Ferraris for all

Rereading Richard Layard’s Happiness: Lessons from a new science (Allen Lane 2005) I unexpectedly came across a useful reference. Evidently for primitive societies for which there are records over 20% of all male deaths happened through war. This figure is far higher than for the twentieth century, even taking the two World Wars into account. The source is Lawrence Keeley’s War before civilization (Oxford University Press 1997).

Labels: book, happiness, progress

An article in today’s New York Times discusses the remarkable changes to human bodies over the past century (“So Big and Healthy Grandpa Wouldn’t Even Know You”). It is fairly well known – although not as widely recognised as it should be – than humans are living longer and healthier lives than ever before. But the article goes further:

"The biggest surprise emerging from the new studies is that many chronic ailments like heart disease, lung disease and arthritis are occurring an average of 10 to 25 years later than they used to. There is also less disability among older people today, according to a federal study that directly measures it. And that is not just because medical treatments like cataract surgery keep people functioning. Human bodies are simply not breaking down the way they did before.

“Even the human mind seems improved. The average I.Q. has been increasing for decades, and at least one study found that a person’s chances of having dementia in old age appeared to have fallen in recent years.”

The New York Times article seems largely inspired by the work of Robert Fogel, a Nobel laureate in economics and professor at the University of Chicago. His The Escape from Hunger and Premature Death, 1700–2100 (Cambridge University Press 2004) looks well worth reading. His 1993 Nobel lecture (PDF) is also available on the internet.

Labels: economics, progress

Almost a year ago I wrote a spiked essay called “Why people hate fat Americans” (see bar on left). It argued that that obesity was increasingly being used as a metaphor to attack “over-consumption” more generally. Now a new bestseller seems to have joined the fast-growing genre. Insatiable: Competitive Eating and the Big Fat American Dream by Jason Fagone is being widely reviewed (in America it is called Horsemen of the Esophagus). A reviewer in the Scotsman quotes the book as arguing:

"These eating competitions are poetic in their blatancy, their brazen mixture of every American trait that seems to terrify the rest of the planet... if anti-American zealots anywhere in the world wanted to come up with a minstrel show of our culture, this is what they'd come up with."

I should probably read the book but I do not think I can stomach it.

Labels: book, consumption, obesity, spiked

Three short versions of Worldwrite documentaries, putting the case for real development from different angles, are now available on the internet. Bisease story – A letter to Geldof looks at Bob Geldof’s broken promises to a Ghanaian village. Damned by Debt Relief examines the grim reality of the Highly Indebted Poor Country (HIPC) initiative on debt relief. Carry on up the NGO shows that non-governmental organisations do not cater for the real needs of people in the third world. The films can be viewed for free at documentary-film.net although registration is required.

Labels: Africa, development, film, Worldwrite

The advocates of happiness put the argument against affluence in an apparently positive form. Why be obsessed with material advancement, they argue. Instead humans should be content with their well-being. It certainly sounds like a humanistic approach.

I do not intend to put the arguments against this viewpoint here. Instead I will provide links which are a starting point for a critique of the “pro-happiness” viewpoint. Links to my own articles – a review of Avner Offer’s Challenge of Affluence and a review of the BBC’s Happiness Formula documentary – are on the bar on the left hand side of this site.

It is important to remember that the literature on happiness is massive and growing fast. Yesterday the Financial Times magazine included a review essay on several new books on the subject. New York magazine has also recently published a substantial article on happiness.

A useful starting point is the website for the BBC’s Happiness Formula documentary website. It includes happiness tips, a happiness test, video clips and a bibliography.

Will Wilkinson, a policy analyst at the conservative Cato Institute, runs a happiness site which is critical of the discussion . It also includes a bibliography.

The World Database of Happiness provides plentiful statistical information on the topic.

Spiked has also run several critical articles on the subject besides my own including:

Frank Furedi We need teachers, not amateur therapists (11 July 2006). Puts the case against schools teaching children to be happy.

Frank Furedi Why the 'politics of happiness' makes me mad (23 May 2006). Argues against state-sponsored happiness programmes.

Lee Rowland Measuring happiness: a fool's errand (31 May 2006). Examines the difficulties of devising measures of happiness.

Michael Savage If you're happy and you know it... (29 November 2005). Argues the universality of the idea of happiness appeals to its contemporary advocates. It is almost impossible to be “against” happiness. But it would be a mistake to give up the difficult challenges in life.

Benjamin Hunt Economic misery (22 May 2003). Argues it is wrong to blame economic prosperity for feelings of social discontent. And restraint in relation to economic growth would not be a positive development.

Labels: happiness, spiked

My interest in anti-growth sentiment started while working on Cowardly Capitalism, my book on the global financial markets. I began to realise that the critics of the markets often assumed that financial instability was a result of economic dynamism. If only the economy was less dynamic, they seemed to be arguing, then the financial “casino” would be less of a problem. I came to the opposite conclusion. For me the rise of the financial markets was largely a symptom of economic atrophy.

