Books: Tim Harford Dazzles and Severely Disappoints At the Same Time
The price of light, once “too precious to use,” has over the years “fallen by a factor of 500,000.” Interesting about all this is that the flickering candles of the past that few could afford were really messy. And quite unlike the scent and mood-enhancing ones of today, the burning candles of long ago emitted a rather offensive odor.
Importantly, a candle of today “gives off 13 lumens” of light while a typical modern lightbulb “is almost a hundred times as bright as that.” As for light achieved with burning wood, “a hard week’s worth” of gathering and chopping it for ten hours a day over six days would have produced the equivalent of “one modern lightbulb shining for just fifty-four minutes.”
All of the above is information lifted from Tim Harford’s latest book, Fifty Inventions That Shaped the Modern Economy. Harford rates the lightbulb as the top invention, and his discussion of what’s essential is a reminder of how stupendously good the author can sometimes be. At the same time, it also arguably sets the reader up for very real disappointment. Indeed, like seemingly every book penned by the Financial Times columnist, Harford combines dazzling and enlightening information with commentary so obtuse that the reader is reduced to wondering if the author is actually two very different people.
The reluctant conclusion to his schizophrenic attitude toward freedom is that Harford is still worth the read. Amid occasional stumbles that will be addressed in this review, he delivers substantial good here and there. A careful read will have the reader taking copious notes. There’s lots of great stuff to work with.
First up, Harford is not a pessimist. Fifty is a book that cheers the progress wrought by human ingenuity, to a point. Readers will better understand the previous disclaimer as they read on, but for now it should be noted that Harford is a champion of advance. As he sees it, the simple plow “kick-started civilization in the first place.” Its genius was that it destroyed millions and millions of jobs. Precisely because the plow made it possible for only “a fifth of society’s population to grow enough food to feed everyone,” those rendered “unemployed” (the quotes are mine) by the technological advance were “freed up to specialize in other things.” Human wants are endless, and the fact that they are underscores the unrelenting wonders of technology. The latter by its very name destroys jobs, only to free up precious human capital to fix other problems.
Harford’s book also substantially adds to the body of evidence which loudly rejects the silly conservative fear of allegedly low birthrates. All too many on the right wring their hands over demographics while claiming the developed world is not having enough kids. Apparently we face economic doom. Oh dear.
Of course, this is yet another reason that Harford is worth the purchase. The inventions he describes discredit all the birthrate hysteria since they’ve given the productive a chance to “apply their constructive genius to undertakings vaster, and extending over a wider area, than ever before”(Alfred Marshall). Sure enough, it used to be that for 200 people to hear a song, the singer had to belt it out 200 times. Not so with the introduction of Thomas Edison’s phonograph. As Harford explains it, the phonograph “was the first machine to be able to both record and reproduce the sound of a human voice.” With this innovation, the ability of the talented to reach a growing number of people surged.
Thinking about the invention of chemical fertilizer (#33 on Harford’s list), this robot of the mineral kind massively enhanced crop yields such that the need for human effort in the fields shrank even more. About the invention that was and is the (#5) “Google search,” Harford cites studies that suggest “googling is about three times as quick as finding information in the library.” The previous number is seemingly a misprint? Google’s impact on speedy information searches seems quite a bit greater than three. Whatever the answer, Google’s existence is the equivalent of giving each human being 36 hands.
Speaking of extra hands, what about the Kiva robots (#7) that increasingly populate Amazon’s warehouses? Harford writes that they “can improve efficiency up to fourfold.” Thinking about Amazon more broadly, the internet enables Jeff Bezos to apply his own “constructive genius” to the world. Implicit in the witless demographic/low birthrate hysteria is that we no longer have enough hands to produce, and as such, the economy will shrink. Such a static point-of-view ignores just how much technology has rendered us humans exponentially more productive. Looked at in this light, it’s easy to see that falling birthrates are a natural and happy consequence of technological advances that have powerfully boosted individual productivity all the while “shrinking” the world in such a way that geniuses like Bezos can serve a growing number of people. The birthrate argument presumes a world defined by autarkic countries, but in the capitalistic arena, the world shrinks by the day. In modern times, Bezos could start a much enhanced version of the original Amazon in a retirement home. Harford further shuts the door on “demographic doom” and other right-wing phobias involving allegedly insufficient procreation.
