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The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All
A radical new approach to economic policy that addresses the symptoms and causes of inequality in Western society today
Fueled by populism and the frustrations of the disenfranchised, the past few years have witnessed the widespread rejection of the economic and political order that Western countries built up after 1945. Political debates have turned into violent clashes between those who want to "take their country back" and those viewed as defending an elitist, broken, and unpatriotic social contract. There seems to be an increasing polarization of values. The Economics of Belonging argues that we should step back and take a fresh look at the root causes of our current challenges. In this original, engaging book, Martin Sandbu argues that economics remains at the heart of our widening inequality and it is only by focusing on the right policies that we can address it. He proposes a detailed, radical plan for creating a just economy where everyone can belong.
Sandbu demonstrates that the rising numbers of the left behind are not due to globalization gone too far. Rather, technological change and flawed but avoidable domestic policies have eroded the foundations of an economy in which everyone can participate--and would have done so even with a much less globalized economy. Sandbu contends that we have to double down on economic openness while pursuing dramatic reforms involving productivity, regional development, support for small- and medium-sized businesses, and increased worker representation. He discusses how a more active macroeconomic policy, education for all, universal basic income, and better taxation of capital could work together for society's benefit.
Offering real answers, not invective, for facing our most serious political issues, The Economics of Belonging shows how a better economic system can work for all.
Fueled by populism and the frustrations of the disenfranchised, the past few years have witnessed the widespread rejection of the economic and political order that Western countries built up after 1945. Political debates have turned into violent clashes between those who want to "take their country back" and those viewed as defending an elitist, broken, and unpatriotic social contract. There seems to be an increasing polarization of values. The Economics of Belonging argues that we should step back and take a fresh look at the root causes of our current challenges. In this original, engaging book, Martin Sandbu argues that economics remains at the heart of our widening inequality and it is only by focusing on the right policies that we can address it. He proposes a detailed, radical plan for creating a just economy where everyone can belong.
Sandbu demonstrates that the rising numbers of the left behind are not due to globalization gone too far. Rather, technological change and flawed but avoidable domestic policies have eroded the foundations of an economy in which everyone can participate--and would have done so even with a much less globalized economy. Sandbu contends that we have to double down on economic openness while pursuing dramatic reforms involving productivity, regional development, support for small- and medium-sized businesses, and increased worker representation. He discusses how a more active macroeconomic policy, education for all, universal basic income, and better taxation of capital could work together for society's benefit.
Offering real answers, not invective, for facing our most serious political issues, The Economics of Belonging shows how a better economic system can work for all.
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First published June 16, 2020
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January 3, 2021
15 years ago, David Friedman argued in "The moral consequences of economic growth" that economic growth does not just generate direct benefits in terms of more goods and services, but also makes societies more tolerant and progressive (see https://www.goodreads.com/review/show... for my review of the book). More recently, economic historian Barry Eichengreen has studied the relation between economic prosperity and populism (see
https://www.goodreads.com/review/show...).
Martin Sandbu also argues that the threats to liberal democracy we are now witnessing have economic problems as root cause. In short, Sandbu argues that economic development since the 1980s have not benefited all people in developed countries equally, and even left some structurally behind. And it is the disenchantment with those economic prospects that has led to the rise of populism and anti liberalism.
But Sandbu does not stop at the diagnoses of the problem; he sets out an agenda for reforms that would keep the benefits of globalisation while addressing the grievances of the "left behind".
The result is a very accessible book with a list of concrete policy proposals. Some noteworthy elements are: a proposal for higher minimum wages, for Scandinavian "flexicurity" in labour markets policies, a move from means tested welfare to universal basic income, a renewed approach to collective bargaining, more pro growth monetary and budgetary policies, a financial system that is less based on debt financing and where more risk is moved from the debtor to the creditor, a move to taxes on *net¨* wealth, more active regional policies... At first sight, most of these proposals look like social democratic agenda points, but Sandbu emphasizes that his proposals are compatible with free markets and globalization. (Sandbu argues convincinhly that globalisation is often used as a scapegoat, but is not the root cause for the problems discussed in the book).
This is not the place to evaluate the merits of those proposals. Let me just say that they do deserve a serious discussion, and that policy makers, policy advisers, think tanks etc would do well to read the book attentively. Some of Sanbu's proposals are more controversial than others (especially the universal basic income and the wealth tax), but it is important that policy discussions are based on a sound analysis. Sandbu's work is a good starting point to move the discussion to a next level, even if it is far from the final word.
It is remarkable in itself that this work comes from a writer for the Financial Times. It is in line, though, with one of the most noteworthy developments of the last decades, namely that the former temples of economic orthodoxy such as the IMF and the OECD are now all moving towards policy positions that would have been very radical in the 1990s. As Keynes would have said, in the face of changing facts, they have also changed their minds, and arguably faster than mainstream public opinion.
Of course, that doesn't mean that the book is flawless. I am not completely convinced that economics is always a better explanation for the rise of anti liberalism than identity issues, but these are typically issues where causal links are very difficult to establish.
Also, the case for the policy proposals would have been stronger if Sandbu had spent more time addressing the numerous serious arguments against them (especially for the more controversial ones such as the universal basic income or the wealth tax).
The most interesting discussion is probably the issue of left behind regions. As Sandbu points out, the "places that don't matter" are a fundamental problem: when regions are declining (for instance, because the most important industry is competed away), this affects everyone, not just the poorest members of the community, and it is very difficult to stop a vicious circle. Several EU countries are confronted with unequal regional development that decades of regional policy have not put in reverse - it is also the domain where Sanbu's policy proposals are the vaguest.
This book is an important contribution to the public debate (even if most of the proposals are not tha original or radical) and deserves a wide audience.
https://www.goodreads.com/review/show...).
Martin Sandbu also argues that the threats to liberal democracy we are now witnessing have economic problems as root cause. In short, Sandbu argues that economic development since the 1980s have not benefited all people in developed countries equally, and even left some structurally behind. And it is the disenchantment with those economic prospects that has led to the rise of populism and anti liberalism.
But Sandbu does not stop at the diagnoses of the problem; he sets out an agenda for reforms that would keep the benefits of globalisation while addressing the grievances of the "left behind".
The result is a very accessible book with a list of concrete policy proposals. Some noteworthy elements are: a proposal for higher minimum wages, for Scandinavian "flexicurity" in labour markets policies, a move from means tested welfare to universal basic income, a renewed approach to collective bargaining, more pro growth monetary and budgetary policies, a financial system that is less based on debt financing and where more risk is moved from the debtor to the creditor, a move to taxes on *net¨* wealth, more active regional policies... At first sight, most of these proposals look like social democratic agenda points, but Sandbu emphasizes that his proposals are compatible with free markets and globalization. (Sandbu argues convincinhly that globalisation is often used as a scapegoat, but is not the root cause for the problems discussed in the book).
This is not the place to evaluate the merits of those proposals. Let me just say that they do deserve a serious discussion, and that policy makers, policy advisers, think tanks etc would do well to read the book attentively. Some of Sanbu's proposals are more controversial than others (especially the universal basic income and the wealth tax), but it is important that policy discussions are based on a sound analysis. Sandbu's work is a good starting point to move the discussion to a next level, even if it is far from the final word.
