As 2014 comes to a close, it’s time to award the 6th annual Albies, named in honor of Albert O. Hirschman, to recognize the best writing on political economy over the past year. Past winners of the Albies have included award-winning books, peer-reviewed scholarship, polemical essays, provocative blog posts and even one Twitter feed.
The competition for this year’s Albies was tough, and there were some personal favorites that I had to knock off the list. And I might have wanted to award myself an Albie for ” The System Worked: How the World Stopped Another Great Depression,” which just received a favorable review in Foreign Affairs. But that would have been wrong. Even I have self-promotional limits. They’re barely visible, but they’re there.
So, in no discernable order, here are the 10 Albie winners:
1) Thomas Piketty, “Capital in the Twenty-First Century” (Cambridge: Belknap Press). So let’s get the obvious one out of the way. I don’t think I agree with Piketty’s “r > g” argument, and I’m obviously intrigued by Daron Acemoglu and James Robinson’s recent riposte to Piketty’s structural argument. But that doesn’t really matter. The fact is that a 700+ page, translated-from-French tract on economic inequality was the #1 Amazon bestseller for at least a week. Piketty clearly tapped into something.
Having actually read parts of Piketty’s book — and let’s be honest, no one read the whole damn thing — I was struck by the accessibility of the prose, the grandiosity of the argument and the proper humility about the methods and empirical evidence. If Piketty is right, then he’s unearthed a pretty serious endogenous problem in capitalism as we understand it. I’m not sure he is right, but it’s a debate worth having, and Piketty is a straight shooter when it comes to the data.
2) Lant Pritchett and Lawrence Summers, “Asiaphoria Meets Regression to the Mean,” NBER Working Paper 20573. During a year when, by one measure, China surpassed the United States to have the world’s largest economy, Pritchett and Summers offer a cautionary warning. China’s economy has been growing so fast for so long that the natural tendency is to simply extrapolate from recent years. The general problem, as Pritchett and Summers point out, is that most economies regress back to average growth rates rather than continue to grow at an accelerated rate. The specific problem for China is that there are excellent institutional reasons to believe that it will suffer a greater-than-average growth slowdown.
3) Jeff Colgan, “The Emperor Has No Clothes: The Limits of OPEC in the Global Oil Market,” International Organization, Summer 2014. You might have heard that oil prices are down somewhat in 2014. Why didn’t OPEC arrest the decline? Isn’t OPEC supposed to be the atypical cartel that actually works? As it turns out, not so much. Colgan demonstrates that “OPEC has little or no impact on its members’ production levels.” Which doesn’t mean that the organization is useless to its members — the one benefit that OPEC membership does confer is greater international prestige, in the form of enhanced recognition by other countries.
4) Benn Steil, “Taper Trouble,” Foreign Affairs, July/August 2014. Steil is on a roll. In 2013, his superior Bretton Woods book came out, and this year he wrote a short, sharp essay on the international challenges that will come as the Federal Reserve starts shifting toward a more conventional monetary policy. Because the Fed’s mandate is entirely domestic, developing countries will feel the fallout from an eventual increase in interest rates. Indeed, Steil even makes the case that the real source of Russia’s troubles with Ukraine began with Ben Bernanke!
5) Stefan Avdjiev, Michael Chui and Hyun Song Shin, “Non-Financial Corporations from Emerging Market Economies and Capital Flows,” BIS Quarterly Review, December. Why can’t developing economies hedge against the fluctuations of the dollar? They can, but it’s a bit trickier when it comes to their corporations. This paper by three Bank of International Settlements economists shows that if the dollar appreciates too much, a lot of companies in developing economies could face the same problems that Russian firms are guaranteed to face in 2015 — which could be a trigger for global financial instability.
