: redistributing wealth and income from the rich minority to the poor majority.
But, instead of pressing ahead with this, the country’s leaders succumbed to a false global doctrine that — using the World Economic Forum’s archaic assessments of competitiveness — views the basic human rights protections contained in South Africa’s Constitution and labor regulations as factors that reduce the efficiency of markets. Such egalitarian laws, in this view, prevent the country from competing for foreign direct investment with countries like India and Indonesia, which do not have the same progressive founding ethos of social justice and human dignity.
It is perhaps slightly ironic that Mr Molefe uses Cape Town as the setting for his attack against the capitalism. The Western Cape is one of the fastest growing regions in South Africa, where poverty levels have fallen most significantly (but also where migrants are moving to, which suggest that conditions and opportunities must be better there than elsewhere, right?). I have other questions too. Perhaps Mr Molefe would tell us in greater detail when and where labour market deregulation has failed? Or where growth has failed to reduce poverty? Or why he calls competitiveness ‘a false global doctrine’?
Mr Molefe, author of ‘Black Anger and White Obliviousness’, suggests that ending poverty and inequality will be achieved through the redistribution of wealth and income from the rich to the poor. When last did Mr Molefe investigate South Africa’s income distribution? If he used the Census 2011 to do this, he would realise that even if all of South Africa’s whites left the country tomorrow, and their incomes were transferred directly to the poorest, we would still have lower per capita incomes than Brazil, Russia, Latvia or Gabon. In other words, we would still be poor. And does he know that if all white South Africans left the country tomorrow, the Gini coefficient would stay the same? That is because the major trend after apartheid has been the large increases in inequality within the black (and white) population.
I suspect Mr Molefe also failed to read any of the most recent work by economists that attempt to address South Africa’s legacy of discrimination. Based on years of excellent research, Servaas van der Berg summarises the difficult solutions we face if we are to reduce inequality and increase living standards. Yet Mr Molefe would probably disregard such advice, given that it is posted on a World Bank website, an institution he clearly despises. There are valid reasons to criticize the work of the World Bank. Jagdish Bhagwati has done so. Yet Mr Molefe would do well to read Bhagwati’s latest book – Why Growth Matters – which explains the miracle economic transformation still underway in India. In fact, Mr Molefe’s use of India and Indonesia is extremely ironic: these are two countries in the world that has made the most rapid improvements in poverty in the last two decades by doing exactly the things he warns against.
First-year textbooks often use the metaphor of doctors to explain what economists do. When a patient feels ill, they go to a doctor who, through various tests, identifies the cause of the illness and prescribes remedial medicines. Similarly, when a country is performing poorly, it is the economist’s job to identify the causes of the problem and identify remedial policies. Economists in South Africa are doing this, in education, in health, in fiscal policy, monetary policy, environmental policy and labour markets.
Unfortunately, as elsewhere in South Africa, the advice these doctors give are sometimes difficult to swallow. Their diagnosis suggests that the symptoms of the disease will remain for a long time, and its demise will be painful and expensive.
So, instead, we visit a sangoma. With no formal training as a doctor, this is someone who prescribes a remedy that is more to our liking. Sometimes, if we’re lucky, the symptoms would disappear. But mostly it doesn’t, and often-times it is likely to worsen. That is because there is no scientific basis for the prescriptions.
The likelihood that Mr Molefe’s prescriptions improves the welfare of our poorest citizens is far smaller than if Mr Molefe had understood the science of economics. There is a reason sangoma’s are popular; they give easy answers to difficult questions. Sangoma’s are also quite vocal, and shamelessly promote themselves.
I fear we will see the proliferation of sangomanomics in the coming years, with no or even negative consequences for those who most suffer the perils of poverty.
It is another perfect day in the desert. It’s early still, six o’clock, and the day is pregnant with possibilities. I read my mails, scan Facebook. It is a more remarkable day than usual. Today I turn 31. Lots of messages of congratulations and well wishes. I really appreciate each of these, take time to think about each friend. When did we last speak, have a drink or dinner, laugh together?
