Book review: Doughnut Economics by Kate Raworth: Rethinking the economy

 While I say that as well as fiction I read non-fiction, really I typically only read popular science, ancient history and some travel. One area that I never expected to be reading is the wannabe science of economics - but, as with politics, you might not take an interest in economics but it will take an interest in you.

There have been a slew of popular progressive economics books in recent years - from examinations of our broken system like John Lanchester’s Whoops! and Grace Blakely’s Stolen, to those that are more focused on looking at how we build better systems (The Spirit Level and Utopia for Realists), to the more hardcore economic theory (I swear I’ll get round to reading Thomas Piketty and Yanis Varoufakis!), and Kate Raworth’s book may be the best I’ve read at both outlining the problems and offering potential solutions in clear, straight-forward language.

It is an idea she has been presenting and working on for almost a decade. While her degree is in economics she was disenchanted by the blinkered, systematised thinking that shackles the discipline (as she points out early on, and again at the end of the book, while other social sciences seek out an encourage different ways of thinking, economists are taught that certain core principles are not to be questioned - no, more than that; they are indoctrinated into the mindset that there are no other ways of thinking.)

The idea of the doughnut is simply this: the hole in the middle is the lack of human dignity - insufficient food, water, shelter, healthcare, education. Those basics that we should allow to all people as a right.

The outer circle is the limit to which we can live with the finite resources of minerals, energy, food production, clean air, clean water.

The doughnut, therefore, is the space between those, where we as a species, as a culture, can provide a decent standard of living for every individual for the long term, without threatening the environment that we rely on for our survival.

It seems like almost too simple an idea - and an even simpler diagram, however she begins by pointing out how important visual signifiers are to us - the iconic map of the London Underground, Copernicus’ illustration of the heliocentric universe - the rising curve of progress and Paul Samualson’s simplistic Circular Flow diagram, picturing the economy as a closed loop that is taught in Econ 101 to this day. Raworth references sharing the ‘doughnut’ diagram with activists who respond effusively stating “YES! That is EXACTLY what I’ve been trying to say!”

And if that was all this book was, it would be no more than an interesting idea. I am sure there are many who are happy to scoff exactly so without engaging, but Raworth both delves into the history of and problems with economic theory, and outlines ideas - both conceptual and real-world ideas actually being implemented - for how we can, and must, do things differently.

She points out how so many of the great economic theorists of the past are selectively understood - Samuelson knew his diagram was a simplification ad absurdum, of use as only the most broad idea for non-specialists; when Simon Kuznets came up with GDP as a measure of productivity, he specifically warned that it was necessarily a narrow measure that should not be used as a benchmark to gauge progress; back to John Stuart Mill and Adam Smith (I always find it remarkable that most people who quote Smith appear completely ignorant of the half of his work in which he talks about social responsibility and warns against the dangers of subverting everything to the acquisition of wealth).

She thoroughly dismantles the consensus idea of economics that growth is the Ultimate Good (quoting a respected economist whom she doesn’t name, when asked why perpetual growth is possible simply responds “Because it has to be!”) to a more thorough debunking of some of the assumptions and models that underpin a pseudoscience that has come to dominate both public policy and public consciousness to a degree that neither the public nor policy makers feel they can question it.

On top of this, the author outlines the generalities of what we need from a new economics and gives examples that work in the real world, along with concepts that should be used in general. 

But this is not a utopian exercise; Raworth makes sure to state that change will be far from easy, and requires some extremely difficult choices. Nonetheless, the tenor of the book is ultimately hopeful, pointing out possible routes out of consumption-driven catastrophe to a future that is not only survivable and sustainable but equitable and regenerative, where we are not merely ameliorating the damage we do to our life support system but actively improving it.

I mostly consumed this via the audiobook, while dipping into the ebook - hence the sparsity of notes. I feel I need to go back for a closer read, to fully embed the ideas. I should do the same for some other books - the ones mentioned at the start of the review. For all the economics is a pseudoscience, it may be the most important factor in how we cope with the coming decades, impacting on everything from our jobs to the welfare state to climate change and alleviating mass extinctions, to production of food and energy and technology.

A must read, and must act on.

