Book report

by John Quiggin on August 7, 2016

I’ve been getting lots of free books lately, and the implied contract is that I should write about at least some of them. So, here are my quick reactions to some books CT readers might find interesting. They are

The Great Leveler: Capitalism and Competition in the Court of Law by Brett Christophers

The Rise and Fall of American Growth:
The U.S. Standard of Living since the Civil War
by Robert J. Gordon

The Sharing Economy:The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan

Econobabble: How to Decode Political Spin and Economic Nonsense by Richard Denniss

Generation Less: How Australia is Cheating the Young by Jennifer Rayner

I’ll be on a panel discussing the last two of these at the Brisbane Writers Festival, Sep 11-16.

The Great Leveler: Capitalism and Competition in the Court of Law by Brett Christophers looks at the balance between competition and monopoly in capitalist economies, and makes the case that it has shifted heavily towards monopoly for two reasons. First, intellectual property is increasingly central to the value of corporations. Second, the Chicago critique of antitrust policy has been widely accepted, with the result that more and more markets are dominated by a handful of firms. To that list, I’d add privatisation and corporatisation of government businesses, which have greatly reduced the role of public ownership as a policy response to monopoly, particularly in relation to utilities and infrastructure. More speculatively, I think that there’s a complementary relationship between monopoly profits and financialisation.

The Rise and Fall of American Growth:
The U.S. Standard of Living since the Civil War
presents detailed evidence for Robert J. Gordon’s view that the US has entered a period of permanently depressed economic growth, particularly because the low-hanging technological fruit has been picked and partly because of developments endogenous to the economy, such as rising inequality. The book is massive already, but I nevertheless think that it suffers as a result of treating the US in isolation. The fact that economies will inside the technological frontier also seem to be suffering from stagnation suggests to me that endogenous developments may be more important than technology.

The Sharing Economy:The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan is well worth a read, but the relevant part of the title is “The End of Employment”. In fact, the book would have been better entitled “The Gig Economy“. Sundararajan refers back to Yochai Benkler’s classic Sharing Nicely. Long before Uber, Benkler was talking about “ride sharing” in the context of Internet-facilitated car pooling. That comparison makes it obvious that there is no sharing involved in Uber. It’s just a taxi service where the owner-drivers have none of the entitlements that employees usually get. That’s even more true of examples like TaskRabbit, which is just an app for hiring freelance workers.

Econobabble: How to Decode Political Spin and Economic Nonsense by Richard Denniss shows how economics is used for the purpose of mystification to control public debates and what can be done about it. Some of the discussion is Australia-specific but a lot is more broadly applicable [Disclosure: I’ve worked with Richard on a number of the issues mentioned in the book, such as the economic evaluation of coal mining projects]

Generation Less: How Australia is Cheating the Young by Jennifer Rayner is a big improvement on the kind of generation game nonsense I’ve been criticising for the better part of a generation. Rayner shows how developments in the economy over the last couple of decades have led to worse life prospects for the current cohort of young (roughly, under 35) people. I’d prefer to put this argument into the broader context that inequality has been increasing on all dimensions: capital vs labor, college-educated vs high school, experienced vs less experienced and, along with all of these, older vs younger. [Disclosure: I gave comments on an earlier draft and I’m quoted in the book]

{ 7 comments }

1

derrida derider 08.07.16 at 6:05 am

Only two of these have I read:

1) On Gordon, I’m a bit more persuaded than you. If the PPF is expanding outwards rapidly we would expect to see slow or no convergence to it from those well inside it – it would be retreating away from them, so to speak. But one clear story of the last thirty years is there has been more convergence than in the previous thirty – there are now many more middle income countries. True, this is only fragmentary evidence as a lot else was going on – but then the same applies to your claim. But you are correct that Gordon’s book is needlessly US-centric.

2) I found Rayner’s book frustrating – contrary to your reaction, I think there was a lot of evidence-free kvetching in it. I also thought it was downright smug in its ignoring of intra-generational inequity. Ms Raynor sounds a child of privilege to me, frankly, and I would wish she showed a little more consciousness of it. If you are worried about intergenerational equity, you don’t want to compare the position of 60yos with 20yos in 2016. You need to compare the position of 20yos in 2016 with that of 20yos in 1976, and have projections of the position of 60yos in 2056. And when you do that it is not at all clear that the baby boomers have eaten the young’s lunch. An awful lot of the current agonising is a pure product of the current stage of the business cycle; chronic low wage growth simultaneous with a housing boom at it s peak. I think the young ‘uns will have their day.

2

BenK 08.07.16 at 11:19 am

Definitely we need to discern between the gig economy (micro-work), the ‘sharing’ Economy (micro capital), and a Sharing ‘economy’ (tech assisted barter with reputation).

I disagree with the characterization of Uber, for example, but it certainly is a mix of micro-work (the hours) and micro-capital (the car). AirBnB is more about the capital than the work.

As for sympathy for the devil (union bosses, regulators, taxation), I have instead sympathy for workers and the environment; who benefit when capital and labor are neither sitting idle unnecessarily nor simply wasted. Job protections are less necessary when jobs are more readily available; and if the protections and jobs are so very dear, they demonstrably become a nexus of corruption, with few to be had regardless. The same holds, in fact, for housing, for example.

3

Layman 08.07.16 at 11:42 am

Does anyone who talks about the sharing economy ever refer to actual sharing, or is it always about paying someone for the use of their stuff?

4

Howard Frant 08.08.16 at 4:07 am

What surprised me about the publisher’s description of “Generation Less” is that there is no sign of awareness that people have been saying exactly the same thing about the US for many years now. That, I think, makes it less likely that fixing this is completely within Australia’s power.

5

Manoel Galdino 08.08.16 at 9:35 pm

@2 BenK, could you expand on the differences between gig, “sharing” and Sharing economy? Any reference where I can read about it?
It seemed a very useful distinction to make.
Thanks.

6

magari 08.10.16 at 11:34 am

Christophers’ book looks useful, thanks for the blurb.

7

Brett Dunbar 08.13.16 at 7:21 pm

Privatisation is normally associated with increased competition.In a fair number of cases a largely unaccountable state owned monopoly is replaced with a competitive market. At times when a state owned monopoly has been sold without establishing competition this can at times been added later, for example BAA being forced to sell Gatwick in order to bring in competition to the airport market in the southeast of England. The level

State owned monopolies had the same problems as private monopolies, they are basically unaccountable and have no incentive to be efficient or have good customer service as they can pass on the costs to their customers who cannot go elsewhere. They are also severely affected by the principal-agent problem as the ostensible owners have little stake in the company’s success compared to the managers. The management of a monopoly can freely pass costs on to the customer and, in a state owned business, the taxpayer so don’t tend to confront lazy and incompetent staff. Even when there is a private monopoly there is usually some benefit to the consumer if only due to the courts being substantially more likely to fine private businesses. Apparently the courts seem to view that as the state fining itself.

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