31 is a special number for me. It happens to be a combination of my two favourite numbers, 3 and 1. Like most habits, I don’t know when it started. It happened to be my first-year room number in Eendrag. In the off chance that I play roulette, I always bet on 31. Mostly I lose, but I remember the one time it actually won me something. When the world was my oyster, it was also the name of my fictional company – Group31. I think the plan was to own 31 farms across South Africa and Africa. Yes, farms. A tourist-farm where visitors can enjoy the delights of rural living while the farms, each carefully selected for its diversity of produce and experiences, produce organic goods for the top-end of the retail market. Or Hotels31, with boutique hotels in my favourite university towns; Utrecht, Coimbra, Geneva (photo), Lund, Tuebingen. Or Books31, because, well, it’s books.
31 is also the division, for me at least, between young and old. It is complete fabrication, I know. I’m in no way more older from yesterday to today, than from two days ago to yesterday. But it does feel as if I’ve turned a corner. My body is less malleable; training and running will only make marginal differences from now on. My future is less malleable. At school, I used to play a game where I would imagine five different futures: Johan the jet-setting businessman, Johan the publisher, Johan the history teacher, Johan the architect, Johan the Protea cricketer (don’t laugh). Aside from the small issue of talent, those were all potential options for teenager Johan. Not any more (although I still harbour a faint hope that somehow I’ll discover a new variation of spin-bowling that will catapult me into cricketing stardom).
So what determined that I now teach, do research and write a weekly blog? I don’t know. It was never just one decision. I never decided to do this. It happened, but also not in a fatalistic, deterministic sense. It happened through the cumulative effects of millions of tiny, every-day decisions. Yes, some were bigger: my choice of university programme certainly influenced my future options, or my choice of where to apply for jobs, and whom to marry. But these bigger decisions, I would argue, were contingent on many smaller, earlier decisions. Take my PhD, for example. Had I not met Jan Luiten van Zanden at a Social Science History conference in Lisbon, where we happened to be at the same meeting for economists, and, if several months earlier, I had not come across a link to the conference website while browsing online, and a few months before that happened to find a dataset that intrigued me (a dataset I wasn’t searching for), Utrecht would have been nothing more than a pretty Dutch town. And so on, and so on.
Life is a happenstance of uncoordinated decisions. The bigger ones we tend to overthink: we try to analyse the costs and benefits much like an accountant balances books. I think these ‘decisions’ are overrated. The smaller ones, the ones we make without thinking about it, are sometimes vastly more important. The future, then, is the outcome of thousands of small decisions, each the result of an earlier one. Like sending that last-minute email – Drink jy koffie? – to the girl that would later become my wife. Or the smile, only visible for an instant, that made me send that email.
And yet, we don’t celebrate these little decisions. We often don’t even take notice. We tend to live from one special event to the next – birthdays, anniversaries, business targets, sport milestones – all the while forgetting that life is in the detail. We may have big plans, dreams, aspirations, and that is certainly not a bad thing. But, now that I’ve moved through my proverbial veil of ignorance, perhaps I understand better what Paul Cilliers meant when he urged us to ‘make every act in one’s daily life a quality act’. Note the difference between ‘Enjoy every moment’, the cliched phrase of Supersport commercials, and ‘Make every act a quality act’. Not all moments are enjoyable; I certainly don’t enjoy washing dishes. But the next time I watch cricket with buddies, talk to students, walk to work, or, as Cilliers recommends, eat an egg, I’ll try to rush it a little less, to occupy the moment a little more. Because, to quote another famous 20th century philosopher, you never know what you gonna get.
Being in Tucson, we don’t have big plans for today. I’ll miss watching the Boks play Wales. Instead, I’ll attend my first game of American Football; it is Homecoming weekend here and, thanks to Price Fishback, Helanya and I have tickets to the big game between UofA and UCLA tonight. I can’t see how this will help me reach the goals I’ve set myself. Or help me realise those disillusioned dreams.
