Ferraris for all

The current Economist (19 December) has an article savaging those who romanticise hunter-gatherer societies. It argues against the view put forward by the likes of Jared Diamond that the development of agriculture was the worst mistake in human history.

Evidently in the 1970s some experts began to argue that the advent of agriculture led to a decline in human health – as people were short of protein and caught diseases from domestic animals – and the emergence of significant social inequalities. However, it now seems that hunter-gatherer societies were exceedingly violent:

“Several archaeologists and anthropologists now argue that violence was much more pervasive in hunter-gatherer society than in more recent eras. From the !Kung in the Kalahari to the Inuit in the Arctic and the aborigines in Australia, two-thirds of modern hunter-gatherers are in a state of almost constant tribal warfare, and nearly 90% go to war at least once a year. War is a big word for dawn raids, skirmishes and lots of posturing, but death rates are high—usually around 25-30% of adult males die from homicide. The warfare death rate of 0.5% of the population per year that Lawrence Keeley of the University of Illinois calculates as typical of hunter-gatherer societies would equate to 2 billion people dying during the 20th century.” (For another reference to Keeley’s work see post of 30 July 2006. On living conditions before the Industrial Revolution see 14 August 2006 and 7 April 2007 posts).

The Economist also makes an interesting parallel with the Industrial Revolution:

“When rural peasants swapped their hovels for the textile mills of Lancashire, did it feel like an improvement? The Dickensian view is that factories replaced a rural idyll with urban misery, poverty, pollution and illness. Factories were indeed miserable and the urban poor were overworked and underfed. But they had flocked to take the jobs in factories often to get away from the cold, muddy, starving rural hell of their birth.”

Labels: cities, happiness, health, inequality, progress

The World Bank’s World Development Report 2009 will focus on the economic geography of development. To quote the World Bank’s page on the report: “The objective of the World Development Report (WDR) 2009 is to identify and understand the interactions between geography, economic activities, and living standards, and to draw the implications of these interactions for public policy.”

A draft will be available in June 2008 and the full report will be posted on the site in October 2008.

Labels: cities, development, economics

By coincidence a review by Helene Guldberg on spiked echoes the points made in my 22 December post. She reviews Shyness by Christopher Lane, a Chicago-based research professor, which evidently shows how the definition of mental illness has widened considerably. Once again this broadening definition is reflected in the Diagnostic and Statistical Manual of Mental Disorders. According to Guldberg:

“His [Lane’s] painstaking research shows how the Diagnostic and Statistical Manual of Mental Disorders (DSM), the bible of the psychiatric profession worldwide, has been transformed – by a handful of psychiatrists behind closed doors – from the thin handbook it was up until the 1980s into the hefty tome it is today, with hundreds of new, poorly specified and poorly researched syndromes being added.”

Labels: affluenza, book, happiness, spiked

Paul Krugman has written a dispatch on his blog counter-attacking the criticisms against him in the Economist (see 21 December post). His main points:

“Inequality denial generally involves four dodges — all four of which are present in this article.

“First is a narrow technical issue — the misuse of the Consumer Expenditure Survey, which is used to claim that there hasn’t been much rise in spending inequality. First of all, that’s not true even if you believe the survey; plus, there’s good reason to believe that the Survey has been systematically underreporting the growth in higher-income-group consumption. See CBPP on all this.

“Second is the use of very long-run comparisons — what I think of as the “but even Louis the XIV didn’t have electricity!” defense. Yes, over the centuries economic progress has reduced some gross disparities — modern Americans are relatively unlikely to simply starve to death (though it can happen), so in that sense the gap between rich and poor has narrowed. But the question isn’t whether society is, in some sense, more equal than it was in 1900. It’s whether it is radically more unequal than it was in 1970. And of course it is.

“Third is the downplaying of poverty. Seventy percent of the poor have cars! They must be doing fine! Except that they often can’t afford medical care, sometimes can’t afford enough food, and usually can’t find a way to get their children a decent education.

“Finally, there’s the failure to appreciate just how rich today’s rich are. They’re not people who drive cars just like the rest of us, only fancier.”

Elsewhere on his blog Krugman includes an audio link to a speech he gave on The Conscience of Liberal at the Commonwealth Club of San Francisco.

Labels: America, book, economics, inequality

Will Wilkinson has reviewed a useful-sounding book in the December issue of Reason which rejects the view that material abundance is causing higher levels of depression. Allan V Horwitz and Jerome C Wakefield’s The Loss of Sadness: How Psychiatry Transformed Normal Sorrow Into Depressive Disorder (Oxford University Press) is a polemic against the arguments on depression put forward by the likes of Ed Diener and Martin Seligman. (Oliver James and Richard Layard have proposed similar arguments in Britain).

