The Undercover Economist

I've just finished reading "The Undercover Economist" by Financial Times journalist Tim Harford, and would recommend it to anyone interested in the workings either of the world as a whole or of the minds of economists. Harford tackles complex issues with a lightness of touch that makes the book a joy to read. In places, I probably sounded like a mad person, bursting out in laughter while not interacting with any other human being.

Harford sets out to explain how economics can make sense of a lot of things in the world around us that would otherwise be mysterious. He starts with coffee. Given that the price of a cappuccino from a stall in Waterloo Station is so much higher that the cost of production, who makes all the profit? Why do the different drinks on sale in that same stall differ in price by far more than any difference in the ingredients cost or the time taken to assemble them? It's all explained. Harford then takes us on a tour of how supermarkets manipulate their customers; externalities (when a transaction has a cost paid by people not party to it); why poor countries are poor (mainly corrupt leadership -- the chapter on his visit to Cameroon is unforgettable); and the merits of globalisation (yes, he loves the stuff).

The brand of economics that Harford expounds is probably best described as a useful analysis of the kinds of economic behaviour that people exhibit in a world powered by cheap energy that can be used without any foreseeable limits and that everyone assumes is always going to stay cheap. He argues that trade barriers in the form of import duties cannot be the best thing for the environment, because pollution is caused by transport per se, not specifically by crossing national boundaries. For example less damage is caused by transporting an item by sea from Japan to Los Angeles as part of a bulk shipment than by then ferrying it by lorry a couple of hundred miles inland to where it is to be sold.

His argument in favour of globalisation is basically that it is the most efficient way to help poorer countries achieve something more like the level of prosperity of rich ones. There is no real analysis, however, of how the planet could possibly support such a massive increase in both resource use and pollution. He states (p223) that "it seems likely, though we do not know at the moment, that the richest countries in the world are just reaching the point where even energy consumption per head is about to stop rising. After all, our cars and domestic appliances get more efficient every year, and when we all have two cars and an air-conditioned house, it's hard to see where extra energy demand will come from." But this is just laughable. First of all, the evidence is clear that the richer you get, the more energy you tend to burn; for example, people earning over £60,000 in the UK fly four times per year on average. And anyway, by the time seven billion people each have two cars and an air-conditioned house, it will already be far, far too late to avert climate catastrophe, even assuming such a fantastic state of wealth could be achieved given the energy resources available to us.

It's not at all that Harford dismisses climate change. He actually cares about it quite a lot, and makes some interesting points. One of the funniest passages in the book is when he arrives at a public meeting hosted by an environmental group. At the door he is asked how he travelled to the meeting, so that the group can calculate his carbon footprint and plant trees to offset it. He approves of planting trees, and therefore tells them he has arrived by anthracite-powered steamer from Australia. The ensuing analysis of the whole principle of expiation by offsetting is very thought-provoking.

No, the problem is more that he displays almost no sense of history; of the fact that things change in major ways over time, and civilisations rise and (universally, except for our current global one so far) fall. Because of this, his book pays little attention to intergenerational externalities (things we do now affect not just other people today, but all our descendants), and absolutely none to peak oil and the resulting energy crises that we face. So there is no discussion of how the arguments he puts forward through the book need to be modified given the falsehood of his (unstated) assumption of "cheap energy forever" and the importance of the intergenerational factor. Harford comes across as a genuinely nice and engaging person with an active social conscience, but at the same time, as a perfect example of someone completely hoodwinked by what the Archdruid calls the myth of progress: all of history has been leading up to the present, and all past forms of society are merely poor approximations to what we currently enjoy. And he's all the more worth reading for that reason, because in that respect he typifies the vast majority not just of economists but of politicians, business people, educators and the rest of the people who run things.

Harford's analyses may work very well for the present -- and that's why I'm recommending the book, because it is worth understanding how things are currently working, not least because such an understanding can affect, among other things, the kinds of measures that one sees as likely to be effective in dealing with climate change and peak oil. He has, for example, convinced me that any worthwhile action must take the form either of an enforceable legal constraint with real sanctions attached, or of a (financial or material) incentive to behave in the right way. His book has helped me to appreciate that by and large, people act in their own perceived self-interest, and we can't expect to sort things out by elevating their consciousness. But as a guide to the medium and long term future, Harford's perspective is woefully myopic. If that's what you're after, take a look at the Archdruid's writing (see above) and "Collapse" by Jared Diamond.

