So that was my initial panic. Now I remember working on a film-script which took 4 months some years ago, and we got how long to pitch it? 5 minutes. And of those, we only got to talk for 50 odd seconds. But we’d practiced for that – so how to practice this? I guess the story is similar for a book pitch. You want to write 80,000 words, good, but the editors wants to see 300 words that will make them read the whole abstract, excite them and then give you money to do the work. But I’ve never written a book before. With that mind-set I figured there had had to be lots of ‘how to write a great abstract’ papers out there. How wrong I was.

Thus far I have found two pieces of solid advice. The first is now written in big bold red across the header of my abstract, and the second is just below in black italics:

An abstract is not an introduction. It is a résumé of your thesis
………………………………………-Joe Wolfe, U. of New South Wales

More is in vain, when less will serve
………………………………………-René Descartes, 1638

Right. All I have to do is: Explain what I’ve done, how I did it, and the exciting results. Bad news: This blog post is 300 words long. Shit.

Visualisation is the new ‘cool’ thing to do in economics. The World Bank has their own visualiser and has even splurged on direct developer tools and on-line data simulation (called iSimulate, so one might expect the odd R-rated joke, as with the iPad). Both the IMF and even Eurostat has  joined the bandwagon, and the UK government is promoting data visualisation for its civil servants to use in the public sector. This is following a private sector trend, admittedly started by the Gapminder project, which is still – I think – the best of the lot, which explains why Google bought it back in 2007. But google operates their own visualiser straight on the search engine, and the Guardian runs a big data storage and visualisation site, to which David McCandless, of the excellent Information is Beautiful Blog contributes and writes for.

So where does all this visualisation lead? Well… for the moment it is a lot of fun and data can be revealing. That said, it needs to be combined with insight and planning before it will be much use to the day-to-day economist I reckon. Davind McCandless’ new book The Visual Miscallaneum (which I got today) goes a long way to inspire our use of graphics. Garr Reynold’s Presentation Zen books on Presentation and Design are good for helping us think about how to present (the first more so than the second I think). But the reality is that for the moment journals print graphs in black and white, with a bare minimum of design scope. And lets be honest, visualising the supply lines and bottlenecks in the confused and complicated Haitian (and similar) aid operations would probably be the most beneficial of all data visualisations – but that’s not being done, not yet at least.

I am being overly harsh. If the whole thing was a big collection of theoretical Merton-Scholes / Fama financial-theory-is-fantastic-don’t-worry kind of thing there would be good reason to criticise them. I still remember Nassim Taleb’s call to boycott any business school that continued to teach portfolio theory in 2009. They still do teach that stuff, but some of the things slated for the Easter school isn’t all bad. There seems to be a focus on empirical work, at least in the recent working papers on the first lecturer (Princeton’s Prof. Hyon Shin) and a lot of his recent work looks at financial intermediaries. The second lecturer (also from Princeton, prof. Hirotaki) seems interested in empirics, but only to the extent that they fit into “theoretical models”, and an older (pre-crisis, 2007) paper of Prof Shin’s uses the assumption that traders use Value-at-Risk models and finds that this may amplify shocks to the system if traders are risk neutral. A second very timely paper of his and Gara Afonso showed, in October 2008 no less, that:

banks attempting to conserve liquidity cause an increase in the demand for intraday credit and, ultimately, a disruption of payments. Additionally, we find that when a bank is identified as vulnerable to failure and other banks choose to cancel payments to that bank, there are systemic repercussions for the whole financial system.

I think this sounds rather interesting actually, although how much of the course will be talking about exciting empirical results and research, and how much will be on theory remains to be seen. I don’t think we need to throw Taleb’s book at these people, but I am not going to throw a grand their way either. Hey, there’s a recession ending over here, (with 0.1% growth), no need to go nuts just yet.

