A customer uses an RBS cash machine in Edinburgh. Photo: Getty
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Power to the economists: new books by Ha-Joon Chang and John Lanchester

Both books are based on the premise that if the general public knew more about finance and economics things might be better.

Economics: the User’s Guide 
Ha-Joon Chang
Pelican, 528pp, £7.99

How to Speak Money 
John Lanchester
Faber & Faber, 304pp, £17.99

In 2008, while the Queen was at the LSE being schooled on the troubling situation that turned into a credit crisis, she asked the assembled professoriate: “Why did nobody notice it?” A number of reputable economists felt the need to send her a letter apologising for their lapse and stating that the reason was a “failure of collective imagination”. But although it was the first case to involve such a specific rebuke from the lady with her face on the money, it was far from the first instance of failed imagination – or collective misprognostication – involving the economics profession.

Repeated evaluations of the accuracy of economic forecasts hint at predictive powers reminiscent of the wrong day’s horoscope. And when it comes to growth strategies, any economist worth a PhD should be able to present competing theories supporting the advantages of openness or protection, the centrality of education and health, the prime role for investment in factories or infrastructure, and the overwhelming importance of civil rights or property rights. One might be left wondering: does econo­mics have any real-world utility at all?

Given this, Economics: the User’s Guide, by the Cambridge University economist Ha-Joon Chang, and How to Speak Money, by the journalist and author John Lanchester, should provide some comfort to the lowly researcher hunched over his laptop, analysing the latest data from the Office for National Statistics. For all that they poke a stick at mainstream thinking in the subject, at least the authors prove that it matters.

Both books are based on the premise that if the general public knew more about finance and economics things might be better. Chang says there is no one right answer in economics, and so “we cannot leave it to experts alone”. For Lanchester, with most of us ignorant, “the money people didn’t have to explain what they were up to” before the Great Recession. He learned “to speak money” and he wants us to learn, too.

The authors take different approaches. Much of Lanchester’s book is taken up with an entertaining (if not fully reliable) dictionary of terms. I spent a happy and thought-provoking few hours reading the entries. But I am not sure, if you took the book as your teaching aid to the 2008 financial crisis, that you would learn all you needed to know. The “hot waitress index” (the theory that you find many more attractive women working as waitresses in a recession, because the jobs they do when the economy is good, such as fashion and luxury retail, get scarce) has a longer entry than the one on derivatives and is, as Lanchester suggests, “fanciful” at best.

The 12 chapters of Ha-Joon Chang’s book cover topics ranging from income, happiness and finance to inequality and international development. He writes with enough depth to provide insights for experts and enough breadth to reach the further shores of the discipline for the interested layman. Chang convincingly demonstrates that there are no certain laws of behaviour and that individuals (let alone societies) are too complex to be explained by simple models. He highlights the example of Singapore, one of east Asia’s most miraculous success stories, which has policies that frequently place it at the top of the “economic freedom” indices compiled by right-wing think tanks. At the same time, as Chang points out, 85 per cent of housing in Singapore is supplied by the government, which also owns a swath of big businesses that account for more than a fifth of the country’s GDP. Or look at China: it is a melange of Wild West capitalism and state control beyond the fevered imagining of even the most postmodern of economic theorists.

But despite that, and though economists disagree about a lot of things, a lot of economists also do agree about some things. And this very agreement indicates that their hubris and blind spots might matter less than Lanchester and Chang seem to think. The Chicago Booth survey of US economic experts finds that more than four out of five think that increased budget spending in 2008 helped reduce unemployment over the next two years, but only 5 per cent were convinced that the costs of the US stimulus programme outweighed its benefits. Only 5 per cent think having trillion-dollar banks is definitely good for the US. Not a single economist out of those surveyed said he or she disagreed with the idea that “freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment”. Almost nine out of ten think that more skilled immigration would be good for the economy and few­er than one in ten think that more unskilled immigration would definitely be bad.

Better regulating banks that are deemed too big to fail, and going for stimulus when the economy craters (because we didn’t regulate the banks properly), are ideas that most economists actively support – but, before the 2008 financial crisis, their opinions didn’t seem to matter very much. The immensely powerful lobbying efforts of the financial services industry stymied such responses. We created corporations that can be sued by minority shareholders if they do not focus on maximising shareholder value: a case of too much regulation. When we give those corporations the right to spend on political campaigns we should not be surprised if they lobby for a singular focus on (short-term) shareholder value rather than longer-term sustainable growth.

If economists had such great power over the world, wouldn’t the World Trade Organisation be a little less moribund, and the transatlantic and trans-Pacific trade deals a little less of a land-grab by people trying to preserve their intellectual monopolies? Chang notes that “there are very few free-market economists who advocate free immigration in the way they advocate free trade”. That is all too true, yet opening the world’s borders to unencumbered movement of people could more than double global GDP, compared to a gain of a few percentage points from removing the remaining barriers to trade. However, economists know that their power to influence the debate is minimal, and so they keep quiet.