According to the review what has really happened is that the definition of depression has widened enormously to include many who are simply unhappy:

“According to Horwitz and Wakefield, ‘There are no obvious circumstances that would explain a recent upsurge in depressive disorder.’ The ranks of the depressed are bulging, they argue, because the clinical category fails to make the elementary distinction between normal, functional sadness and true mental disorder. The depression data are littered with false positives—jilted lovers, white-collar workers who missed out on a promotion, and kids nobody asked to the prom. People who are suffering but aren’t sick.”

This broadening definition of depression is reflected in the standard reference book on the subject:

“Since its third edition was published in 1980, the Diagnostic and Statistical Manual (DSM), the standard handbook used by clinicians to classify mental problems, has defined major depressive disorder with a complex checklist of symptoms. In order to meet the exigencies of 15-minute doctor’s visits and the needs of public health surveys, the few diagnostic qualifications calling for expert judgment were stripped away to produce a simple rule of categorization that family doctors, mental health epidemiologists, and even—or especially—computers can apply. To simplify only slightly, if you meet five of nine mundane requirements over the course of two weeks, you qualify as suffering from major depression. The checklist: a persistently low mood, a diminished interest or pleasure in almost everything, an increase or decrease in appetite leading to a gain or loss in weight, too much or too little sleep, fatigue or low energy, fidgetiness or listlessness, feelings of worthlessness or guilt, difficulty concentrating or indecisiveness, and thoughts of death, suicide, or an attempt of suicide.”

Labels: affluenza, book, happiness

The special double holiday issue of the Economist (22 December) includes a piece on inequality which is essentially a rebuttal to Paul Krugman. In his recent book, The Conscience of a Liberal, the New York Times columnist and Princeton professor emphasises widening income inequalities in America. The Economist concedes they are widening but argues they only tell a small part of the story:

“measures of income inequality are misleading because an individual's income is, at best, a rough proxy for his or her real economic wellbeing. Because we can save, draw down savings, or run up debt, our income may tell us little about how we're faring. Consumption surveys, which track what people actually spend, sketch a more lifelike portrait of the material quality of life. According to one 2006 study, by Dirk Krueger of the University of Pennsylvania and Fabrizio Perri of New York University, consumption inequality has barely budged for several decades, despite a sharp upswing in income inequality.”

However, consumption surveys also have their limits. The Economist argues that broader measures of well-being show that inequality is narrowing in many respects:

“This increasing equality in real consumption mirrors a dramatic narrowing of other inequalities between rich and poor, such as the inequalities in height, life expectancy and leisure. William Robert Fogel, a Nobel prize-winning economic historian, argues that nominal measures of economic well-being often miss such huge changes in the conditions of life. “In every measure that we have bearing on the standard of living...the gains of the lower classes have been far greater than those experienced by the population as a whole,” Mr Fogel observes.” (The Economist reference is to Fogel’s The Escape from Hunger and Premature Death 1700-2100 Cambridge University Press 2004).

Labels: America, book, inequality

Steve Salerno, the author of SHAM: How the Self-Help Movement Made America Helpless (Crown, 2005), has an interesting article on the “happiness myth” in today’s Wall Street Journal. It discusses how the “pursuit of happiness” has become an American obsession. He is not talking about the term in the sense used by America’s Founding Fathers as part of a broader struggle for social progress. Instead it has become an expression of narcissism:

“Certain to end up under the trees of at least some Americans who don't already own it is that unparalleled tribute to wishful thinking, "The Secret," by Rhonda Byrne. The year's blockbuster best-seller-cum-cultural phenomenon sold six million books and DVDs on the strength of the belief that you can imagine your way to total fulfillment.

“Some of the season's hottest inspiration books, though not "how-to" in format, sell a similar message. Notable is Elizabeth Gilbert's "Eat, Pray, Love," the story of one woman's (literal) journey to happiness, in which she decided to forsake the comfort of her known life for regions uncharted. "Eat, Pray, Love" reached the top of the best-seller lists after being blessed by Oprah. Self-help guru Tony Robbins, too, has lately been spamming his online community with holiday offers. Various Robbins products, and even tickets to his entry-level seminars on personal reinvention, will likely end up as stocking-stuffers.

“If the quest for joy doesn't take center stage at Christmas, it will surely pop up the following week. Typically, New Year's resolutions that don't involve weight loss have something to do with embracing change, choosing happiness, following your dreams, etc. We are consumed by the pursuit of happiness.”

