some time mid-October
Culture and Prosperity: The Truth About Markets--why some nations are rich but most remain poor, John Kay (2003, 2004)

This is a marvelous book, deserving of much better than the erratic and piecemeal way in which I read it or the sketchy and belated review I'm going to give it here. I was hoping to read it a second time, but that won't happen soon, since it's overdue and I've already renewed it once.

The subtitle has two parts because this is a revised edition of an earlier version in which "The Truth About Markets" was the title. That was published in Britain. Apparently the American publisher determined that Americans would never buy a book with a title suggesting an economics text, so "Culture and Prosperity" was added to the front.

The book is, in fact, an economics text, but one that starts with observations about the real world and derives economics from that, rather than the other way around. The title's similarity to that of Adam Smith's classic Wealth of Nations (full title "An Inquiry into the Nature and Causes of the Wealth of Nations") is no coincidence. Like Smith, Kay starts with simple questions about the world like "why are some nations rich and others poor?" or "If a farmer in Africa and a farmer in Sweden do roughly the same work, why does the Swede earn 12 times as much?" He then goes on to explore the reasons, building from simple everyday observations up to generalizations about the society at large. Somewhere along the way, economic terms pop up -- "the total measurement is what economists call the 'gross national product' of the country" or "the difference between those two values is what economists call the 'economic rent' (even though it isn't rent in the normal sense of the word)".

One thing that has always bothered me about ordinary news journalism -- ever since the early days of Benzene 3 -- is the way in which news stories toss around economic terms as if everyone knows what they mean but without ever really telling where those numbers come from. We always have a general idea of what the number is about, when they talk about the budget deficit or the national debt or the interest rate, but what exactly do those numbers measure, anyway? A lot of times we don't even realize what we don't know. I've been reading about GNP and GDP for years, but it wasn't until this book explained them that I realized I never really understood the terms. I knew that rich states have high GDP and poor states have low GDP, and thus the number measures the richness of a country, but I never thought to ask exactly what it was counting.

Even worse is when we hear about "the economy". All through campaign season I heard pundits shouting, "The economy is up" and, "No, no, the economy is down". They talk about it like they're discussing a number that can be measured, but what the heck is that number? (I think it's the GDP, but I'm still not sure.) Once we know what it is they're measuring, more questions follow. If "the economy" goes up, does that necessarily mean the country is better off? Clearly, there's some correlation, but maybe there's a way to jack up the number without actually making things better. Or maybe when the number goes up it's better for other people but not better for me. But nobody asks those things, they just go on arguing about whether "the economy" is really up or down, because votes depend on the answer.

Maybe I'm just dense. Maybe other people actually understand what all those numbers mean. I don't. Sometimes I get the feeling that nobody does except for economists, and sometimes I wonder even about them.

This book doesn't really answer all my questions, but at least I'm a little clearer on some points. I think I'd be even more clear if I were to read it again and pay more careful attention. Maybe some other day.

As usual, I have my little list of notes -- though I can't help noticing that these are overwhelmingly in the second half of the book, suggesting that perhaps there was another page which I've since lost. I also have on file one enormous digression that, according to my computer's File Info box, I wrote on Sept 30, which tells me how long it's been since I read the book.

• After specifying a list of "rich countries", which happen to be geographically clumped, Kay discusses the next tier of almost rich countries:

That's not right. As every Dip player knows, Portugal doesn't border anything but Spain and the Mid-Atlantic Ocean, and Spain is listed as "potentially productive" not "rich".

• An interesting analogy that amused me: "Only in the twentieth century did marriage become a put option, in which either party could exit the contract at a pre-arranged price."

• In the course of discussing how some of society's greatest inventions and discoveries were made without financial remuneration to the discoverer, Kay mentions two achievements of the non-profit Rockefeller Foundation: the development of practical antibiotics and the development the strain of wheat which enabled the "green revolution" in much of the Third World. I hadn't known that Rockefeller was behind those. That's a pretty good record of large-scale philanthrophy.

• About Julius Nyerere, the first president of Tanzania, who during his 20 years in office pursued a socialist economic policy: "After his retirement, Nyerere faded from view, conceding, with the honesty and modesty that had characterized his life, that he and his policies had failed."

I see that a couple of my notes were suggestions to myself for little discussions.

One of the themes of the book is that Kay believes that the "American business model", very popular among some economists, doesn't work. He hastens to point out that the true American business model -- that is, the way the actual American economy actually operates -- does work. His complaint is that the set of collection of economic and philosophical ideals to which the label "American business model" is attached does not in fact describe the real American economy, and the things that make the American economy work so well (mostly social conventions) are exactly what the model fails to capture.

