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Showing posts with the label economics

Red Plenty - Francis Spufford

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If I told you that one of the dramatic highlights of Red Plenty is an upgrade to a Siberian viscose works, you might jump to the conclusion that it has niche appeal. But thanks to the literary wizardry of Francis Spufford this event is genuinely an enthralling plot point, and only one of many he uses to bring to life how Russian society operated in the Khrushchev era.

As if the subject wasn't risky enough, Spufford decided not to write the conventional history he was planning and instead made what he describes as a "Russian fairytale", a kind of heightened-reality novelisation of history. It may sound unappealingly quirky but it works brilliantly because it's a perfect fit for the story he's telling. It could easily have ended up like one of those TV history shows where actors prance about in period costume while a voiceover explains what's really going on, but it is much more immersive than that. There are real lives being lived here, albeit fairytale real …

EU leaders agree "European Debt-Deflation Death Spiral Pact"

BRUSSELS - Triumphant EU negotiators are preparing to announce a resolution to the Eurozone crisis which absolutely won't be revealed to be half-baked within a week or so.

The European Debt-Deflation Death Spiral Pact, also known as the "European Suicide Pact", will commit all Eurozone members to a strict austerity regime that will plunge Europe into a deep recession, which will lead to higher borrowing requirements, which will lead to more austerity, which will lead to a deeper recession, and so on until Europe is torn apart by social unrest.

Speaking from her coronation as God-Empress of Europe, German Chancellor Angela Merkel welcomed the deal. "The horror of 1920's hyperinflation is burned on our nation's collective memory," she said. "So we must act now to replay the even more disastrous but somehow conveniently forgotten 1930's austerity policies of Heinrich BrĂ¼ning. Yes, it will lead the EU to its doom, but at least we'll get to wag …

Keynes: The Return of the Master - Robert Skidelsky

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On to my birthday presents... first up is an impassioned defence of the economist John Maynard Keynes by his leading biographer, Robert Skidelsky. The Return of the Master is a much slimmer affair than his original three-volume opus (which I haven't read) and has no time for any nuance that a longer work might provide. Appropriately for a book with such a Star Wars-ish title, Keynes is here presented as a Jedi master of economics, guardian of great monetary truths which later generations have foolishly cast aside.

The book opens with a potted history of the financial crisis and its aftermath. It's not a bad summary but I'm not sure what sort of reader it is aimed at. Anyone who has been following the story closely will find it short on revelations, while people with less abnormal interests will surely be baffled by all the unexplained jargon.

More substantial is the second chapter, which describes and denounces the three pillars of modern conventional economic wisdom: rat…

The root of almost all evil

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"What we measure affects what we do. If we have the wrong measures, we will strive for the wrong things." - Joseph Stiglitz

After hearing so much about The Spirit Level over the past year, actually sitting down and reading it was almost an anticlimax. The authors point out that the results of social science research often seem obvious in hindsight, once the evidence has seeped in. Just how obvious the arguments of The Spirit Level now seem is a testament to the weight of evidence that Richard Wilkinson and Kate Pickett have brought to public attention.

The book opens with a startling observation: that the rich countries of the world can no longer achieve gains in wellbeing from increasing their material wealth. This is illustrated with a graph of life expectancy versus national income per person. For poor countries life expectancy rises rapidly up until an average income of around $10,000. After that it starts to slow, and beyond $25,000 the curve flattens out. Similar resul…

Bubble, bubble, toil and trouble

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Whoever designed my 1996 GCSE history syllabus was, in hindsight, inspired. One of the modules was on the Roaring Twenties in the US. We learned about jazz, flappers, prohibition and so on, but also about the causes of the Wall Street Crash of 1929. As far as I can remember, it was a mixture of laissez-faire government and excessive hire-purchase of lawnmowers that did for them. But the main thought I came away with was this: how could they be so stupid? Why didn't they see it coming?

The inspired part came a bit later, in 2008. After years of economic hubris, we found out that we're not so very much more sophisticated than our predecessors after all. That's probably the most important lesson history can teach us (after "don't invade Russia"). So how could we be so stupid? Why didn't we see our crisis coming?

The truth, now as then, is that some people did. They just weren't listened to. This time round Paul Krugman was one of those people. Back in 1…