Book Review: Stolen by Grace Blakely; a devastating review of a devastating economics

Blakely delivers a scathing, thorough and very readable account of why the move to 'financialisation' - that is, a vast portion of economic growth has moved to the finance sector rather than the manufacturing or service. As she puts it; the majority of wealth is in the hands of those who make their money from the money they have, rather than those who work for a living. Decades of regulation encouraging this behaviour, along with the selling off of public services and the financialisaton of public life has lead directly to the crash of 2007, austerity and the continuing economic uncertainty that has seen the driving down of wages in real terms.



Over each section Blakely lays out the history of how we got here with clarity - the Bretton Woods accord, the post war consensus, and the breaking of this with financial deregulation in the 70s and 80s - and the complete red in tooth and claw free for all since the end of the cold war. I've seen a few negative reviews where it has been said that the author "doesn't understand economics" which is patently untrue; she has a very through grasp of economic theory, and recognises that it is far from being the clear-cut science that many pretend, that it relies on assumptions in prejudices and and understanding that humans are not the 'rational actors' portrayed by classical economics.



Blakely very much wears her own bias on her sleeve - as well as lambasting right -wing economics she calls for socialist policies - but also criticises Keynes and Piketty where she feels they deserve it, while drawing on their good ideas.



After all this, however, I confess I struggled with the final chapter, on how we fix the situation. Partly, the author loses some of the readability in laying out her vision for the future; suddenly there is less verve and clarity, and it begins to read more like an academic paper. The other problem, though, is that she doesn't shy away from how huge a change needs to be made; it's not just the relatively minor legislation that a government can enact, but root and branch change not just on the level of that undertaken by the post-war Atlee government, but the far greater changes they proposed but were forced to back down from. Blakely also recognises that the forces of international capital would fight these changes before, during and after they were enacted. Frankly, the scale and difficulty of the changes she suggests are beyond daunting, but that doesn’t detract from their veracity.



Grace Blakely has given a vital critique of what many call late-stage capitalism, pointing out just how destructive it is, in so many ways, as well as a potential way forward, This book should be on every radical reading list, beside Naomi Klein and Barbara Ehrenreich and Rutger Bregman - and, if you’re wanting more optimism, The Spirit Level and The Optimist’s Guide to the Future.


( first published at https://www.goodreads.com/book/show/48201027-stolen )

Book review: Prisoners of Geography by Tim Marshall

Tim Marshall presents an interesting book showing how, in so many ways, geography is destiny, how climate, along with access to arable land, navigable rivers, and suitable coastal seaports determines the level of success a nation can achieve and indeed - along with the seas, rivers, deserts and mountains that border it - the reasons a given area will even become a nation.



This in itself should not be especially revelatory - in his wonderful Guns, Germs, and Steel: The Fates of Human Societies Jared Diamond give an extraordinarily well argued case of how these factors have shaped the history of humankind, and Marshall references this - but here the writer gives ten specific examples, focusing on recent history, current geopolitics, and the future. He is making the point that these factors seem to be something we have forgotten, that we have been blinded by the power of technology and how much it has shrunk the globe but, in fact, power - either economic or military - still relies on moving large amounts of material by land and/or sea.



He covers such things as Russia's lack of a warm-water port and single point of easy land access to Europe via the Northern European Plain and how this explains that Putin's focus on Ukraine is at least as much tactical as ideological. Why India and China have never had a major conflict, separated as they are by the greatest mountain range on Earth. Why any talk of a Latin American great economic power is premature to say the least, due to the all but insuperable terrain and, well, that it's just so damned far from the rest of world. How, once it gained control of the landmass via clever dealing/luck/genocide the United States was almost guaranteed dominance due to the terrain, climate, and positioning. (As an aside, he points out that annexing of Texas in 1836 was a close thing; how much would an opposite outcome have changed things?)