Or take the neoliberal policies of the Washington consensus, pushed by the World Bank and the International Monetary Fund. The American economist William Easterly reviewed the evidence on the impact of loans from the Washington-based institutions that were meant to help balance budgets, introduce open exchange rates and support privatisation and competition. He found that while some macroeconomic policies led to marginal improvements, overall they appeared to have had almost no impact – positive, or negative.

It may be that we want economists – with their consensus desire to spend our way out of recession, reduce monopolies, rein in the banks and open our borders not just to goods but to people – to have more influence over politics. If such books as these two spark a greater interest in economics, as they should, I hope that will be one result.

Charles Kenny is a senior fellow at the Centre for Global Development and the author of “The Upside of Down: Why the Rise of the Rest Is Great for the West” (Basic Books, £17.99)

Correction: an earlier version of this article incorrectly stated that "How to Speak Money" does not contain an entry on credit default swaps. The author apologises for the error. 

This article first appeared in the 09 December 2014 issue of the New Statesman, How Isis hijacked the revolution

Ben Whishaw as Hamlet by Derry Moore, 2004 © Derry Moore
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The art of coming out: how the National Portrait Gallery depicts the big reveal

Portraits of gay celebrities, politicians and sports stars line the walls in a new exhibition called Speak Its Name!, marking 50 years of advances in gay rights.

I have a million questions for the doctor friend I’ve brought with me to the National Portrait Gallery. A million questions that, if I really think about it, boil down to: “Why were the Tudors so godforsakenly ugly?”

Inbreeding? Lead makeup? An all-peacock diet?

I don’t know why I assume she’ll know. She’s a neonatologist, not a historian. But I’m desperate for some of the science behind why these 500-year-old royals look, if these imposing paintings of them are anything to go by, like the sorts of creatures that – having spent millennia in pitch black caves – have evolved into off-white, scrotal blobs.

My friend talks about the importance of clean drinking water and the invention of hygiene. We move onto an extremely highbrow game I’ve invented, where – in rooms lined with paintings of bug-eyed, raw sausage-skinned men – we have to choose which one we’d bang. The fact we’re both gay women lends us a certain amount of objectivity, I think.


Alexander McQueen and Isabella Blow by David LaChapelle, 1996 © David LaChapelle Courtesy Fred Torres Collaborations

Our gayness, weirdly, is also the reason we’re at the gallery in the first place. We’re here to see the NPG’s Speak its Name! display; photographic portraits of a selection of out-and-proud celebrities, accompanied by inspirational quotes about coming out as gay or bi. The kind of thing irritating people share on Facebook as a substitute for having an opinion.

Managing to tear ourselves away from walls and walls of TILFs (Tudors I’d… you know the rest), we arrive at the recently more Angela Eagle-ish part of the gallery. Eagle, the second ever British MP to come out as lesbian, occupies a wall in the NPG, along with Will Young, Tom Daley, Jackie Kay, Ben Whishaw, Saffron Burrows and Alexander McQueen.

Speak its Name!, referring to what was described by Oscar Wilde’s lover Lord Alfred Douglas as “the love that dare not speak its name”, commemorates 50 years (in 2017) since the partial decriminalisation of male homosexuality in England and Wales.

“Exhibition” is maybe a grandiose term for a little queer wall in an old building full, for the most part, of paintings of probably bigoted straight white guys who are turning like skeletal rotisserie chickens in their graves at the thought of their portraits inhabiting the same space as known homosexual diver Tom Daley.


Tom Daley By Bettina von Zwehl, 2010 © Bettina von Zwehl

When you’re gay, or LBTQ, you make little pilgrimages to “exhibitions” like this. You probably don’t expect anything mind-blowing or world-changing, but you appreciate the effort. Unless you’re one of those “fuck The Establishment and literally everything to do with it” queers. In which case, fair. Don’t come to this exhibition. You’ll hate it. But you probably know that already.

But I think I like having Tudors and known homosexuals in the same hallowed space. Of course, Angela Eagle et al aren’t the NPG’s first queer inhabitants. Being non-hetero, you see, isn’t a modern invention. From David Hockney to Radclyffe Hall, the NPG’s collection is not entirely devoid of Gay. But sometimes context is important. Albeit one rather tiny wall dedicated to the bravery of coming out is – I hate to say it – sort of heart-warming.


Angela Eagle by Victoria Carew Hunt, 1998 © Victoria Carew Hunt / National Portrait Gallery, London

Plus, look at Eagle up there on the “yay for gay” wall. All smiley like that whole “running for Labour leader and getting called a treacherous dyke by zealots” thing never happened.

I can’t say I feel particularly inspired. The quotes are mostly the usual “coming out was scary”-type fare, which people like me have read, lived and continue to live almost every day. This is all quite mundane to queers, but you can pretty much guarantee that some straight visitors to the NPG will be scandalised by Speak its Name! And I guess that’s the whole point.

Eleanor Margolis is a freelance journalist, whose "Lez Miserable" column appears weekly on the New Statesman website.