The book was initially spurred on by the 1997-8 Asian financial crisis. Many commentators, some implicitly some explicitly, argued that the crisis was a result of the previous period of rapid economic growth in the region. To me, in contrast, financial instability was a result of a combination of economic lethargy in the West and risk aversion. The solution was not a new “international financial architecture” to use the favoured phrase of the time. Instead it was important to counter risk aversion and promote further growth.

Labels: book, economics, finance, growth

Once you start looking you find numerous examples of anti-materialism. Today I came across two before even arriving at work.

BBC TV’s Breakfast programme included an item on the proposal by David Miliband, Britain’s environment minister, to introduce swipe cards to ration carbon usage. Supporting the proposal, on the green side of the couch, was Mayer Hillman. Indeed he claimed he proposed the idea many years ago. Opposing Hillman was James Woudhuysen, professor of innovation at De Montfort University, who proposed “supply side innovation” as an alternative (more efficient power stations, nuclear energy, tidal power and so on).

On my train journey the front page headline in the Metro was “Rise in crime is blamed on iPods”. John Reid, the home secretary, was quoted as saying the rise in violent crime “is largely driven by a rise in the numbers of young people carrying expensive goods". Now it is true that iPods could not have been stolen before they were invented but it is hard to take this argument seriously. For example, one study estimates that the murder rate in medieval England was twice that in contemporary America. Or alternatively perhaps the current conflict in the Middle East can be reinterpreted as a battle over iPod ownership?

Labels: climate, environment, technology, television

Martin Wolf, the chief economics commentator of the Financial Times , is one of the most consistently interesting writers on economic growth and development. Unfortunately his work is generally only available to those who buy the FT or subscribe to ft.com. But those who can get hold of a copy are usually rewarded.

For example, in today’s paper he ran article on dealing with climate change. I do not agree with his conservative outlook but his articles generally include interesting facts and references. Wolf cites a paper by Klaus Lackner and Jeffrey Sachs of Columbia University (PDF) which shows that even if energy efficiency increases substantially there will be a sharp rise in energy use. Assuming a 1.5% annual fall in energy use per unit of output they estimate that world demand for primary energy is still likely to grow 2.8 fold by 2050.

For my review of Wolf’s latest book see the link on the left hand bar of my homepage.

Labels: climate, development, economics, environment

Steven Rattner, managing principal at the Quadrangle Group, argues in today’s Wall Street Journal that “income inequality has become the next global warming”. By this he means that widening inequality will become a big election issue in America. Evidently the Democrats are slowing moving to capitalise on the question. The misunderstandings in the inequality discussion will be a central feature of this website and in my book.

Labels: America, inequality

My day job is as the editor of Fund Strategy magazine, a weekly magazine for investment advisers, running a core editorial team of seven people. Most of it is too technical to be of interest to non-professionals but occasionally I write articles from a broader perspective. Where possible I will put these, or at least extracts, on to this website. The magazine can be accessed at: Fund Strategy (free registration required).

Sometimes Fund Strategy is also involved in conferences which explore broader themes. In March 2006 I chaired the Investment Summit in St Moritz which included a session on the rapid economic growth of India and China. Among the experts speaking were Nicholas Lardy of the Institute for International Economics in Washington DC and Vijay Joshi of Oxford University.

Labels: Fund Strategy

I was stunned today by the Modernism exhibition at London’s Victoria & Albert Museum. I am not qualified to discuss its artistic merits but what struck me most was the difference in perspective between the modernists, particularly in the early years of the movement from 1917 through the 1920s, and today (for a review of the exhibition see Karl Sharro on Culture Wars ). They welcomed science and technology as a way of enhancing the potential of humanity. In contrast today, tragically, the development of human control over nature is generally seen as a threat.

Labels: modernity, science, technology

Much of my writing on growth scepticism has appeared on Spiked-online; an independent online publication which describes itself as having the modest ambition of making history as well as reporting it. My recent articles include a contribution to its Enlightening the future 2024 project and a piece on the extradition of the “NatWest three” to Texas from Britain. The latter is a first attempt at dealing with what could be called the “paradox of inequality”: those who have the least suffer the most as a result of contemporary attacks on affluence. I also sometimes write on other topics, such as my essay on Steven Spielberg’s film Munich , but these articles will not generally appear on this site.

Labels: corruption, film, inequality, review, spiked

The slogan “Ferraris for all” comes for Worldwrite; an education charity campaigning for real development in the third world. Ceri Dingle, the director of the charity, was evidently asking some of its volunteers what they would really like to have. They said Ferarris. I am sure they did not necessarily mean it literally. No doubt Lamborghinis, McLarens or Maseratis would do for some. The point is that everyone should have access to the best that the world has to offer.

I appeared in the Bitter Aftertaste; a short documentary Worldwrite made criticising fair trade. To view the film on the internet click HERE. I have also written an article on the subject, called the coffee con , for Spiked.

On 28 October I will be chairing a discussion of Worldwrite’s new film Damned by Debt Relief at the Battle of Ideas festival. In 2005 I wrote an article on debt relief for Spiked.

