Wednesday, March 16, 2011

Diane Coyle's "The Economics of Enough"

Diane Coyle runs Enlightenment Economics, a consulting firm specializing in technology and globalization, and is the author of a number of books on economics, including The Soulful Science, Sex, Drugs and Economics, and The Weightless World. A BBC trustee and a visiting professor at the University of Manchester, she holds a PhD in economics from Harvard.

She applied the “Page 99 Test” to her new book, The Economics of Enough: How to Run the Economy as If the Future Matters, and reported the following:
This page of The Economics of Enough captures my main theme. It’s in a chapter called ‘Posterity’. The page specifically concerns the impossibility of sustaining the present system of welfare, pensions and other state spending when western countries have growing numbers of elderly people relying on the support of fewer and fewer taxpayers. It quotes a semi-joke from Axel Weber, the president of Germany’s Bundesbank, who said future taxpayers are taking evasive action:

“They are doing the only thing they can. They’re avoiding being born.”

The growing problem of deficits and debt – not just the parts that are included in the government’s accounts but also the implicit political promise to look after the old and infirm – is only one problem of sustainability. The Economics of Enough brings together the issues of debt, inequality and fairness, civic life and the quality of the environment, linked by the failure of policy-making to take proper account of the future. We are eating into the legacy needed for our children and grandchildren to have at least the same standard of living as us. What a contrast with the legacies left by earlier generations of political and business leaders in the US, UK and other western countries.

Changing the present short-sightedness will require change in three areas. One is how we measure the economy, where the priority is to measure properly national wealth as well as national income. What assets have been created and what debts incurred, including government finance but also the national infrastructure, and natural and human capital? The second is devising institutions which embody a concern about the future – the economy is not all about either markets or states, and we should pay attention to the rich array of other economic institutions from 100-year-old corporations to voluntary groups that plant trees. The third is to remind ourselves - and high finance – that healthy capitalism has a strong sense of morality and that includes stewardship.

And as page 99 puts it, what governments – and we – cannot do is carry on ignoring the future. The unsustainable never gets sustained.
Read more about The Economics of Enough, and visit The Enlightened Economist blog.

Writers Read: Diane Coyle.

--Marshal Zeringue