Economics & Marginalia: December 9, 2022

Hi all,

The eagle-eyed among you will notice something different about this week’s links. No, it’s not the novelty socks I’m wearing (I hope those aren’t visible); it’s the fact that the email has now moved to an online platform, as part of my efforts to keep onside of GDPR laws. There should, somewhere in this missive, be a little ‘unsubscribe’ button, giving you an alternative to the immense social awkwardness of emailing me and asking to be removed; I’m sure some of you have changed jobs solely to stop receiving this email without having to ask me directly. If this is the case (or you were planning on doing so), I salute your Britishness and shall avert my gaze to avoid unintentional eye-contact. I think there are some other innovations coming: some fancier formatting, and perhaps finally the possibility of embedding graphs into the links less grainy than the gravy at a school cafeteria. But rest assured: the content will not change. They will still be the musings of a moderately eccentric economist with a taste for hip-hop, cricket and intellectual grudge-matches.

1. Earlier this week, Andrew Mitchell gave evidence to the International Development Committee in Parliament. He opened with some real talk: “The UK is no longer a development superpower.” And he kept going through the whole session. It was great. I agree with his assessment; and with Stefan Dercon I’ve written a note that sets out what he can do about it. It’s not rocket science, but it will be difficult. He wants to make things better, which helps; and he hasn’t deluded himself about the scale of the challenge, which is critical. Our ideas might not be the only way out of the mire, but we think they’re a good bet, and I hope he can act on some of it. A blog for the hard-of-time here.
2. Gift-giving causes a great deal of stress for some people. Most of us are trying to locate a miniscule area of overlap in a venn diagram with circles of surprise, need, affordability and desiredness (not everything that someone needs, would be surprised by and which the gift-giver can afford is wanted: a swift kick in the pants usually fits the first three but rarely the third). Tim Harford has some tips for gift-givers, drawn from the economics and psychology literature, ranging from the obvious (don’t buy a partner of two weeks a new car) to the I-bet-this-result-won’t-replicate (people like poorly wrapped presents more, a theory I’ve been involuntarily testing my whole life). The best piece of advice is that the moment of unwrapping is generally not that important; a boring present that you use for years is much better than a hilarious fake nose you lose in three days (one of the best presents I was ever given was a pan. It’s ugly, and was obvious from the shape of the wrapping paper, but I’ve probably used it a thousand times or more since that day). My own approach is my trinity: books, wine or food. Everyone likes at least one of the three, and there’s endless variation within each.
3. With Christmas in sight, it’s also the end of the Development Impact Job Market Paper series. It’s been full of bangers, like this one on the effects of democratization earlier this week. It’s worth checking out the full list.
4. One of the things I find frustrating about talking economics on twitter (and in real life, to be honest) is that for all the mathematical precision we aspire to, the careful identification of our studies, and the time we spend measuring things in surveys, we can be really fast, loose and vague with concepts. This isn’t just about the esoterica of economics, but about some of the central concepts of the discipline. Branko discusses how Marx’s conception of what ‘capital’ is differs from the neo-classical definition in rathe profound ways. For all the casual denigration of Marxist economics one encounters as an economist, there’s relatively little appreciation for the fact that the concepts and problems it is aimed at can be importantly different to what more mainstream economics is trying to do. As Branko puts it: “[one] tells us something about the level of economic development, [the other] about social relations.”
5. Speaking of big ideas, I very much enjoyed this Diane Coyle piece about the limitations of the ‘Chicago’ conception of regulation in a modern, rapidly changing economy. I think it overplays somewhat how rigid regulatory agencies thinking about the world is (and how formal regulation is only a part of what actually regulates the economy), but it is, as everything she writes is, deeply thought-provoking.
6. And one of the most interesting things I read all week: we all know that tax codes are not rational, first-best solutions to a well-defined optimisation problem, but rather an accretion of additions, plasters and quick fixes that add up to a truly hideous legal and fiscal edifice. The thing about a building constructed in that manner is that there are places where you can take a step and fall through where the floor should be, and lots of hiding places. Planet Money go into the various loopholes in the US taxation system: entirely legal ways that people avoid paying taxes (transcript). The system is broken, and values aren’t enough to wholly right it. It’s a fun piece, but with a really depressing edge.
7. Lastly: Sight and Sound released their list of the 100 greatest movies ever made, a regular but infrequent occurrence. I’ve seen 50 of the 100, and this is as someone who hasn’t watched a serious movie in years (these days I don’t have the mental energy for anything more taxing than superheroes or whodunnits). It’s a brilliant list, though In the Mood for Love is 5 places too low. And not a superhero in sight. And for those of you who prefer the written word: LitHub interviews five writers and publishers on Africa’s literary landscape.

Have a great weekend, everyone!

R