It is remarkable in itself that this work comes from a writer for the Financial Times. It is in line, though, with one of the most noteworthy developments of the last decades, namely that the former temples of economic orthodoxy such as the IMF and the OECD are now all moving towards policy positions that would have been very radical in the 1990s. As Keynes would have said, in the face of changing facts, they have also changed their minds, and arguably faster than mainstream public opinion.
Of course, that doesn't mean that the book is flawless. I am not completely convinced that economics is always a better explanation for the rise of anti liberalism than identity issues, but these are typically issues where causal links are very difficult to establish.
Also, the case for the policy proposals would have been stronger if Sandbu had spent more time addressing the numerous serious arguments against them (especially for the more controversial ones such as the universal basic income or the wealth tax).
The most interesting discussion is probably the issue of left behind regions. As Sandbu points out, the "places that don't matter" are a fundamental problem: when regions are declining (for instance, because the most important industry is competed away), this affects everyone, not just the poorest members of the community, and it is very difficult to stop a vicious circle. Several EU countries are confronted with unequal regional development that decades of regional policy have not put in reverse - it is also the domain where Sanbu's policy proposals are the vaguest.
This book is an important contribution to the public debate (even if most of the proposals are not tha original or radical) and deserves a wide audience.
June 27, 2020
I am beginning to get a sense that observers are beginning to view the next round of elections, especially in the US, as a time when significant changes may actually occur. Politicians are loath to say such things, of course. Pundits, however, get to redraft the nature of the problems they address to fall into line with the futures they expect to face. The more one reads policy books that adopt the perspective of “OK, now you won back power from the bad guys, what do you plan to do about it?” the more possible it may be that they are looking at the future less as a chance to complain or conduct anthropology studies on down and out populist voters and more as a chance to come up with a policy agenda for those needing specific policies In order to put up or shut up. I sure hope that is the case.
“The Economics of Belonging” by Martin Sandbu is such a book. The key intuition is to ask how FDR was so successful with progressive social democracy (relative to the contemporaneous autocrats) and then ask what went wrong. If you follow policy books, you know what comes next, in literally hundreds of volumes on economics, political economy, history, international relations, and the like. Mr. Sandbu, who seems to be an upscale business journalist with some good university ties, has the common diagnoses of what led to the hollowing out of the traditional postwar political economy in the West and how we got to record levels of income inequality, a lackluster macro economy, and the rise of Trump, Bojo, Le Pen and others. It is his suggestions for fixing things that are different.
Sandbu describes and bemoans the loss of the “economics of belonging” - meaning the premise of national economic action that to the extent possible, national economic prosperity should be shared across society, across classes, and across regions. His argument is that the malaise of the West is due to the loss of this sense of belonging. Specifically, changes in politics and society after 1970 have served to benefit some groups at the expense of others and have led to the near complete stagnation of the bottom 80% of the US economy in conjunction with the skyrocketing growth in earnings and wealth for those within the top 1% of earners. Sure, there have been other changes, such as due to technology and globalization, but the major changes - without which the other changes would matter much less - has been associated with the maldistribution of earning and wealth and their appropriation by the very richest in society.
So far so good, but don’t we all know that, Martin? What is new here?
What is new is his claim about fixing things. He suggests that the changes that generated our economic mess - in terms of inequality - were due to the failure of policy makers to consistently employ the intellectual and policy options that had been open to them since the time of Roosevelt. There has been a profound lack of vigilence that permitted the neoliberals (yes there are villains) to take the wheel and do their dirty work in the 1970s, 1980s, and 1990s. But when this began to be recognized, nobody tried to undo the changes or take actions to slow the spread of social erosion.
I know — this sounds a bit whiny.
When he gets around to proposing a program for reform, which he does in the last part of the book, Sandbu outlines a set of policy proposals - most of which have been raised elsewhere - that together go far beyond the typical course in these books of redefining the problem in the form of a solution. These include tax policy, reforms for financing, new policies for investments in social infrastructure, changes in education, and the like. Together, they present a plausible array of actions. They are necessarily together and are recommended as a program. The key question, of course, is where the political will comes from to motivate such an effort for comprehensive reform. Perhaps after a dramatic election?? I know - political will has been quite scarce recently. But this is a nice presentation that comes close to moving from the level of fantasy to that of at least plausible.
At least that is a start.
I recommend the book. I cannot wait to see how he updates this for a COVID-19 world.
“The Economics of Belonging” by Martin Sandbu is such a book. The key intuition is to ask how FDR was so successful with progressive social democracy (relative to the contemporaneous autocrats) and then ask what went wrong. If you follow policy books, you know what comes next, in literally hundreds of volumes on economics, political economy, history, international relations, and the like. Mr. Sandbu, who seems to be an upscale business journalist with some good university ties, has the common diagnoses of what led to the hollowing out of the traditional postwar political economy in the West and how we got to record levels of income inequality, a lackluster macro economy, and the rise of Trump, Bojo, Le Pen and others. It is his suggestions for fixing things that are different.
Sandbu describes and bemoans the loss of the “economics of belonging” - meaning the premise of national economic action that to the extent possible, national economic prosperity should be shared across society, across classes, and across regions. His argument is that the malaise of the West is due to the loss of this sense of belonging. Specifically, changes in politics and society after 1970 have served to benefit some groups at the expense of others and have led to the near complete stagnation of the bottom 80% of the US economy in conjunction with the skyrocketing growth in earnings and wealth for those within the top 1% of earners. Sure, there have been other changes, such as due to technology and globalization, but the major changes - without which the other changes would matter much less - has been associated with the maldistribution of earning and wealth and their appropriation by the very richest in society.
So far so good, but don’t we all know that, Martin? What is new here?
What is new is his claim about fixing things. He suggests that the changes that generated our economic mess - in terms of inequality - were due to the failure of policy makers to consistently employ the intellectual and policy options that had been open to them since the time of Roosevelt. There has been a profound lack of vigilence that permitted the neoliberals (yes there are villains) to take the wheel and do their dirty work in the 1970s, 1980s, and 1990s. But when this began to be recognized, nobody tried to undo the changes or take actions to slow the spread of social erosion.
I know — this sounds a bit whiny.
When he gets around to proposing a program for reform, which he does in the last part of the book, Sandbu outlines a set of policy proposals - most of which have been raised elsewhere - that together go far beyond the typical course in these books of redefining the problem in the form of a solution. These include tax policy, reforms for financing, new policies for investments in social infrastructure, changes in education, and the like. Together, they present a plausible array of actions. They are necessarily together and are recommended as a program. The key question, of course, is where the political will comes from to motivate such an effort for comprehensive reform. Perhaps after a dramatic election?? I know - political will has been quite scarce recently. But this is a nice presentation that comes close to moving from the level of fantasy to that of at least plausible.
At least that is a start.
I recommend the book. I cannot wait to see how he updates this for a COVID-19 world.
October 24, 2021
I’m a fan of Martin Sandbu. Was lucky enough to ride eight stops to Bank with Hugh Dixon once (he speaks perfect Greek) and we agreed that Sandbu is currently the brightest star at the FT. His magnum opus about the Euro, Europe’s Orphan, is my favorite book in print on the topic. So my expectations were sky-high for The Economics of Belonging, much as I knew upfront that I was bound to disagree with a lot I’d read here.
