Economics & Marginalia: March 22, 2024

Hi all,

Well, if everything works out, today should be the day you get the snazzy new links email in your inbox, complete with the Economics and Marginalia branding and the new (old) title. Let me know how you like it! On the plus side, I like the logo and the font, and it’s a starting point from which we might move into graphs and embedded images (rather than me constantly rick-rolling you, or reviving the old Taylor Swift gifs). But I don’t want the email to seem less personal either, so am genuinely interested in what people think. The content will remain the same, though in a slightly different (possibly larger) font. Economics, random geekery, public policy, cricket statgasms, birdwatching and basketball, not necessarily in that order. In fact, just to prove the point: a murmuration of Starlings.

1. Just the other day, I had lunch with a friend and we were bemoaning the paucity of really good descriptive work on firms, jobs and growth. Well, apparently our lamentations were heard. The best thing I read all week was this, on VoxDev: Vittorio Bassi and a number of co-authors summarise the results of a survey they undertook on firms in Uganda. It is excellent. They collect all of the usual data, but take the unusual step of including questions on how different workers in the firm spend their time, the precise activities they undertake. The findings are quite amazing, and have given me a great deal to think about: specifically, they discover that even in quite large establishments, there is very little specialisation of activities across workers. This has important implications for policy: we often assume that increasing firm size is part of the productivity puzzle, but this is not so obvious if the workforce is under-specialised. The productivity benefits of firm size will be, at least, smaller in these circumstances. There is much more here, including heterogeneity across different kinds of firms.

2. Ken Opalo’s recent piece about the differences between academic and policy research was popular enough to prompt a follow-up, and it’s also very good indeed. It is full of wisdom, not least this passage:  “Policymaking is hard work. There are no shortcuts. Everything takes time.” Ken argues for much more of the thinking about the objectives, strategy and content of policy to be homegrown; it is this way that it will focus on the achievable, important and tractable problems a given government faces, which will vary by time and place, and the approach to which will vary even more. I agree with a great deal of this, particularly his concern that too much policymaking is driven from the outside. When I worked in civil services in Africa, it was only when we had a real grip on what we wanted ourselves that our work was effective; at other times, we were buffeted by stronger forces outside the teams I was in. But the space to think about objectives and navigate them through sometimes dysfunctional small and big p politics was sometimes narrow. At times, it could feel that imperfect external objectives were the best we could do. But perhaps that was wrong.

3. You may need to register for this one, but it’s worth it: Penny Goldberg on the retreat from multilateralism among many of today’s developing countries. It’s an interesting piece. She is convincing (and surely correct) on many of the reasons for the loss of faith in the multilateral approach—it is and has been stacked in favour of the wealthy or too easy to undermine and sabotage. The example of the WTO, driven to incoherence by US policy, is instructive. She concludes by arguing that the correct response, though, should be to lean ever-harder into multilateralism. I sort of agree, but also don’t see how her preceding analysis gives any indication that this strategy would work.

4. Two good pieces from the FT recently. First, Raghu Rajan argues that the creeping protectionism and nativist turn of many governments will ultimately backfire, because government overstretch their abilities in attempting to implement these policies. I’ve got a great deal of sympathy with the argument, but also think he’s a little too strong on it; there is a place for an activist state, but, as with most things, in appropriate doses and times. Secondly, Tej Parikh speculates that there is a ‘high income trap’ which makes growth more difficult and slower in the richest places. I think much of this makes sense, particularly his discussion of the role of interest groups. But one key point: the interest groups are everywhere, and so is their influence on policy (often, but not always, malign). The rich grow less fast than they could, but that is often an active choice.

5. Paddy Carter on DFI mobilisation rates. Paddy is consistently one of the best and clearest voices on these issues.

6. This, from Tim Harford really struck a chord with me: how “groupishness” can entrench division and polarisation, even when contact between groups is possible or encouraged. Tim suggests that social media is not all to blame, and I agree. At university, I remember being struck by how much like attracted like in friendship groups. I’ve never quite had the same impulse. The best friend I made back then was a libertarian who—at the time—could barely see the value in taxation, the state or most (indeed any) redistribution. His views have somewhat mellowed with time, but our conversations almost always involve substantial disagreements still. And though an economist, almost every friend I’ve made outside of work has been a non-economist (indeed, my wife is the opposite of an economist, an anthropologist). I think it’s because I’m innately sceptical of almost everything: on hearing something (anything) my instinct is to think about why it might be wrong; I like being surrounded by people who question my beliefs the same way. Being surrounded by people who agree with you just sounds so boring.

7. And finally, it’s March Madness! In past years we’ve had some true superstars emerge in March, even if they eventually flamed out. I remember watching Trae Young and Steph Curry before him shoot the lights out; like everyone else, I was ridiculously excited to watch Zion Williamson only for Duke to flame out early; I’m even old enough (just) to remember the Fab 5. This year is going to belong to Caitlin Clark. Not since Steph has there been a flamethrower like her in college basketball (percentages be damned, every time she crosses the halfway line you want her to shoot). The Ringer’s feature on her captures something of the thrill of watching her play. There is a cottage industry of making predictions on the tournament. I no longer attempt it. Just enjoy the incredible drama.

Have a great weekend, everyone!

R