Books that John has reviewed in the past…
Free lunch by David Smith
Naked Economics: Undressing the Dismal Science by Charles Wheelan
The Essential Difference by Simon Baron-Cohen
‘Management Today’ review.
width=65 height=45 border=0 align=bottom>Happiness: Lessons from a New Science by Richard Layard
A thoughtful analysis of what it would mean, especially for public policy, if we aimed to maximise happiness rather than material wealth (see the Financial Times article from 15 March).
width=65 height=45 border=0 align=bottom>Why Most Things Fail: Evolution, Extinction and Economics by Paul Ormerod
The title gives a completely misleading description of what this book is about. In reality, it is a provocative survey of some of the alternative insights that might be gained from the application of models derived from statistical physics and evolutionary biology to economics.
Two books for people concerned with environmental issues:
width=65 height=45 border=0 align=bottom>Collapse: How Societies Choose to Fail or Survive by Jared Diamond
Not as good as Diamond’s stunning Guns Germs and Steel, but still a magisterially balanced and well informed account of why some past human societies fail, drawing – as that book did – on a whole variety of disciplines in order to do so.
width=65 height=45 border=0 align=bottom>The March of Unreason: Science, Democracy and the New Fundamental by Dick Taverne
Crisply sorts out nonsense about alternative medicine, organic food, and genetic modification.
Two outstanding analyses of the problems that confront Africa. The principal weakness of both is the political context that means the policy conclusions – which involve large scale financial assistance to African governments – are largely divorced from the analysis, which points to specific, targeted interventions at a local level to improve health and education.
And one that uses conventional economic analysis to asses many issues concerned both with the environment and third world poverty:
width=65 height=45 border=0 align=bottom>Global Crises, Global Solutions by Bjorn Lomborg (ed.)
If you are wondering why climate change is regarded as a more urgent global problem than HIV/Aids or nuclear proliferation, then you will still be wondering that when you finish this book. And if you haven’t asked that question yet, it is time to do so.
width=65 height=45 border=0 align=bottom>The Innovator’s Dilemma/The Innovator’s Solution: Creating and Sustaining Sustainable Growth by Clayton Christensen
In the general wasteland of business books, Christensen stands out as original and thoughtful. His work is focused largely on one issue – the difficulty large companies have in handling innovations that are inconsistent with their established core business. But the issue is important, the examples well thought through, and the proposals intelligent.
width=65 height=45 border=0 align=bottom>Who Runs This Place?: The Anatomy of Britain in the 21st Century by Anthony Sampson
The Future of Freedom: Illiberal Democracy at Home and Abroad by Fareed Zakaria
Thirty years ago, I read and reread Sampson’s brilliant account of British institutions and society in Anatomy of Britain. Now he revisits the theme, with particular emphasis on the decline of traditional institutions – church, civil service, universities – and the corresponding rise of investment banks. (The centre of gravity of the power world was shifting away from Westminster towards the City.) And he starts to unravel the paradoxes of a democracy turned less democratic by its emphasis on following public opinion. A theme well developed in Fared Zakaria’s The Future Of Freedom. In this book, Zakaria takes apart the old paradox – that democracy and liberty are not the same thing – and develops a new twist – that the more open a political system becomes, the less representative it truly is.
width=65 height=45 border=0 align=bottom>The New Financial Order: Risk in the 21st Century by Robert Shiller
Shiller became famous outside the economics profession when his book Irrational Exuberance was published in March 2000. Its appearance coincided exactly with the top of the dot.com boom and stock market bubble. This book is aimed less at the bestseller list and more at influencing public policy. Its central thesis is that the world would be a better place if there were many more risk and securities markets. We should be able to write contracts to ensure against – for example – global economic downturn, increased longevity, changes in income inequality.
You may think that compared to Shiller’s balanced stance against madness three years ago, this book is mildly dotty: and you would be right. There could be many more risk markets than there are: but the main explanation for the missing markets Shiller identifies is shortage of demand, not of supply. And the markets Shiller would create could still never properly insure against the key economic risks we face in every day life, which are to do with personal uncertainties – marriage and relationship breakdown, redundancy and unemployment – which are only marginally dependent on events in the external environment. The oddest thing of all about this book is that Shiller has probably done more than any other economist to explain the reasons why the ideas he propounds will not work.
width=65 height=45 border=0 align=bottom> Sex Drugs and Economics by Diane Coyle
Free lunch by David Smith
For a long time, there has been a market niche for a book, not a text book, whose purpose was to explain basic economics to non-economists. In the last year, three books have appeared to fill this gap.
All of them are written by people who have been successful economic journalists, and all are as one would expect lucid and easy to read. They are also technically solid professional economists might not agree with all that is said, but they will not find major errors. All of them can be recommended to people who want to read something with the objective I have described: my personal ranking would probably be Whelan, Coyle, Smith, but there isn’t much in it and since all have a somewhat different focus and style they are not mutually exclusive.
But you may share some of my irritation at the relentlessly jolly style which begins with the titles. You are reminded of a schoolmaster who is concerned that if he fails to keep the class entertained even for a moment they will start to throw pellets at him, the clergyman who fears the message of the gospels is so dull that he can only attract a congregation with bells, whistles and sideshows. Is the reputation of economics so dismal that this is necessary?
