Financial Times 2023 Economics Books 1-9

https://www.ft.com/content/31ced0bb-cdb7-43ae-aeea-fbcac8d1b9cd

Mini and by definition unfair views the FT’s 18 best books on economics of 2023 based on the blurbs supplied by Matin Wolf.  Here are the first 9.  Numbers 10 – 18 follow.

1. “Plunder: Private Equity’s Plan to Pillage America” by Brendan Ballou (Public Affairs) There have always been two ways to make money: value creation and plunder. A good society is one in which the first outweighs the latter. In this powerfully argued book, Ballou, currently at the antitrust division of the US Department of Justice, insists that private equity’s returns derive in substantial part from plunder. That is particularly likely where those profits are made at the expense of the powerless — prisoners, patients or the elderly. Given the incentives, the outcomes he describes seem inevitable.

If the incentives are wrong, why is it only private equity that is plundering?

2.  “Digital Empires: The Global Battle to Regulate Technology by Anu Bradford (Oxford University Press) The arrival of the digital economy, now accelerated by the emergence of artificial intelligence, has inevitably — and properly — created a political and regulatory response. In this comprehensive and important tome, Bradford of Columbia Law School elucidates the contrasting approaches of China, the US and the EU. She notes that the latter two confront China, “in the name of saving democracy from the autocracy”. But there is a battle to save democracy from the power of unbridled tech, too. This one is crucial: it is about whether tech controls democracy or democracy controls tech.

And a battle to save consumers from injudicious use of the technologies.  Could clever taxation of digital attention be part of the solution?

 3. “A Crash Course on Crises: Macroeconomic Concepts for Run-ups, Collapses, and Recoveries” by Markus Brunnermeier and Ricardo Reis (Princeton University Press) “Economies sometimes go through macro-financial crises.” Indeed, they do, as we have so painfully learned in recent decades. In this excellent and blessedly brief book, two distinguished scholars bring students and busy professionals up to date on the best thinking about how these crises originate and unfold and how policymakers need to respond. A valuable guide for those who need to understand what contemporary economics has to say on this vital topic.

Not much substance to go on here, so I’ll go with a guess that like almost all the other punditry on this subject, it overlooks the role of central banks and to a lesser extent prudential regulators of financial institutions, in causing/not preventing crises and in allowing them to do macroeconomic harm.

4.  “Economics in America: An Immigrant Economist Explores the Land of Inequality” by Angus Deaton (Princeton University Press) Deaton, winner of the Nobel memorial prize, is also an immigrant to the US. In this highly enjoyable book of essays, he focuses largely on the country in which he now lives. He also condemns international aid. This is surprising and also too sweeping. Yet Deaton emerges from the book as a decent human being who wants to make the world a better place. Unfortunately, he has also come to the conclusion that economics and economists are not as good at that as he would wish.

From what I know elsewhere, immigrant Deaton does not include increasing immigration as one of the ways to make the word a better place. 

International aid IS somewhat misguided in that is does not promote more and better changes in policy in the “aided” countries but is not usually counterproductive.

As for economists not being as good at changing the world as Deaton would like, tu qouque.  He points to huge flaw in the US employer provision of health insurance schema, that it has the effect of taxing the wages (raising the cost to the employer) of low-wage employees at a higher rate than high-wage employees.  And then does nothing with his analysis.

5.  The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism by Sebastián Edwards (Princeton University Press) “The story of Chile’s free-market reforms may be summarized with two words: success and neglect.” Thus does Edwards, himself of Chilean origin, summarizes the outcome of this “experiment”. These reforms originated in dictatorship, made Chile “within one generation Latin America’s brightest star”, at least economically, then, somewhat surprisingly, survived the transition to democracy and finally foundered in popular reaction against inequality and perceived injustices. Edwards tells this complex and controversial story superbly.

An important part of the story is the international discredit brought upon the “neo-liberal” reforms by the fact that they were carries out by a brutal and repressive dictator.

6.  “The Eight Per Cent Solution: A Strategy for India’s Growth” by Nikhil Gupta (Bloomsbury) This is an outstanding book. The author, chief economist at Motilal Oswal Financial Services, explains and applies the “sectoral balances” approach to the Indian economy. This analysis illuminates the weak financial position and deteriorating savings of households and, more recently, also of the unlisted corporate sector. In view of the likely weakness of household consumption, government spending and exports, there is little chance of the desired boom in investment. The balance of this decade must be, he argues, a time of healing, before growth can accelerate.

The book may be outstanding, but the summary is totally incomprehensible.  “Deteriorating savings” and “weakness of household consumption” at the same time?  Households are both saving AND consuming too little?  Doesn’t “weakness in government (non-investment) spending and exports release resources for investment?  The “balance of this decade” must be “healed?

7.  Legacy: How to Build the Sustainable Economy by Dieter Helm (Cambridge University Press) Helm of Oxford university puts forward a passionate case for moving to a sustainable economy based on the principle that each generation bequeaths a stock of capital — physical and, far more important, natural — as good as what it inherited. To make this approach operational, we should embrace the twin ideas of “polluter pays” and the “precautionary principle”. Helm argues that implementing such ideas requires a concept of citizenship. Unfortunately, the challenges of making this idea work globally are daunting.

This “principle” is the normal outcome of garden -variety capitalism if not undermined by excessive public-sector deficits.  It applies likewise to the natural environment if we make the tweak of taxing environmental damage, principally net emissions of CO2.  Making this work globally might not be so challenging if people like Mr. Helm advocated for it “passionately” enough.

8.  The Trade Weapon: How Weaponizing Trade Threatens Growth, Public Health and the Climate Transition by Ken Heydon (Polity) Trade has become a weapon. Heydon, a former Australian trade official, argues that this approach — in the form of trade sanctions, pursuit of self-reliance in value chains, use of trade remedies in the cause of “national security”, and curtailing imports necessary for the climate transition — are “bad for the world economy, as it diminishes and distorts the benefits of international flow of goods and services.” A brave and necessary book.

This looks entirely sensible in its conclusions with the caveat that unwise trade restrictions are very often not the result of intending to harm the other party as “weaponize” implies.  Indeed, the examples cited here are all just misapplication of incentives (wrong instrument or wrong degree) to achieve valid objectives.

9.  “Seven Crashes: The Economic Crises That Shaped Globalization” by Harold James (Yale) In this fascinating book James, a leading historian of both economies and economic policy, analyses the impact of seven economic crises on the history of globalization: the famines of the 1840s, the financial crisis of 1873, the first world war and subsequent hyperinflations of 1914-23, the Great Depression of the 1930s, the inflation of the 1970s, the Great Recession of 2008, and the lockdowns of 2020-22. His surprising conclusion is that supply shocks promote globalization, while demand shocks inhibit it.

This is one I almost want to read to see how the author classifies some of these events.  The conclusion that “supply shocks promote globalization, while demand shocks inhibit it” seem quite UNsurprising assuming he means negative supply and negative demand shocks.  In this framework the 1970s inflation has to be interpreted as a supply shock (oil price increase) and the 2020-20 “lockdowns” are considered more of a demand shock than a negative supply shock.  Demand shocks have to be interpreted as well as net of or incorporating central bank policies to

[Standard bleg:  Although my style is know-it-all-ism, I do sometime entertain the thought that, here and there, I might be mistaken on some minor detail.  I would welcome what the diplomats call “a frank exchange of views.”😊]