Ferraris for all

This week my recent Fund Strategy news analysis on the market meltdown (see 6 October post) was reproduced on Real Clear Markets while spiked ran an updated version of my review of Robert Reich’s Supercapitalism. I was also invited to appear on the Al Jazeera English TV station and Sky News but could not do either as I was in Dubai. It seems that I am at my most popular during a global financial crisis!

Labels: book, economics, finance, Fund Strategy, media appearances, review, spiked, television

Development Redefined, a new book by Robin Broad and John Cavanagh, promises to provide a critique of the Washington Consensus or “market fundamentalism”. Unfortunately, judging by its endorsements – including Walden Bello, Naomi Klein and Vandana Shiva – it is likely to prove even more conservative than the ideas it criticises.

Labels: book, development, economics

Duncan Green of Oxfam GB has started a blog on development issues. Given the substantial (and often pernicious) influence of non-governmental organisations (NGOs) in development it will probably prove worth monitoring. Oxfam is one of the most influential of such organisations.

On Green’s recent book on development see my 22 June 2008 post.

Labels: book, development, economics

An interesting article by Sameer Panya in Miller McCune on apocalyptic visions in movies, popular books and TV. Examples he points to include the Dark Knight (the latest Batman movie - evidently shows the Joker trying to destroy the world for sheer pleasure), Wall-E (see my post of 21 July 2008), Battlestar Gallactica (the recent TV version) and Cormac McCarthy’s The Road ( a novel which comes out as a film later this year). Two recent books examine this phenomenon: In Apocalyptic Dread by Kirsten Moana Thompson and Shocking Representation by Adam Lowenstein.

I wrote about apocalpytic visions in non-fiction in my post of 24 April 2008. I also used the introduction from Mad Max II to introduce my recent Fund Strategy feature on oil (see 26 August 2008 post).

Such visions seem to represent, in an extreme form, the fear of the future that is so prevalent at present.

Labels: book, environment, film, television

There have been several interesting articles and discussions this week but until now I have been too busy to blog them all. Here is a quick round-up:

* Debate on geo-engineering. The Royal Society (Britain’s premier science organisation) has published a series of papers in its Philosophical Transactions on geo-engineering. That in turn prompted a substantial article in the Economist (6 September edition) and a piece by Oliver Tickell (an environmental campaigner) on the Guardian comment is free site supporting geo-engineering but only if it is linked to a reduction in emissions.

* Book on Nazi’s green credentials. I came across this when I heard radio presenters making fun of the title How Green were the Nazis?. To me it is a perfectly reasonable question and the book looks interesting. There is no doubt that many Nazis supported what are today classified as environmental ideas - which does not mean that all environmentalists are Nazis. The most serious critique I could find of the book was in Haaretz (Israel’s leading newspaper).

* Critique of Garrett Hardin’s classic article on “The tragedy of the commons” from a leftist viewpoint. Available here.

* Article on conservative assumptions of organic food movement. Conservative in a literal Burkean sense. Available here.

* Poll on hostility to local development in America, Britain and Canada. Available here.

* James Heartfield on Enron as a pioneer of environmentalism. Based on extracts from his latest book. Available here.

Labels: book, development, economics, environment, finance, food, geo-engineering

Spiked has published an extended version of my review of Robert Reich’s Supercapitalism. The original was published in Fund Strategy (see 4 August 2008 post).

Labels: book, economics, review, spiked

Chrystia Freeland, the US managing editor of the Financial Times (FT), reviews what she describes as a “fine new book” on “the most important US economic trend, and hence most critical domestic issue - growing income inequality” (FT, 25 August): Claudia Godlin and Larry Katz, The Race Between Education and Technology, Belknap Press.

However, I’m not convinced by her contention that “this trend is hard to discuss in the US”. This blog alone includes numerous references to the debate on rising inequality in America.

Labels: America, book, inequality

Tom Friedman, a foreign affairs columnist for the New York Times, is having a new book published in September called Hot, Flat and Crowded. Evidently he argues that America should pursue environmental goals both as a good in itself and because it can help the nation retain its position of world leadership. It sounds like it puts him firmly in the neo-Malthusian camp (for Friedman's earlier work on this theme see post of 15 April 2007).

Labels: America, book, environment, Malthus

I have finally managed to find a publisher for my book on growth scepticism! I tried three other publishers before I found my present one but each of them backed away when they realised the full implications of my argument. The experience reinforced my view that an uncompromising defence of prosperity is both necessary and likely to prove unpopular in some quarters.

Labels: book, growth

Miller-McCune magazine, a publication from the Miller-McCune Center for Research, Media and Public Policy in California, has a useful review essay by David Villano on the “more-is-less” thesis. In other words it examines (sympathetically) the argument that it is possible to be more prosperous while consuming less.

Many of the points it makes are familiar – Americans consume far more per head than most of the rest of the world, the threat of climate change is imminent, the need to change lifestyles etc – but it includes many useful references. Among them are Confronting Consumption, (MIT Press) a 2002 book on America’s consumer society co-edited by Michael Maniates. Others include the California-based Global Footprint Network, the Voluntary Simplicity Movement, Redefining Progress and Mean Genes, a book on how our desire to consume is embedded in our DNA.