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After Stephen Pinker’s The Blank Slate (on my bookshelf recently) come two more popular science books in the same area. Ridley, like Pinker, explores how our behaviour is formed by a combination of genetic hard-wiring and experience. From this perspective the question ‘what are the relative contributions of nature and nurture’ is fundamentally misconceived: both are inseparable parts of an interdependent whole. But while Pinker’s book was concerned with controversial implications, Ridley’s main focus is on the science involved – a combination of neurophysiology, genetics, and psychology.
Baron-Cohen tackles head on one of the most controversial implications of ththe thesis Ridley propounds. Gender differences in behaviour are not simply the product of conditioning, but are partly genetic. ‘The female brain is predominantly hard-wired for empathy. The male brain is predominantly hard-wired for understanding and building systems’. Something you always knew, but were afraid to say. Now you can claim for it the authority of a serious, distinguished, Cambridge scientist.
width=65 height=45 border=0 align=bottom>Fooled by Randomness by Nassim Nicholas Taleb
This book was published a year ago, but I have only just read it, in part because the promotion and the reviews, reflecting its accessible style, give the impression of a much less heavyweight book than Taleb provides.
Taleb’s thesis is that we are routinely misled because we find the mathematics of probability difficult to grasp. For example, the person who bought the winning lottery ticket made a bad decision, because 9, 999,999 times out of 10 million it would have been a bad decision. We find this hard to accept, though the logic is irresistible.
But what then if much of what we regard as ‘success’ in business and finance is ‘success’ of this kind? We congratulate the winner of the lottery on his or her good fortune, but we do not waste time examining their lives in the hope of finding clues that will make our own careers more successful. But that is exactly how we treat high achievers in business and finance.
Any thoughtful manager will be stimulated by this book, and everyone with management responsibility in financial services should read it.
width=65 height=45 border=0 align=bottom>Does Education Matter? by Alison Wolf
Since everyone has undergone education, everyone has expertise on education derived directly from their personal experience. There is no subject on which so many opinions are expressed on the basis of so little evidence or knowledge.
Alison Wolf takes a sceptical look both at evidence on the effectiveness of education and at the education policies which have been adopted in Britain. It is a devastating and provocative critique of non-evidence based policy and raises seriously the question posed by her title: does education really have the significance for economic growth which is so often claimed?
width=65 height=45 border=0 align=bottom>The Blank Slate by Stephen Pinker
‘Not another book on nature and nurture!. Haven’t we all moved beyond the simplistic dichotomy between heredity and environment and realised that all behaviour comes out of an interaction between the two?’
Pinker begins his book with these words, and many readers will sympathise. But Pinker does demonstrate convincingly that much political debate, and research in social sciences, is still conditioned by the notion of ‘the blank slate’, the notion that our actions are exclusively the product of our own environment and our own experiences. (In fact Pinker is much too kind to economists, who are at least as guilty of this as other social scientists).
Even if much effort is devoted to demolishing a straw man, Pinker does so with great wit and verve: there are exhilarating ideas on every page (even if not all of them are right).
It is unlikely that any book written about the boom and bust of the late 1990s will ever be as good as John Kenneth Galbraith’s account of the equivalent episode in the 1920s – The Great Crash. But this is a brave attempt – sufficiently brave to earn Galbraith’s strong commendation on the back cover. And Cassidy is ready to assign blame, although this does not get beyond the obvious targets – the complacency of Greenspan’s Federal Reserve Board, and the cynicism of investment banks which vied against each other for the opportunity to launch ever more ludicrous offerings. Valuable reading for those who have already forgotten how they were taken in – and for the ever-growing group who now remember that they were never really deceived.
Why is Virgin successful? is close to the top of the FAQs people ask me. This book reveals a lot about Branson and Virgin – certainly more than Branson’s own autobiography or the common hagiography. Still, Bower’s unremitting hostility to his subject grates after a bit.
There are three key messages for the fair-minded reader.
1. Branson has been instrumental in the creation of two successful businesses – a record business and an airline. Most of his other ventures have not worked. But by any reckoning, this is a considerable achievement.
2. Branson has rediscovered a nineteenth-century business secret – that personal publicity for the founder is a very cheap means of advertising. Do not expect to learn anything more profound about business either from Branson or from Virgin.
3. Branson should not be running the National Lottery, and it is a demonstration of the naiveté which has characterised many recent relations between government and business that this was ever a serious possibility.
For a decade or so, it has seemed possible that complexity theory – the mathematics of non-equilibrium physics – might lead to breakthroughs in our understanding of economic and business processes. And yet hard results from the theory have remained elusive. But maybe that is changing. This is the best popular exposition of the issues.
Buchanan’s book is focussed on one simple issue – how fractal geometry generates event distributions described by power laws. If that sounds abstruse, it is – but Buchanan’s book isn’t – and it is this theory that begins to explain both what we can, and cannot, know about the incidence of catastrophic events – like earthquakes, or large falls in the stock market, or contagious financial crises. There is a new social science developing, which combines more complicated maths than anyone had imagine applicable with careful observation about how people actually behave. This book is a good introduction to some of the issues.
It is a timely moment to read a deconstruction of the 1990s, the great American decade. Frank is relentless in his appraisal of all the revered activities of the period – investment banking, management consulting, populist newspapers and radio, media account planning, and the pursuit of cultural studies in American universities. The old left perspective is tedious at times, but nonetheless Frank brings to his task wit, panache and brio, and a wide knowledge of all these subjects. This style and erudition makes the book hard to put down. And Frank’s attack on his central target – the notion that the market has replaced elected democracy as the factor legitimating the distribution of power and wealth – is well argued. If you don’t enjoy this book, it is because you are too closely involved in the events Frank describes.