It starts alright. I’ve no idea how many books have been billed as the ones that would explain Brexit or Trump’s ascent to power and this is probably the most coherent I’ve read. In his usual style, and with the help of figures and statistics, the author explains why people who never met a foreigner were bound to vote for Brexit and why rich Americans with little to lose from deindustrialization would vote for Trump. He takes apart the standard views involving trade, migration and financialization by showing that they were incidental rather than instrumental in the change of mood and moves to propose that a combination of secular trends and policy mistakes right here in the west resulted in a vast number of the previously “well to do” finding that they were left behind. These people have a beef with the status quo and get a chance to bring the temple down once every four years when there’s an election.
Next comes the “What is to be Done” section, which I found to be underwhelming. Like, after the 92-page introduction I was thinking perhaps I will buy this for my parents. I won’t.
In particular, the author fails to identify which parts of the recipe are near the mainstream and which ones are off-the-wall, rendering this book dangerous to gift to a family member.
It has its moments, no doubt. So Universal Basic Income is an idea I disagree with. I strongly believe it amounts to the state abdicating on its duty to provide services and opens the door to the affluent to feel everybody’s now taken care of. A bit how many right wingers would rather we threw school vouchers at the kids and had the state pull out of education. That’s where I see the endgame with UBI, no matter how it starts. But I digress. The case is made by Martin Sandbu very eloquently that the concept would solve a whole host of problems with our current system, starting with the particularly strong disincentives for anybody on the dole to take a bad job, which render our system inoperable in the absence of coercive workfare rules. This is a case where the author takes an idea that’s very much part of the discourse today and explains to the layman why it might be a good idea. (even if I might disagree)
I similarly have my doubts about the effects of nosebleed level minimum wages or the efficacy of a tax on wealth (the former, I reckon, primarily hurt employment despite occasional outcomes in very rich, cold countries; the latter would simply make valuations plummet and come up a cropper) but these are again concepts that, while controversial, are discussed and debated and analyzed and occasionally even tried out here and there. Like, dunno, in Alaska and Norway, though not in Siberia or Antarctica, I don’t think.
But then you read on and you discover a discourse on how we have a duty to always run the economy hot. Right or wrong, that ain’t mainstream AT ALL. And Keynes is quoted as having claimed it’s our duty to always overdo it on stimulus, but I took enough economics in school to know his teachings were much more nuanced.
At the very least, Sandbu ought to have mentioned that the privileged few will always discover a manner to get to the front of the queue when money’s getting handed out and funnel it all to their own assets’ valuations, as opposed to the real economy. What we have here is a book that came out in year 2021 and advocates accommodation but fails to mention record market prices on all assets coupled with record shortages in basics.
Also, the perhaps necessary Pigovian taxation of “bads” is promoted here in conjunction with allocation of the proceeds to green projects. Yes, I know, our Chancellor is fresh from hitting us with higher taxation on employment whose proceeds will allegedly be earmarked, but let’s get real. That’s politics and this is meant to be a book about economics.
So I’m left underwhelmed.
The content is far too light for specialists and far too misleading for the general public.
If “The Economics of Belonging” is a bunch of notes the author took for himself, if this is his attempt to connect the dots on his thoughts, to put together an ensemble of ideas, he should have kept it to himself, rather than embarrass himself with a “manifesto” that lacks a target audience.
P.S. I, too, can daydream. But I ain’t writing a book. Here’s what I’d do (and feel free to tell me your ideas are better)
1. tax capgains and employment equally
2. tax all corporate distributions at that same rate, no matter how they came about: dividends or buy-backs
3. on top of that, set a corporate tax at 5%, mainly so companies are forced to do their accounts
4. cut (especially in the US) any government subsidies on healthcare
5. cut (everywhere) tax relief on debt, both corporate and private
6. ban international transfer payments for intellectual property: bring your IP here if you will use it here
7. impose VAT on any energy-related component in spending, including at the border: make the buyer pay
8. give all citizens a free bank account with the government / get rid of deposit insurance
9. to generate inflation, automatically pay government employees more and let that trickle down
It starts alright. I’ve no idea how many books have been billed as the ones that would explain Brexit or Trump’s ascent to power and this is probably the most coherent I’ve read. In his usual style, and with the help of figures and statistics, the author explains why people who never met a foreigner were bound to vote for Brexit and why rich Americans with little to lose from deindustrialization would vote for Trump. He takes apart the standard views involving trade, migration and financialization by showing that they were incidental rather than instrumental in the change of mood and moves to propose that a combination of secular trends and policy mistakes right here in the west resulted in a vast number of the previously “well to do” finding that they were left behind. These people have a beef with the status quo and get a chance to bring the temple down once every four years when there’s an election.
Next comes the “What is to be Done” section, which I found to be underwhelming. Like, after the 92-page introduction I was thinking perhaps I will buy this for my parents. I won’t.
In particular, the author fails to identify which parts of the recipe are near the mainstream and which ones are off-the-wall, rendering this book dangerous to gift to a family member.
It has its moments, no doubt. So Universal Basic Income is an idea I disagree with. I strongly believe it amounts to the state abdicating on its duty to provide services and opens the door to the affluent to feel everybody’s now taken care of. A bit how many right wingers would rather we threw school vouchers at the kids and had the state pull out of education. That’s where I see the endgame with UBI, no matter how it starts. But I digress. The case is made by Martin Sandbu very eloquently that the concept would solve a whole host of problems with our current system, starting with the particularly strong disincentives for anybody on the dole to take a bad job, which render our system inoperable in the absence of coercive workfare rules. This is a case where the author takes an idea that’s very much part of the discourse today and explains to the layman why it might be a good idea. (even if I might disagree)
I similarly have my doubts about the effects of nosebleed level minimum wages or the efficacy of a tax on wealth (the former, I reckon, primarily hurt employment despite occasional outcomes in very rich, cold countries; the latter would simply make valuations plummet and come up a cropper) but these are again concepts that, while controversial, are discussed and debated and analyzed and occasionally even tried out here and there. Like, dunno, in Alaska and Norway, though not in Siberia or Antarctica, I don’t think.
But then you read on and you discover a discourse on how we have a duty to always run the economy hot. Right or wrong, that ain’t mainstream AT ALL. And Keynes is quoted as having claimed it’s our duty to always overdo it on stimulus, but I took enough economics in school to know his teachings were much more nuanced.
At the very least, Sandbu ought to have mentioned that the privileged few will always discover a manner to get to the front of the queue when money’s getting handed out and funnel it all to their own assets’ valuations, as opposed to the real economy. What we have here is a book that came out in year 2021 and advocates accommodation but fails to mention record market prices on all assets coupled with record shortages in basics.
Also, the perhaps necessary Pigovian taxation of “bads” is promoted here in conjunction with allocation of the proceeds to green projects. Yes, I know, our Chancellor is fresh from hitting us with higher taxation on employment whose proceeds will allegedly be earmarked, but let’s get real. That’s politics and this is meant to be a book about economics.
So I’m left underwhelmed.
The content is far too light for specialists and far too misleading for the general public.