Labels: affluenza, America, book, climate, consumption, environment, footprint, inequality, progress, review, sustainability

Dick Meyer, a veteran American journalist, has written an interesting-sounding book on self-loathing in America with the brilliant title of Why We Hate Us (Crown 2008). To quote the blurb from his publisher:

“Meyer argues—with biting wit and observations that make you want to shout, “Yes! I hate that too!”—that when the social, spiritual, and political turmoil that followed the sixties collided with the technological and media revolution at the turn of the century, something inside us hit overload. American culture no longer reflects our own values. As a result, we are now morally and existentially tired, disoriented, anchorless, and defensive. We hate us and we wonder why.”

No doubt there is much that is wrong with Meyer’s analysis but he raises some important questions. There certainly is a strong element of self-loathing in America and Western culture more generally. This is apparent in many areas including environmentalism, identity politics and the hostility towards Chinese economic development. It is a topic that is worth examining in more detail.

An extract from the book and interview with the author are available here.

Labels: America, book, china, consumption, happiness

Today’s Guardian has an unashamedly one-sided review essay by Tim Flannery (Australian academic, climate change activist and author of The Weather Makers), of books on climate change. Among those authors recommended in the piece are works by Al Gore (Earth in the Balance), Mark Lynas (Six Degrees), George Marshall (Carbon Detox) and Oliver Tickell (Kyoto2). The review concentrates on British writers but American authors mentioned include Keith Bradsher (High and Mighty - an interesting sounding book on SUVs), Ross Gelbspan (Boiling Point), William McDonough (Cradle to Cradle), Bill McKibben and Gus Speth. Bjorn Lomborg, a leading sceptic on climate change, is mentioned in a few sentences but disparagingly dismissed.

One telling sentence in the article: “Few books about climate change have been written by the meteorologists and atmospheric physicists that dominate the field”. So even in relation to the science of climate change – as opposed to the politics or economics – there are few popular books written by experts. Pro-environmentalist non-specialists seem to dominate the popular debate.

In relation to the economics of climate change the Stern Review and William Nordhaus (A Question of Balance) are mentioned.

Labels: book, climate, consumption, economics, environment, review, science

Anything that winds up George Monbiot, the Guardian’s most high profile environmental columnist, is worth looking into. He wrote a comment entitled “Hypocrites unite!” in response to a new book by Julie Burchill, a well known British writer, on hypocrisy. Monbiot deployed what could be called the standard hypocrisy defence. In addition to admitting to being a “posh git” (his father was deputy chairman of the Conservative party) he goes on:

“Sure we are hypocrites. Every one of us, almost by definition. Hypocrisy is the gap between your aspirations and your actions. Greens have high aspirations - they want to live more ethically – and they will always fall short. But the alternative to hypocrisy isn’t moral purity (no one manages that) but cynicism.”

This conveniently absolves him of any need for consistency but it is also untrue. Greens are characterised by their low expectations rather than high aspirations. It is their glum view of humanity that leads them to elevate the idea of natural limits to human action. It is hard to imagine a more cynical outlook.

Those who want a more considered critique of green elitism and double standards should read James Heartfield’s book on the subject (see 17 February 2008 post).

Labels: book, environment, ethics

The following review by me appeared in this week’s Fund Strategy.

Robert Reich blames big business and technological progress for the erosion of democracy. But his flawed thesis is self-serving and - worryingly - he calls for a lowering of living standards.

Supercapitalism is about a fundamental schism in contemporary society. Robert Reich, a professor at Berkeley and labor secretary under President Bill Clinton, argues that big business is increasingly undermining democracy. Although people have benefited enormously as consumers and investors from this trend they are losing out in their capacity as citizens. His understated conclusion is that people should be pushed into accepting falls in living standards in return for greater democracy.

Reich's critique of contemporary capitalism is more sophisticated than many. He eschews explanations that simply attack human greed or slate conservative politicians. Reich also acknowledges that the recent era of big business has brought some substantial benefits.

But Reich's confusion of basic categories leads him to serious errors and damaging political conclusions. The key development to understand is the demise of the role of humans as producers rather than the rise of consumption. To the extent that consumption has become more important it is largely through default. The striking trend of the past 30 years is in the reduction in importance attached to humanity's productive role.

This productive side of humanity should not be understood simply in terms of making widgets. It needs to be put more broadly in the context of what might be called "the human subject": the capacity of people to make and remake the world around them. The diminished sense of human subjectivity, rather than the rise in importance of consumption, is the key to understanding the trends identified by Reich.

Reich's notion of supercapitalism has to be set against the "not quite golden age" of 1945-75. That period embodied many of the values that he holds dear: it was an era of relative equality, job security and trust. There was also a compact between labour unions and big business. Yet Reich is balanced enough to acknowledge it was far from perfect. For example, women and minorities suffered severe discrimination.

For Reich this set-up began to break down in the second half of the 1970s. New technology increased competition between corporations. This in turn led to a new era of globalisation, new production techniques and deregulation.