So does his research reject the popular notion among economists that economic growth causes inflation. As he reveals time after time, it’s the productivity advances that bring down the price of everything. Economic growth is just another term for productivity growth. As the example that begins this review makes rather plain, the endlessly crucial economic good that is light has plummeted in price over the years. The creation of the shipping container (#17) helped bring down the price of shipping goods overseas from $420/ton to $50/ton. And while bananas used to be the rarest of delicacies that women ate with forks and knives (for a variety of reasons….), refrigeration (#19) has rendered them rather inexpensive. Economic growth is the logical outgrowth of technology that consistently pushes down the price of everything. The models of economists are quite simply backwards.
Regarding the childish notion of “bubbles,” Harford’s mention of 19th century “railway mania” in Great Britain exposes the very idea as silly. Harford did the same in Adapt with his discussion of cars, and the incorporation of over 2,000 carmakers in early 20th century U.S. In each instance there was no “bubble” as much as profits attract imitators. Logically so. What’s transformative is naturally going to appeal to entrepreneur and investor alike. Crucial here is that all the experimentation that mostly results in failure speaks to progress, not “bubbles popping.”
Yet the challenge with Harford is that one must read what is ridiculous in order to profit from the good. There’s lots of ridiculous in Fifty that will have free-thinkers wondering. It’s as though the cheerleader for innovation that plainly resides inside the author feels a powerful need to similarly please the statists in our midst. Sometimes the reader is reduced to wondering if thoroughgoing statists Paul Krugman and Martin Wolf have Polaroids of the author….There are many examples, but here are a few.
While Harford broadly cheers the robot that is the ATM, he adds that “one dubious benefit of cash machines is that they freed up bankers to cross-sell dodgy financial products.” Books could be written about how wrongheaded the previous statement is, but as anyone who has ever worked in finance knows well, the competition for profitable customers is brutal. Evidence supporting the previous claim is all the money earned in finance to begin with. What this means is that the seller of that which is “dodgy” won’t last long in a marketplace defined by ferocious battling for the customer. Put simply, the profits in finance are regulation par excellence. This doesn’t mean that there aren’t bad apples in what is a crowded industry, but it does mean that that those who mean customers harm will be exposed rather quickly not by regulators, but by the marketplace itself. Lest we forget, market sleuths (as opposed to regulators) discovered banking-sector problems in 2008, only for governments to meddle in a correction that was healthy. The crisis was one of government intervention, not “dodgy financial products”
Harford blames leaded gasoline on “delayed regulation,” but he misses the simple truth that regulators are almost always last to any alleged error. That they are is a statement of the obvious. If regulators could see around corners they wouldn’t be working as regulators. Instead, they would enjoy high-paying jobs as trouble-shooters for corporations looking to avoid embarrassing errors, or as investors capable of investing in ways that anticipate the mistakes that Harford naively assumes regulators save corporations from. If his history about leaded fuel is actually correct, that it is doesn’t call for more regulation. The track record of government when it comes to policing commerce, particularly in the financial space, loudly calls for less oversight, not more.
On the subject of money, Harford notes a third of the way through that it “works only if people expect other people to accept the paper as payment.” Well, of course. Per Adam Smith, “the sole use of money is to circulate consumable goods.” Since our wants are decidedly not coincident, the agreement about value that is money enables trade regardless. The butcher can trade regularly with the vintner even if he’s mostly interested in the bread of the baker. Money is the measure that facilitates exchange and investment.
Harford seems to get this, but near book’s end he informs the reader that “mainstream economists generally believe that pegging the money supply to gold is a terrible idea.” Ok, but then what he describes has realistically never been done in the first place. It’s a falsehood promoted by “mainstream economists.” In England and the U.S., the supply of pounds and dollars grew at rates that well exceeded supply of gold by many, many miles. All while each currency was pegged to gold. The value of the standard was that gold’s unique qualities of the stock/flow variety rendered it then and now intensely stable. That’s why it served as a measure of money for millennia. Money’s sole purpose is as a measure, so in defining paper money in terms of gold, issuers of money could better ensure its stability, and by extension its utility.
In Harford’s case he simply comments that money associated with gold is a “terrible idea” without explaining why. Odds are he, like most economists, doesn’t understand the argument as is. While he gets that money is an agreement about value, seemingly a yearning for mass appeal among economists has closed his mind to why gold served as the definer of money for thousands of years. This wasn’t a coincidence. Unfortunate is that Harford’s curiosity doesn’t pull him into a critical analysis of mainstream economic thought. Unknown is why. Figure that Great Britain’s “mainstream economists” similarly thought Margaret Thatcher a “terrible idea” if a FT poll from long ago was accurate. Harford should be having a field day with the pretense of economists, but in Fifty he joins them.
