Bad Samaritans

This book, by distinguished Cambridge economist Ha-Joon Chang (also author of this and this), is a superb exposition of how various aspects of the global economy are basically rigged in the favour of the rich, and covered up with a wide variety of pseudo-economic lies. I started reading it last week, powered through most of the rest of it on the far-too-long Megabus journey from Sheffield to London to Amsterdam, and have just now finished the last chapter while sat atop my suitcase in the train station while I wait for my friends to get here from the airport. I am very sleep deprived, it is busy here, I am writing this on my phone on borrowed Dutch wifi, and me and my housemates are about to go to a techno festival in the nearby forest this afternoon, so I am quite distracted - I don't even know when they're arriving here, but the general gist is that I don't have an awful lot of time to write things about this book, even though it was great.

   Chang's style is friendly, accessible and readable - see my other posts about his other books for further discussion of that. His academic approach of demystifying economics to the general reader deserves applause, especially since he does so with such calm aplomb, and splits apart 'common knowledge' assertions about the way international economic systems work, then showing us in detail how and why certain presumptions aren't warranted, or how some things can't be properly understood yet, and how better explanations may lie just round the corner, if only we can be convinced to drop our unrelenting trust in the innate beneficent tendencies of rich people, large multinational corporations, rich countries' governments, and the hosts of apologists and aides to these three. Basically, we should drop our trust in these, because they're making life extremely hard for developing countries and the poor generally.

   Throughout the course of the book, Ha-Joon dissects myths about globalisation, especially from a developmental perspective (looking at how rich countries became so, and are now depriving poor countries from using the same means as they did in order to develop), whether free trade is always the best option in a globalised world of varyingly-developed players, likewise whether foreign investment should be regulated, why public sector initiatives are demonised comparative to private sector ones and whether these suspicions are warranted, the complexities of copyright law and ownership on an international stage, likewise for financial prudence and how far we should consider regulation of monetary systems to be sensible, where corrupt and undemocratic countries stand in all of this, and whether some poor countries are simply that way because of an economically unhelpful culture.

   Every chapter is rigorously researched and argued, but made clear for the non-economists who I hope will read this: we are shown a glimpse of a world which is truly unfair, where the orthodox preconceptions about these issues of justice from the science which is meant to impartially discern socioeconomic problems has been co-opted into perpetuating fictions about how people and countries develop so that the rich can stay rich and the poor can get poorer as the rich increasingly exploit them. We need more economists like Ha-Joon Chang; not an ideological leftist, but a common-sense whistleblower on the nonsenses and deceptions of his own subject. The book opens and closes with fictional near-future accounts of global business activity (I found these far too exciting, I love potted economic histories and these were basically one utopian and one dystopian track along the possibilities for our current world); these show just as clearly as the implications of his core chapters the sheer range of possibilities that exist for our world, if only we can properly adopt, nationally and internationally, policies conducive to equitable sustainable development.

   Ha-Joon Chang's other two books (thus far blogged about), I would recommend to literally everyone - Economics: The User's Guide is an indispensable tool for general public education in the most important subject that they know probably not much about, and 23 Thing they don't tell you about Capitalism is a good book to flesh out that framework with a few added extra mythbusters to undo what may have been misled by the plutocratic media. Bad Samaritans is a bit more specialist but still a general readers' book; anyone with a broad interest in international economic justice, globalisation, and development; especially students studying something similar to this; should absolutely read it.

That was good timing, I can see my housemates meandering through the station. It is time for me to go have my eardrums burst by waves of raw delight amid happy Europeans and beautiful trees. I'm on a family holiday in rural Holland straight afterwards, on which I'll be doing a lot of reading, so (if there's wifi), see you soon.

23 Things they don't tell you about Capitalism

This book, by Cambridge professor of economics Ha-Joon Chang, is just excellent. I acquired it during a spate of book-buying during the early days of my economics A-level, when the subject was still academically (rather than just generally) exciting to me. Then - what, four years ago now, yikes - I breezed through it quite carelessly, but having read his more recent book (which was brilliant) and heard him speak at a Manchester conference for student societies campaigning for reform of economics education last month (which was also brilliant), I decided to give it a proper attempt. Also, my own branch of the student campaign for reform of economics education is hosting a talk by him (this Wednesday, actually), so I finished it considerably quicker than I usually do non-fiction books.