6) Vladimir Putin’s Presidential Address to the Federal Assembly, Dec. 4. A lot of international relations folk have pointed to Putin’s Valdai address as the exemplar of his distinctly Russian worldview. That’s fair. But it’s his speech this month to Parliament that reveals Putin’s economic worldview — and that worldview should scare the crap out of ordinary Russians. On the one hand, Putin makes it clear in this speech that he’s fully aware that a robust economy is the foundation for projecting all forms of national power. On the other hand, Putin’s grasp of how to bolster Russia’s economy is faint at best. The few policy proposals in the speech are pretty ineffectual. Instead, the text is littered with exhortations like “We will succeed if we defeat disorder, irresponsibility and our habit of burying good decisions in red tape … much will depend on what each one of us do at our workplaces.” Sure, political speeches around the globe have exhortations like this one, but heads of government usually also offer concrete policy proposals as well. Putin’s policy arsenal is decrepit. The other theme that runs through this speech is Putin’s conviction that the United States is the mastermind behind all of Russia’s economic woes.
Comparing Crimea to the Temple Mount in Jerusalem was just the cherry on the top of this nutball sundae of economic thinking. If this is the man in charge of Russia’s fate for the next few years, then Russia’s petro-economy is doomed.
7) Caleb Melby, Laura Marcinek and Danielle Burger, “Fed Critics Say ’10 Letter Warning Inflation Still Right,” Bloomberg News, Oct. 2. Speaking of nutball economic sundaes, one of the things I wrote about in The System Worked was the extent to which advocates of fiscal and monetary austerity really sabotaged the post-2008 European recovery and hampered the U.S. economic recovery after the 2010 midterms. The years since have somewhat weakened their ideational power, but as this Bloomberg story opens:
Signatories of a letter sent to then-Federal Reserve Chairman Ben S. Bernanke in 2010 warning of the risks associated with the bank’s policy of quantitative easing are standing by their claims — even as the biggest U.S. companies are flourishing, inflation is muted and holding Treasuries has been one of the best trades out there.
The story is chock-full of quotes from the signatories insisting either that there really is inflation and we just can’t see it, or that it’s just around the corner, or that the risk remains very high. Now there is a glimmer of truth to one of these claims — as Steil’s essay points out, the taper is producing some fallout — but the notion that the Fed shouldn’t rescue the American economy from a recession to ward off future turmoil is more than a bit loopy. As the U.S. economy surges ahead, and two additional rounds of quantitative easing have ended, deflation is still a bigger concern than inflation four years after this letter was written.
The next time someone tells you that all economists are strict rational-choice theorists, point them to this article and ask your interlocutor about the rationality of the 2010 signatories.
8) Marion Fourcade, Etienne Ollion and Yann Algan, “The Superiority of Economists,” Max Planck Sciences Po Center discussion paper no. 14/3. On economists. There’s a double meaning in that title. The first meaning comes from the article’s first sentence: “There is an implicit pecking order among the social sciences, and it seems to be dominated by economics.” But the second meaning somewhat undercuts the first one, arguing that the reason that economists have achieved that place has less to do with their theories and methodologies as with their insularity and self-confidence. I think Fourcade et al are a bit harder on the discipline than I would be, but they raise some points that economists need to consider the next time they start beating their chest about their superiority.
9) Dani Rodrik, “When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations,” Journal of Economic Perspectives, Winter 2014. For political scientists, there is little that is new in Rodrik’s essay about the ways that ideas can affect economic outcomes. No, what makes this paper worthy of an Albie is that Rodrik does everything that Fourcade et al note is not normally done in economics journals: He cites other disciplines, he points out why standard political economy models might be flawed, and he connects the notion of ideas with more standard concepts in neoclassical economics, like technological innovation. If a political scientist had written this paper, it wouldn’t have mattered all that much. That Rodrik wrote and published it in one of economics’ flagship journals makes it more important. Furthermore, Rodrik’s paper puts into context stories that the New York Times and The Post have run about the funding of think tanks. Sure, material interests matter — but policy ideas matter as well.
10) Ed Mansfield, “The Political Economy of the Itching Palm: An Analysis of Tipping Norms,” presented at the 2014 American Political Science Association annual meeting. I explained in this post what I found fascinating about Mansfield’s paper. To sum up:
This is a great example of a political science paper that uses what seems like a small topic to ask a big question about the diffusion of norms in the world, and then devises an interesting and empirically imaginative way to measure and test that question.
I’m so intrigued that part of me wants to follow up on it by trying to test for variation in what kinds of breakfasts metropolitan hotels serve across the globe. But I’m saving that research for the emeritus stage of my career.
Congratulations to all of the 2014 Albie winners!!!