Sigrún Davíðsdóttir's Icelog

Jeremy Corbyn will no doubt discover that the wisdom of crowds isn’t always enough nor is meeting with busy world-famous economists and other wise-men and -women four times a year. Here are some books to hone his arguments and stimulate and inspire the intellectually inquisitive mind.

The distorting effect of debt and how to avoid socialising losses and privatise the profit

I’m almost finished reading House of Debt: How They (and You) Caused the Great Recession, and How We Can Prevent It from Happening Again by Atif Mian, Princeton and Amir Sufi, Chicago University. I had bought it even before Mark Carney recommended it; it was recommended to me soon after it was published last year.

No doubt Corbyn knows why debt is harmful, why fueling the housing market with debt is dangerous and why it is ominous that household debt in the UK is high. But in order to clarify and stimulate the mind Mian and Sufi’s book is both an essential and timely read, also to argue against the received wisdom that banks are different from other companies and need to be saved – no, they don’t.

The two economists have formulated what they call “the primary policy lesson of bank support: To prevent runs and preserve the payment system, there is absolutely no reason for the government to protect long-term creditors and shareholders of banks.” – So true (as Icelanders know). Alors, an essential read, also to gather sensible arguments in the debate on banks and banking, debt and the housing market, all topics that the new Labour leader needs to be as skillful in debating as he is cultivating his allotment.

The anti-social mixture of aggressive tax planning, tax evasion and offshore havens

Tax and the revenue lost to society due to the anti-social mixture of aggressive tax planning, tax evasion and offshore havens are close to Corbyn’s heart. To my mind, the most illuminating writer on these matters right now is the French economist Gabriel Zucman, who studied with Thomas Piketty (they have written articles together) and who has recently (and sadly) left the London School of Economics for Berkeley. I read his little book on tax havens when it came out in French last year but now it has luckily been published in English, called The Hidden Wealth of Nations.

Much of the material is on-line and much of the reasoning is put forth in his 2013 article, The missing wealth of nations: are Europe and the U.S net debtors or net creditors? where Zucman i.a. points out “that around 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unrecorded.” – Yes, things to work on.

Inequality, health and wealth

These days, not only the lefties are preoccupied with inequality – not only is it socially harmful in terms of wasting and wasted human resources but it also hampers growth. An easy and insightful read, the harvested fruits of a lifetime of studying these issues, is gathered in The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality, published in 2010.

As an economist at the World Bank, the author Branko Milanovic (blogs here) worked on these issues long before they turned into a fashionable topic beyond the left margin of politics. And being an economist with a wealth of fabulous statistics at his finger tips he is both brilliant at choosing and presenting intriguing numbers, also with some striking graphs.

The book that led me to reading Milanovic’ book was another very different but equally weighty book, also harvesting a life time of studying these issues. Angus Deaton’s The Great Escape: Health, Wealth and the Origin of Inequality, was published two years ago and I had the pleasure of listening to Deaton present his book in London last year.

Deaton is a professor at Princeton and the inspiration for the book is partly his own family story of better lives in the generations spanning the 19th and into the 20th century. He investigates inequality not only from the perspective of wealth but also health. One point is that better health not only depends on money but good institutions.

The great escape of the title is the escape from hunger and poverty, spanning centuries in historical overview. A riveting and optimistic read, though far from wishful thinking, i.a. on development. The clear conclusion is that concentrated wealth in the hands of few is now being used to buy influence on policy making for narrow special interests, not the general good of society.

The synthesis of privatisation

Again, Corbyn will not need to be exhorted in his doubts on privatisation but it is always good to gather insight and arguments for familiar causes, especially when you spend most of your waking hours arguing and reasoning for your points of view.

I read The Commanding Heights by Daniel Yergin and Joseph Stanislaw when it came out in 1998. At the time its full title was The Commanding Heights: the Battle Between Government and the Marketplace that is Remaking the Modern World (the latter part was changed in a later edition to The Battle for the World Economy; I prefer the old one, more telling; here is a 3 parts documentary based on the book). Readers of Lenin will recognise where ,,commanding heights” stems from.

At the time, I read it more or less in one go and have since given away several copies because I think that everyone remotely interested in politics should read it. Agree or not, it is essential to understand the driving forces behind privatisation especially for those who want to question them. I have for a long time meant to re-read it, would be interesting, considering events since the book was published.

The book is often taken to have been one big bravo for globalisation and privatisation but that was not my impression at the time. After all, the authors strongly warn against special interests and stress the need for legitimacy.

And something for the soul

Apart from reading up topics that nourish his political thinking and reasoning the soul must not be forgotten. Here I suggest two books that tell stories of the have-nots in different parts of Europe in the 1930s, shaped by circumstances and ideas of that time.

Independent People by the Icelandic Nobel price winner in 1955 Halldór Laxness was published in 1934. Inspired by Laxness’ infatuation with communism and socialism, it tells the story of Bjartur, a dirt-poor crofter who fights for being independent of others, without realising that his strife goes against his own interests.

Carlo Levi’s Christ stopped at Eboli is the memoir of his political exile in a remote part of Southern Italy, Basilicata, in the years 1935-1936, not published until 1945. In Iceland, the cold harsh climate made for a difficult life but in Italy the heat and the barren earth was no less harsh. Written by brilliant and reflecting minds, both books are further demonstrations of the topics above: debt, private ownership and inequality.

Cross-posted with A Fistful of Euros.

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