Marshall writes with clarity but, surprisingly given his pedigree as a journalist, rather drily. Perhaps this is a stylistic choice to let his assertions speak for themselves and grip the reader, which they generally do. While he mentions trade rather a lot, and food production and water availability, his focus is largely on how geography affects military movements (Russian tanks across the aforementioned Northern European Plain, Chinese warships through the Straits of Malacca, etc) and the transport of oil and gas. That this last currently tops all else for importance is difficult to argue with - the modern, and modernising, world runs on energy and fossil fuels are currently cheap and plentiful and (barring the increasingly obvious side effects of their use) incredibly efficient. Marshall seems to be implying increases in fossil fuel use - references to expansion of fields in South America, Africa, and the Arctic in particular - and not only is this depressing but his predictions barely touch on the effect of this use, and don't seem to account for the changes in climate in sea levels that they will bring.



This edition was revised in 2016, and I was constantly reminded of how some things have changed since publication. That Crimea is now part of Russia a startling but minor change. What kept leaping out were the points when discussing US influence around the world. For instance, in the sections on China and Korea & Japan, much was made of China's aggression nautical expansion and the pressure it is putting on its neighbours - throwing money at Pakistan and other places to develop friendly ports, or the threats toward South Korea, Japan, Taiwan and the rest. The author regularly states that there is no percentage in countries switching allegiance despite China's best efforts while the US has their backs, and I could not help but think of Donald Trump's systematic dismantling of American diplomacy and soft power. OK, he may be out of the way in two years (or less!) but trust is easily lost and difficult to regain. When faced with both carrots and sticks from the new Asian proto-superpower and uncertainty on the reliability of the existing American one, it may not be a difficult decision. After all, to refocus and repurpose a quote from the book, "Beijing is close, and Washington is far away."


3.5 stars

Does how you spend your money matter?

Every pound or euro or dollar we spend is a vote on how we want the world around us to be.


This is not, of course, my original thought but it is one that requires regular restatement  against the constant counter narrative that is simply seen as normal.


It is easy to buy from Amazon. We all do it; it is easy and fast and cheap, so why not? Well, just think about what money is, and where it goes. Amazon are cheap partly due to the economies of scale and low overheads, but more so because of the power that they wield in the marketplace.. For instance, with books the standard agreement is that they sell at a 60% discount, and the publisher does not allow other retailers to undercut that price. Of course, that cut doesn't come from Amazon's profits, but from those of the publishers and authors, which is largely the reason that the average UK-based writer makes around £11, 000 per year from their work.


So the vast amount of your spend with Amazon goes to the company, not to those who produce the products it sells - and, of course, we all know how little Amazon pays in tax or staff wages.


Big chain stores are a little better. While they generally have a similar profile in terms of passing costs on to producers (see the various reports on how the major supermarket chains screw over farmers) , and often in paying taxes, but at least they provide jobs in the community in which they are based.


Best of all is the old mantra: buy local, as much as is possible. Spending £100 in a chain store mostly goes to the overpaid CEO (by definition, executives are grossly overpaid in the modern economy, with few exceptions) and shareholders, but £100 at a local hardware shop goes to the family that own it buying food and supplies, ideally in other local shops, strengthening the local economy in a virtuous circle. Maybe paying local craftspeople, or for repairs from local tradespeople.


Sometimes these decisions are fairly easy. I'm lucky enough to live in a city with many, many fantastic small - often family-run - restaurants, cafes, takeaways and sandwich shops, so I've not been to a chain eatery in years. I made the choice not to - but, let's face it, the places I frequent serve far better food than KFC or Nando's or Zizzi, and are often cheaper. If you're going to a local butcher or greengrocer, you're probably paying more than you would at Tesco or Aldi, but the quality is probably higher. But many of the groceries - the dry goods, the cleaning products, the toilet paper - are almost certainly going to be a damned sight more expensive at your local corner shop, and they'll have a poorer selection. And you might not even have the choice.


These and many other factors make it easier to shop online or at big supermarkets. While the greengrocer and butcher are closed by 6 pm (if you're lucky) the supermarket is likely open until at least 10, and the internet never shuts. But it is worth making the effort, rather than slipping into the most convenient way of doing things, because it's better for everyone in the long term. And it isn't all or nothing. I've fallen back to doing most of my shopping at one supermarket or other (Aldi is just so cheap and convenient...), mostly through working hours and a lack of planning. But I haven't given up.


