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Nominations for a silly economics prize with a deeper purpose

While the Nobel Prizes are no doubt a splendid thing, the Ig Nobels are far more fun. Ig Nobel prizes have been awarded for discovering that every language has a word for “huh?” (Literature, 2015) and for comparing the discomfort of looking at an ugly painting with the discomfort of being shot with a laser beam (Art, 2014), and of course for studying farts (Biology, 2004; Literature, 1998).

They do not seem very important, and indeed Robert May, then the UK’s Chief Scientific Advisor, requested in the 1990s that Ig Nobels not be awarded to British scientists for fear of damaging their reputations.

That seems a little po-faced. It may be better for researchers to laugh at themselves than to let politicians do it for them. The late William Proxmire, a former US senator, relished his “Golden Fleece” awards, a destructive and sometimes inaccurate mockery of research conducted at taxpayers’ expense.

Proxmire did not seem to care that silly research sometimes has serious benefits. The Ig Nobels are designed to “make you laugh, then make you think”, and they have a surprising record of turning up gems. Andre Geim won an Ig Nobel for levitating a live frog, en route to his Nobel Prize in physics for his work on graphene. David Dunning and Justin Kruger received an Ig Nobel prize in psychology for discovering that incompetent people are too incompetent to know they are incompetent. It seemed funny at the time; nobody is laughing these days.

I have been disappointed, however, with the quality of Ig Nobel prizes in economics and business, which have recognised rogue trader Nick Leeson, Lloyd’s of London, Enron, WorldCom, and the entire banking system of Iceland. This is a shame, because if silly-seeming research in physics and biology might lead somewhere intriguing, why not recognise silly research in economics and business?

I have a few candidates in mind. I’d like to nominate Benjamin Scheibehenne, Peter Todd and Rainer Greifeneder for discovering that whether you offer shoppers a choice between a few types of jam, or lots of types of jam, it doesn’t make much difference to whether they buy jam. This finding might seem unremarkable, but the received wisdom in behavioural economics had been that consumers simply stop buying if offered too many choices. Prof Scheibehenne’s team examined 50 studies and concluded that on average, offering more choices made no difference either way.

I also nominate economists Hunt Allcott and Matthew Gentzkow, for studying fake news by inventing fake fake news. They conducted their study immediately after the 2016 presidential election, in an effort to measure how much fake news was around, and how many people had seen it. The use of “fake” fake news was to test people’s recall of “real” fake news stories: some people will say they remember seeing things that they did not, and so Profs Allcott and Gentzkow put fake fake news alongside real fake news and real real news in order to understand what was really going on. Clear?

Perhaps the Ig Nobel committee is concerned that the pair are trespassing on the domain of recent winner Gordon Pennycook (a psychologist) with the economist David Rand. Profs Pennycook and Rand are studying “bullshit receptivity”, a tendency to read profound meanings into randomly generated sentences such as “we are in the midst of a high-frequency blossoming of interconnectedness that will give us access to the quantum soup itself” and “hidden meaning transforms unparalleled abstract beauty”. Highly bullshit-receptive experimental subjects were more likely to believe in fake news headlines, even when part of the study was conducted on April 1.

If all this seems rather obvious, note that there’s an important difference between the kinds of things people believe because they don’t stop to think (for instance, that Pope Francis endorsed US president Donald Trump), and the kinds of things people believe because their political identities depend on it (for instance, that Mr Trump is “draining the swamp”). Anyone trying to restore sanity to political debate needs to understand the distinction. If you think this isn’t an important issue, I have a story about EU cabbage regulations to tell you.

Finally, I nominate Sendhil Mullainathan and Eldar Shafir, for discovering that being “hangry” is a major impediment to economic development. In their book, Scarcity (UK) (US), Profs Mullainathan (an economist) and Shafir (a psychologist) argue that there is a common response to being short of almost anything: money, time, and even food. Scarcity absorbs our mental energies and makes us act in ways that can be deft in the short term but self-defeating over the long haul.

The Ig Nobels glory in the opposite: a surplus of weird ideas that are foolish in the short term but may pay dividends in the end. And if they do not? There’s no harm in being silly.

Written for and first published in the Financial Times on 21 September 2018.

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How to burst your political filter bubble

There are certain resolutions that are easily made and easily broken: lose weight; drink less; be mindful. They all seem a cinch compared with the challenge of our age: think less tribally. Try meeting people who disagree with you. Try to understand both sides of the argument. Most of us instinctively feel that this is desirable. Each of us has something to learn from others. And even if we do not, even if the other side of the argument is utterly wrong, how are we to persuade them if we are not on speaking terms? And yet bursting our own bubbles is infuriatingly hard.

Here’s one obvious approach: use social media to follow people with opposing opinions. If you see what they are saying, you can ponder their arguments and try to see the world from their point of view — at the very least, you can understand how best to convert them.

To investigate this idea, a group of social scientists (Christopher Bail, Lisa Argyle and others) recently recruited several hundred people with Republican or Democrat leanings, and gave them a small financial incentive to follow a Twitter bot for a month that would expose them to the opposing point of view. Republicans followed a liberal bot that would retweet 24 messages from elected Democrats, left-leaning media outlets and non-profit groups; Democrats followed a conservative bot.

But the Twitter bot’s efforts at fostering understanding backfired. Being exposed to opposing views on Twitter pushed people away from the centre ground. “Republicans who followed a liberal Twitter bot became substantially more conservative post treatment,” write the researchers. Democrats moved further left — although their moves were not as large nor as statistically reliable.

This is a disappointing finding, but not entirely surprising. Some earlier research has found evidence of backfire effects in other contexts — perhaps because we find contrary views or inconvenient facts discomfiting and may immediately recall or invent reasons to demean or dismiss them. And Twitter is hardly the venue for a deep meeting of minds.

Still, the conclusion is clear enough: if our aim is to find common ground or at least to foster mutual understanding, simply being exposed to the comments of our political opponents will not do it. It leads to aggravation, not understanding, and it is as counterproductive as it sometimes seems.

What, then? Cass Sunstein, an academic who has served in the administrations of Presidents Ronald Reagan and Barack Obama, makes an intriguing suggestion in his new book The Cost-Benefit Revolution (US) (UK). He points out that we can protect ourselves from certain cognitive errors by translating arguments into an unfamiliar form — perhaps a second language, or perhaps a mathematical abstraction. When you see the argument thus rephrased, you are forced to stop and think. Your response is less emotional.