Labels: America, book, happiness

Lester Brown, one of the doyens of environmentalism, excels himself in miserabilism in a missive entitled “Santa Claus is Chinese” (apparently first published in 2006 but emailed out today). After complaining about how many Christmas goods are made in China, and the fact Americans are willing to go into debt to pay for them, he goes on to argue:

“It’s not the fact that our Christmas is made in China, but rather the mindset that has led to it that is most disturbing. We want to consume no matter what. We want to spend now and let our children pay. It is this same mindset that introduces tax cuts while waging a costly war. Economic sacrifice is no longer part of our vocabulary. After the Japanese attack on Pearl Harbor, President Roosevelt banned the sale of private cars in order to mobilize the manufacturing capacity and engineering skills of the U.S. automobile industry to build tanks and planes. In contrast, after 9/11, President Bush urged us to go shopping.”

The more this passage is examined the more worrying it becomes. What does he mean when he says “We want to consume no matter what”? This is essentially an attack on the demand for high living standards. And why should be celebrate economic sacrifice? Like many environmentalists he goes on to celebrate war as it leads to curbs on consumption. But the fact that many millions of people died in the second world war – hardly an incidental fact – does not seem to strike him as relevant.

Labels: china, consumption, economics, environment

William Easterly, perhaps the world’s best-known conservative development economist, has written a critique of the millennium development goals (MDGs) as they apply to Africa. In his view the goals are constructed in an arbitrary way which leads to an underestimation of Africa’s development progress. For example, the 1990s was a bad decade for Africa yet, although the MDGs were officially declared in 2000, the targets are backdated to 1990. Therefore Africa starts at a disadvantage as a result of an arbitrary statistical decision.

Easterly makes some useful points but it is a pity that most criticisms of the MDGs come from the right. The idea that the goals embody and reinforce a climate of low expectations in relation to development is rarely made outside of spiked or Worldwrite.

Labels: Africa, development, spiked, Worldwrite

spiked has run two particularly interesting articles on energy over the past couple of days. Both show how the irrational character of environmentalism leads to arbitrary distinctions.

For example, Rob Johnston, a freelance science writer, argues that:

“Try to sink one 15,000 tonne oil platform in the North Sea (as Shell attempted with the Brent Spar platform in 1995) and Greenpeace will vilify you, but announce a plan to plant 7,000 concrete and steel pylons - each weighing 2,000 tonnes - on the seabed and you will be an eco-hero. Pour 60million tons of concrete across the Severn Estuary to build an energy-generating tidal barrage and Sir Jonathon Porritt and his Sustainable Development Commissioners will carry you in triumph through Jerusalem.”

Meanwhile, James Woudhuysen, professor of forecasting at De Montfort university in Leicester, concludes his article by looking at the UK Department for Business Enterprise & Regulatory Reform (BERR):

“BERR’s ‘Energy Group’ of 29 civil servants is enough to cause concern. Just two of them look after ‘Emerging Energy Technologies’ and ‘Cleaner Fossil Fuels & Hydrogen’. The others deal in strategy, planning, bills, market instruments, regulatory framework, consultations, licensing and liabilities.

“In short, BERR is a department devoted to everything - except actually doing something serious about energy supply.”

Labels: energy, spiked

I am reminded that this year is the 75th anniversary of a famous essay (PDF) on economic methodology by Lionel Robbins of the London School of Economics. In it he defined economics as "the science which studies human behavior as a relationship between scarce means which have alternative uses". The starting point of scarcity is one of the key problems with contemporary economics. To put it in colloquial terms its emphasis is on how to share out the cake rather than how to make it bigger. A key premise of contemporary economics is flawed.

Labels: economics

Cheap food is one of the great achievements of humanity. Despite the sneering of environmentalists the available of cheap and abundant food – at least in the developed world – is to be celebrated. Thanks to enormous increases in productivity we no longer live on the edge of starvation.

It is therefore worrying that food prices have started to rise. The Economist, in its lead comment this week (6 December), estimates that food prices have risen by 75% in real terms since 2005. This follows a fall by three-quarters in real terms from 1974-2005.

According to an accompanying briefing in the Economist there are two main reasons for the rise in prices. First, rising incomes in Asia means that people are consuming more meat which in turn bolsters demand for animal feed. Rising meat consumption is closely correlated with economic growth and therefore welcome. However, this is a long-term trend which does not explain the sudden surge in prices. Second, is the increased demand for crops such as maize to be converted into ethanol for fuel. There is nothing wrong with this development in principle but it is necessary to ensure sufficient food is produced as well.

