Economics & Marginalia: August 18, 2023

Hi all,

In London, it’s hard to tell what season it is. The weather veers from wet and miserable to sunny and Mediterranean, sometimes in the course of a few hours; or indeed minutes. Today, we took our son to the Tate Modern to see the Yayoi Kusama Infinity Rooms exhibition (highly recommended, watching him seize hold of me to distinguish the real thing from my many reflections and laughing with glee at his success was not something I will forget any time soon), and walked into the building in raincoats and jumpers; we left to bright sunshine in sunglasses. I had a conversation with two colleagues about climate change yesterday, noting that things seem noticeably different these days; it’s not just the extreme heat some parts of Europe had this summer, but its variability. And yet, despite the change being sufficient to notice within our lifetimes, none of us had much confidence that policy would change quickly enough to keep ahead. What optimism we have tends to be about human ingenuity and the market, not what seems (in Europe at least) to be one of the most underwhelming generations of political leadership I can think of.

  1. Of course, not all decisive political leadership is good: one can decisively take a wrong turn just as easily as the right one. Ngaire Woods has a very good essay out on the IMF’s Finance and Development blog. She argues, persuasively, that just as free trade and inclusive multilateralism has (once again) proven its worth, with food prices being far more resilient than expected in the wake of Russia’s invasion of Ukraine, the US and China are taking their geostrategic rivalry global. In doing so, they are trying to push developing countries to take sides. Ngaire suggests that remaining non-aligned may well be their best option, and may do the most to protect what remains of true multilateralism. As an aside, one point that occurred to me reading this: the US strategy of making it harder for China to try and buy components for semiconductors probably underestimates something that Alex Tabarrok has commented on in the past: the superpower of substitution in capitalist systems. When one thing or one source becomes problematic, economies tend to find a way of identifying alternatives, and reorienting around them quickly.

  2. Laura Boudreau, Rocco Macchiavello and co-authors have one of the best things I’ve read on VoxDev out this week: an account of experimental work which aims to document the effect of union leadership on worker behaviour and choices, and the mechanisms through which this effect seems to operate. It’s excellent from the beginning: the descriptive statistics alone make this worth reading, quantifying the ways in which union leaders differ from the workers they represent. Many years ago, in my MSc thesis, I attempted to answer some of the questions they address here (my attempt was much less sophisticated, of course), specifically focusing on the role of leadership in plantation conflict between workers and estate management. I came to similar conclusions the authors do here, but would never have been able to show things nearly as clearly as they do. This is really important work on a topic economists don’t pay enough attention to.

  3. I’m a noted UK-pessimist, a situation not helped by reading either the policy or (for the most part, with some notable exceptions) the policy commentary in the country. My take on the UK is, roughly, that it’s a place where some people can become extremely privately prosperous, but its utter failure of imagination in dealing with problems of public provision and collective wealth mean that even for the few it is becoming a relatively worse place to live, declining in relative terms pretty much year-on-year. Tim Harford (whose institution, the FT, is one of the notable exceptions to the poverty of policy analysis) brings both anecdote and data to this position following his recent holiday to Germany.

  4. As I get older, one of the things I am increasingly impressed by is logistics: the difference between having a great project manager and good one can be truly enormous, and can raise the productivity of everyone they work with in ways you take completely for granted. In most businesses, the equivalent is the operations manager: the person in charge with making the incredibly complicated act of serving Ethiopian coffee to 300 people an hour in a small town in Northern England something we just accept as part of our normal lives. Planet Money’s Summer School goes deep on operations management, a great show with some really excellent examples (transcript).

  5. I was incredibly struck by something in this Branko Milanovic discussion of Adam Smith and his views on slave-owning (the discussion goes far beyond this, too, and is worth reading in full): Smith question what either prosperity or popular, democratic, Government could possibly be worth if their maintenance must depend on the institution of slavery. My son pulled The Wealth of Nations off my bookshelf this morning; glancing through it was a reminder that Smith is one of those writers who constantly reward re-reading, and consistently surprise you with the sheer distance by which their thinking went beyond their contemporaries.

  6. I started on climate change and will (sort of) finish the econ section of the links with it: another very good VoxDev write-up, this time of work by Meera Mahadevan and Ajay Shenoy on how social protection provision is politicised in India.

  7. Finally, it’s almost 50 years to the day that DJ Kool Herc hosted the party in the Bronx that is now widely recognised as the birth of hip-hop. The Ringer marked the anniversary with an interview with a hip-hop academic, who described it as a ‘distinctly American’ art form. It doesn’t take much to send me to YouTube but this really did: I think hip-hop is much less distinctly American than, say, jazz; while jazz was more-or-less only ever successfully created at the highest level in America, there are great hip-hop artists all around the world (even if you count great Puerto Rican rappers with the Americans), all operating in a distinctly local idiom. You have Belgian-Congolese rappers working French and a bit of SwahiliFrench-Senagelese sampling GainsbourgBongo Flava from Tanzania; un trio de Mexicanos con machete en la manoHindi rapJapanese rap since the 1990s…. and I’m only going to stop now because this is becoming a rabbit hole I will never escape from. The point isn’t that hip hop may have started distinctly American, but as its spread across the world, it’s been adopted and adapted to local circumstance—and has become even better for it.

Have a great weekend, everyone!

R (that’s Ranil, not Rakim)


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.