I am persuaded that this exercise would slow me down and force me to think more with my brain and less with my gut. But it would not be easy to force myself to apply a cost-benefit framework as I pondered the appeal of a hard Brexit, say, the benefits of GM food or the winners and losers from restrictions on abortion. Alas, I doubt the prescription has broad appeal.

So we are back to trying to appreciate the other side’s point of view by talking to them, and that probably means talking to them respectfully, attentively and at some length. To understand what is going on in the head of someone who sees the world very differently from me — say, an evangelical Christian, a diehard Trump fan, a Corbynista or a hard-Brexiter — I would need to spend proper, quality time with them. And they would need to spend proper, quality time with me.

Unless one of us had the patience of a saint (and it would not be me), that would require some other social glue. If we could first spend time together as friends, neighbours, colleagues or teammates, we might later have a chance to talk in depth about politics and values. Starting with politics is likely to lead nowhere.

Occasionally — rarely enough that each instance is memorable — I have sat and respectfully disagreed with someone for hours: listening to them, understanding their viewpoint, presenting my own ideas and searching for common ground. Without exception, these heart-to-hearts have been preceded by months of friendship built on some other shared interest or experience. You can have a civil debate with a political enemy, but it really helps if the political enemy is a friend in real life.

It is sobering, then, to ponder the enthusiasm with which various activists on both sides are keen to make everything political. I do not object to anyone, on any side, who believes that there are deep political issues more important than entertainment, sport or music.

But the cumulative effect of the polarisation of everything is not healthy. Paradoxically, a vibrant, thoughtful politics needs some parts of life that are free of politics, free of the idea of them-and-us. Otherwise we stop listening to each other. We often stop thinking entirely.

 

Written for and first published in the Financial Times on 14 September 2018.

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Why big companies squander brilliant ideas

J F C Fuller did not invent the tank.

That distinction should probably fall to E L de Mole, an Australian who approached the British war office in 1912 with a design that was — in the words of historians Kenneth Macksey and John Batchelor — “so convincingly similar to those which finally went into service that one wonders why it was never adopted from the outset”.

But when the British army eventually introduced the tank, it was J F C Fuller, chief staff officer of what would later become the tank corps, who understood what to do with it. At 39 years old, Fuller was a small man with a neatly trimmed moustache and a hairline that had retreated over his crown and was beginning to march down the back of his head. He could have passed for a butler in a costume drama, but his appearance belied an inner radicalism. (He had been friends — and then enemies — with the occultist Aleister Crowley.)

Late in 1917, after almost 400 British tanks had, with modest success, lumbered across the German lines at the battle of Cambrai, Fuller applied his radical streak to the problem of using the tank effectively.

A new and much faster tank, the Medium D, could travel 200 miles at a speed of 20 miles per hour. Fuller proposed that these tanks would attack the German army’s brain — the string of German headquarters miles behind the front line.

A Medium D could roll across the trenches and be on the German command posts in an hour; Fuller’s attack would come from nowhere. Air support would disrupt German road and rail travel.

“Bad news confuses, confusion stimulates panic,” wrote Fuller. His idea was dubbed Plan 1919. By striking suddenly at the German command, Plan 1919 would cause the German army to disintegrate. It would, Fuller declared, be “the winning of the war in a single battle”.

His astonishing idea became “the most famous unused plan in military history”, according to his biographer Brian Holden Reid. But, of course, that is not entirely true. It was used to great effect, in 1940 — by the Germans. J F C Fuller had invented blitzkrieg.

 

The story might be a historical curiosity, had echoes of it not been repeated so frequently since the British army stuffed Fuller’s plans for blitzkrieg into a desk drawer. Organisations from newspapers to oil majors to computing giants have persistently struggled to embrace new technological opportunities, or recognise new technological threats, even when the threats are mortal or the opportunities are golden. Why do some ideas slip out of the grasp of incumbents, then thrive in the hands of upstarts?

In 1970, the photocopying giant Xerox established the Palo Alto Research Center, or Parc. Xerox Parc then developed the world’s first personal computer, with a graphical user interface, windows, icons and a mouse. Bill Gates of Microsoft and Steve Jobs of Apple observed developments at Xerox Parc with great interest. Xerox still makes photocopiers.

In 1975, a 24-year-old engineer named Steven Sasson built the world’s first digital camera — a patched-together device scavenging a lens from a Super-8 camera, magnetic tape in a portable cassette recorder and a TV screen. Sasson worked for Eastman Kodak, where in 1989 he and his colleagues also constructed the first modern digital SLR camera. Kodak built a sizeable line of business in digital photography, and earned a small fortune from the patents. Yet Kodak could not adjust to a world in which every phone contained a camera. The company filed for bankruptcy in 2012.

In 1999, Sony launched the “Memory Stick Walkman”, one of the world’s first digital music players. Sony was armed with the iconic Walkman brand, some of the world’s best consumer electronics engineers and the talent-soaked Sony-BMG music label. The Memory Stick Walkman went nowhere and, two years later, it was eclipsed by a product that transformed the fortunes of a struggling Apple: the iPod.

And in 1918, Britain had the best tanks in the world, a clear vision of how to use them and, in Fuller, one of the best military strategists to emerge from the British army. The German army was forbidden to use tanks at all; it was scarcely more than a collection of officers, a head without a body. Heinz Guderian, later one of the leading Panzer commanders, had not even seen the inside of a tank until he managed to go on manoeuvres with the Swedish army in 1929. Yet by the late 1930s, the British had conceded technical and tactical superiority to Hitler’s new army.

There is an obvious explanation for all of these failures and missed opportunities: people are idiots. “Now we can get back to some real soldiering,” remarked one senior officer to Fuller at the end of the first world war — as though defending Britain in an existential struggle had been a frivolous distraction from tending to noble horses, bright buckles and shiny boots. The army blocked publication of Fuller’s books for several years; they were seen as insubordinate.

When Steve Jobs visited Xerox Parc in 1979, and saw a windows-and-mouse interface for the first time, he couldn’t contain himself, according to Malcolm Gladwell. “Why aren’t you doing anything with this?” he yelled. “This is the greatest thing. This is revolutionary!” If Jobs had been teleported into the British war office in the 1920s, he might well have said the same thing.

Idiocy is a tempting explanation and not without merit. The top man in the British army, Field Marshal Sir Archibald Montgomery-Massingberd, responded to the threat of Nazi militarisation by increasing the amount spent on forage for horses by a factor of 10. Cavalry officers would be provided with a second horse; tank officers would get a horse too. As I say: people are idiots.