If “The Economics of Belonging” is a bunch of notes the author took for himself, if this is his attempt to connect the dots on his thoughts, to put together an ensemble of ideas, he should have kept it to himself, rather than embarrass himself with a “manifesto” that lacks a target audience.
P.S. I, too, can daydream. But I ain’t writing a book. Here’s what I’d do (and feel free to tell me your ideas are better)
1. tax capgains and employment equally
2. tax all corporate distributions at that same rate, no matter how they came about: dividends or buy-backs
3. on top of that, set a corporate tax at 5%, mainly so companies are forced to do their accounts
4. cut (especially in the US) any government subsidies on healthcare
5. cut (everywhere) tax relief on debt, both corporate and private
6. ban international transfer payments for intellectual property: bring your IP here if you will use it here
7. impose VAT on any energy-related component in spending, including at the border: make the buyer pay
8. give all citizens a free bank account with the government / get rid of deposit insurance
9. to generate inflation, automatically pay government employees more and let that trickle down
November 1, 2023
Like his Free lunch* columns in the Financial Times, Martin Sandbu’s "The Economics of Belonging" is well-written, convincingly argued and, above all, thought provoking. The book makes the case that the recent surge in populist sentiment in most Western democracies is a direct consequence of economic mismanagement and suggests a comprehensive policy programme to create a more productive and fairer economy in which no one is left behind.
In Sandbu’s telling, for the first three decades after World War II, the populations of Western-style social market democracies could “'justifiably see their national economy – and, by extension, their national society – as one where they all belonged and belonged together.” (p. 8) As jobs were plentiful and offered economic security, increasingly adequate incomes, status and a sense of dignity, “virtually every social group could aspire to an attractive place for themselves.” Upward convergence between social classes and regions reinforced social cohesion throughout the entire population. These ‘economies of belonging’ started to gradually unravel, however, as of the end of the 1970s as a consequence of technological change and wrong-headed economic policy choices. This resulted in increased inequality of opportunities between economic classes and regions and a growing sense of economic insecurity among marginalised groups and places. This, in turn, provides the breeding ground for populist resentment, which has been a common fixture of Western democratic politics since the early 1980s and culminated most recently in the election of President Trump, the UK’s decision to leave the EU and the spectacular rise of political parties such as Alternative für Deutschland, Cinque Stelle and the Sweden Democrats.
The first part of Sandbu’s book (Chapters 1 to 5) explores the root causes of this gradual unravelling of the economics of belonging. Citing the latest research on the topic, the author quite convincingly argues against the popular view that increased global economic integration has contributed significantly to the plight of the left behind, leaving them with fewer and/or worse job opportunities and less economic prospects. According to Sandbu, the grievances expressed by the left behind against trade or financial globalisation and/or immigration are based on a misreading of the historical record. While globalisation is often being attacked as the ultimate scapegoat by populist politicians, it has neither contributed significantly to the very real increase of inequality in Western democracies nor has it limited the options of policy makers to do something about it. According to Sandbu, the political leaders in the West have only themselves to blame as they committed “half a century of policy mistakes.” (p. 50) Among the latter, Sandbu in particular takes issue with the efforts by the Reagan and Thatcher administrations to undermine collective bargaining, coupled with ill-targeted welfare reforms which eroded economic security at the onset of deindustrialisation and with tax reforms resulting in less redistribution. He also spends quite a lot of ink on the deregulation of the financial sector as of the 1980s and on the timid policy response to the global financial crisis of 2008.
The second part of "The Economics of Belonging" (Chapters 6 to 11) outlines an integrated set of policies to reverse the trend towards greater economic inequality between social groups and/or economic regions. The comprehensive programme advocated by Sandbu comprises a plea for sufficiently high minimum wages, a set of policies to correct power imbalances in goods, services and labour markets (including the institution of a sufficiently generous universal basic income, establishing statutory rights for non-employment work relationships, extending the scope of collective bargaining agreements and stronger enforcement of competition policy), fiscal and monetary policies to sustain high demand conditions, corporate taxation reforms to facilitate a shift from debt to equity financing and to prevent profit shifting, the introduction of net wealth taxes (as an alternative to traditional property taxes) and the development of official digital currencies backed by the central banks.
I suppose I must share quite a few of the author’s values and preconceptions of how the economy works, as I am sympathetic to most of the elements of his diagnosis and to quite a few of the remedies he suggests. In my humble opinion, Sandbu’s policy prescriptions, if properly designed and implemented, can indeed help to create a more productive and more egalitarian economy.
I also very much appreciated the way in which Sandbu argues his case. While the large majority of books on the plight of the left behind are rife with indignation and moralist overtones, this is not the case here. Sandbu makes his point in a dispassionate manner and gives due consideration to issues of allocative efficiency and the maximisation of economic growth when discussing ways in which to improve the distribution of economic opportunities. Take his plea for net wealth taxes. If Sandbu favours annual levies on taxpayers’ total net worth instead of the more common property taxes, taxes on dividends or on capital gains it is not only because the former are better than the latter at making sure that those with the broadest shoulders bear the greatest burden but also because net wealth taxes are likely to encourage greater productivity as they penalise low-return investment.
My overall very strong appreciation for the book does not mean that I fully concur with all of Sandbu’s positions, however. While reading the chapter on “Macroeconomic policy for the left behind”, for example, I found my right eyebrow raising itself involuntary on at least a few occasions. I do agree with Sandbu that the timid monetary and fiscal response to the financial crisis in the euro area has likely unnecessarily prolonged the time needed to fully recover from the initial shock. I also have a lot of sympathy for his proposals for a “high-pressure” macroeconomic policy, i.e., a combination of fiscal and monetary policy “which aims for high-pressure demand conditions as the economy’s normal state” (p. 141-142). Like Sandbu, I believe that more forceful fiscal and monetary policies can indeed help minimise the permanent loss of national income and productivity caused by temporary downturns. That said, I have much more difficulty accepting his outright dismissal of the notion of “fiscal space” as a concept that “borders on incoherence.” (p. 146). Stating that “in a downturn (…) deficit-funded fiscal stimulus, far from exceeding limited ‘fiscal space’, improves a depressed economy’s ability to service its debts” without any further consideration for the composition and the quality of public finances also strikes me as far too simplistic.
My main disagreement, however, concerns the central thesis of the book, according to which populism is first and foremost rooted in economic factors. Granted, Sandbu is no crude materialist. He does recognise the role of cultural factors in the contemporary political debate and is ready to concede that “the electoral insurgency against the liberal order and globalisation is expressed in terms of a political culture war as much if not more than economic interests.” (p. 15) Ironically as this may sound coming from an FT writer, however, Sandbu seems to espouse the kind of “last-instance” dialectical materialism Friedrich Engels identified Marx and himself with. This slightly "more subtle" type of materialism is described as follows in Engels' famous letter to J. Bloch:
“According to the Materialist Conception of History, the factor which is *in the last instance* decisive in history is the production and reproduction of actual life. More than this neither Marx nor myself ever claimed. If now someone has distorted the meaning in such a way that the economic factor is the only decisive one, this man has changed the above proposition into an abstract, absurd phrase which says nothing.” (*Emphasis in the original)
Sandbu’s position indeed is very similar. As he states in the opening chapter, his entire book “is premised on the view that since economic change is the root cause [of the populist attack on liberalism], better economics can improve our politics.” (p. 15). He makes the same argument even more forcefully in the dedicated third chapter on “Economics versus Culture” which argues for the “primacy of economics in the backlash against the post-war Western order.” (p. 14). In it, Sandbu claims, for example, that “illiberal values and ideology do not seem to be a direct, independent determinant of how people vote, but rather something that first begins to affect their political choices when triggered by economic stress.” At least in my view, this comes very close to the kind of “last instance” argument about the primacy of the economic base over the ideological/cultural superstructure common in traditional Marxist circles.