So, if you're going for coffee look around from the Costa and find that little independent place around the corner, which is probably cosier and friendlier - and definitely has better coffee. Seek out that local Italian restaurant and get that warm welcome feeling when they recognise you on your second visit. And maybe, on the Saturday drive to the supermarket see if you can drop by some local shops or the town market and enrich your shopping experience.

Are immigrants making miners work til they are 75? Response to a Facebook post.

I meant to write this a few weeks ago when someone - a family member, actually - shared on Facebook a meme showing two pictures. One was a group of smiling white men wearing overalls and mining helmets and the second a photo of a large-ish family of brown-skinned, possibly muslim, people. The text suggested that the first group were being forced to work to 75 because the second group were sponging off the state.


I’m hardly on Facebook, and don’t think this person makes a habit of sharing this kind of thing, so was ‘lucky’ it was posted just as I popped on for five minutes. I commented with an exasperated “what utter bollocks!” and left it at that. I probably should have been a bit more constructive, but it was such a ridiculous argument (for want of a better word) I was just annoyed. The poster did quickly respond, asking if he wasn’t entitled to his opinion. I replied that of course he was, but that there was a difference between things which are opinions and things which were verifiably true or false, and this was both the latter and false. Again, I should probably have offered an explanation, so here it is.


I will leave aside the miners - of whom there are precious little left in the UK, and who are certainly not required to work to 75. I will assume they were simply being used to represent the “ordinary working Brit”, although that does bring into question why a group of white men was used but, again, I shall leave that aside.


More important are the false implications and assumptions of the brown, muslim-looking family. There are many, and I doubt I’ll cover all of them.


The points I’ll be making are about the value of immigrants, and are all based on hard fact. Not feelings, not ‘fake news’, not massaged statistics, but well-documented, consistent, incontrovertible facts.


Immigrants claim a lower proportion of benefits than any other segment of the population. These are people who have had the wherewithal to travel hundreds or sometimes thousands of miles. They have already worked hard are certainly not expecting an easy life. When allowed to, they work. As a group, they work hard. They set up far more businesses as a proportion than do native born people. There is a reason the ‘Indian corner shop’ is a cliche.


Linked to this, immigrants pay taxes.So, not only do they not drain the national resources, they actually add to the pot of money from which these resources come.


“Ah!” (I hear someone say) “But that is because they take jobs from honest, British workers!” Well, person who I have heard say that, no; you fundamentally misunderstand how economies work. Most of our economy is based on the consumption of goods and services. Whether it is using utilities (paying for gas, electricity, broadband, etc), buying cars or furniture or groceries or a bagel and coffee from the sandwich shop down the road, this puts money into the economy and is how other people’s wages are paid - gas engineers and call centre staff car mechanics and sandwich makers. Look at Germany, which has brought in more than a MILLION asylum seekers in recent years (on top of the immigration already happening), and has the lowest unemployment since East and West reunified - when, practically overnight, West Germany had to integrate 16.5 million poor East Germans and spend billions of marks changing 45 years of separation.


Then there is the demographic ‘time-bomb’. The largest population spurt we have ever seen are the baby boomers, that generation born after the second world war who benefited so much from the newly created Welfare State (and created so much wealth in return) and have been gradually retiring over the last two decades. Birth rates have been dropping, which means a smaller than ever working population are supporting a larger than ever retired population. Bt most immigrants are in their 20s and - as i said above - more than happy to work and pay taxes.


And, here’s another thing about that, it’s a damned sight cheaper to bring in immigrants than raise our own population to working age. How much do you think it costs - the state, and parents - to raise a child, to pay for 17, 18, 24, years of healthcare and education? Any cost in language skills or integration or even a few months of benefits is literally insignificant next to that.


There are people (mentioning no daily newspapers) that also suggest there is a crime problem associated with immigration, but this is also simply wrong. Immigrant populations, wherever they are from, consistently commit FAR less crime than native born populations. Seriously, a fraction as much.


Lastly, and on a different tack, why assume a brown family are immigrants in any case? I’ve known lots of people of Asian and African descent who were not only ‘born here’ but whose families have been here for generations. My own family are largely of Welsh and Irish descent within the last four generations or so, so are also immigrants. As is everybody else on this island. Yes, there are people who have traced their line back centuries (often to the Normans, who were of course immigrants who didn’t want to mix with the locals and learn the language) but that is only one branch of the family. It is clear that one of the main legions who held Britain for the Romans was the Africanus legion so (despite Nassim Nicholas Taleb’s ill-educated protestations) black people have been in these isles for at least two thousand years.