Instead, it promises four hours of fun and laughter. Perfect.
Every year I try my best to keep the number of books I order for the December holidays as close as possible to what I can reasonably expect to read. Every year I fail miserably. (But who buys books to read them, anyway?) Sometimes I am lucky, like my recommendation last year for The Black Count, which won this year’s Pulitzer Prize in Biography, a story about the father of Alexandre Dumas who fought alongside Napoleon. But most of my selections are just because I found the books interesting, or simply happened to pick them up at the airport book store.
So here’s what will be my 2013 failings, and more:
As always, there are several titles that contend for the best book in the History category. There is John Darwin’s Unfinished Empire, which I wrote about here. There is Robert Twigger’s Red Nile, a fascinating history of the world’s greatest river. There is Russel Shorto’s Amsterdam: a History of the World’s Most Liberal City. Shorto is one of my favourite authors, and after his The Island at the Centre of the World (a history of seventeenth-century New York), this should be a fascinating read, especially for those who travel to Holland frequently. And watch out for a biography of DF Malan, due early next year. Written by Lindie Koorts, a former PhD student at Stellenbosch, this will be the first full biography of a man that had a remarkable influence on South African society.
Another event that influenced South African history is the topic of Geoffrey Treasure’s new The Huguenots. This was a book I was looking forward to; for long I’ve wanted to know more about this episode of history, also because the South African (and my own) story is influenced by these events. Yet when I opened the book on the page that deals with the arrival of French Huguenots in South Africa, he writes that “by 1691, 13000 [Huguenots] were settled there, planting their vines, reinforcing the Calvinist ethos, and the sense of being a chosen people that would affect their relationship to the natives” (p. 371). Uhm, 13000? No. More like 160. I’ll pass.
Instead, I’ve invested in a two-thousand year history of paper. On Paper, by Nicholas Basbanes, is beautiful (it’s worth buying simply for the cover) and a must-have for any bibliophile. Finally, while more to do with the future than with the past, J. Craig Venter’s Life at the Speed of Light: From the Double Helix to the Dawn of Digital Life, seems pretty good. If you want an insider’s understanding of what our future might be like, Venter’s book highlights how the science of synthetic genomics will “enable us to actually write the genetic code for designing new species to help us adapt and evolve for long-term survival”. (I’d like a gene that allows me to read faster, please.)
Yet my favourite book this year is not a new release. It is Steven Pinker’s The Better Angels of Our Nature, published in 2011. I purchased my version in Lund and it’s been travelling with me for the last three months. It is a fat, monumental book. And it is gripping. Pinker not only provides convincing evidence that violence – in all its formations, from nation-state wars, to terrorism, to murder, to domestic violence and even playground bullying – has declined over the last few centuries, but also explains why it did. (Warning: for those with a weak appetite for violence, or for an over-creative imagination, the opening chapters should probably be skipped.) His answers include the evolutionary, the economic, the biological and the moral. Although he primarily discusses the decline of violence in the West, his analysis is applicable to developing countries and certainly to South Africa. (Perhaps that is a topic for another post someday.)
The book is long and I suspect a good editor would have cut some of his graphs and lengthy explanations. And I don’t think all of his statistics are entirely accurate: on page 237, he refers to Shaka as “a Zulu Hitler who killed between 1 and 2 million people during his conquest of southern Africa between 1816 and 1827”. I’m not sure the entire Mfecane can be attributed to one man, and even these numbers, as Wikipedia authoritatively informs, are dubious. (Also, given that Shaka came first, is it not more appropriate to call Hiter the German Shaka?) But the few generalisations are a low price to pay for what is, at the minimum, a thought-provoking book. The book really deserves a better review than what I have space for here. But here and here are good reviews. Of course, not everyone agrees.
I try to read at least one book on sport every year. Ever since the 2010 FIFA World Cup, my interest in English football has increased, and more specifically in Arsenal’s attempts at winning a trophy. (I’ve been well-prepared by the Stormers and the Proteas.) So it must come as little surprise that one of the sport books to read this summer is Alex Ferguson’s My Autobiography. As The Economist noted, Ferguson will not only be remembered for what he did, but also the way he did it; his management style is already taught in business schools around the world. If you are an Arsenal fan, you might also be interested in Dutch-legend Dennis Bergkamp’s Stillness and Speed.