I personally do not share this position for reasons which cannot be explained in what is intended as a book review. More interestingly perhaps in this context is the observation that, despite his insistence to the contrary, Sandbu himself seems to have difficulty to stick to his own stated position in the following chapters of his own book.
In a number of instances in Sandbu’s narrative, it indeed seems as though cultural factors and not merely economic ones are the driving force of politics and policies. Thus, for example, when discussing opposition to immigration, Sandbu admits that “beyond the economic, there is the psychological impact of immigration – some feel a genuine loss of community when suddenly many of their neighbours no longer have the same roots as they.” (p. 216) Elsewhere in the book, he also suggests that “the most important reason why data and evidence have little traction with those who are opposed to immigration […] is that compared with trade, immigration presents a challenge that is culturally more much more raw. Immigrants are people and people shape communities in ways that imported good do not.” (p. 84).
There are other examples as well. When trying to explain why the Scandinavian institutions governing collective wage setting can not simply be transposed to other Western countries, Sandbu again invokes primarily cultural arguments. He suggests that “national culture shapes how the people making up those institutions behave and interact. None of this could be simply copied and pasted into the different historical, cultural, and institutional landscape of another country.” (p. 101).
More generally, in the concluding chapter on “Globalisation with a human face, Sandbu again invokes culture, values and history to explain diverging economic policy preferences between countries. In his words, “the brute fact of international economics is that different countries have different preference for how goods and services are produced, expressed in laws, regulations, and culture. Often these are deeply held moral or cultural values, arrived at through the resolution of long historical conflicts.” (pp. 221-222)
In my opinion, these few examples illustrate the difficulty of maintaining Sandbu’s professed theoretical position which considers material conditions and economic opportunities as the ultimate determinants of (populist) politics. As indicated above, I have a lot of sympathy for the economic policy proposals so eloquently advocated in the book and consider that most of them can indeed help restore the economics of belonging the West seems to have lost. However, unlike Sandbu, I am not convinced that even an ambitious as economic policy programme as his is sufficient to stem the worrying rise of illiberal populist discourse and politics. Populist discourse and identity politics lead a life of their own and will not simply wither away once economic prospects improve.
That said, this book definitely deserves 3.5 stars for the reasons outlined above. I’ll even give it 4 full ones in recognition of the beautiful but scary Yates’ quote Sandbu reminds us of on p. 4:
Things fall apart; the centre cannot hold
Mere anarchy is loosed upon the world
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Have a good read.
*P.S.: In case you are wondering, Sandbu’s Free Lunch columns in the FT are indeed protected by a pay wall. There is no such thing it seems. :-)
In Sandbu’s telling, for the first three decades after World War II, the populations of Western-style social market democracies could “'justifiably see their national economy – and, by extension, their national society – as one where they all belonged and belonged together.” (p. 8) As jobs were plentiful and offered economic security, increasingly adequate incomes, status and a sense of dignity, “virtually every social group could aspire to an attractive place for themselves.” Upward convergence between social classes and regions reinforced social cohesion throughout the entire population. These ‘economies of belonging’ started to gradually unravel, however, as of the end of the 1970s as a consequence of technological change and wrong-headed economic policy choices. This resulted in increased inequality of opportunities between economic classes and regions and a growing sense of economic insecurity among marginalised groups and places. This, in turn, provides the breeding ground for populist resentment, which has been a common fixture of Western democratic politics since the early 1980s and culminated most recently in the election of President Trump, the UK’s decision to leave the EU and the spectacular rise of political parties such as Alternative für Deutschland, Cinque Stelle and the Sweden Democrats.
The first part of Sandbu’s book (Chapters 1 to 5) explores the root causes of this gradual unravelling of the economics of belonging. Citing the latest research on the topic, the author quite convincingly argues against the popular view that increased global economic integration has contributed significantly to the plight of the left behind, leaving them with fewer and/or worse job opportunities and less economic prospects. According to Sandbu, the grievances expressed by the left behind against trade or financial globalisation and/or immigration are based on a misreading of the historical record. While globalisation is often being attacked as the ultimate scapegoat by populist politicians, it has neither contributed significantly to the very real increase of inequality in Western democracies nor has it limited the options of policy makers to do something about it. According to Sandbu, the political leaders in the West have only themselves to blame as they committed “half a century of policy mistakes.” (p. 50) Among the latter, Sandbu in particular takes issue with the efforts by the Reagan and Thatcher administrations to undermine collective bargaining, coupled with ill-targeted welfare reforms which eroded economic security at the onset of deindustrialisation and with tax reforms resulting in less redistribution. He also spends quite a lot of ink on the deregulation of the financial sector as of the 1980s and on the timid policy response to the global financial crisis of 2008.
The second part of "The Economics of Belonging" (Chapters 6 to 11) outlines an integrated set of policies to reverse the trend towards greater economic inequality between social groups and/or economic regions. The comprehensive programme advocated by Sandbu comprises a plea for sufficiently high minimum wages, a set of policies to correct power imbalances in goods, services and labour markets (including the institution of a sufficiently generous universal basic income, establishing statutory rights for non-employment work relationships, extending the scope of collective bargaining agreements and stronger enforcement of competition policy), fiscal and monetary policies to sustain high demand conditions, corporate taxation reforms to facilitate a shift from debt to equity financing and to prevent profit shifting, the introduction of net wealth taxes (as an alternative to traditional property taxes) and the development of official digital currencies backed by the central banks.
I suppose I must share quite a few of the author’s values and preconceptions of how the economy works, as I am sympathetic to most of the elements of his diagnosis and to quite a few of the remedies he suggests. In my humble opinion, Sandbu’s policy prescriptions, if properly designed and implemented, can indeed help to create a more productive and more egalitarian economy.
I also very much appreciated the way in which Sandbu argues his case. While the large majority of books on the plight of the left behind are rife with indignation and moralist overtones, this is not the case here. Sandbu makes his point in a dispassionate manner and gives due consideration to issues of allocative efficiency and the maximisation of economic growth when discussing ways in which to improve the distribution of economic opportunities. Take his plea for net wealth taxes. If Sandbu favours annual levies on taxpayers’ total net worth instead of the more common property taxes, taxes on dividends or on capital gains it is not only because the former are better than the latter at making sure that those with the broadest shoulders bear the greatest burden but also because net wealth taxes are likely to encourage greater productivity as they penalise low-return investment.