He acknowledges that the new era has brought enormous benefits. Thanks largely to innovations in medical science the average American lives almost 15 years longer than in 1950. Americans are also rich and have a far wider range of consumer choices than in the 1970s. Other countries too have benefited from similar developments.

However, many of the positive features of the not quite golden age have gone too. Societies have become more unequal, job security has diminished and trust in politicians has disappeared. Corporations through their incessant lobbying have, in Reich's view, undermined the democratic process.

Against those who argue that conservative politicians, such as Ronald Reagan in America or Margaret Thatcher in Britain, are to blame for this shift Reich points out (correctly) that the shift predates their time in office. Reagan was president from 1981-89 while Thatcher was prime minister from 1979-1990 yet the shift started in the 1970s. Both leaders simply intensified an attack on the post-War consensus, particularly in relation to unions, that had started before their time in office.

However, in relation to this point Reich seems to be suffering from a temporary memory lapse. The attack on the consensus in America started in earnest under the presidency of Jimmy Carter (1977-81). It was under Carter's presidency that Reich himself was a political appointee at the Federal Trade Commission. Reich does not deny his position but is shy of drawing any conclusions about the role of the Democrats in breaking the consensus. In Britain the Labour government of 1974-9 played a similar role in launching an assault on unions and destroying post-War institutions.

More broadly the way to understand this shift is as a response to the end of the post-War boom. After the second world war the world economy, particularly the developed countries, grew at record rates. But by the early 1970s signs of economic crisis were clear. This lead governments on both sides of the Atlantic to launch an assault on the unions and give much freer rein to business.

This trend in turn meant that ordinary people had much less of a say in their lives. Politics was no longer about competing camps or competing visions of how to organise society. Instead the era of "Tina" - as Thatcher put it "There Is No Alternative" came to the fore. The focus of politics switched to regulating individual behaviour - including such areas as drinking, smoking and even eating - rather than battling over how to organise society.

This is a much more convincing explanation for the shifts that Reich identifies than his focus on technology. Although Reich denies being a technological determinist his explanation exaggerates the role of technology and understates the role of political defeat in creating the current climate.

Reich's outlook also leads to some deeply conservative conclusions despite his reluctance to spell them out in detail. He is in favour of "new rules of the game" (read regulation) particularly in relation to corporate lobbying. Reich seems to lack confidence in the capacity of others to counter the arguments of corporations.

More worryingly, he twice advocates "sacrifice" by ordinary people by which he seems to mean an acceptance of lower living standards. He appears to take the peculiar view that reducing living standards will somehow bolster democracy.

In reality democracy can only be achieved by a revival of politics in the proper sense of the term. This means relaunching a battle of ideas over competing visions of how to organise society. It involves a struggle that is entirely consistent with raising rather than lowering the living standards of the bulk of the population. It is Reich's demand for sacrifice that is the antithesis of democracy.

Labels: book, economics, Fund Strategy, globalisation, review, technology

Eric Rolston, an American science writer, has written a fascinating sounding book on carbon. Despite its sensationalist sub-title – “how life’s core element has become civilization’s greatest threat” – The Carbon Age rightly makes the point that carbon is the building block of life. Despite the element’s key role in the natural world it is strangely seen as a great threat to humanity nowadays.

Labels: book, energy, environment, science

Barbara Ehrenreich, a prominent American activist and writer, has added her voice to the debate about inequality in America. This Land is Their Land (Metropolitan Books), her book on American extremes, seems to be receiving a lot of publicity. This includes an appearance on Comedy Central’s The Colbert Report.

Labels: America, book, inequality, television

Oxfam has published a book that looks likely to become highly influential in the development debate. Although From Poverty to Power, written by Duncan Green, probably says little original it codifies the current development consensus. It has a foreword by Amartya Sen and is endorsed by, among others, Dani Rodrik of Harvard. An accompanying website includes a full download of the book, background papers and a blog. The New Statesman (23 June) has already carried an article on it.

Labels: book, development, economics, inequality

Icfai Books in Hyderabad, India, has published Prosperity Index, a collection of articles including my January 2007 spiked essay arguing “There is no paradox of prosperity”. It is edited by Asha B Joshi, a faculty associate at the Icfai Business School Research Centre in Ahmedabad.

Labels: book, happiness, india, spiked

Josie Appleton has a perceptive review of Benjamin Barber’s Consumed in the latest (April) spiked review of books. Rather than focus too closely on the book itself she looks at the changing ethic of capitalism. In broad terms her breakdown is the following:

* “The capitalist bookkeeper”. The model was Benjamin Franklin (18th century). Its chief theoritician was Max Weber in his Protestant Ethic (1910).

* “The counter-cultural ethic” of the 1920s and later the 1960s. Analysed by Daniel Bell in his Cultural Contradictions of Capitalism (1976).

* “Infantalisation”. Posited as the ethic for 21st century capitalism by Barber. However, Appleton argues it is misleading to talk of an ethic of consumption and that Barber’s is a weaker book than Bell’s. Rather it has taken on a greater importance in society by default. She cites George Simmel in his Philosophy of Money as a useful theorist of consumption.

