Economics & Marginalia: February 17, 2023

Hi all,

Last week’s email included a link about the hellscape that is Anglo-American childcare provision, and prompted some really wonderful emails from readers who have navigated it, with varying levels of success (as an aside, I always love it when I get any emails about the links I send. Economics doesn’t end when the analysis is written up, but when its applied to someone’s life). This week we have had less childcare to deal with since our son was home ill, and instead we had to navigate the slightly different hellscape that is English healthcare provision. Getting a GP appointment is only slightly easier than winning The Running Man; getting our prescription filled took phone calls to 9 pharmacies and eventually a revised script that meant I had to go to two different places for a portion of the medicine in each. Even with fairly innocuous cases, the system is struggling; it must be even harder for people with less flexibility, mobility and support. I compared childcare to Squid Game last week, but perhaps childcare was too narrow a reference. As ever, though, to fix things, I start with the economics.

1. And it turns out, it’s not only me, and not only economists, who do so. While I’m more used to philosophers throwing a handful of salt over their shoulder to ward off evil spirits after even saying the word economics, not all take such a dismal view of our science. Erik Angner, for example, has just written a book called ‘How Economics Can Save the World’. He argues that our analytical and empirical toolkit provides, more than a set of ideas, a specific way of thinking about the world that is particularly useful for solving problems. I haven’t read it yet, but this review by Tej Parikh is very good, and I suspect it will be a Christmas present for a few family members this year.
2. Are you subscribed to Ken Opalo’s substack yet? I’m sure I’ve asked this question before, but if it hasn’t cut through I cannot stress enough how much you should be. Two more superb pieces from him, both packed with ideas, data and insights. First, he considers the looming African debt crisis, and how its genesis, its specific nature and—hopefully—the proposed solutions will be different to the last time. It’s a really excellent piece of analysis, and makes one specific point that I think should be shouted from the mountaintops: “African countries are witnessing the consequences of being poor with very small margins for error.” For the most part, most countries in difficulties have not been wildly flinging money into the abyss. A priori, it was easy to make the borrowing was sensible: there was much to do, and not enough money to do it with. But it doesn’t take much to make that go sour when you start from a perilous place. Also from Ken: on the lack of natural resource billionaires in Africa. It makes a number of good points, notably one Nick Lea at DFID once called ‘the curse of medium oil’: having enough resources to foster bad habits, but not enough to excuse them.
3. Also on the subject of financing, I think this piece by Paddy Carter at BII is superb, and full of sensible analysis (that may sound like faint praise, but ‘sensible’ in this field is not always the dominant strain of thinking). Two things he says that particularly struck me, writing of the overpromising of the ‘billions into trillions’ agenda. First, arguing that things being good is not a sufficient condition for their implementation, a point often forgotten in documents that estimate the financing gap for [insert your pet topic]: “…even estimates of positive social returns investments are not estimates of the likely demand for finance. Something needs to turn hypotheticals into reality.” And secondly, on the paltry effort actually made to effect large scale investments: “We should be unsurprised when small changes in prices produce small change in quantities.” If we want more, we need to do more.
4. Pretty much any time you have the opportunity to read Pranab Bardhan, you should. His work is always good economics, rooted in proper political analysis, and always has been. So when he writes of India “Most of the industries in which crony capitalists operate produce non-traded goods or are highly regulated, which means that getting government favors is much more important than being successful in foreign markets (this is the main difference between Indian conglomerates and those in, say, South Korea).”, and casts pessimism on its prospects, you should listen, and update your views accordingly. The system he describes is so similar to other places I visited as a DFID economist, where potential was wasting away in a structure that rewarded connections rather than competition.
5. Once again, I must inform you: attention is the scarcest resource in Government. James Berry and co-authors in VoxDev have another entry in this series.
6. Earlier, I suggested that philosophers often have a fairly grim opinion of economists (which is almost certainty too broad and uncharitable a statement). But one of the things that people often use to beat us economists with is the way we deal with costs and benefits when human life is involved. We have to pretend we’re not valuing a human life, and pretend we’re not making a judgement about whether lives in different places are worth different amounts of resources, but of course that is exactly what we are doing. And it’s right to: no-one expects it to be the whole conversation, but it’s a part of it, that someone has to say. Planet Money use the social cost of carbon as an entry way into this thorny part of econ, one of the things that gets students most exercised when I introduce it (transcript).
7. Ok, so last week I didn’t give you much pop culture, so this week I’m giving you an absolute ton of it, condensed into two minutes of the most intense wtfery imaginable. I have no idea where this video comes from, or why it exists, or how whoever made this came to the conclusion that what the world needs is every has-been from US pop culture to sing Let it Be together, but I can say that on my twentieth listen, I’m still cracking up when Carlton shows up warbling like Mariah Carey shortly before Columbo just silently waves at everyone. If AI did this, then plug me into the Matrix (but not before I read Bill Watterson’s comeback comic).

Have a great weekend, everyone!

R