My overall very strong appreciation for the book does not mean that I fully concur with all of Sandbu’s positions, however. While reading the chapter on “Macroeconomic policy for the left behind”, for example, I found my right eyebrow raising itself involuntary on at least a few occasions. I do agree with Sandbu that the timid monetary and fiscal response to the financial crisis in the euro area has likely unnecessarily prolonged the time needed to fully recover from the initial shock. I also have a lot of sympathy for his proposals for a “high-pressure” macroeconomic policy, i.e., a combination of fiscal and monetary policy “which aims for high-pressure demand conditions as the economy’s normal state” (p. 141-142). Like Sandbu, I believe that more forceful fiscal and monetary policies can indeed help minimise the permanent loss of national income and productivity caused by temporary downturns. That said, I have much more difficulty accepting his outright dismissal of the notion of “fiscal space” as a concept that “borders on incoherence.” (p. 146). Stating that “in a downturn (…) deficit-funded fiscal stimulus, far from exceeding limited ‘fiscal space’, improves a depressed economy’s ability to service its debts” without any further consideration for the composition and the quality of public finances also strikes me as far too simplistic.
My main disagreement, however, concerns the central thesis of the book, according to which populism is first and foremost rooted in economic factors. Granted, Sandbu is no crude materialist. He does recognise the role of cultural factors in the contemporary political debate and is ready to concede that “the electoral insurgency against the liberal order and globalisation is expressed in terms of a political culture war as much if not more than economic interests.” (p. 15) Ironically as this may sound coming from an FT writer, however, Sandbu seems to espouse the kind of “last-instance” dialectical materialism Friedrich Engels identified Marx and himself with. This slightly "more subtle" type of materialism is described as follows in Engels' famous letter to J. Bloch:
“According to the Materialist Conception of History, the factor which is *in the last instance* decisive in history is the production and reproduction of actual life. More than this neither Marx nor myself ever claimed. If now someone has distorted the meaning in such a way that the economic factor is the only decisive one, this man has changed the above proposition into an abstract, absurd phrase which says nothing.” (*Emphasis in the original)
Sandbu’s position indeed is very similar. As he states in the opening chapter, his entire book “is premised on the view that since economic change is the root cause [of the populist attack on liberalism], better economics can improve our politics.” (p. 15). He makes the same argument even more forcefully in the dedicated third chapter on “Economics versus Culture” which argues for the “primacy of economics in the backlash against the post-war Western order.” (p. 14). In it, Sandbu claims, for example, that “illiberal values and ideology do not seem to be a direct, independent determinant of how people vote, but rather something that first begins to affect their political choices when triggered by economic stress.” At least in my view, this comes very close to the kind of “last instance” argument about the primacy of the economic base over the ideological/cultural superstructure common in traditional Marxist circles.
I personally do not share this position for reasons which cannot be explained in what is intended as a book review. More interestingly perhaps in this context is the observation that, despite his insistence to the contrary, Sandbu himself seems to have difficulty to stick to his own stated position in the following chapters of his own book.
In a number of instances in Sandbu’s narrative, it indeed seems as though cultural factors and not merely economic ones are the driving force of politics and policies. Thus, for example, when discussing opposition to immigration, Sandbu admits that “beyond the economic, there is the psychological impact of immigration – some feel a genuine loss of community when suddenly many of their neighbours no longer have the same roots as they.” (p. 216) Elsewhere in the book, he also suggests that “the most important reason why data and evidence have little traction with those who are opposed to immigration […] is that compared with trade, immigration presents a challenge that is culturally more much more raw. Immigrants are people and people shape communities in ways that imported good do not.” (p. 84).
There are other examples as well. When trying to explain why the Scandinavian institutions governing collective wage setting can not simply be transposed to other Western countries, Sandbu again invokes primarily cultural arguments. He suggests that “national culture shapes how the people making up those institutions behave and interact. None of this could be simply copied and pasted into the different historical, cultural, and institutional landscape of another country.” (p. 101).
More generally, in the concluding chapter on “Globalisation with a human face, Sandbu again invokes culture, values and history to explain diverging economic policy preferences between countries. In his words, “the brute fact of international economics is that different countries have different preference for how goods and services are produced, expressed in laws, regulations, and culture. Often these are deeply held moral or cultural values, arrived at through the resolution of long historical conflicts.” (pp. 221-222)
In my opinion, these few examples illustrate the difficulty of maintaining Sandbu’s professed theoretical position which considers material conditions and economic opportunities as the ultimate determinants of (populist) politics. As indicated above, I have a lot of sympathy for the economic policy proposals so eloquently advocated in the book and consider that most of them can indeed help restore the economics of belonging the West seems to have lost. However, unlike Sandbu, I am not convinced that even an ambitious as economic policy programme as his is sufficient to stem the worrying rise of illiberal populist discourse and politics. Populist discourse and identity politics lead a life of their own and will not simply wither away once economic prospects improve.
That said, this book definitely deserves 3.5 stars for the reasons outlined above. I’ll even give it 4 full ones in recognition of the beautiful but scary Yates’ quote Sandbu reminds us of on p. 4:
Things fall apart; the centre cannot hold
Mere anarchy is loosed upon the world
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Have a good read.
*P.S.: In case you are wondering, Sandbu’s Free Lunch columns in the FT are indeed protected by a pay wall. There is no such thing it seems. :-)
August 10, 2020
This is a crucial contribution to the debate around the questions of why contemporary society is so much at odds with itself, why do so many of our fellow world citizens lack so much (including hope) and how do we get out of the mess.
Send a copy to your elected representative!!!!
Post WW-II liberal democracy was built on the three pillars of political rights (individual rights, equality before the law, and free elections), the social market economy (balance of social rules permitting a shared prosperity tempering the competitive forces of a free market), and openness to the outside world (early globalisation). This political ethos sustained a period of unprecedented improvement in living standards in the West. Poor children could aspire to any future where their abilities could carry them. This began to change in the 1970s. The explanation is complex and highly debated. What is clear - in the context of ever-growing affluence, we confront today levels of inequality not witnessed since the 1920s and the dying days of the Gilded Age. Underlying this are many "left behinds", individuals, towns, regions who have lost the capacity to maintain a stable and healthy lifestyle, much less dream of a better tomorrow. This sense of "not belonging" to the prosperous economy breeds disillusionment and creates vulnerability to populism and potentially illiberal political leaders and movements
The author leads the reader through the what, when and why of this transition in Part 1. Thereafter, in Part 2, proffers a set of policy measures, and finishes with comments on the way forward in Part III.
I read books such as this one and marvel at the scholarship, but I find myself feeling helpless when done. The problems are actually fairly clear. In a classroom or research setting, it is possible to identify sensible, remedial policies. When walking outside into the "sunshine"(or rainstorm) of today's polarised world, however, I am always jolted by the sad reality that we may face social and political divisions so wide that short of revolution or the next coming of Bernie Sanders we will fail to change the world. We must all keep trying.
A must read!!!
Send a copy to your elected representative!!!!
Post WW-II liberal democracy was built on the three pillars of political rights (individual rights, equality before the law, and free elections), the social market economy (balance of social rules permitting a shared prosperity tempering the competitive forces of a free market), and openness to the outside world (early globalisation). This political ethos sustained a period of unprecedented improvement in living standards in the West. Poor children could aspire to any future where their abilities could carry them. This began to change in the 1970s. The explanation is complex and highly debated. What is clear - in the context of ever-growing affluence, we confront today levels of inequality not witnessed since the 1920s and the dying days of the Gilded Age. Underlying this are many "left behinds", individuals, towns, regions who have lost the capacity to maintain a stable and healthy lifestyle, much less dream of a better tomorrow. This sense of "not belonging" to the prosperous economy breeds disillusionment and creates vulnerability to populism and potentially illiberal political leaders and movements
The author leads the reader through the what, when and why of this transition in Part 1. Thereafter, in Part 2, proffers a set of policy measures, and finishes with comments on the way forward in Part III.