   It's a fantastic book. High depth of research, socially and pragmatically grounded, well-argued and critically thought, taking a pluralistic interdisciplinary approach to economic issues; he handles the subject as it should be handled.* He also writes extremely readably and accessibly, amusingly even (he does pepper his paragraphs with brief anecdotes or pop culture references, not to an annoying or distracting extent, but they are sometimes clumsy, but on the whole he writes with clarity, wit, and a vivacious charm), digesting fairly hefty socioeconomic issues into laypersons' terms without dumbing them down or misrepresenting their complexity. Like his other book (see *), it's great for those who are interested in economics but feel alienated by its impenetrable elitism and jargon - though while his other book is an introduction/manual, this (as its title may suggest) is out-and-out mythbusting. Ha-Joon, in a deft ten-pages or so each, outlines the surprisingly straightforward cases for 23 things about our current system of freemarket capitalism which if were widely known would radically alter political and corporate activity. They are:

1. There is no such thing as a free market
2. Companies should not be run in the interests of their owners
3. Most people in rich countries are paid more than they should be
4. The washing machine has changed the world more than the internet has
5. Assume the worst about people and you get the worst
6. Greater macroeconomic stability has not made the world economy more stable
7. Freemarket policies rarely make poor countries rich
8. Capital has a nationality
9. We do not live in a post-industrial age
10. The US does not have the highest living standard in the world
11. Africa is not destined for underdevelopment
12. Governments can pick winners
13. Making rich people richer doesn't make the rest of us richer
14. US managers are over-priced
15. People in poor countries are more entrepreneurial than people in rich countries
16. We are not smart enough to leave things to the market
17. More education in itself is not going to make a country richer
18. What is good for General Motors is not necessarily good for the United States
19. Despite the fall of communism, we are still living in planned economies
20. Equality of opportunity may not be fair
21. Big government makes people more open to change
22. Financial markets need to become less, not more, efficient
23. Good economic policy does not require good economists

   Sound interesting? Oh of course.

   Sound like the exact opposite of what most mainstream pro-establishment-remora-fish economists tend to say on these matters? Why, yes.

   Sound plausible, having weighed up evidence, theory, and arguments from economics, politics, sociology, psychology, history, ethics, and the various other fields one must draw from and think in to make proper judgements about these issues? Yes. All of them do.

   The 23rd thing is an excellent critique of current vested interests in economic policy-making and education. The reason he can make such cogent points in direct contrast to the myths he busts is because 'economics' as a discipline has lost its way, has become enslaved as an apologist for the status quo, enforcing its dogma by mathematics and abstract diagrams, ignoring any inconvenient misalignment of theory and reality. He does economics properly by recognising its limitations and uses, and complementing it with other tools of thought to tell better truths about economic issues. Though politically controversial topics, these are not opinions he's voicing; these are calmly-assessed analyses and presentations of facts, more often than not weighted with ethical implications. It'd be a great book to give to someone with right-wing socioeconomic views (assuming they were open-minded enough to properly engage true stuff) as a challenge. These assertions that sound like leftist spoutings are actually just statements about economic reality. It reminds me of the simple brilliance of evidence-based policymaking, which I discussed in my post about The Spirit Level.

   Anyone with but a newswatcher's understanding of the economy has, most probably, been deceived about how quite a lot of it works. There's a two-fold effect to this misinformation; established elites propagate myths about the world economy that aid their positions of wealth and power, and mainstream academic economics (doubtless aided by funding from the aforementioned top-class citizens) has become narrowed and corrupt in the way it approaches any issue, leading to often radically ineffectual and often arguably unethical conclusions about them. Because of this, not even economists are much help.** Ha-Joon makes an excellent case for our need to take a critical stand toward the conventional wisdom of pseudo-economists, as in the dismal science if we are better informed and better able to understand the issues we have a much clearer means of making ethically right sociopolitical choices.
   If you think you understand economic issues because you've seen a Robert Peston documentary or two, read this book. If you don't even have a layperson's understanding of economics, I still recommend you read it, but would advise first checking out his other book (see *) as a helpful clear-headed overview of the subject and how to think in it.

   

* For more on proper approaches to economics, especially public understanding of it, check out my post about his other book, Economics: the User's Guide. There are also relevant resources from the international network of campaigners, Rethinking Economics.

** Our lecturer for a module called The International Economy asked the class (third-year economics students, mind you) earlier this year who could explain, even superficially, how the financial crisis happened. Less than a fifth raised their hand. Have we learned nothing?

   Imagine if psychology were dominated by a single school of thought (fortunately, it isn't). Then, imagine tens of millions of people around the world go insane in ways that no mainstream psychologist can properly rationalise given their existing theories of the human mind. Would those theories and models continue to have as much worth? Demonstrably not, as they failed to predict and even fail to satisfactorily explain an enormous series of catastrophic psychological events. Handfuls of heterodox psychologists, though disreputed in academic circles for espousing 'implausible' or 'outdated' theories about mental activity, had (weirdly enough) predicted the 'Insanity Crisis' decades earlier, and using their alternative schools of thought and models are able to form a variety of coherent, overlapping explanations for what caused it and how it might be prevented from reoccurring. However, seven years after the Insanity Crisis, psychology students are taught the exact same mainstream models, policymakers are informed using those exact same mainstream theories, and psychologists all over the world despair that their noble and important science has become the object of so much public distrust and disillusionment.
   Economics's reaction to the 2008 crash was, cheesy thought experiment aside, pretty much this absurd.