It is a useful complement to Dolan Cummings’ recent essay on contemporary anti-capitalism (see 9 March 2008 post) which also refers to Barber’s book.

Labels: book, consumption, economics, review, spiked

Why are environmentalists obsessed with the idea of apocalypse? Rebecca Onion, a writer based in Texas, discusses the question in an article in Slate. She points to contemporary authors such as James Howard Kunstler and Alan Weisman as examples of the trend. But the strain of thought emerged in the 1970s with the likes of Edward Abbey and Philip Wylie. As Onion argues:

“While the enviros of the 1970s worried about population, we worry about climate change, but the possibilities for post-crisis humanity remain rosy. Kunstler's glorious images of ripped-up strip malls and catamounts in empty houses echo Weisman's regenerating landscapes, and both recall the new eco-orders of Abbey and Wiley. In the perfect green apocalypse, population reduction leaves a world in which everybody wins—birds, bees, and people.”

Thanks to James Heartfield’s Facebook entry for the Slate reference. Meanwhile, I notice George Monbiot has a new book out: Bring on the Apocalypse. I have not seen it yet but it sounds like a collection of Monbiot’s’ misanthropic articles.

Labels: book, environment

Fund Strategy has run my review of James Heartfield’s Green Capitalism in today’s issue.

Terms such as "ethical", "responsible" and "environmentally friendly" are used so often nowadays in the investment world that it almost seems churlish to question them. Who would want to present themselves as unethical, irresponsible or hostile to the environment?

Yet James Heartfield, a writer and lecturer based in London, puts a strong case for such terms to be interrogated. In "Green Capitalism" he argues that the rise of environmentalism and green consumerism are entirely negative trends. His logic is compelling even though it runs directly counter to the spirit of the times.

Heartfield's starting point is that the global elite is facing its worst nightmare: cornucopia. Until recently the history of humanity was one of living in conditions of scarcity. But the virtual abolition of scarcity, at least in the developed West, has radically changed perceptions. The elite feels a desperate need to recreate scarcity artificially just as developed economies have overcome its constraints.

The origins of contemporary environmentalism go back to the economic crisis of the mid-1970s. At that time the Club of Rome, an organisation of top industrialists, sponsored a high-profile report on "The Limits to Growth". It argued that the world economy was increasingly coming up against natural limits - although its predictions have proved ridiculously pessimistic over time. The backdrop to the report was the combination of economic crisis and industrial militancy of the time. Under such circumstances this early form of environmentalism helped make cuts in wages and a reduction in popular living standards more acceptable.

More recently, two developments have helped popularise green thinking. The first is what Heartfield calls "the retreat from production". With the abolition of scarcity it became easier to prioritise other forms of economic activity besides industry. Financial markets took on an enormous importance; most strikingly in Britain.

Notions such as brands and the New Economy were elevated to the status of key concepts. Industry, in contrast, was increasingly viewed with disdain. It was often more associated with emerging economies, notably China and India, than the developed West.

The second development was the end of the Cold War and the demise of the Soviet Union in the late 1980s. This deprived the ruling elite of a focus as anti-communism had long played an important unifying role for the Western powers. It also led many disorientated radicals to support environmentalism.

This combination of factors has had perverse results. In particular it has meant that a misplaced belief in natural limits has come to the fore. For Heartfield there is no real shortage of natural resources in the world. Instead there is an ever increasing manufacturing of scarcity by the ruling elite.

An excellent contemporary example of this trend is the retirement of land from production. "Green Capitalism" points out that almost 19m square kilometres of land, more than the combined area of China and South-East Asia, are classified as protected. This amount has grown more than sevenfold since 1962.

Heartfield argues that this is the main cause of rising food prices. It is a problem of an artificial constraint on supply rather than growing consumer demand. The increasing area of land devoted to growing crops for biofuel is tiny in relative terms. If even a small proportion of "protected" land were harnessed for agricultural production, it is likely food prices would fall dramatically.

The trend towards organic food also helps to exacerbate rising prices. Since yields from organic farming are low - by definition it shuns modern farming methods - land cannot be used efficiently. Although the total consumption of organic food is relatively small, its popularity illustrates the disdain of the green elite for economic efficiency.

A particular irony is that the richest people in the world, in other words those who consume the most resources, tend to be the greenest. In Britain this includes the likes of Zac Goldsmith of the Ecologist magazine (an Old Etonian and an heir to the Goldsmith family fortune) and Lord Peter Melchett (another Etonian, and director of the Soil Association). In America the mould is set by Al Gore (the son of a senator and the owner of three homes, including a 20-room mansion).

It is tempting but misleading to accuse such people of hypocrisy. It would be closer to the mark to describe them as elitists. Their objection is not to consumption itself but to mass consumption. They see no problem with their own considerable appetite for resources but they believe that popular consumption is constrained by natural limits.

Indeed, this elitist view of consumption, Heartfield argues, is embodied more generally in green consumerism. The main role of green products - whether organic tomatoes or GM-free soya - is what he calls "status affirmation". It is to mark the green consumer out from the bulk of society. In that way the green consumer can happily use resources while distancing himself from the consumption of the mainstream. Such expressions of ethics are in reality declarations of moral superiority. Their importance is symbolic rather than practical.