Ghostbusters meets Leviathan

If you saw the front page of the economist this week you might quickly conclude that the Washington Consensus and Neo-Classical economics is back in the ascendancy. “STOP!” shouts the front page, “The backlash against big government” and a suitably Leviathan-cum-Ghostbuster’s-Slimer picture swallowing the poor citizen follows. That the poor citizen looks like a suited and booted businessman is probably a freudian slip, but the image tells the story. Let business get on with its work and start cutting back on the government.

For the first time, to my memory, the front page leader runs onto the second page, and the reason is simple. The Economist is confused. It wants to encourage us to cut back on the government, limit its impact but it also wants us to support banks being propped up, government stimulus packages and systems of governance by that same government (a lesson of Haiti if not the global recession).  So why is the Economist promoting and opposing ‘big’ government in the same editorial?

Their problem is one of prejudice, of ideology. Don’t take my words for it, the Economist is refreshingly open in stating the ideology to which it clings after reality has illustrated the problems with lack of government intervention in market places:

In these circumstances, hard rules make little sense. But prejudices are still useful – and this newspapers prejudice is to look for ways to make the state smaller. That is partly for philosophical reasons: we prefer to give power to individuals, rather than governments. But pragmatism also comes into it. (Economist Jan 23: Leader p. 9)

They can’t be serious! They oppose government on the philosophical grounds that individuals need to be empowered and protected from big scary states. So much for empirical evidence. Surely, if there’s anything the last 12 months have shown us it is that the individual is not under threat from the state as the leviathan in the 21st century. Yes in the 17th century when Hobbes wrote his book the state was all powerful (Think Cromwell). And if we talk of Myanmar or such states then yes sure. But in today’s market economy the label of Leviathan should be applied to those enitites ‘too big to fail’ – companies.

Hobbes's 1652 Leviathan was the government. Ours may be the firm

Banks have been given a bad reputation these last months, but for good reason. Oil, media, pharma, cigarettes, software – all of these industries have their monopolists and their scare stories. Aren’t they the 21st century  leviathan? What governments try to do is to support both companies and individual citizens. Where the company is responsible to the shareholder, the government is responsible to the electorate – sort of. The pragmatism refered to by the Economist is their fear of government mandarins directing private activity. A fair concern, but is that any more fair than worrying about the lobbying and advertising campaigns of monopolies and oligopolies? Too quickly will we forget what has happened in the last year, and move back to a trajectory of prejudice and ideology without understanding the economy or its features.

I wish that the academic economic community would be as open as the economist in declaring its inherent biases or perhaps investigating them. Yes, David Colander and others talked about how we should change the way we teach economics as a result of the crisis at this year’s AEA meeting, but he’s been saying that for a while and I don’t think anyone will change their ways. Sad.

So, who’s not in the club: Mauritania had a coup in 2008, Western Sahara is not technically a country according to the UN although I am sure that’s disputable. Iran is Iran and North Korea is North Korea. Turkmenistan is the country famous for once renaming their months and days according to the presidents whim – a new government has since changed that, but not much else. Somalia has famously become the pirate capital of the world and has no effective governance – and one suspects other countries would worry what effect an agreement would have on their relations with other trading partners who keep getting hi-jacked.

Panama does not – according to the map – have a free trade agreement with anyone in particular, but with one of the largest docking systems in the world and a WTO membership, one might claim that Panama has a trade agreement with everyone. But that could be conjecture. Similarly the grey dots in Europe might be the Vatican and Monaco perhaps (?), but these also have free trade with their ‘host’ countries Italy and France.

Mongolia – I don’t why Mongolia has chosen to exclude itself or why it’s neighbours exclude it. I guess there are some old tensions with China, and it was never incorporated into the Soviet Union so maybe it just likes its independence, or its two neighbours are not overly keen on the Parliamentary Republic?

Now I am not suggesting that free trade agreements are the utopia of economic policies, nor is this implying that these agreements are actual 100% free trade agreements. The EU is probably the closest thing to that with free labor and trade movement. But it is fascinating how this idea of a free trade agreement has become so popular, regardless of its proposed benefits.