Economics: The User's Guide

This book, a swift but penetrating introduction to the social science of economics from the veritable iconoclast Ha-Joon Chang, should be compulsory reading for voters and politicians and students and probably most other people. Chang is of the [excellent] opinion that economics, being as it is the shady force that drives global human society, is too important to be left to dubious academics. Widespread public understanding of the principles, arguments, theories and difficulties of economics is essential to a healthy democracy; our daily lives are shaped by economics and the policy decisions informed by it - how can we assent to government actions that we don't even vaguely comprehend for ourselves? In the prologue he puts forward a compelling case for even those who haven't touched a supply/demand diagram* with a bargepole to engage with the dismal science - 95% of which he says is common sense, and which is of course too important to be left to economists.

   His purpose in place, Chang then dives in to explain, in subject-divided chapters covering broad topics:

• a critical look at what economics actually is
• and an overview of how it has changed with the economies it studies, from Adam Smith in 1776 to current day
• followed by a brief history of the world's [mainly] capitalist economy
• then an open-minded insight into the varying methodologies, core theories and models of economics
• and of the economic actors' characteristics, behaviours, and interactions

[then an interlude]

• overview of issues in output, income and happiness
• overview of issues in economic production
• overview of issues in money and financial systems
• overview of issues in inequality and poverty
• overview of issues in work and unemployment
• overview of issues and debates in the role of the state
• final summative look at how we can use economics to improve the world

   The first half is an excellent orientation to economics as a thing, placing it in context of how we understand changing systems and providing insights from which one can begin to question and consider economists' points of view. The second half is an excellent introduction to some of the most hotly-contested-in-the-media important social concerns stemming from economics, which will allow a lay-reader to better engage with debate in such issues.

   The entire book is both a superbly educative primer for someone who has never properly encountered economics before, and a thought-provoking stir-from-ignorance for students of economics who have never been taught or shown (leastways, not in their course) how the subject should really be working. There are many schools of thought, and looking through a different lens or ten every so often is a great way of seeing complex issues more clearly - so why do economics departments (such as mine) focus their curriculum almost exclusively onto Neoclassical? The rational self-interest of economic actors is called into question by a host of empirical findings, but this is still taught as fact - why? How come economic policy is still taught as if it were the scientific deductions from infallible theoretical models, despite dozens of historical examples showing that the world doesn't work quite so neatly? These are questions Chang raises, curiosities he arouses in those both currently engaged with economics and those not; he intends to create a stir of educated shrewdness toward those who would otherwise blindside us with jargon and statistics. And I applaud him for it.**

   One (the only one I can think of without being overly pedantic) criticism I do have is of Chang's style of explanation. Not so much his actual explanatory sections - he writes with a clarity, levity and sensitivity to jargon and numbers; in plain English that makes the whole thing a breeze to read. He does have a habit though of peppering his descriptions with largely-irrelevant pop-culture references which themselves he then over-explains. Once or twice these actually do add to the point he's making or make a concept easier to grasp, but mostly they just seem to be there as unnecessary layman-accessibility window-dressing. I got used to them quickly, as they fit in with his relaxed tone, but it's still an irritating distraction whenever a paragraph-long explanation of a film pops up so he can employ a single short quote that he could have just said in his own words.

   Anyway.

   If you are, were, or will be an economics student; read this book. It won't teach you anything new about the content of your subject, but will teach you a huge amount about its context; it will help you weigh up your maybe-beloved-maybe-behated subject more objectively and healthily. If, as is more likely, you aren't, weren't and won't be an economics student - read it anyway. It's not at all academic so don't be scared off (it really is more of a "user's guide" than an introductory textbook, it's designed for laypeople), and will broaden your understanding of the world immensely, better equipping you to discerningly engage with political, social and business problems.

* The introductory reader will be pleased to hear there are no diagrams in the whole book. There's a few tables and numbers, but all very easily comprehensible in context. Chang is an excellent layman's explainer.

** For those interested in how current campaigns to reform economics syllabuses to something that better reflects a more humbly inquisitive subject, something less  insistent on diagrams as truth and more willing to accept pluralist schools of thought in critical debate - well, here's the facebook group for the Alternative Thinking for Economics Society at Sheffield University (where I be), and the website for Rethinking Economics, an international network of such student groups. They can probably put you in touch with an academic campaigning group near you.