I read books such as this one and marvel at the scholarship, but I find myself feeling helpless when done. The problems are actually fairly clear. In a classroom or research setting, it is possible to identify sensible, remedial policies. When walking outside into the "sunshine"(or rainstorm) of today's polarised world, however, I am always jolted by the sad reality that we may face social and political divisions so wide that short of revolution or the next coming of Bernie Sanders we will fail to change the world. We must all keep trying.
A must read!!!
December 5, 2020
The Economics of Belonging by Martin Sandbu turned up on my radar by means of the weekly column of my favourite economic journalist, Marike Stellinga (of NRC, a Dutch Newspaper). Her appraisal of the book intrigued me, and now I know why: the book is simply fascinating. Following the Clintonian mantra 'Its the economy, stupid', Sandbu sets out on clear path from perceived problem (globalisation), actual problems (technological progress and botched policy responses) and a coherent set of policy solutions to finally end up where we started, globalisation. It's a fun ride for those who are on board and a rather miserable one if policy proposals just isn't your thing.
It would be easy to pick out a number of curious omittances or analytical shortcomings. Why skip over all the evidence on UBI experiments that point to a negative effect on labour supply and argue the opposite? Is it fair to talk about a wealth tax without discussing how you would implement it? And how can you promote a message of globalisation without really discussing the elephant in the room, China? However, the value of really explaining the anger of those left behind and constructing a set of policies that are pretty well known separately, but when put together provide a new way of thinking. The few shortcomings of the book (the chapters are otherwise very well sourced and Sandu clearly knows what he is talking about) fortunately dot not diminish its main message
What is most odd about the book is the last chapter: Sandbu tries to pursue us that his plans are 'radically centrist' and not left-wing or ring-wing. I get it: as an author you don't want to politicize your book or proposals, but come on. After summing up almost exclusively left-wing, progressive and left-of-centre policies, continuously referring to the Nordics and taking inspiration from FDRs New Deal, the argument that the policy set is middle of the road is just whacky. Martin, you can be honest with us: we would read the book either way.
It would be easy to pick out a number of curious omittances or analytical shortcomings. Why skip over all the evidence on UBI experiments that point to a negative effect on labour supply and argue the opposite? Is it fair to talk about a wealth tax without discussing how you would implement it? And how can you promote a message of globalisation without really discussing the elephant in the room, China? However, the value of really explaining the anger of those left behind and constructing a set of policies that are pretty well known separately, but when put together provide a new way of thinking. The few shortcomings of the book (the chapters are otherwise very well sourced and Sandu clearly knows what he is talking about) fortunately dot not diminish its main message
What is most odd about the book is the last chapter: Sandbu tries to pursue us that his plans are 'radically centrist' and not left-wing or ring-wing. I get it: as an author you don't want to politicize your book or proposals, but come on. After summing up almost exclusively left-wing, progressive and left-of-centre policies, continuously referring to the Nordics and taking inspiration from FDRs New Deal, the argument that the policy set is middle of the road is just whacky. Martin, you can be honest with us: we would read the book either way.
April 16, 2022
Precise and well-argued, based both on economic theory and empirical research, but also framed by important (and so often neglected!) historical contexts. Sandbu focuses on our society generally and the economy more specifically. Before presenting well-reasoned solutions, he spends much time analysing and describing current issues, both done in a thorough and sharp way. Although he touches upon many and often neglected themes, from inequality to trade to how to make rural regions prosper, some issues should have gotten more attention, like commodification, tech giants and climate change (he is conscious of the latter). I hope a Norwegian translation, with a Norwegian specific additional chapter, will be out soon! We need a better and less simplified economic debate in Norway and this book and the author could certainly help achieve this.
Disclaimer: I listened to this book as an audiobook in a somewhat lumpy way. Although all the above is sincere, I tend to better understand details and remember more from reading the actual book.
Disclaimer: I listened to this book as an audiobook in a somewhat lumpy way. Although all the above is sincere, I tend to better understand details and remember more from reading the actual book.
July 9, 2021
No doubt that we need a progressive policy agenda to tackle rising inequalities, populism, and weaken the connection between money and power. But Sandbu’s agenda is so expansive as to be unserviceable. He fails to persuade the reader about the urgency of acting on its proposed policy agenda.
Far from being radical it rests on a mix of well-known, already generally accepted policy measures that do not quite add up to an original vision for the economy. Moreover, Sandbu sidesteps fundamental questions about how the state, markets, and individuals should be arranged in relation to one another.
Far from being radical it rests on a mix of well-known, already generally accepted policy measures that do not quite add up to an original vision for the economy. Moreover, Sandbu sidesteps fundamental questions about how the state, markets, and individuals should be arranged in relation to one another.
August 9, 2020
The first 6 chapters of this book lays out how national economic policy is a major factor in the rise of nationalism, and anti-globalist, anti-liberal movements. It identifies failings in governmental response to economic phenomena and argues that the nationalistic biases of social groups are not inherent, but economically influenced.
The second segment of the book examines a number of policy options (some novel, some well tread in western politics), that can bridge the gap between the economically left behind and the richest in society, both in terms of actual wealth, but also in terms of social support and attention.
Finally, Sandbu describes how his suggested policies work together, and support each other. They are intended as a network of responses to the issue of the economic left behind, that should be implemented together in a radical reform. He also suggests that these policies go beyond conceptions of left and right and hold appeal for any political leaning.
Very interesting theories and evidence-based policy suggestions. I hope financial ministers worldwide give it a look.
The second segment of the book examines a number of policy options (some novel, some well tread in western politics), that can bridge the gap between the economically left behind and the richest in society, both in terms of actual wealth, but also in terms of social support and attention.
Finally, Sandbu describes how his suggested policies work together, and support each other. They are intended as a network of responses to the issue of the economic left behind, that should be implemented together in a radical reform. He also suggests that these policies go beyond conceptions of left and right and hold appeal for any political leaning.
Very interesting theories and evidence-based policy suggestions. I hope financial ministers worldwide give it a look.
August 7, 2020
The ideas and thought in this book are great. Everything is backed up with good evidence from the global economy or specific case studies of countries or history. The author lists the arguments against his suggestions, and then goes through and argues against them/ proves them wrong.
The first part, was the best, and goes through the authors central thesis; that the political landscape is created by the economy and that the “health” of the economy is based on its levels of inequality. These are currently very high, which explains why people have been left behind or abandoned and this translates into votes that give us Brexit and Trump. Policy decisions have been insufficient to keep up with the changed world of work since the 1980s.
The second part highlights the economic policy the author would suggest and why.
The third part is a kind of summary and overview of how this plan can cater to left and right. To me it was rather unnecessary to an otherwise phenomenal book.
The first part, was the best, and goes through the authors central thesis; that the political landscape is created by the economy and that the “health” of the economy is based on its levels of inequality. These are currently very high, which explains why people have been left behind or abandoned and this translates into votes that give us Brexit and Trump. Policy decisions have been insufficient to keep up with the changed world of work since the 1980s.