Another common expression of disdain for ordinary people, in Heartfield's view, is the attitude greens typically take to the most valuable resource of all: human time. Their admonitions to recycle, not use standby buttons and save energy are free of any concerns for the time such actions take for the average household. Ordinary people are expected to expend enormous amounts of their energy on useless gestures.

It is a shame that "Green Capitalism" is not more widely available. Although its arguments are often counter-intuitive they represent a powerful critique of the pervasive outlook of environmentalism. An unexpected bonus is that it also provides insights into practical issues such as the surge in food prices.

Fortunately, through the power of the internet, it should be possible for those readers who are interested to get hold of a copy.

Labels: book, consumption, economics, environment, review

Jeffrey Sachs has a new book out. Yet, judging by an extract in Time magazine (24 March), Common Wealth for a Crowded Planet repeats many of the themes of his previous work (see links to “my reviews” in the left hand column):

“The defining challenge of the 21st century will be to face the reality that humanity shares a common fate on a crowded planet. We have reached the beginning of the century with 6.6 billion people living in an interconnected global economy producing an astounding $60 trillion of output each year. Human beings fill every ecological niche on the planet, from the icy tundra to the tropical rain forests to the deserts. In some locations, societies have outstripped the carrying capacity of the land, resulting in chronic hunger, environmental degradation and a large-scale exodus of desperate populations. We are, in short, in one another's faces as never before, crowded into an interconnected society of global trade, migration, ideas and, yes, risk of pandemic diseases, terrorism, refugee movements and conflict.

“We also face a momentous choice. Continue on our current course, and the world is likely to experience growing conflicts between haves and have-nots, intensifying environmental catastrophes and downturns in living standards caused by interlocking crises of energy, water, food and violent conflict. Yet for a small annual investment of world income, undertaken cooperatively across the world, our generation can harness new technologies for clean energy, reliable food supplies, disease control and the end of extreme poverty.”

Although he does not say it explicitly his argument is that there are natural limits to economic growth. The best we can hope for is to eradicate “extreme poverty”. Our growing use of resources, in his view, could lead to disease, terrorism and conflict.

Labels: book, development, economics, environment, inequality, Malthus

Dolan Cummings of the Institute of Ideas has an astute review essay on the Culture Wars website on contemporary capitalism and anti-capitalism. He argues that:

“That the defence of capitalism takes the form of an apology is nothing new, but the critique made today is very different from that of traditional anti-capitalism. While in the last century the pragmatic case for capitalism was made in opposition to calls for social change, in this case it is the opposite: it is capitalism that threatens to transform society and critics who seek to conserve the status quo, talking in terms of resisting change rather than taking control of it. Rather than debating which changes are or are not desirable, from more convenient shop opening hours to GM food, we are presented with a binary opposition: for or against this single relentless force, variously described as ‘neoliberalism’, ‘globalisation’ or simply ‘capitalism’? Worse, critics rarely expect to prevail anyway: ‘anti-capitalism’ has become a moralistic posture rather than a political challenge. Significantly, this almost-emotional critique has become mainstream only with the passing of the political alternative that once had capitalism on the defensive.”

Cummings touches on similar themes to me in my critique of growth scepticism. Among the authors he cites are Benjamin Barber, Daniel Bell, Frank Furedi, Clive Hamilton, Eva Illouz, Oliver James and Brink Lindsey.

Labels: book, economics, review

Frank Furedi has written a generally positive but critical review of James Heartfield’s Green Capitalism for the February spiked review of books. On the positive side he praises Heartfield’s critique of green consumerism. Furedi endorses the view that the critics of consumerism are as obsessed with consumption as the most ardent brand junkies:

“Ironically, green protest against consumerism doesn’t represent the rejection of consumption, but rather its moralisation. From a sociological perspective, green consumption can be seen as a new form of conspicuous consumption. This is consumption for effect. Consumption apparently must no longer be an impulsive act of buying – rather it has become a massively over-examined experience, and both a moral statement and an affirmation of status and identity. In the nineteenth century, theories of commodity fetishism noted the growing tendency for people to live through things – commodities appeared to acquire a life of their own through the working of the market. In the world of green consumerism, the fetish of commodities acquires an unprecedented significance. Things are assigned human and ethical significance. Thus we have the stigmatisation of certain foods as ‘evil’ and the rendering of other products as ‘ethical’.”

However, in his criticism of the book, Furedi argues that Heartfield is guilty of reading history backwards. Furedi says that it is wrong to portray the capitalist elite as deliberately setting out to engineer scarcity:

“What Green Capitalism characterises as the ‘engineering of scarcity’ could be more usefully described as the creation of new demands. Indeed, what is most striking today is not simply the rise of the celebration of scarcity, but the growing tendency to marketise every aspect of life. Under the banner of green capitalism, more and more features of economic life are being reorganised and restructured. Everything from the emission of carbon to the air we breathe to the water we drink has been transformed into a commodity. Arguments for protecting nature are really a demand for the gradual securitisation of the environment. Powerful forces insist on transforming every object of possible use into a value, in an attempt to subject them all to the influence of market transactions.”