But there is something about the “idiot” theory that feels too glib. Consider Xerox Parc: how is it that a corporation could be smart enough to establish such a superb research centre, but then fail to take advantage? Was Sony really run by idiots in the 1990s? Even Montgomery-Massingberd is too casually caricatured. These organisations stumbled for a reason.

Management theorists have a word for it: disruption. “Disruption describes what happens when firms fail because they keep making the kinds of choices that made them successful,” says Joshua Gans, an economist at the Rotman School of Management in Toronto and author of The Disruption Dilemma. (US) (UK) Successful organisations stick to their once-triumphant strategies, even as the world changes around them. More horses! More forage!

Why does this happen? Easily the most famous explanation comes from Clayton Christensen of Harvard Business School. Christensen’s 1997 book, The Innovator’s Dilemma, (US) (UK) told a compelling story about how new technologies creep up from below: they are flawed or under-developed at first, so do not appeal to existing customers. Holiday snappers do not want to buy digital cameras the size of a shoebox and the price of a car.

However, Christensen explains, these technologies do find customers: people with unusual needs previously unserved by the incumbent players. The new technology gets better and, one day, the incumbent wakes up to discover that an upstart challenger has several years’ head start — and once-loyal customers have jumped ship.

Christensen’s story is an elegant one and fits some cases brilliantly. But there are many examples that do not fit — such as the failure of Xerox to exploit the cutting-edge research at Parc. The mouse and the graphic user interface aren’t a low-end competitor to the photocopier. They’re from a completely different universe.

The iPod didn’t sneak up on Sony from below: the company had seen the potential of a digital music player and moved quickly. Dominant organisations often see the disruptive technologies coming. “Kodak and Blockbuster weren’t caught by surprise,” Joshua Gans tells me. “They knew what the future looked like. They didn’t know later than everybody else, they knew ahead of everybody else.” They knew; but they were unable to put together the right response.

There is also a striking counter-example to Christensen’s idea that disruptive technologies begin as flawed or low-quality options. The iPhone was priced as a premium product with never-before-seen capabilities. It devastated Nokia and Research In Motion — now simply named BlackBerry Ltd in an echo of its once-iconic offering.

Christensen has tried to fit the iPhone into his theories. At first he predicted that incumbents would easily respond, and later he recast it as a disruption in a different industry altogether: “It was intended to disrupt the laptop. And that’s the way it happened.”

The laptop? Tell that to Nokia and BlackBerry.

Anyway, is the tank a low-end competitor to the horse? That’s a stretch. When a theory needs to be made this elastic, it may be time to look for another theory.

 

In 1990, a young economist named Rebecca Henderson published an article with her supervisor Kim Clark that presented a different view of why it is hard to do new things in old organisations. The relevant word is “organisations”.

Dominant organisations are prone to stumble when the new technology requires a new organisational structure. An innovation might be radical but, if it fits the structure that already existed, an incumbent firm has a good chance of carrying its lead from the old world to the new.

Consider, for example, IBM — the giant of mainframe computing. IBM is a survivor. It predates the digital computer by more than three decades. While the performance of computers was being revolutionised by the semiconductor, the integrated circuit, the hard drive and the compiler, IBM maintained a dominant position without breaking stride. This was because the organisational challenge of making and selling a sophisticated mainframe computer to a bank in the 1970s was not greatly different from the organisational challenge of making and selling a mechanical tabulating machine to a bank in the 1930s. Change was constant but manageable.

When computers started to be bought by small businesses, hobbyists and even parents, IBM faced a very different challenge. It did build a successful business in PCs, but was unable to maintain its old dominance, or bring to bear its historical strengths. In fact, the PC division prospered only as long as it was able to snub the rest of the organisation, often partnering with component suppliers and distributors that directly competed with IBM divisions. Internal politics soon asserted itself.

A case study co-authored by Henderson describes the PC division as “smothered by support from the parent company”. Eventually, the IBM PC business was sold off to a Chinese company, Lenovo. What had flummoxed IBM was not the pace of technological change — it had long coped with that — but the fact that its old organisational structures had ceased to be an advantage. Rather than talk of radical or disruptive innovations, Henderson and Clark used the term “architectural innovation”.

“An architectural innovation is an innovation that changes the relationship between the pieces of the problem,” Henderson tells me. “It can be hard to perceive, because many of the pieces remain the same. But they fit together differently.”

An architectural innovation challenges an old organisation because it demands that the organisation remake itself. And who wants to do that?

 

The armies of the late 19th century were organised — as armies had long been — around cavalry and infantry. Cavalry units offered mobility. Infantry offered strength in numbers and the ability to dig in defensively.

Three technologies emerged to define the first world war: artillery, barbed wire and the machine gun. They profoundly shaped the battlefield, but also slipped easily into the existing decision-making structures. Barbed wire and machine guns were used to reinforce infantry positions. Artillery could support either cavalry or infantry from a distance.

Tanks, however, were different. In some ways they were like cavalry, since their strength lay partly in their ability to move quickly. In other ways, they fitted with the infantry, fighting alongside foot soldiers. Or perhaps tanks were a new kind of military capability entirely; this was the view taken by J F C Fuller.

These discussions might seem philosophical — but in the light of Henderson’s ideas, they are intensely practical. “You have to find an organisation that will accept the new bit of technology,” says Andrew Mackay. Mackay runs an advisory firm, Complexas, but was also the commander of British and coalition forces in Helmand, Afghanistan, in 2008. “The organisational question is deeply unsexy, but it’s fundamental.”

A more recent example: is the helicopter basically a kind of aeroplane, and therefore an asset of the Royal Air Force? Or something quite different? Who should be in charge of drones today?

So it was with the tank. If it was to prosper, it needed an organisational home. Someone would have to argue for it, someone would have to pay for it, and someone would have to make it all work, technologically and tactically.

Perhaps the two most obvious places to put the tank were as a standalone unit (since it offered quite new capabilities) or in cavalry regiments (since it was highly mobile and the horse was becoming obsolete). There were traps along either route: the established regiments would resist a standalone structure for tanks, which would compete for resources while the postwar army was shrinking. A new tank regiment would lack both allies and the heft of historical tradition.

After various twists and turns, it was the cavalry that ended up as the organisational home of the tank. And cavalry officers certainly understand a highly mobile strike capability. But they were never really organised around the concept of “mobility”. They were organised around horses. The cavalry officer loved his horse and rode it with skill. His regiment was devoted to feeding and caring for the horses. Would he not resist the usurper tank with every fibre of his being?