The key features of the "American business model" are: Self-interest is the citizen's primary motivation, the role of government is as minimal as possible, markets are as unregulated as possible, tax rates are set as low as possible, and taxes are not used for wealth redistribution. These features, Kay says, do not describe America's successful economy; rather, they describe the economy of a nation like Russia or Nigeria. That is why, Kay argues, attempts to impose the "American business model" on other countries tends to muck them up. (He cites New Zealand as a recent example. Apparently New Zealand's economy has gone quite bad in the last decade or two and New Zealand is now at risk of becoming only the second country, after Argentina, to go from rich to non-rich.)

Lest anyone get the wrong idea, I should note that Kay doesn't argue against self-interest and free markets either. "The assumptions of the ABM [American business model] are false, but that does not imply their opposites are true," he says. "The economic world is complex. Self-interest is an important motivation, but not an exclusive motivation. ... Markets work, but not always and not perfectly," and so forth.

Throughout most of the book, the author remains aloof. Near the end, he starts to discuss the economics profession, and it becomes very personal. I feel like I'm listening in on someone else's argument here. I gather that there is a division among economists and Kay is venting a professional cri de coeur. He complains that too many economists today long for their science to be a "hard" science like physics. These economists are eager to describe the world with equations which they can declare are "true" in the same sense that chemical and physical laws are.

This, Kay says, draws the profession into an imaginary land where all the equations add up but they don't properly reflect reality. To be good science, economics must accept that it is a social science which is squishy and flexible, not rigid like physics or chemistry.

I'm not sure how well it comes across without the context of the entire book. Kay's language generally is cheerful but subdued -- very British. After 300 pages of that, one sees that this is him being furious:

Earlier in the book is a more light-hearted preview of the same theme:

And as long as we're telling economist jokes, here's one more:

(As I type this, I can't help noticing that if my mother were the book editor, there would have been a comma before "too".)

"F.Y. Edgeworth, who measured the welfare of society by aggregating the welfare -- the utility -- of its individual members and who looked forward to a felicific calculus that would measure progress toward their objective, the greatest happiness of the greatest number, in an objective manner." That's a tough slog of a sentence, but what a lovely word in the middle to light the way! Felicific is a fancy word meaning "causing or intending to cause happiness".

Orange roughy, the fish. I always thought it was ruffy. Merriam-Webster doesn't list either. A Google search turns up some of each, but far more roughies than ruffies.

I've seen casuistry before, but I tend to forget what it means: specious argument. I think this is my first encounter with those who advance said specious arguments, casuists.

"People who have been right in the past cannot be blamed for thinking they are more than averagely likely to be right in the future." I get what he means, but I don't think I've seen averagely before. Maybe it's a Britishism.

Two hyphenations that look wrong to me: Hege-mony reminds me of the Economist, which tends to hyphenate after the vowel, like in most Romance languages but contrary to the standard in American English. The-ories -- across a page turn even! -- reminds me of the re-ally that I reported in another book not long ago. Do some people really pronounce it as three syllables? I don't.

In the course of a discussion about supply of oil, Kay writes:

The point he's heading for (which he admirably makes without ever using the academic word "elastic") is that supply expands to meet demand. Offshore and Arctic oil is developed because the high demand warrants it. If global demand were lower, those deposits would remain untapped, just as deep-ocean and tar-sands deposits are untapped now but might be tapped later if demand increases.

But I quote the paragraph for a different reason. As a sometime copyeditor who grew up in Alaska -- not to mention the son of a longtime copyeditor who has done most of her professional work in Alaska -- I know full well that the proper use of the word "Alaskan" is only as a noun, indicating a person. If one needs an adjective to describe something of or related to Alaska, the proper word is simply "Alaska". If my mother were this book's editor, she would have corrected Kay's second sentence in the quoted paragraph so that it starts "Alaska temperatures are so low...".

This is not a perverse insistence of Alaskans; it is simply a rule to make Alaska consistent with the rest of the states of the union. Other states, as a rule, do not add a suffix to create an adjective. If Kay were writing about temperatures in California, Texas, Florida or New York, he would not write of "Californian temperatures", "Texan temperatures", "Floridian temperatures", or "New Yorker temperatures". No, he would write "California temperatures", "Texas temperatures", "Florida temperatures", or "New York temperatures". To be consistent, it should also be "Alaska temperatures".