When I get a chance I will read Green Capitalism and make my own mind up.

Labels: book, consumption, economics, environment, review, spiked

Spiked has published a review essay by me on books which see affluence and consumerism as leading to mental illness.

Labels: affluenza, book, happiness, review, spiked

James Heartfield has a new book out called Green Capitalism: manufacturing scarcity in an age of abundance. I have not even seen it yet but, judging by the quality of his articles and previous books, it should be excellent. It is available from his personal website.

Labels: book, economics, environment

Newsweek has a particularly interesting article on the backlash against the obsession with happiness (2 February). This blog has already mentioned some of the key references but it adds more as well as some illuminating details:

* Allan V Horwitz and Jerome Wakefield The Loss of Sadness: How Psychiatry Transformed Normal Sorrow Into Depressive Disorder (see 22 December 2007 post). In the foreword Robert Spitzer of the New York State Psychiatric Institute, the psychiatrist who oversaw the current Diagnostic and Statistical Manual, expresses doubts about the medicalising of sadness: "To be human means to naturally react with feelings of sadness to negative events in one's life".

* Eric Wilson Against Happiness (see 17 January post).

* Also Ed Diener, a veteran happiness researcher, has evidently co-written a book with his son, Robert Biswas-Diener, called Rethinking Happiness. It is due for publication later this year.

Labels: affluenza, book, happiness

spiked has published a review by me of John Kenneth Galbraith’s Affluent Society. I argue that the book, which was first published 50 years ago, anticpates many of the key themes of contemporary growth scepticism.

Labels: book, consumption, economics, growth, review, spiked

Eric G Wilson, a professor of English at Wake Forest University in North Carolina, has written a wonderful essay on the value of melancholy as opposed to happiness in the Chronicle Review (18 January). It is adapted from his book Against Happiness which is about to be published by Farrar, Straus and Giroux in America (and is also reviewed in the issue of the Economist that is about to be published).

He starts with the observation that, in recent poll conducted by the Pew Research Center, almost 85 percent of Americans said they were very happy or at least pretty happy. Then he goes on to argue:

“Surely all this happiness can't be for real. How can so many people be happy in the midst of all the problems that beset our globe — not only the collective and apocalyptic ills but also those particular irritations that bedevil our everyday existences, those money issues and marital spats, those stifling vocations and lonely dawns? Are we to believe that four out of every five Americans can be content amid the general woe? Are some people lying, or are they simply afraid to be honest in a culture in which the status quo is nothing short of manic bliss? Aren't we suspicious of this statistic? Aren't we further troubled by our culture's overemphasis on happiness? Don't we fear that this rabid focus on exuberance leads to half-lives, to bland existences, to wastelands of mechanistic behavior?”

He later goes on:

“Melancholia, far from a mere disease or weakness of will, is an almost miraculous invitation to transcend the banal status quo and imagine the untapped possibilities for existence. Without melancholia, the earth would likely freeze over into a fixed state, as predictable as metal. Only with the help of constant sorrow can this dying world be changed, enlivened, pushed to the new.”

At the end of the article also reproduces the “Ode on Melancholy” (1919) by John Keats.

Labels: affluenza, book, happiness

A new spin on growth scepticism from John Naish, a health journalist, in an extract from his book Enough in today’s Times (London). He takes two of the usual charges from the growth sceptic litany – humanity is destroying the environment and making it unhappy – and blames them on our primitive human brains.

The opening passage of the extract argues that: “Over the past decade, two facts have become increasingly obvious – that our ever-increasing consumption is wrecking the planet, and that continually chasing more stuff, more food and more entertainment no longer makes us any happier. Instead, levels of stress, obesity and dissatisfaction are spiralling.” Of course these may appear to be obvious “facts” to Naish but they are far from straightforward or beyond dispute.

However, Naish does not waste any time. The next passage gives his explanation for what he sees as our terrible social maladies: “So why is our culture still chasing, consuming, striving ever harder, even though we know in our sophisticated minds that it’s an unrewarding route to eco-geddon? New scientific studies are helping to reveal why. It’s our primitive brains. These marvellous machines got us down from the trees and around the world, through ice ages, famines, plagues and disasters, into our unprecedented era of abundance. But they never had to evolve an instinct that said, ‘enough’.”

By a few paragraphs down it is becoming pretty silly: “The desire-driven wiring of our primitive brains evolved in the Pleistocene era, between 130,000 and 200,000 years ago. It was moulded by half-starved hunter-gatherers and farmers whose crops frequently failed. Those who kept going survived to give us their yearning genes. That wanting instinct gets fixated on material goods. We evolved to desire possessions as no other creature does. Neolithic cave sites may partly explain why. Many contain millions of hand-axes – far more than cave-dwellers ever needed. Anthropologists believe that the best axes were not just prized tools, but precursors of Ferraris and Jimmy Choos. Owning Stone Age bling displayed your high reproductive value.”

So whereas the likes of Oliver James blame “selfish capitalism” for our alleged plight John Naish points to the primitive human brain as the culprit.