 

Xerox Parc developed or assembled most of the features of a user-friendly personal computer, but Xerox itself did not have the organisational architecture to manufacture and market it. Xerox Parc did develop the laser printer, a product that matched the company’s expertise nicely. As Gladwell pointed out, this easily paid for the entire Parc project. The laser printer was like artillery or the machine gun for Xerox: it was an exciting new technology, but it was not a challenge to the organisation’s architecture. The personal computer was like the tank.

The same is true for Sony and the Memory Stick Walkman. As Sony expanded, it produced radios and televisions, video recorders and camcorders, computers, game consoles and even acquired a film and music empire. But to keep this sprawl manageable, Sony’s leaders divided it into silos. As Gillian Tett explains in The Silo Effect, (US) (UK) the silo that produced the PlayStation had almost nothing to do with the silo that produced portable CD players. The Memory Stick Walkman was like the tank: it didn’t fit neatly into any category. To be a success, the silos that had been designed to work separately would have to work together. That required an architectural change that Sony tried but failed to achieve.

And for IBM, the shift from a mechanical tabulator to a mainframe digital computer was like the shift from rifles to the machine gun: an awesome step up in firepower, but a modest adjustment to organisational capacity. The tank was like the personal computer: it may have been a logical step forward given the technology available, but it required a different organisational architecture — one that bypassed and threatened the existing power centres of Big Blue. That was the problem.

The politics of organisational change are never easy. In the case of the tank, they were brutal. The British public never wanted to fight another war in mainland Europe, and the tank represented an admission that they might have to. The armed forces were starved of cash in the 1920s and 1930s. In 1932, the British army ordered just nine tanks — delicate four-tonners. The total weight of this entire force was less than a single German Tiger tank. But at a time of declining budgets, who could justify buying more?

It did not help that the tank enthusiasts were often politically naive. Since an architectural innovation requires an organisational overhaul, it is a task requiring skilful diplomacy. Fuller was no diplomat. His essays and books were dotted with spiky critiques of senior military officers. After a while, even the junior officers who admired his wit began to tire of his “needlessly offensive” lecturing. D

espite alienating the army top brass, Fuller was handed a unique opportunity to advance the cause of tanks in the British army: he was offered the command of a new experimental mechanised force in December 1926. There was just one problem: he would have to step away from his single-minded focus on the tank, also taking command of an infantry brigade and a garrison. In short, Fuller would have to get into the organisational headaches that surround any architectural innovation.

He baulked, and wrote to the head of the army demanding that these other duties be carried out by someone else, eventually threatening to resign. The position was awarded to another officer, and Fuller’s career never recovered. His petulance cost him — and the British army — dearly. Architectural innovations can seem too much like hard work, even for those most committed to seeing them succeed.

 

Within academia, Rebecca Henderson’s ideas about architectural innovation are widely cited, and she is one of only two academics at Harvard Business School to hold the rank of university professor. The casual observer of business theories, however, is far more likely to have heard of Clayton Christensen, one of the most famous management gurus on the planet. That may be because Christensen has a single clear theory of how disruption happens — and a solution, too: disrupt yourself before you are disrupted by someone else. That elegance is something we tend to find appealing.

The reality of disruption is less elegant — and harder to solve. Kodak’s position may well have been impossible, no matter what managers had done. If so, the most profitable response would have been to vanish gracefully. “There are multiple points of failure,” says Henderson. “There’s the problem of reorganisation. There’s the question of whether the new idea will be profitable. There are cognitive filters. There is more than one kind of denial. To navigate successfully through, an incumbent organisation has to overcome every one of these obstacles.”

In an email, she added that the innovators — like Fuller — are often difficult people. “The people who bug large organisations to do new things are socially awkward, slightly fanatical and politically often hopelessly naive.” Another point of failure.

The message of Henderson’s work with Kim Clark and others is that when companies or institutions are faced with an organisationally disruptive innovation, there is no simple solution. There may be no solution at all. “I’m sorry it’s not more management guru-ish,” she tells me, laughing. “But anybody who’s really any good at this will tell you that this is hard.”

Almost a decade after resigning from a senior position in the British army, Andrew Mackay agrees: “I’d love to think that there could be a solution, but I don’t think there is.”

 

If I had to bet on the most significant disruption occurring today, I would point to the energy industry.

Chris Goodall is a longtime observer of the renewable energy scene and author of The Switch, a book about breakthroughs in solar panel technology. Goodall points out that solar photovoltaics have enjoyed a dramatic fall in costs, one that shows no sign of abating. Solar PV electricity is now cheaper than electricity generated by gas or coal in the sunny climes where most of the planet’s population live. A few more years and that advantage will seem overwhelming, which is great news for the planet and terrible news for incumbents.

Consider General Electric, which this year disappeared from the Dow Jones Industrial Average. In little more than a year, the old industrial titan’s share price had halved. One of the key culprits for its woes was a precipitous collapse in the demand for large gas turbines, that, in turn, was the result of a fall in the cost of solar power cells that had been relentless, predictable and ignored.

This possibility has been clear to the fossil fuel industry for a while. I know: I used to work in long-range scenario planning for Shell International. Back in 2001, my Shell colleagues and I were discussing thin solar films that could be printed cheaply and applied to windows or hung as wallpaper. We could see the threat of exponentially cheaper solar power — but recall what Joshua Gans said about Kodak and Blockbuster: “They knew what the future looked like. They didn’t know later than everybody else, they knew ahead of everybody else.”

They knew. But they could not act. Because what is an oil company to do in a world of abundant, cheap solar energy? Offshore wind farms play to some oil-company strengths; they know a lot about large metal structures in the North Sea. But solar energy is an architectural innovation. The pieces just don’t fit together like an oil rig or a refinery. As a mass-market, manufactured product it is closer to the skill set of Ikea than Exxon.

The implication of Christensen’s theory is that oil companies should have set up solar subsidiaries decades ago. Many of them did, without much success. The implication of Henderson’s theory is that the oil companies are in big trouble.

Chris Goodall thinks the oil companies should rescue what they can — for example, by developing synthetic hydrocarbons derived from water, atmospheric carbon dioxide and solar energy. Such products would play to oil-company strengths. But for most of their business lines, Goodall says, “The best strategy for the oil companies is almost certainly gradual self-liquidation.”

Or as BP’s chief executive Bob Dudley candidly admitted to the Washington Post recently, “If someone said, ‘Here’s $10bn to invest in renewables,’ we wouldn’t know how to do it.”