The Foolish Virgins

To pick up one of the threads from my last post: Simone Weil (Gravity and Grace, chapter on "Necessity and Obedience") writes:

"The Foolish Virgins: The meaning of this story is that at the moment when we become conscious that we have to make a choice, the choice is already made for good or ill."

I think of this a lot in connection with the Copenhagen conference on climate change, which is at its halfway stage as I write. I know that many of those pressing for firm action on greenhouse gas emissions are doing so because they believe that if such action is taken, most of the good things about life in the richer parts of the world can be preserved. I am fully in favour of such action, but am not so sanguine about the resulting prospects. It won't preserve what we have; it can only cushion the decline, although that's valuable enough.

I remember reading some words by Jonathon Porritt some time ago. I can't find the quote now, but it was something like this: "I believe we have around twenty years to turn things around. Not to agree to do it, or start to do it, or put the frameworks in place to do it, but actually to do it." It was about twenty years ago that he wrote that. And I think his assessment was probably about right. Which is unfortunate, given that on a global scale, the last twenty years have been characterised by doing approximately nothing to prepare either for climate change or for peak oil. In fact, we have moved a very long way in the wrong direction. Did we know about the issues during those two decades? Some of us did, consciously; others doubtless didn't; and still others did know, but managed to render their knowledge unconscious so that they wouldn't have to face it.

There is a modern-day relevance of the Simone Weil quote above that she couldn't possibly have been aware of when she wrote it in the 1940s. What was the predicament faced by the foolish virgins (Matthew 25:1-13)? Oil, and more specifically, the lack of a sufficient supply of the stuff when it really mattered.

Remembering Kirsty

Last week a routine visit to the dentist revealed holes in two of my back teeth, one of them worryingly large. The dentist said she would try to fill it but that there was only about a fifty-fifty chance it would work, and muttered darkly about root canal procedures.

I returned a few days later for the drilling and filling to be performed. Dora had reminded me to breathe from my abdomen to keep the energy as low as possible in my body. I did so, and was largely able just to observe any discomfort, not react to it. This worked so well that after a few minutes, my main problem was simply boredom. I found myself pondering how fortunate I was to be able to access modern dentistry carried out by a first-rate practitioner. That is one of things that I expect to miss the most if things start to fall apart in the decades to come.

As the dentist and her assistant were about to get to work, what should come on the radio but "Fairytale of New York" by Shane MacGowan and Kirsty MacColl. I had heard MacGowan perform with the Pogues fifteen years before, and remember his facial appearance rather more clearly than the music. I commented that there was someone with teeth much worse even than mine, but to my surprise, neither of these dental specialists knew what I was talking about. If you don't either, have a look at these "before and after" pictures -- it seems he's finally got them sorted.

But it's the other member of the duo, Kirsty MacColl, that I really want to write about here. I never heard her perform, but have much enjoyed listening to her soulful, moving and often very funny songs ever since Dora introduced me to them ten years ago, not long before Kirsty was tragically killed. When I returned home from the dentist, I saw on the BBC news web site that the campaign mounted by her friends and family to have her death properly investigated had been wound up.

There can be no more heroic way to leave this life than to save someone else's by doing so, and it looks as though that is exactly what Kirsty MacColl did: rushing to push her son out of the way of a fast-moving speedboat, which then smashed into her. I have sometimes wondered whether I would be capable of that kind of sacrifice for The Bean if a similar situation arose. There is no way to know, but I can only imagine the whole thing happened so fast for Kirsty that she had no time to assess the risks to herself and her son and make any kind of conscious decision. Her body would have acted before her mind could even start to think. And a reaction like that can only be the result of an ongoing attitude of heart. Very often, our decision is made before we become aware of any need for making one, and when that happens, which way it goes depends on how we have chosen to shape our souls over the years.

On a more mundane note, three days on, I am happy to report that my teeth appear to be in good shape, and I am determined to take better care of them, as I trust Shane MacGowan will also be doing with his.