Labels: affluenza, book, consumption, environment, happiness

The awful Oliver James has a new book out. The Selfish Capitalist (published by Vermilion) evidently argues that the model of capitalism in the Anglo-American countries has led to an explosion of mental illness. I have already reviewed James’s previous book (see menu bar on left) and will read his new one as soon as I get a chance.

Labels: affluenza, book, happiness

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

Today’s Fund Strategy includes a review by me of a book on India and China.

The rise of China and India has, apart from anything else, produced a booming economy of books designed to introduce the countries to western readers. Robyn Meredith's The Elephant and the Dragon is one of the best of the genre.

Meredith's perspective is that of an American journalist who has covered recent developments in India and China at first hand. From her base in Hong Kong, where she is a correspondent for Forbes magazine, she has written widely on both countries. Her mission in the book is to help her predominantly American readership better understand the two emerging Asian powers.

Her approach is in contrast to that of David Smith, the economics editor of the Sunday Times, who recently wrote a book on the same subject called The Dragon and the Elephant (see 9 July post). His work, while worth reading, is more historical and based largely on secondary sources. But Meredith has spent much time watching Chinese workers produce goods for western markets, navigating India's awful roads and talking to people in the region. Both books are well written, but Meredith's is more vivid.

She, like Smith, tends to alternate chapters on the two countries. So after a general introduction on "tectonic economics" she has a chapter on China's rise since the 1970s, followed by one on India's ascent. She then moves on to China's manufacturing and India's surge in IT services.

Perhaps most interesting is her chapter on what she calls "the disassembly line". This describes how the world economy has moved from one where production is focused on assembly lines to one where supply chains are key. Under the old system, of which Ford was the emblematic example, each company was responsible for a series of processes that ended up with a final product.

Under the new system, different parts of a product can be made by an enormous array of producers all over the world. Chinese firms play a key role in such supply chains as important links in this new set of processes. Often the final goods end up in the West, under western brand names, even though a good part of their value is created in China.

Although Meredith is generally sympathetic to the rise of India and China, she does discuss problems associated with their emergence as economic powers. First, she says that the rise of the two nations puts strains on the availability of natural resources. Second, she warns that the modernisation of their military forces could create tensions with America. Finally, she discusses the environmental problems posed by the rise of the two Asian giants.

In her conclusion, Meredith looks at what the rise of China and India means for America. She argues that the solution to the challenge they pose is neither an unadulterated free market nor protectionism. Instead, America needs to create more jobs and educate its population better.

Unfortunately, The Elephant and the Dragon takes the mainstream view of the two countries too much at face value. Perhaps this is inevitable in what is essentially a primer. But, like Smith, she accepts what I call the "revelation theory" of economic development.

This essentially argues that China and India lived in the intellectual dark ages until their leaders realised that capitalism was best. If only they had latched on to this perspective sooner they could, so the argument goes, have enjoyed spectacular growth rates much earlier.

What this argument misses is that there was little incentive for third-world countries to open their economies in the decades following the second world war. During the post-war boom the West was generally uninterested in investing in or trading with the developing world. Therefore there was not much incentive for third-world leaders to encourage western investment or trade. This was particularly true of demographic giants such as China and India as their strategy of relying on their large domestic markets seemed reasonable at the time.

This is not to be in favour of autarky in principle. On the contrary, it has many disadvantages. But even if China and India had opened themselves up earlier, it is doubtful whether the West would have been particularly interested in doing business with them. It was only with the end of the post-war boom in the West that an externally orientated development strategy became feasible.

The Elephant and the Dragon is also too much influenced by western, and particularly American, preconceptions. Rather than ask what the rise of China and India means for the world, the "all of us" in the subtitle seems to refer only to Americans. Meredith's primary concern is how American policy-makers should react, rather than what is best for humanity.

Such one-sidedness is particularly apparent in her discussion of the environment. She describes, correctly, how China and India are heavily polluted. But she fails to recognise that focusing on economic development, rather than the environment, can be the correct approach for developing countries. Since human welfare is closely linked to poverty, a focus on development can benefit a country's citizens even if it increases pollution.

Meredith also fails to draw out the fact that economic development provides the resources to tackle pollution. American cities are cleaner than those of Asia precisely because America is so rich. It has the economic resources and technology to clean up its environment. As time goes on it is likely that India and China will make a clean environment a greater priority.

Despite these weaknesses, The Elephant and the Dragon is well worth reading for anyone who wants to get a quick overview of the Asian giants. Given their importance to the world economy, they are countries of which people can no longer afford to be ignorant. The rise of India and China is one of the key trends in the contemporary world.

Labels: book, china, Fund Strategy, india, review

It is frustrating that two recent key books in the growth sceptic genre are not yet available in Britain. From what I can gather Paul Krugman’s The Conscience of a Liberal focuses more on politics than economics. Krugman, a New York Times columnist and professor of economics at Princeton, apparently blames fundamentalist Republicanism for widening inequality in American society. It is hard to be sure but I strongly suspect he somehow links inequality to economic growth. I hope to receive the book soon. In the meantime there is a useful review in the New York Sun and a piece in the New York Review of Books.