Being cricket season, the best book-for-the-beach is probably Mark Boucher’s Bouch: Through my Eyes. (I’m not sure whether the ‘through my eyes’ refers to the way he was forced to retire from test cricket.) Then there is also Drew Forrest’s The Pacemen: 100 Years of South African Fast Bowlers. And then Ricky Ponting’s At the Close of Play (due next week) is probably one of the most anticipated cricket autobiographies of this decade (well, until Sachin writes one).
My pick, though, goes to Ed Smith. Ed who? Ed Smith, journalist (who often writes for cricinfo) and former England international cricketer, is the author of Luck: What it Means and Why it Matters. As one reviewer noted: As a former professional cricketer and a lifetime fanatic of other sports, Ed cuts quickly to what makes a great athlete, noting the various forms of luck/chance/good fortune which have influenced the careers of the famous and infamous. He describes these using fun quotes and stories from his own career and from others around him. The discussion is not limited to sport, though, and he explores the role of luck in careers like Churchill’s and Thatcher’s as well as other great and small events in history, often colouring the narrative with personal interviews, like with a WW2 parachute jumper. Sport can teach us much about life; it’s great to have a sport book that does the same.
Am I the only one to have struggled through Daniel Kahneman’s 2011 book, Thinking Fast and Slow? He aims to show how psychology and behavioural economics (for which Kahneman won a Nobel prize) influences our daily lives, and the book is certainly littered with experiments that prove humans’ irrational and quirky behaviour. But all that littering pollutes what could have been a more succinct narrative; for most of the book, I felt as if I was reading just ‘one damn experiment after another’.
One book that has managed to avoid repetitiveness is Tim Harford’s new The Undercover Economist Strikes Back: How to Run – or Ruin – an Economy. Harford, known for his use of economics to answer every-day questions, tackles macroeconomics in his latest book. Here is an excellent review, written in Harford’s conversational style. Perhaps this is what we should prescribe to second-year Macroeconomics students next year?
Another book that should be on any student of economics’ reading list is Angus Deaton’s The Great Escape: Health, Wealth and the Origins of Inequality, which is as concise a history of development as you will find. It explains the exceptional progress in living standards of a large proportion of the globe over the last 250 years, and also recommends policies to address the plight of those left behind. (There are some reviews here and here.)
Inequality is a hot topic, and that is why Tyler Cowen’s Average is Over: Powering America Beyond the Age of the Great Stagnation will be probably be the pick of the summer. Cowen argues that technology will split society in two: those whose skills are complementary to the new machines will prosper while everyone else will struggle. This is not a new argument, but Cowen, famous for his blog Marginal Revolution, makes a compelling argument, supported by evidence, that this divide is real and that it will continue to diverge in the future. This, of course, has very important implications for already unequal countries like South Africa. One is social mobility. Here’s one reviewer’s prediction: “Divided by outcomes, winners and losers are likely to have few chances for meaningful engagement with one another. For one thing the two groups are likely to live in entirely separate communities, and this residential economic segregation will mean that they share few common institutions. For these and a variety of other reasons, it is easy to imagine a highly polarized world providing little opportunity for upward mobility.” Sounds familiar?
For a more optimistic peak into South Africa’s future, there is no need to look beyond economist JP Landman’s The Long View: Getting Beyond the Drama of South Africa’s Headlines. His conclusion – that South Africa will continue to muddle along it’s current 2-3% growth path, with steady if unspectacular improvement in the long-term – is, I believe, the general consensus of most economists. Even if we only implement half of the National Development Plan, he argues, South Africans can expect a more peaceful, prosperous, healthier (but perhaps also more unequal) society.
Before that can happen, though, we have books to read this summer. Feel free to recommend any that I’ve missed.