And yet, if using "Alaskan" as an adjective is an error, surely it is a very common one. When one sees "Texan" used as an adjective, it immediately jumps out as sounding wrong. When I see "Alaskan" used as an adjective, I know that it is wrong because I have been taught so, but even for me it doesn't jump out as much as "Texan" does. Why is that?

Perhaps it's because I'm simultaneously reading The Language Instinct that it occurs to me to wonder about this. That book has quite a bit of discussion about why certain "mistakes" in spelling, pronunciation, and usage come to be common and eventually are considered correct.

My first thought was that perhaps it has something to do with the sound of the word "Alaska". As it turns out, that theory doesn't bear up. There happen to be two other states which capture most of the sounds of the word "Alaska": Alabama and Nebraska. With neither of these does it feel natural to add a suffix to form an adjective. It sounds wrong to say "Alabaman cotton" or "Nebraskan beef". "Alabama cotton" and "Nebraska beef" feel natural.

As I go through the names of the 50 states in my mind, thinking through what word sounds right, I find that for 48 of them it feels natural to use the name of the state as an adjective and feels unnatural to use the word for a person from that state as an adjective.

The one exception, along with Alaska, is Hawaii. It sounds perfectly natural to me to say "Hawaiian punch". If, preferring something that isn't a brand name, I imagine a pineapple from Hawaii, I am very much inclined to call it a "Hawaiian pineapple" and not a "Hawaii pineapple". There is even the commonplace name "Hawaiian Islands". That's a slightly different case, since it's a complete geographic name. Still, you wouldn't talk about the Oregonian Coast or the Mississippian Delta.

Whatever it is that tempts people to use a different method for creating the adjective form of a state name, it is something which is true for Alaska and Hawaii but not for the other states. Two distinctions (indirectly related) come immediately to mind. One is that those two states are disconnected from the others and further away. The other is that they joined the union more than 50 years after the others.

If I had to guess, I'd say it has something to do with the timing. For whatever reason, some time between 1902 and 1959, the standard method for creating an adjective out of a state name changed. The older 48 states already had their adjective names sufficiently established that they remained unchanged, but the two new states followed the new pattern.

That's just speculation. If anyone has other ideas, I'd be happy to hear them.

Later: The reference to Language Instinct is your clue that this is the part I wrote back in September. Since then I've had a few more thoughts on this. Expanding beyond U.S. states, I notice that for countries, we do use the nationality name for an adjective. We'd say French countryside or English coast, rather than France countryside or England coast. Perhaps further consideration of regions within foreign countries, cities, etc., is in order, but I'll leave that to you.

It could be that Alaska and Hawaii take the different form because they are perceived as more like a foreign country than like a region within America. That could be a result of geography or of history.

(At the bottom of my file with this discussion, which was otherwise completely written, I have the note "alaska blue, hawaii red". The obvious guess is that this has something to do with electoral politics, but I don't know what.)

This book was typographically eccentric in many ways. For starters, it has a slightly unusual text font. I kept meaning but forgetting to ask either my font-geek brother or my local font-geek friend about it. (On one occasion I even brought the book to the latter's house, and he's geek enough that he'd recognize it instantly on sight, but I got distracted and forgot to show him.)

The book has occasional sidebar text, like you'd expect in a real textbook. Since this book doesn't have wide pages, the "sidebars" fill the full column but are occasionally interposed within the text. They appear in a sans-serif font, but the contours of it are so like that of the main text font that I wonder if the two aren't intentionally related.

Subheads (of which there are many) and folios appear in yet a third font, which doesn't look much like the other two. Underneath each subhead is a row of gray circles which is indented on the left to match a paragraph indent but runs all the way to the right. The bullet used in the text is tiny. I'm not sure if that's a function of the font or if it's just a design decision to use a raised decimal instead of a bullet.

Strangest of all is that every page number and every chapter number is enclosed in curly brackets (which mathematicians and other fussbudgets call "braces"), so that it looks like it's some sort of computer programming code. Some of the main section heads also have these braces around them. Even on the cover, there is a pair of stylized braces enclosing the illustration on the front cover and another enclosing the main publicity blurb on the back.

One other quirky innovation, which I rather like, is that in addition to the superscript numerals used to reference endnotes, some names have a superscript letter "n". This indicates that the person named won a Nobel Prize in economics. (A complete list of the Prize winners appears in an appendix at the end.)

Although it never appears in the main text, some of the endnotes include a word in all caps marked with a superscript "w". This indicates that if you go to the book's website, you can type the word for more information. Or at least that's what the book says. When I tried the website, I couldn't find any page that asks for a keyword. (I did see lots of those curly brackets, though.)

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