It is clear that the urban poor suffer as a result of the trend to agflation. They have to pay more for their food both in absolute terms and substantially more relative to their incomes.

But it is doubtful that most of the rural poor benefit from higher prices. Those that are landless still have to pay for food. And the main problem facing most third world producers if low productivity rather than low prices.

Recent publications which examine this trend more closely include an article in Finance & Development from the International Monetary Fund (IMF). There are also relevant sections in chapter one (PDF) of the IMF’s most recent World Economic Outlook. More broadly the latest World Development Report from the World Bank is about agriculture and development.

Labels: consumption, economics, food, globalisation

An international opinion poll conducted in 20 countries by GfK Research on behalf of the Wall Street Journal Europe shows how gloomy contemporary opinion tends to be. According to the main article in Friday’s (7 December) Weekend Journal Europe:

“the most surprising detail of the survey statistics was the overall negative outlook. "It is striking how negative the attitude is in Europe, but even more so in the U.S.," where 62% said society was getting worse, says Mark Hofmans, a managing director in GfK's Brussels office, who analyzed the survey results…

“The survey didn't point to a single source of dissatisfaction among Europeans but showed a diverse set of worries. Terrorism ranked as the biggest fear for 17% of those surveyed, but issues such as war (15%) and global warming and environmental degradation (14%) were also major concerns.

“By comparison, in the U.S., moral decay was the single-largest worry, cited as the paramount problem by 20% of respondents. In Europe, only 11% of those surveyed said moral decay was their main source of anxiety.

“India, with its booming economy, was the most optimistic country included in the survey, with 51% of respondents saying global society was getting better. By contrast, only 20% of Europeans and 22% of Americans said society is improving. Turkey, where global warming was the single-largest worry for 27% of respondents, was among the most pessimistic countries included in the survey -- only 13% of those polled said global society is getting better, while 72% said it is deteriorating. (The most negative overall was Greece -- devastated by forest fires last summer -- where 74% said life is getting worse.)”

In other words the mood is overwhelmingly downbeat despite the fact that objective trends are generally improving. This is one of the key paradoxes I hope to examine in my forthcoming book.

Labels: America, environment, india, progress

Tessa Mayes has written on Culture Wars about the meeting I spoke at in November at the Institute of Contemporary Art on the global working class.

Labels: Asia, globalisation, speeches, work

This week Fund Strategy published the following comment by me on Prince Charles’ initiative in relation to the United Nations summit on climate change in Bali.

The one interesting thing in Prince Charles's article on climate change in the Financial Times last week was his admission that he favoured lower living standards: "Many of us fortunate enough to have lived in the developed world since the second world war have grown up assuming that standards of living will continue to rise generation by generation. But climate change will not only halt this process it will reverse it - and most probably for ever" (November 30, 2007).

The prince is not only fortunate enough to reside in the developed world, he also lives in a palace and has inherited substantial wealth. But it is to his credit that he expresses his preference for mass austerity - usually environmentalists are more guarded. The promotion of lower living standards makes it easier to understand the nature of the discussion.

His article was timed to precede the United Nations summit on climate change in Bali. The prince has led an initiative by 150 world business leaders to "advocate bold action to tackle climate change" (www.balicommunique.com) to present to the politicians attending. As with most such discussion the summiteers will no doubt be reluctant to draw out the implications of their arguments.

Such reticence is unsurprising given that austerity rarely proves popular with most people. Even those in the West who are sympathetic to environmental initiatives are likely to baulk at the prospect of lower living standards. Let alone the billions who live mired in third world poverty. In the prince's brave new world only a tiny minority can even dream of the like of trips to luxury resorts in Bali.

No doubt the environmentalist mainstream would claim that sacrifices are necessary to deal with global warming. But the idea there is a trade-off between tackling climate change and living standards is the fundamental mistake in the orthodox discussion of the subject. To tackle climate change, and to control the environment, it is necessary to have more development rather than less.

Such development frees resources to enable humans to reshape the environment for their own benefit. It is also closely associated with the creation of more advanced technology.

The best way to tackle climate change should be resolved through democratic debate between competing views. It is the kind of discussion that an unelected head-of-state-to-be should have no special role in.

Labels: consumption, environment, Fund Strategy

I have just discovered that the monograph by Helen Johns and Paul Ormerod on Happiness, Economics and Public Policy (Published by the Institute of Economic Affairs) is available to download from the internet. The report is a useful critique of the mainstream happiness discussion from a technical economic perspective. It is also a good source on the key references on the subject. I am sharing a panel with Ormerod at the Royal Society of Arts on Thursday (see 30 November post).

Labels: economics, happiness, speeches