“We [Britain] did well in the American century. We can take little for granted in the Asian century.” (p. 15)

It seems the old superpower – the 19th century is often referred to as the ‘British Century’ – is getting ready for yet another change in global conditions towards Asia. Yes, I know it may be old-hat that there is an on-going shift towards Asia, and that the term has been around since the 1980s but even so, it is interesting to see a government taking a stand and developing its policies in such a light.

2009 was also the year when a political scientist got the Nobel remembrance prize. The best quality work in economics again comes from non-economists, and in a crisis it is given to someone outside the ‘mainstream’. When Kahneman got the prize it was for an equally excellent body of work, which was read by more than just economists. When Merton and Scholes got it in 1997, they ruined the financial system. By 2001 the lesson was forgotten, I hope 2010 is not the year when the 2008-09 crisis is forgotten too, but lets see if Fama doesn’t get it next year. Then we’ll know.

Finally 2009 was the year we lost Professor Samuelson. A man who epitomized economics in the 20th century, not always for his theoretical ideas, nor for his (plaudable) approach to mathematics, but for introducing the textbook. Economics post-Samuelson became dominated by textbook instruction which for better or worse has spread economics much beyond a few specialised departments. Whether it needs re-thinking is a question posed in the latest International Review of Economics Education, but for now, lets look forward while remembering the past. In his excellent obituary in The Mint (India’s Wall Street Journal Partner), a fellow New Schooler has provided a good start to to doing just that, by remembering Prof. Samuelson. Happy New Year

British Midlands (airline) advertises that they won't be striking over Christmas - as opposed to threats from British Airways (BA)

We are not gathering for the holidays (be it Christmas, Hanukkah, Eid, Diwali etc. etc.) to swap cheques. The consumer surplus – sticking with the jargon – is not solely reliant on the cost-value of the present, but on the whole occasion. Presents are an not an expression of “Look, I think you’re worth me spending $60 on”. That’s why we take price tag of! We buy presents without the price-tag because we want to give something the recipient wants for fun or in need based on our experience of the. We may even make something from scratch – often more appreciated than store-bought presents, ask any mother who keeps a macaroni decorated jewelry box. Or, tellingly, we give an ‘experiential good’ that we have enjoyed (a book, film, theatre tickets) and thought the recipient would like. We might not always be right, but the thought goes a long way to making presents special. So my personal opinion about the arguments of Scroogenomics, Bah Humbug – but I can think of someone who’d probably love it, which is why I might buy it, despite the dire warnings of the author.

There is much to catch up on, but for the moment I just want to wish everyone a merry Christmas and suggest a very nice piece in the X-mas Economist out this week on ‘Progress and its Perils‘ (generously available for free) on how good we actually have it, despite our search for positional goods.

-I wish, that on every draft which people have commented on, I’d written the date it was returned, the draft number and the name of who commented. Now I have a pile of useful comments, but no idea when or why they were made on an ocean of paper instead.

-I am happy that I wrote out each of my references as I went along. Especially when I have single sheets of paper with notes, even there I pasted in any bibliographical detail at the end. It’s great! Because whenever I add new material this week I only need to copy-paste the reference off the note sheet into the bibliography.

-I wish I’d have some way of shuffling each chapter reference section into a aggregate reference section. This seems like a lose-lose situation though. Because if you work with a ‘thesis bibliography’ from the start, it becomes a pain putting out papers for conferences as the work is on-going, and if you don’t you get the pain in the last week.

-I wish I had asked more people to read my chapters, and to read them earlier. I’ve had lots of great feedback, and a lot of it from outside sources. But each draft seems to make the point clearer, and each comment tends to sharpen the mind. “If it’s unclear to the reader, then your writing is unclear” – regardless of who the reader is. Rough but true.

-I’m glad I went to conferences every year. Why didn’t someone tell me in my first year that going to conferences means you’ll meet people who are interested in what you do, have expert knowledge, and are generally willing to read your stuff (because they’re interested) and give you comments and feedback. Fantastic.

I’m sure more will come to me as I finish the thing up – and it has to be done – and once this week is over there will be more recurrent blog posts from my side. I already have two or three very exciting things lined up :)