 

Despite all the obstacles, the British army continued to develop both tanks and tank tactics throughout the 1920s and 1930s. Yet the internal politics proved toxic. The Germans, meanwhile, watched and learnt. If the British were hamstrung by their inability to reorganise what was, after all, a victorious army in the first world war, the Germans had the opposite problem: they had barely any army, and no status quo to defend. There was no organisational architecture to get in the way. When Adolf Hitler came to power in 1933 and began to expand the German army and invest in tanks, he encountered a German military that had been watching, thinking and experimenting for 14 years.

On his 50th birthday in 1939, Hitler celebrated with a parade of Germany’s newly reconstructed army through Berlin. “For three hours,” wrote one witness, “a completely mechanised and motorised army roared past the Führer.”

This witness was a guest of honour at the celebrations. His name: J F C Fuller. After quitting the British army in frustration, he had thrown his lot in with the British fascists of Oswald Mosley. He wrote vitriolic attacks on Jews. Some observers wondered whether this was simply an attempt to win favour with the world’s tank superpower, Nazi Germany. One of Fuller’s biographers, Mark Urban, doubts this: “The facility with which Fuller made anti-Jewish jibes in letters and books suggests pleasure rather than duty.”

Nobody doubts, however, that Fuller was obsessed by German tanks. After all, there was one army that had really understood and embraced his ideas: that of Adolf Hitler. After the parade, Major General Fuller met Hitler himself in a receiving line at the Chancellery.

The Führer grasped Fuller’s hand and asked, “I hope you were pleased with your children?”

“Your excellency,” Fuller replied, “They have grown up so quickly that I no longer recognise them.”

This article was first published as a cover story in the FT Magazine on 8/9 September 2018. 

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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6th of October, 2018HighlightsOther WritingComments off
Undercover Economist

Counting the costs of Brexit uncertainty

I recently had a couple of conversations with bright teenagers. One wanted to discuss philosophy — Gödel, Turing, and Wittgenstein. Not a problem. The other asked me to explain Brexit. Not a chance. The Brexit saga is madder than a box of hallucinating frogs.

Most likely, Britain will push its way pigheadedly through the brambles of the Brexit negotiations. The country will emerge scratched and bruised but largely intact, proudly declaring that the ordeal was a brilliant shortcut, then fumbling for a map and compass. But, while that is the most plausible result, the risk of a total train wreck remains. More worryingly, it seems undiminished more than two years after the referendum.

A recent report from the academics at The UK in a Changing Europe think-tank explores the likely impact of a bitter, finger-pointing failure to negotiate an agreement under the Article 50 withdrawal process. This is not the only way in which agreement could fail to be reached, but it is the starkest.

In a truly acrimonious failure to reach a deal, British food would not pass EU import controls. Aircraft would be grounded and border crossings jammed. This would clearly be harmful to the EU and disastrous for the UK, so we can expect good sense to prevail on all sides. And yet, senior ministers in Denmark and Latvia have judged “no deal” to be a 50-50 possibility. It would be unwise, then, to dismiss the contingency as remote.

The UK’s own trade minister, Liam Fox, says the chance of no deal is even higher, 60-40. Why he wishes to emphasise the risk of a disruptive outcome is unclear; perhaps Mr Fox believes it will serve his political ambitions. It will not serve the exporters it is his job to represent. The trouble is that as businesses and individuals quite reasonably plan for trouble, they will damage the British economy. After an initially bullish response to the referendum result, UK consumers are now borrowing and spending less, with obvious consequences for high-street retailers.

Consumer caution can swiftly be reversed. But the business response to uncertainty may be less easy to unpick. This week, the Federation of German Industries (the BDI), warned about emergency plans being implemented if there is no agreement by mid-November. For a taste of what these emergency plans might entail, ponder Honda’s warning to MPs last year that if the post-Brexit customs process took 15 minutes per truck at Dover, the annual cost of that would be £850,000.

For a company of Honda’s scale, less than a million pounds a year doesn’t sound too bad — until we consider two things. First, the Freight Transportation Association’s estimate that the briefest delay at crowded Dover — just two minutes — would quickly spiral into a multi-mile tailback. At a busy port, short delays quickly become long and unpredictable ones.

Second, the World Bank’s Doing Business database reports that the typical time to clear border checks in high-income countries is not two minutes, nor even 15 minutes, but 12 hours and 40 minutes. This, remember, is not a train-crash scenario but business as usual for most of the rich world. The World Bank adds, helpfully: “It is entirely possible that the border compliance time and cost could be negligible or zero, as in the case of trade between members of the European Union.”

If things go badly, then, companies that have built supply chains on the assumption of frictionless borders will find those chains jammed hopelessly. Or we may decide in the end to remain in the customs union. Businesses simply do not know — and that uncertainty is already damaging.

To see why, simply imagine that you are organising a wedding for — say — March 29 2019. Taking a cue from Mr Fox, your chosen caterer boldly declares that it may be unable to supply the food — the chance of that, in fact, is 60 per cent. Let’s say you love this caterer’s food, prices, and service. Even so — how long before you cancel the contract and hire someone else? Not long. And it will do no good for the caterer to confirm in February that all will be well after all. That is far too late for you.

Businesses trying to trade between the UK and the rest of the EU find themselves in a similar situation. At what point do they decide it is too risky to assume that all will be well? According to estimates published by three Cambridge university economists — Meredith Crowley, Oliver Exton and Lu Han — some companies reached that conclusion two years ago. Several thousand British companies have ceased some exports to the EU, and several thousand more were discouraged from launching a line of exports, simply because the Brexit vote threw the future trade regime into doubt. Unpredictable trade policy is a kind of trade barrier in itself.

Economies can cope with all kinds of shocks, and have sometimes bounced back from hurricanes or earthquakes with astonishing strength and resilience. An utter fiasco in the Brexit negotiations will be survivable, in time. But even if the fiasco never materialises, the prospect is causing damage today. Nobody thought they were voting for an earthquake.

Written for and first published in the Financial Times on 7 September 2018.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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Other Writing

Review of The Cost-Benefit Revolution by Cass Sunstein

Given that The Cost-Benefit Revolution (UK) (US) has emerged from the pen of the co-author of Nudge (UK) (US) — the 2008 book that showed how to pull the levers of behavioural science to persuade us to eat less, save more and donate our kidneys — we should start with the obvious: this is a drier topic. Nevertheless, it is important — and, at times, Cass Sunstein manages to convince the reader that the word “revolution” is justified.