Robert Reich, a professor of public policy at the University of California at Berkeley and former Clinton labor secretary, is more clearly a growth sceptic. In a Q&A on Supercapitalism, his new book, he argues that contemporary capitalism has a dynamic side but then refers to the familiar growth sceptic litany:

“Inequality hasn’t been this wide in 80 years. Jobs are far less stable, and the median wage is below where it was in 1980, adjusted for inflation. Main Streets are disappearing. And our planet’s environment is endangered.”

To him the solution is to put curbs on corporations. For him it appears corporations are the force that gives capitalism both its dynamic and destructive side:

“We have to end the corporate arm’s race. That means strict limits on corporate lobbying, on corporate spending for public relations intended to influence legislation, on legislators and public officials turning to lobbying when they leave office, and on corporate money otherwise flowing in politics.”

In reality the problem is not that capitalism is too dynamic. On the contrary, it is not dynamic enough. Rather than putting curbs on corporations the emphasis should be on promoting even more growth.

The first chapter of Supercapitalism is available on the New York Times website. More information can also be found on Reich’s website.

Labels: America, book, corporations, corruption, inequality

Spiked has run my review of Gregory Clark’s A Farewell to Alms in its monthly review of books.

Labels: Africa, book, Malthus, progress, review, spiked

There seems to be a surge of interest in economic history. After the works by Jared Diamond and Greg Clark (see 7 August and 10 August posts), and the provisional text on growth by Daron Acemoglu (see 6 October post), another draft work has appeared on the internet. Meir Kohn, professor of economics at Dartmouth College in New Hampshire, has put most of his The Origins of Western Economic Success in PDF format on his homepage.

Labels: book, economics, growth, progress

Daron Acemoglu, a professor of economics at the Massachusetts Institute of Technology, has published a draft version of his massive Introduction to Modern Economic Growth on the internet. The work looks highly technical but it does address three of the core questions in economic development (p25):

• Why are there such large differences in income per capita and worker productivity across countries?

• Why do some countries grow rapidly while others stagnate?

• What sustains economic growth over long periods of time and why did sustained growth start 200 years or so ago?

Labels: book, economics, growth, progress

Paul Krugman, a New York Times columnist and professor of economics at Princeton, has launched a blog. It seems the must-have accessory for any self-respecting economist nowadays (see my posts of 24 March and 25 April).

Krugman uses one of his first entires to publicise his new book, The Conscience of a Liberal. He describes it as: “a book about what has happened to the America I grew up in and why, a story that I argue revolves around the politics and economics of inequality.”

Labels: America, book, economics, inequality

There follows my review of Fantasy Island by Larry Elliott and Dan Atkinson (Constable & Robinson 2007) in the 10 September issue of Fund Strategy.

Larry Elliott and Dan Atkinson see Tony Blair as having turned Britain into a "fantasy island" during his decade in office. The two economics editors, Elliott at the Guardian and Atkinson at the Mail on Sunday, argue that Britain's apparent economic and social health is largely illusory. New Labour has, in their view, simply disguised problems and stored them up for the future.

Fantasy Island sees New Labour as responsible for five minor fantasies and two master fantasies. The minor fantasies relate to inflation, the knowledge economy, the public sector, work and defence. The master fantasies relate to debt and the environment. Behind all these fantasies is a common theme of excess. As Elliott and Atkinson argue: "There is a surfeit of consumption, a surfeit of speculation and a surfeit of deceit".

Before examining these fantasies in more detail it is important to note that this is a broadly sympathetic critique of New Labour. The two authors, who are not members of any political party, praise the organisation for its record on civil partnerships and the minimum wage. They also endorse its overseas record in relation to the Good Friday agreement, Kosovo, Sierra Leone and African development.

What they object to is Labour's habit of pretending two opposites are not opposite. For example, on the one hand New Labour preaches the virtue of people living within their means. On the other hand, it has presided over a huge build-up of household debt. Yet New Labour denies there is any contradiction between the two.

It is certainly possible to sympathise with Elliott and Atkinson's charge of self-delusion against New Labour. Its pronouncements are riddled with inconsistencies. Fantasy Island's strength is that it outlines many of these contradictions well. For instance, New Labour says it is against privatisation but, in its own covert way, has played a big role in privatising welfare services. The Private Finance Initiative has involved private companies in welfare provision at the cost of saddling the public sector with a heavy debt burden.

But the characterisation of New Labour's outlook as "fantasy island" in a way misses the point. If anything defines the party it is a lack of a broader vision of how to run society. It is the Ideas Lite party. To the extent it believes in anything it is regulating individual behaviour and imposing restraint on society. Labour has given up on taking control of the "commanding heights" of the economy and instead wants to tell people how to recycle their rubbish or what food to eat.

It is New Labour's lack of any principles that helps explain why it can take up apparently contradictory positions with such ease. Beyond its avid belief in social regulation it is highly pragmatic. All its leaders care about are the perpetuation of their own cliques and the survival of the party's electoral machine.

What Elliott and Atkinson are really saying is that Labour should be more consistent in its campaign against excess. T