Tuesday, April 02, 2013

Appreciation: Adair Turner

Adair Turner's Economics after the Crisis is the kind of book you would want to be read by--well, by the kind of person who would not read this kind of book.   It's a succinct and elegant sketch of (a) a better world (heh); and (b) a better banking system, with a few added comments about heading off climate change.

Also, to be candid, an imperfect book.  It starts off strong, as much a delight to read as I've picked up his year.  Here, Turner offers a sketch of  conventional wisdom among the great and good.  He argues that they agree that (a)  the best thing a politician can do is to increase "wealth," perhaps in the form of gross domestic product; and (b) the best way to achieve (a) is to let the free market lion roar.  Oh, and (c) yes, income disparities will widen but you know what they say about omelets and eggs.

Turner is elegant and direct on (a).  Grant that if you are a begrimed Indian peasant dreaming that someday you might own a bullock cart, then any extra cash, however trifling, is bound to come as a boon.  But if you are at or around (just say) the current U.S. level, it is not at all obvious that an extra dollar will make you any happier--or, if it does, that the marginal accrual of happiness will be sufficient to outweigh the opportunity cost.

And turn to equality.  Here, for one, there is some reason to believe that the richest among us are not the happiest: there seems to be a lot of status anxiety in the Upper East Side and the Hamptons; enough to make you wonder whether it is really worth their while to strive for so much (Turner doesn't mention it, but my guess is this might be a generational new-money thing.  Most of the hateful ones have way more money than their parents--how could they not?  And there is a lot of evidence that upward mobility causes at least as much insecurity as the reverse).  Moreover there is good evidence that extremes of inequality in a society inflict social damage all the way down the line--for example, in solidarity and trust.

And as to the market--ah,  here, Turner gets  bit less steady.  He declares himself a committed free-market sort of guy (certainly when it comes to restaurants, as he mentions more than once).  But as to banking.  Hm.  I suspect maybe the trouble is that virtually all of  us except the banksters believe that cancerous, metastasized modern banking sucks wealth out of society.   The trouble is I don't know of anybody (not Adair) who can make a comprehensive case that this proposition is true.  He's pretty much reduced to saying thanking doesn't seem to do the job of (e.g.) allocating capital that it promises to do.   And that life seems to have been better (and banksters less of a nuisance) when  banking comprised a smaller chunk of the GDP.

Finally on regulation--I'd say that turner is noncontroversial but rather thin.  He wants s regulation that is stsble, steady, and that itself does not make the problem worse.  Well yes, but it's pretty thin soup.

Turner fleshes this brief book out with a few observations on climate change. I guess I can see why: he is a major player in Britain's climate change debate.  Also, perhaps, he simply had run out of other things to say.  There's nothing really to quarrel with here but it doesn't do much to improve the structure of the book as a whole.

On rereading, this note seems snide and dismissive.  Which is odd because I genuinely enjoyed the book and I think ratio of raw truth to dead trees (it's short) is about as high as you're likely to get.  Give it to your irritating uncle and tell him not to bother you until he's finished reading it.  That ought to keep him out of your hair for a while.

1 comment:

Ebenezer Scrooge said...

"virtually all of us except the banksters believe that cancerous, metastasized modern banking sucks wealth out of society. The trouble is I don't know of anybody (not Adair) who can make a comprehensive case that this proposition is true."

It's not hard. Modern megabanking consists of three interrelated businesses, backed up by two capabilities. The businesses:

1. Monopolization (e.g., consumer payments, derivatives)
2. Mystification (e.g., structured finance, consumer lending)
3. Subornation (e.g., municipal finance; IPOs).
These three businesses are backed by two capacities:
a. Legitimation (that's what lawyers are for);
b. Operations (which is necessary for #1-3, but actually has social value.)

You see, it's easy!