And rather than have a reasonable discussion of money, Harford babbles. He writes that “[M]ost regard low and predictable inflation as no problem at all.” Interesting, except that we earn pounds, dollars, euros, yen, yuan, etc. How is it “no problem at all” if their value is gradually eroding? Money is a lubricant of trade and investment, so how does money that’s declining in value facilitate either? Harford has no answer other than a baseless mumble about how slowly devalued money is “perhaps” a “useful lubricant to economic activity because it guards against the possibility of deflation, which can be economically disastrous.” One gets the feeling Harford doesn’t really understand inflation or deflation either, and evidence supporting the previous claim is that he presumes one is “no problem at all” while the other is “disastrous.”
Most disastrous of all was Harford's discussion of the iPhone. In this case, he writes that “[T]he foundational figure in the development of the iPhone wasn’t Steve Jobs. It was Uncle Sam. Every single one of these twelve key technologies was supported in significant ways by governments – often the American government.” Harford goes on to write that absent the innovations of government and alleged “government risk-taking,” the iPhone would have merely been “an utterly charming toy.” Oh my. Harford will one day want this chapter back. Bet on it.
Indeed, he has written a book that mostly lauds the genius of humans, but then presumes that minus the angels in government, those humans would have achieved quite a bit less? Did anyone edit the author? It’s worth asking simply because governments only have resources to take “risks” with insofar as the private sector creates them. Government didn’t create the internet, the worldwide web or GPS as much as it created primitive and totally unworkable (in the market sense) versions of all three. If anyone doubts this, they need only remember that the GPS alone was rejected by 80+ venture capital firms when it was shopped as a technology that could be useful to actual civilians.
To be clear, “governments” created technologies with resources taken from the private sector, and that had no private sector applications. That’s the seen. The unseen is how much more quickly market-friendly versions of the internet, worldwide web and GPS would have reached the consumer if governments hadn’t been annually consuming so much of the wealth always and everywhere produced by the private sector.
Which brings us to the most obnoxious quality of Harford’s mindless assertion. Implicit in his view that the iPhone of today would be a “charming toy” sans government is that entrepreneurs aren’t tirelessly searching for advances that bring producers closer to other producers. In short, Harford is asking the reader to believe that absent the wise minds in government, Americans would still be migrating back and forth between Los Angeles and San Francisco on horseback. Back to reality, we’d still have roads if government were smaller, or even non-existent. Better yet, the roads would be managed exponentially more efficiently than governments presently manage them, and their defining feature would likely be a lack of traffic. Harford knows this to be true as evidenced by his discussion of plows, fertilizer and other advances that massively increased food production. Capitalism is about turning scarcity into abundance.
More importantly, Harford knows from the very book he’s written that just as Thomas Edison shrank the world with his phonograph, so would have a later Edison-like genius devised a way for individuals and businesses to communicate and trade over wireless lines. He knows this because that’s the basis of capitalism. It’s products for products, and it’s wildly enterprising entrepreneurs applying “their constructive genius to undertakings vaster, and extending over a wider area, than ever before.” If the previous quote sounds familiar, it should. It’s from the beginning of this review, having been lifted from Fifty. It’s repeated to show readers that Harford’s babble about the iPhone’s beautiful uselessness absent “government risk-taking” is more than obtuse. It’s dishonest. Harford’s very own book disproves his witless critique of Steve Jobs and the iPhone. Capitalist history is defined by shrinking the burden of time and distance. It’s not a question of if the internet would exist absent government, as much it’s a question of what would have replaced a rather dated internet by now if government weren’t so wastefully consuming precious resources. Harford owes his readers and his publisher an explanation for why he wrote something so logically untrue, and also something that his own scholarship loudly reveals as untrue.
So there you have it. Harford can be so good on one page, and then awful on the next. So bad can his analysis be at times that one wonders if there weren't ulterior motives. Indeed, there’s no way someone who so plainly understands the genius of phonographs and light could so obnoxiously flub the explanation of the iPhone. It doesn’t mean readers shouldn’t buy what is an at times an interesting book, but it does call for a serious explanation. Harford knows better. Unknown is why someone so wise so often goes out of his way to seriously weaken what would otherwise be great. Harford’s readers deserve better. And so does Harford’s reputation.
