Economics & Marginalia: July 7, 2023

Hi all,

The ‘British summer’ used to be an oxymoron—it meant umbrellas, packing a jumper and a light raincoat as well as your sunglasses and, every four years, getting thrashed by the Australians in the cricket. Things have changed: the Aussies are still giving us a hammering (though England look like they might take something from the third test), but the weather, while still variable, now veers between blisteringly hot and wild, monsoony rain. I’m getting some repairs done on our home and the builder pointed out that all of the weather-proofing built into the house was now obsolete, because we get weather that we simply never had before. While it’s only human to enjoy the sunshine (and didn’t Mitchell Marsh enjoy it more than any of us?), it nevertheless brings into sharp relief the Government’s decision to go back on its climate financing pledges. It’s a decision that is symptomatic of the UK’s habit of letting bean counting decide policy, rather than vice versa; because they insisted on counting all climate finance as aid (mainly so they could cut down on actual spending by using some of the increase in aid, at the time set at 0.7 per cent of GNI, to pay for it), they now, with deep cuts in the aid budget, have forced themselves to choose between spending on the poor or spending on climate change. It’s an entirely self-inflicted choice, but so dominant is the bean-counting mode of policymaking they can’t bring themselves to do both. People complain that economists have too much power in Government, but in reality it’s the accountants who are running the show.

1. While I’m dumping on the Government, it’s hard to read this story, about the Home Office Minister ordering that some pleasant pictures painted on the walls of a refugee processing centre for children be painted over, lest it make them think we consider them to be human, without finding depths of contempt hitherto undreamed-of to hold this cruelty of a Government in. It’s pathetic and mean, which seems to sum up the Home Office perfectly now.
2. After my DC trip last week, I have been thinking about just how much (privately) wealthier Americans are than Europeans; it shows up not only in the numbers, but also in the feel of the city (admittedly, a very wealthy part of a very wealthy city). So it was a necessary tonic to read the horror stories in Sarah O’Connor’s most recent piece on the relative quality of life in the US and here: “One woman said she was grateful to have a whole 12 weeks with her baby before returning to her job, thanks to leave donated by her colleagues. Another TV station told the tale of medical staff who donated their paid time off during the pandemic to a colleague who had leukaemia…One university, for example, gives its workers ‘the opportunity to donate accrued vacation . . . to fellow employees who have experienced a catastrophic illness or injury and who have exhausted all accrued time’.” GDP matters, but it isn’t the only thing that matters; as she puts it, we don’t want health and education in order to get richer, but to get richer so we can have better, healthier lives.
3. In much the same vein is this very good, short blog by Diane Coyle on Economics Observatory. She argues that economics is concerned with too narrow an idea of what the assets of an economy are, and what our wealth consists of. It isn’t simply property, and financial assets, but the natural world around us, and our social ties with each other. These omissions affect not just what we measure, but how we act.
4. Someone recently complained to me that too many policy proposals they read amounted to “spend more money”. While I actually think a lot of what we need to fix in the world inescapably will require spending more money (or just not fixing it), it’s nice to read a proposal by my colleagues Mark Plant and Bernat Camps Adrogué which is basically not to spend more right now (at least not the way that’s being proposed). They argue that it’s not the right time to put more funding into the IMF’s Resilience and Sustainability Trust, unless it changes it model of operation rather substantially; alternative ways of getting much needed finance out there are needed.
5. I thought this was excellent: on VoxDev Joseph Shapiro notes that the structure of trade barriers around the world amount to a large carbon subsidy, since more polluting industries tend to face lower tariffs and non-tariff barriers to trade. The size of this implicit subsidy is extremely large; and he suggests one reason behind is that these industries tend to be firm-to-firm exports, rather than final consumer goods.
6. Last week, I linked to the Francesca Gino fraud allegations; this week one of the papers covered in those allegations was retracted. And on the broader topic of cheating, including in science, Andrew Gelman has extended thoughts on Dan Davies’s book, Lying for Money.
7. Finally, Twitter seems to be entering a death spiral, or at least that’s what people on my timeline seem to be saying (there’s an incredible venn diagram of selection bias here, with most of the people I follow apparently being those who both think Twitter is on the way out and tweet at a healthy rate nevertheless). I don’t have a Blue Sky account yet (send me an invite code!), but I am on Threads using the same name, scepticalranil (I have no idea how to link to that here, as I’ve yet to ‘thread’ anything). I’m not sure if I’ll actually migrate in the event of twitterdeath—much like Tim Harford, I may just revert to my happy pre-twitter state. But there are some things I’ll miss, nothing more than Muppet History. I suppose I’ll just have to watch the movies again…

Have a great weekend, everyone!

R