According to Sunstein, cost-benefit analysis asks, “What are the bad and good effects of imaginable policies? Will we save one life, 10 lives, or 1,000 lives? Will we impose costs?” In other words, cost-benefit analysis prompts us to judge policies not by whether they are popular or ideologically pure, but through technocratic scrutiny of quantified pros and cons.

It is hard to argue against this method in the abstract: who could be in favour of policies with small benefits and large costs? But when a specific policy is on the table, tempers are fraying and the political temperature is rising, many people will view cost-benefit analysis as foolish pedantry.

When Sunstein was running the White House Office of Information and Regulatory Affairs for Barack Obama, the White House rejected a regulation to control ozone and supported a regulation to control mercury. Environmental groups were perplexed: did Obama want to save the planet or didn’t he? Was there cynical political triangulation at play? For Sunstein, the answer is nothing so Machiavellian: ozone regulation was expensive and would do little good; mercury regulation was cheaper and would prevent a great deal of harm.

This example sums up the challenge for defenders of cost-benefit analysis: it’s important, but it is dull.

The book makes three valuable contributions: it relates the history of cost-benefit analysis in US policymaking ; it tackles the economist Friedrich Hayek’s argument that technocrats simply don’t know enough to weigh costs and benefits; and it makes a case that cost-benefit analysis could reduce political tribalism.

The history lesson is briskly delivered, and from a front-row seat — Sunstein worked in the Reagan White House as well as for President Obama. In 1981, Ronald Reagan signed Executive Order 12291, requiring administrative decisions to weigh the costs and benefits of action and maximise net benefits. This order, writes Sunstein, “placed the technocrats squarely in charge”, giving them the authority to reject pointless rules. Subsequent leaders, including Obama and Donald Trump, have taken a similar approach — although President Trump has added deregulatory flourishes that, Sunstein mildly comments, “are hard to defend”.

What of Hayek’s “knowledge problem”? Hayek’s objection to central planning is that it cannot work because the planners will never have enough information. Cost-benefit analysis is a kind of central planning, appealing in principle, but delusional in practice. Hayek memorably wanted economics “to demonstrate to men how little they really know about what they imagine they can design”.

Sunstein acknowledges the problem, but thinks the difficulty is exaggerated. Do we really know so little about costs and benefits that it is futile to even ask? He argues, plausibly, that the right response to Hayek’s warning is to regulate with humility rather than to give up. He argues that regulators should routinely seek comment, experiment, measure the effect of current rules and react if things can be improved.

Perhaps most intriguing is the book’s argument that cost-benefit analysis may help to reduce tribalism in politics. The method makes us reflect, consider the system as a whole rather than some salient part, ask good questions and notice where we do or don’t have good answers.

Of course, if cost-benefit analysis is to have these beneficial effects, we must first agree to use it. Perhaps we already have. The method was retained by every president since Reagan and is one of the few Obama-era principles that survived contact with the Trump administration. It works away, often unnoticed, in the heart of US government, and seems far more likely to do good than harm.

Perhaps there is hope that this quiet revolution will continue.

 
Written for and first published in the Financial Times on 17 September 2018.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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28th of September, 2018Other WritingComments off
Undercover Economist

Did your holiday make you more creative?

A summer of browsing through art galleries continues. After the old masters in Venice in July, I stopped past some humble venues in the Lake District to pay my respects to John Ruskin, Kurt Schwitters and even Beatrix Potter.

The conventional wisdom is that gazing at art improves the soul: it might make me a better person, or at least a better draftsman. It seems absurd to suggest that it will make me a better economist.

Yet perhaps it will. A few years ago, a team of researchers (Jaclyn Gurwin and colleagues) arranged for 18 randomly chosen first-year medical students to take a short course in art appreciation at the Philadelphia Museum of Art. During six 90-minute sessions across a three-month period, the students learnt to study, describe and criticise works of visual art. They were tested against a control group of 18 fellow students before and after the art course.

Each student was given ophthalmologic tasks — observing, describing and diagnosing images of diseases of the eye. The students trained in art showed substantial improvement in these tasks; the control group had actually declined. In this small but rigorous trial, medical trainees became better eye doctors if they spent time studying art. If we want to get better at what we do, then, perhaps we would benefit from taking a break and doing something different. It’s a kind of cross-training for the mind.

The journalists David Epstein and Malcolm Gladwell dub this idea the “Temin Effect”, after the brilliant biologist Howard Temin, a Nobel laureate with interests ranging from social activism to philosophy and literature. It might seem a stretch, and I certainly would not place too much weight on a study of 36 participants. But that study is by no means the only evidence that variety feeds creativity.

Exhibit A: David Bowie. In the build-up to his trilogy of Berlin-based albums, Bowie had collaborated with John Lennon, starred in the film The Man Who Fell to Earth — and worked inconclusively on its soundtrack — lived in Geneva, Los Angeles and Philadelphia, and drafted an autobiography. In Berlin he alternated his own albums with producing and writing for Iggy Pop.

Exhibit B: Michael Crichton. Originally a doctor, in the 1970s and 1980s he wrote novels and directed a mid-budget thriller, Westworld, but also wrote non-fiction books about art, medicine and computer programming. The fruits of all this variety? In 1995 Crichton had achieved the scarcely believable feat of creating the world’s best-selling book (The Lost World), television show (ER) and film (Congo); in 1996 he did it again (Airframe, ER and Twister). I haven’t even mentioned Jurassic Park.

If those examples seem a little middlebrow, Exhibit C is Charles Darwin. He rotated between projects over the course of decades. His article “Biographical Sketch of an Infant”, inspired by his baby son, was published in time for William’s 38th birthday. On the Origin of Species was legendarily long in the making, in part because Darwin simultaneously spent nearly 20 years working on creepers and insectivorous plants. His book on earthworms took 44 years to come to fruition. All these projects were completed in parallel.

One can list examples interminably, but are they representative? Several psychologists have studied the working habits of highly creative artists and scientists, using a variety of methods and selection criteria. Perhaps the most respected is Bernice Eiduson’s life-long study of 40 promising scientists, beginning in 1958. After Eiduson’s death, analysis of her subjects (including the chemist Linus Pauling and theoretical physicist Richard Feynman) concluded that those who enjoyed the longest and most productive careers tended to work on several problems at once. They frequently shifted focus in their research. It helps to look at something fresh.

Another study of high-performing artists and scientists, by Mihaly Csikszentmihalyi, found the same tendency to slow-motion multitasking. Slowly switching from one project to another and back again seems to be standard practice for people with an enviable record of originality and creativity.