Labels: development, film, media appearances, speeches, spiked, trade, Worldwrite

My review of a new biography of Adam Smith which puts him into context as a thinker of the eighteenth century Age of Reason. From the 10 July issue of Fund Strategy magazine:

Adam Smith (1723-1790) was one of the first and greatest thinkers of the modern age. Although nowadays he is normally seen as an economist, his preoccupations encompassed what today would be classified as history, international relations, philosophy, politics and sociology. Smith developed tools to understand the modern world that are in many respects superior to those commonly used today.

James Buchan's new biography of Smith is particularly welcome for two reasons. As would be expected from a novelist, his writing is clear and jargon-free. Even more importantly, he reclaims the legacy of Adam Smith from the contemporary charlatans who want to use him for their own narrow purposes.

Perhaps the best-known - although erroneous - image of Smith is as the founder of free-market economics. Towards the end of the 1970s, it became fashionable to uphold Smith as a defender of markets against state regulation. His the Wealth of Nations, first published in 1776, was promoted as the foundation for Margaret Thatcher's policies in Britain and Ronald Reagan's in America. Even today this view of Smith is popular.

Buchan points out that Smith only used the term "invisible hand" three times in the million words that he wrote in his lifetime. Although this phrase is often upheld as an expression of the free market, he does not use it in that context once. Nor does he use the phrases laisser faire or laissez faire. Such omissions should not be a surprise as Smith lived way before the more recent preoccupations on the relationship between state and market emerged.

However, while it is wrong to portray Smith as an 18th century Thatcherite, it is equally misleading to see him as an early New Labourite. Gordon Brown, who like Adam Smith was brought up in the Scottish town of Kirkcaldy, portrays him as an early socialist. Brown has argued that Smith's invisible hand was underpinned by a "helping hand" in the Theory of Moral Sentiments (1759), his great philosophical work. Yet Buchan points out that Smith does not use the phrase "helping hand" even once. In any case, it makes little sense to draw parallels between ideas being developed in the 18th century and contemporary policy.

None of this means that Smith's work is irrelevant to today's world. On the contrary, he remains of central importance. The paradox is that to understand Smith's significance he must be put in his proper historical context.

Smith was above all a thinker of the 18th century Enlightenment. During this period, a new breed of thinkers developed ideas based on key notions such as reason, science and progress. Smith, for example, was inspired by the breakthroughs of Isaac Newton in natural science.

Although the Enlightenment is often associated with France, and sometimes America, another centre was Scotland. David Hume, one of the most important thinkers of the Enlightenment, was Smith's closest friend. Other key figures of the Scottish Enlightenment included Adam Ferguson, Francis Hutcheson and Dugald Stewart.

Smith's concern in The Wealth of Nations was to understand the economy, as well as society more generally, using Enlightenment principles. He famously started with a description of work in a pin factory - an example taken directly from the encyclopédie compiled by French Enlightenment thinkers - to illustrate the importance of the division of labour. Through specialisation, he argued, productivity could be raised substantially. Society could become more prosperous as a result.

Smith was not the first to recognise the advantages of specialisation. Buchan points out that back in the 17th century Sir William Petty had already recognised the benefits of specialisation. And long before that Plato had written about it in The Republic.

However, Smith's treatment of the division of labour differs from earlier writers in significant ways. The importance he attaches to it is apparent from its place at the start of The Wealth of Nations. It is the foundation on which his system is based. Smith then goes on to explain the central role the market plays in allowing for the exchange of goods that are made by specialist producers.

Despite the high overall quality of Buchan's work, it does contain flaws. Like some of the critics Buchan criticises, he makes the mistake of reading history backwards. For example, he criticises Smith for excluding the role of innovation or the entrepreneur from his theory. Yet Smith was writing in the early stages of capitalism, before even the Industrial Revolution, so it is unreasonable to expect him to use such recent terminology.

More seriously, Buchan makes the mistake of arguing that Smith's "world is static, even frozen". It is hard to think of a criticism that is further from the truth. Admittedly, Smith nowhere uses the term "economic growth", let alone the idea of GDP, which was not invented until the 1930s. But, making allowances for his 18th century language, it should be clear that Smith has a dynamic view of economics.

For instance, Smith talks about the accumulation of capital rather than economic growth. By this term he meant the gradual amassing of wealth through economic activity. For Smith, this concept was in turn linked to a notion of social progress or humanity's drive to better its condition.

In contrast, it is contemporary economics that has a static perspective. It is preoccupied with short-term shifts in supply and demand far more than the long-term factors driving economic growth. It also focuses on the consumption side of the economy rather than the underlying relations of production.

Even more importantly, we can learn from the sense of optimism characteristic of Smith and the early epoch of capitalist development. While the contemporary world is marked by pervasive pessimism, the ideas of Smith were designed to help understand and create a better society. It is an approach that we in the 21st century would do well to learn from this 18th century thinker.

Labels: book, economics, Fund Strategy, review

I wish I had a less serious one but I for some reason I find it hard to appear smiley in pictures.