I’ve only covered the main points, but these are usually the ones made (or snidely hinted at) by racist memes and the EDF and the Daily Mail. All of them are facts and, I think, also make sense when given a moment’s thought. I hope everyone reading this will bear them in mind when responding to knee-jerk emotive posts.


Please, think about what a post is saying before hitting share.

Review: The Black Swan by Nassim Nicholas Taleb

Taleb's book pursues several central ideas that seem fairly commonsensical. The major theme is about the titular Black Swans - events that are ignored by forecasters (be they financial, social, or whatever) because they are either considered too unlikely to be worth taking into account or are not even noticed due to the narrow focus or inadequate models being used. Taleb points out that, rather than being the effect of gradual change, many of the most important changes to our world, for better or worse, are massive upheavals caused by unpredicted events. Financial crises, inventions, wars; so often these things are unpredicted and seem unpredictable, and cause fundamental transformation.

Taleb doesn't advance a model for predicting these things - indeed, part of his thesis is that the fervour for prediction tends to lead to a narrowing of foresight and the expression of false certainty, making the effect of the subsequent (and inevitable) unforeseen events all the more cataclysmic. Instead, he argues for a mindset that is open to seeing the possibilities rather than focusing on certain expectations.

Some of the blame for this outlook he places on the ubiquity of the Gaussian bell curve, or normal distribution, which is excellent for ranking the spread of certain characteristics (height and weight across a population, for example, where the vast majority will fall within a narrow band of the mean and outliers becoming increasingly rare - you probably know lots of people who are six feet tall, a few who are 6'4", and would be dumbstruck on meeting someone 8'), inadequate in areas with a massive disparity (income, book or record sales) and disastrous when used as a predictor - something unlikely can have a far larger effect than all the many median-scale common occurrences, such as a tsunami or a financial meltdown.

The author uses the terms Mediocristan (the place in which events follow the normal distribution) and Extremistan (the place where a significant number of events fall outside of it) and argues that we live with the dual problem that, while many of the vital mechanisms of our world are extreme we tend toward a certain blindness that leads us to think they are mediocre, that we like to form patterns and narratives that seem to make sense of the world and are then unable to respond when the world refuses to fit into these patterns.

While I find this difficult to dispute - especially within the utterly pretend-scientific world of economics which is the target of much of Taleb's vitriol - he tends to argue in terms so broad that this does somewhat dilute the strength of his points. For instance, he rails against the bell curve as a blemish on cognition, eventually conceding that it is just not the tool for the job to which it is being put, and this is emblematic of his approach.

Another example is his preference for the company of people with a broad intellectual scope rather than narrow expertise, and his extension to arguing that the former are generally preferable in all fields. Again, this is difficult to argue with on the face of things - many intellectuals whom I admire greatly have argued against the tendency of our educational system to train students in a limited fashion rather than educate them thoroughly - but the fact is that many of the most brilliant people who have provided the greatest boon to society are narrowly focused experts - not through training, perhaps, but because of targeted obsession in a particular field. If Taleb is arguing for a greater scope of education and interdisciplinary appreciation, I don’t think the point can be denied but, again, his argument is scattershot and it is not entirely clear what he is arguing for.

A final problem is that, early on, Taleb betrays our trust. He tells the story of a Russian author who, unable to get publishers interested in her experimental novel, published privately and became a huge success. Some time later he admits that she is a complete fabrication - and then returns to her in other examples throughout the book. I assume that he is drawing attention to the fallacy of narrative, about which he complains that we place too much trust. We are, as others have said, animals that tell stories to make sense of the world. This meta-textual trick of course makes us take what he writes with a pinch of salt, as we should, but as he uses personal anecdotes frequently throughout to support his points, the thought that he may well be making them all up further weaken his case.

All this said, The Black Swan is an interesting read from a man who obviously has some good ideas and relishes intellect and discussion. I imagine that he is a voluble and entertaining speaker - and probably an excellent conversationalist and dinner guest.