There are several reasons why this might be so. Different fields cross-fertilise each other. We process ideas unconsciously, once we’ve stopped thinking about them. And sometimes we simply need a rest. In the modern world, this may manifest in twitchy task-switching to another browser window. That is unhelpful. But taking a walk, visiting a gallery, picking up a book or planning a different project — this is often the kind of change we need. Darwin soothed himself by walking circuits of his garden, and by studying those earthworms.

All this suggests that the little study at the Philadelphia Museum of Art may be on to something real. When we take a break from our normal jobs and do something different, we may be being more productive than we realise. Of course, a holiday is worth taking for its own sake and one should not visit an art gallery purely as a means to some other end. But new experiences are useful as well as fun. Why not try something fresh in September?

 

If this topic grabs your interest, there’s much more in my book “Messy: How To Be Creative and Resilient in a Tidy-Minded World” which is now available in paperback both in the US and the UK – or through your local bookshop.

Written for and first published in the Financial Times on 24 August 2018.

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Undercover Economist

Is Twitter more unequal than life, sex or happiness?

Bill Gates has more money than I do. JK Rowling sells more books. Katy Perry has more Twitter followers. Usain Bolt is faster. And I can only presume that Buddhist monk Matthieu Ricard, reportedly “the happiest man alive”, is more cheerful.

The world is an unequal place. Exactly how unequal, though, depends on what we measure and how we measure it.

Researchers concerned about the concentration of money in the hands of a small number of people tend to focus on the income or wealth share of high earners. In the US, the income share of the top 1 per cent has soared from 11 per cent in 1980 to 20 per cent in 2016, according to the World Inequality Report 2018. But in western Europe it has merely moved from 10 per cent to 12 per cent.

The top income share highlights something important, but it misses changes elsewhere in the income distribution. If you want a single number to summarise the whole distribution, the natural choice is the Gini coefficient, which varies between zero (equality) and 100 per cent (one person has everything).

The coefficient of post-tax income in the US is nearly 40 per cent, and has been increasing for years. This rise — alongside the increase in the US top income share — has created a perception that inequality is rising everywhere and by every measure. That is not true.

Globally, the Gini coefficient of income is a shockingly high 65 per cent, but it is falling, helped by strong growth in large emerging economies. In France, the Gini coefficient of income has been broadly falling since the 1950s; it is now about 29 per cent.

In the UK, the Gini increased sharply in the 1980s, but not since; it is around 35 per cent today. And as the website Our World In Data observes, the Gini coefficient was also much higher a couple of centuries ago in the UK, perhaps 50 or even 60 per cent.

So that is the story for income inequality. But the Gini coefficient can be applied to inequality in any set of numbers you like, from the number of storks in each country to the body weights of a family of hippos. For example: authoritative data on sexual activity in the UK are available from Natsal-3, the third National Survey of Sexual Attitudes and Lifestyles. Natsal-3 reports the number of opposite-sex partners we say we’ve had in our lives, and the number of times we say we’ve had heterosexual sex in the past four weeks. (It will surprise nobody to hear that men and women make rather different claims, so I’ve averaged their responses.)

Since I know you may be curious, I have made my own calculations, based on these data. For 35-44 year olds, the Gini coefficient of recent sexual activity is 58 per cent. The Gini coefficient of lifetime opposite-sex partners is lower: 50 per cent. Both are much higher than income inequality in the UK.

Nor are these figures driven by a few outliers with thousands of partners. When it comes to the bedroom, we don’t need to consider extremes to witness considerable inequality: many perfectly ordinary people have had only one sexual partner, or none, and many perfectly ordinary people have had at least 10. Bigger variations exist in income, but only at the extremes of distribution.

Of course, while one can measure income and sex using the same statistical method, that does not mean the moral or political implications are comparable. Most of us wouldn’t mind having more money, but it is far from obvious that we all want more lovers. Who has the time?

I would be pleased if the Financial Times decided to increase my salary, but unsettled if they set up a profile for me on Ashley Madison, the marital affairs site. And while the government can redistribute money, it cannot redistribute consenting adults.

There is more to life than money and sex. What about — well, life itself? Some people die young; others endure.

Researchers have computed Gini coefficients for longevity. The economist Sam Peltzman found that inequality of life expectancy has declined enormously since the mid-19th century. The Gini coefficient was then around 50 per cent in the US, because so many people died in infancy. It is now about 10 per cent.

Across the world — according to Jeroen Smits and Christiaan Monden — longevity inequality is just 18 per cent. Looking only at those who survive to adulthood, it is 12 per cent. Recall that the Gini coefficient of income is 65 per cent globally. Since life cannot be reallocated, it is cheering to see that it is far more equally distributed than income.

I have given into temptation in comparing Gini coefficients across domains. Such comparisons can lead us astray. Yes, Perry has a thousand times as many Twitter followers as I do, but Bolt will never be a thousand times faster, nor Ricard a thousand times happier — not according to the oft-used life satisfaction scale of 0-10, anyway. Does that make Twitter more unequal than happiness? I am not sure.

There lies a statistical lesson: measuring inequality is just a step on the road to understanding it. Or so a Zen statistician might say.

 

Written for and first published in the Financial Times on 17 August 2018.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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Marginalia

Why big companies squander good ideas – a reading list

My FT Magazine cover story tomorrow is “Why Big Companies Squander Good Ideas“, and I wanted to give some pointers to further reading, because I learned a lot and had a lot of fun writing this piece. (I’ll post the feature article on this website in due course.)

 

About innovation

The classic here is Clayton Christensen’s The Innovator’s Dilemma (UK) (US) – a book I loved and found compelling, but also has some tantalising gaps. Well worth your attention, though.

Then there is Joshua Gans’s The Disruption Dilemma (UK) (US) – this book places Christensen’s work in a broader academic context, in particular comparing and contrasting with the work of Rebecca Henderson. Lots of interesting case studies and the distinction between demand-side and supply-side disruption is instructive.

The seminal 1990 Rebecca Henderson article, with Kim Clark, is here.

Malcolm Gladwell’s New Yorker essay on Xerox is a classic, and the New York Times published a lovely biographical essay about Steven Sasson, the inventor of the digital camera at Kodak.

Chris Goodall’s book about solar power, The Switch, is a must-read.

If you’re intrigued about what my colleagues and I were thinking about back in Shell around the year 2000, here are the long-term energy scenarios created around that time, out to 2050.

 

About tanks

The original spark for this piece came from reading The Psychology Of Military Incompetence (UK) (US). Not much of that book made it into the final piece, partly because I don’t really buy Norman Dixon’s curious thesis. But there are some amazing and tragic stories of error in this book.

Brian Holden Reid has a thorough biography of JFC Fuller (UK) (US), and Mark Urban’s Generals (UK) (US) has a chapter on him with some telling details.

And there’s also this more academic essay on military innovation in peacetime, by Murray and Watts.

 

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7th of September, 2018MarginaliaResourcesComments off
Undercover Economist

How can we resist the seduction of the mobile phone?

On a recent trip to Venice I saw a striking sight. Of course, I saw many: the Ponte de Rialto at dusk, the ornate glasswork of Murano, the view over the city from the bell tower of San Giorgio Maggiore, and works by Bosch, Titian and Tintoretto. Lucky me.

But the sight that has stayed with me was plain whenever I rode a vaporetto, Venice’s waterborne answer to the London bus. All around were people pecking at screens as they played slither.io or scrolled through Instagram feeds.

A few of them, no doubt, were locals who had grown tired of gawping at their own city. But on a weekend in high summer, my guess is that most were tourists. The vaporetto provided them with a magnificent view of a unique city that is neither easy nor cheap to visit. Yet they felt compelled to look away from the vista they had paid so dearly to gaze upon.

We are hooked. Our devices can, at any moment, demand that we focus upon them by flashing, pinging or even vibrating insistently against our skin. They are constantly evolving to do so more and more effectively. As a result, phone users in developed countries now spend about two hours a day pawing at their little blue screens — a big chunk of our available leisure time.

Recently, the big tech companies, most prominently Apple, have started to trumpet new distraction-fighting features, such as tools that track your usage or remind you to stop watching YouTube videos. While welcome, these features have been halfhearted and slow to arrive.

No wonder. Technology companies, notably Facebook and Google, make money by selling your attention to advertisers. The more attention they have, the more they can sell. There is a limit to how much we can expect them to help us regain control.

So, without letting the technology companies off the hook, the main responsibility for managing our attention has to lie with us. And there is plenty we can do.

The first and simplest principle: if you want your future self to do something, make it easy; otherwise make it hard. So, switch off notifications — of course. Make sure your phone automatically reverts to a silent mode every night, muting incoming calls and messages. My phone is silent between 10pm and 7am; a more aggressive muting might be better.

Set up your phone charging station away from where you sleep (although the London Fire Brigade says don’t charge it at night at all). This is obvious advice, but I can assure you it works. Your phone becomes less distracting without you needing to exert any willpower; I predict that you will recoup the set-up time within 24 hours.

Tristan Harris, a former Google designer and founder of the Time Well Spent movement, suggests taking things further — putting only basic tools such as a calendar and a camera on your phone’s home screen. He hides icons for distracting apps altogether: if you want to use Instagram, you can type “Instagram” into the phone’s search bar. This works because while the search is quick, it requires deliberate effort.

My fellow tourists, I guess, started by taking photographs. Then their attention leaked: they wanted to post those photographs on social media, and from then they slipped unthinkingly into games or newsfeeds. Using Mr Harris’s method might have helped.

A second piece of advice is to notice your own emotional state. On vacation I sometimes found it easy to forget about my phone. The exceptions were instructive: a (small) problem arrived on email; I felt slightly anxious, wanted to send a quick response, wanted to alert the necessary people, wanted to see how they had responded, and suddenly I was checking every few minutes until I noticed my own feelings and got a grip.

Third, keep adapting, because the tech companies certainly will. A few months ago I installed an inbox blocker, a simple plug-in which deflects me from my email inbox by forcing me to click an extra button. After a while I noticed unintended consequences had set in: I had hit a mental block while working, so I would self-medicate by going to check email, where I would be fended off by the inbox blocker and end up checking social media instead. The result: just as much distraction in a less useful form. I have now uninstalled the blocker.

Finally, use social pressure. Platforms such as Facebook, Snapchat and LinkedIn turn reciprocity and fear of missing out into weapons. The most egregious is the Snapchat “snapstreak”, where you need to keep exchanging messages every 24 hours with a friend to keep the streak going. Some kids will do anything to maintain a streak — including giving out their passwords to let others message when they cannot. Adults may sneer, but only because our own phones are subtler in the way they manipulate our social anxieties.

The good news is that social pressure works both ways. Make a point of telling your partner, your friends or your colleagues that you will not look at your phone during a conversation, a meal or a meeting. Ask them to nag you when you fail — and to remind you to look at the view.

 

Written for and first published in the Financial Times on 10 August 2018.

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop. Yes, the iPhone is one of the inventions.

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Resources

Four awesome-yet-accessible economics and business books

The fine folk over at Planet Money’s The Indicator (an excellent podcast) recently spent five episodes discussing five of their favourite fun-to-read economics and business books. It’s a good list, in my humble opinion, and not just because it includes… (drum roll)

Fifty Inventions That Made the Modern Economy, which is emerging in paperback in the US as I type. The fun of this book has been to weave together economic ideas such as winner-take-all effects with the more human side of everything – surprising stories, inspiring (or villainous) people, and generous slices of history. (Or, as my publishers put it, “Who thought up paper money? What was the secret element that made the Gutenberg printing press possible? And what is the connection between The Da Vinci Code and the collapse of Lehman Brothers?”)

Lots more about the book here – the New York Times talked about my “prodigious skills as a storyteller” (shucks) and there are plenty of other cheering reviews too.

 

But what of the other four? One I have not read and cannot vouch for, but three books that I admire more than somewhat:

Diane Coyle’s GDP: A Brief But Affectionate History (US) (UK) – Diane writes elegantly and really understands the topic deeply. This is a thoughtful exploration of the historical strengths and the emerging weaknesses of an important measure of our economy. A lot of books about GDP seem to begin with the assumption that it’s transparently an absurd measure; I learned more from Prof Coyle’s more balanced analysis.

Linda Yueh’s What Would The Great Economists Do? (US) (UK) delivers lovely potted biographies of some of the greats (Smith, Marx, Keynes, Robinson, Fisher and others) and asks what they would think about contemporary economic problems – for instance, Joan Robinson on wage stagnation. The biographies are uniformly fascinating; the contemporary analysis seems (to me) more interesting as the economists get  more recent. Fisher and Robinson had a lot to say about problems today; Smith and Marx not so much, at least not in this book. Still: recommended!

Then there is Sun Tzu’s The Art of War. No, I don’t understand why everyone thinks this is somehow a business book. It’s a thing of beauty, though. (US) (UK)

 

 

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28th of August, 2018ResourcesComments off
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