The second part highlights the economic policy the author would suggest and why.
The third part is a kind of summary and overview of how this plan can cater to left and right. To me it was rather unnecessary to an otherwise phenomenal book.
January 9, 2023
This is a nice book to read, especially during these times. It outlines politices that (local) governments could take in order to improve economic and social outlooks of the ‘worst-off’ populations in each country - the ones that have have been left out. Thus, policies that would help them to ‘belong’ to the economic and social characteristics of current society.
As someone that has an (economic) policy-making background, I believe that this is a good introduction to the general public. However, it is too general for more specialized audiences. Moreover, although the book claims to provide for explanation and solutions to the current economic and social problems of the world, it lacks worldly experience. The book speaks about (Western) Economics of Belonging. It fails to speak about, or even recognize, non-Western countries and their respective populations’ struggles in the current hyper-globalized economy and society.
As someone that has an (economic) policy-making background, I believe that this is a good introduction to the general public. However, it is too general for more specialized audiences. Moreover, although the book claims to provide for explanation and solutions to the current economic and social problems of the world, it lacks worldly experience. The book speaks about (Western) Economics of Belonging. It fails to speak about, or even recognize, non-Western countries and their respective populations’ struggles in the current hyper-globalized economy and society.
July 28, 2020
Great summary of the Free Lunch columns in the Financial Times, in which his enthusiasm about net wealth taxes, carbon tax and dividend and high pressure economies has been covered often enough. He groups different measures together to form a "radically centrist package".
It seems to me that for his proposals to be considered centrist, the Overton window would have to shift substantially to the left. Christian Democrats in most European countries see wealth taxes as almost communist measures (theft! double taxation!).
Also, I think that his efforts to reach left-behind communities could prove to be in vain.
But I would definitely recommend this book to anyone with left-of-centre politics to provide them with a set of viable policy suggestions and the reasoning behind them.
It seems to me that for his proposals to be considered centrist, the Overton window would have to shift substantially to the left. Christian Democrats in most European countries see wealth taxes as almost communist measures (theft! double taxation!).
Also, I think that his efforts to reach left-behind communities could prove to be in vain.
But I would definitely recommend this book to anyone with left-of-centre politics to provide them with a set of viable policy suggestions and the reasoning behind them.
August 26, 2021
The book glosses over all the economical causes and some of the solutions to Le Pen/Brexit/etcetra-style populism. Sadly enough, it doesn't go very deep into that. For example, it proposes the well-known basic income or a negative income tax, but doesn't particularly support it vigoriously like other books do. It feels like I read a summary and that I haven't learned anything new from it. So if you are already versed in the recent economical books for the general public, then you can already skip this book. However, if you want an introduction to our current socio-economical problems, then this book is decently suitable.
October 1, 2022
There are elements of the proposed policies necessary to build economies of belonging that come across as optimistic to the point of naïveté. However, the underlying premise that governments have within their power both the choice and the ability to structure their economy in a way that doesn’t create a permanent and immiserated underclass is sound and correct. A good read on what is possible and a kick in the pants to readers to advocate for radical change to bring everyone along on a journey to prosperity.
August 12, 2023
This is a book about the causal relationship between economics and populism. That is its great strength as it is a convincing hypothesis and it consequently explains a lot of modern current affairs. Technological change is the driving force and a new class struggle is evolving from this - those on the right side of of tech and those on the wrong side. The book proposes a number of policy solutions - all appealing. There is a huge challenge, however, in translating these into workable policy at scale - especially the global scale.
October 26, 2020
I really liked this book. Recommend for anyone wanting to understand more about the value of an economic policy that creates inclusive growth.
I don’t agree with all his policy proposal, but the analysis I think is sound and a very important addition to the discussions on the economy, work and tensions in modern economies.
I don’t agree with all his policy proposal, but the analysis I think is sound and a very important addition to the discussions on the economy, work and tensions in modern economies.
August 5, 2022
Aunque muchos de los datos y hechos que analizan han sido expuestos en multitud de ocasiones, ofrece una visión única y soluciones que no había leído antes. Merece la pena su lectura, sobre todo para todos aquellos interesados en el tema del aumento de la desigualdad, sus causas (basadas en datos y estadísticas y no en creencias simplistas) y soluciones realistas y factibles
May 28, 2021
Some amazing ideas and well researched history of the economics of our global society.
Want to read
June 10, 2022As heard on The New Bazaar:
http://www.bazaaraudio.com
http://www.bazaaraudio.com
March 24, 2023
Brilliant.
September 13, 2021
Let me start with the fact that I am a money guy, with a finance background and a fairly laissez faire view of how we should handle budgets and financial systems. In other words, while not perfect, I think capitalism is the best system out there. I also love analytics and game theory, and have been looking for an unemotional explanation of how our global politics got to where it is today, with Trump and Brexit and all of the other Populist movements fomenting an atmosphere of distrust and divisiveness, and how to keep it from happening again.
Sandbu's take on our current imbroglio is that it all goes back to economic insecurity, and I tend to agree with him. He blames this insecurity on the inexorable march of technology and our incorrect responses to it. Similar to how Hoover and the US government exacerbated the Great Depression by tightening the purse stings at the exact wrong time, US and European governments have been deregulating finance and removing labor bargaining power just as manual labor and manufacturing jobs need to shift to services and information technology. Instead of enabling those workers in declining industries to move into the modern world, we have ignored them (or, as in Trump's case, promised to bolster their dying industries). At least this is what Sandbu believes, and he provides compelling arguments and examples to back it up. While his conclusions on why we have these problems are fairly incontrovertible, and thus somewhat obvious, I was more interested in seeing his proposed solutions -- this is where Sandbu would need to show his mettle.
In general his ideas fall on the financially liberal end of the spectrum, but are fairly creative and well thought out. His explanations on the benefits of minimum wage increases and universal basic income (two ideas that are common in the press today) are unique and provide a new way to look at them. His idea on supporting "places not just people" is interesting and probably deserves some further discussion. I am a little disappointed in his tax ideas, mainly just that taxes should be more progressive and we need a wealth tax, whereas he barely mentions the easier solution of tax simplification as a means to disarm the tax avoidance strategies of the wealthy. However, by far the riskiest aspect to his list of solutions is that they all need to be implemented in tandem in order to be effective. Sandbu himself states that half measures won't work, and in fact could cause negative results if individual policies are implemented in lieu of the whole lot. It is exactly what I was thinking while I read it, and I am glad he addresses it at the end.
All in all this book is what I was looking for: a strong analysis of our current predicament without any political opinions or hidden agendas. Unfortunately, it mainly provides evidence that this problem is complex and has no simple solution. Without action, it will probably get worse, with repeats in the near future of more social backsliding and backbiting, but the actions required to remedy it are complicated, expensive, and go against many of our bootstrap beliefs.
Sandbu's take on our current imbroglio is that it all goes back to economic insecurity, and I tend to agree with him. He blames this insecurity on the inexorable march of technology and our incorrect responses to it. Similar to how Hoover and the US government exacerbated the Great Depression by tightening the purse stings at the exact wrong time, US and European governments have been deregulating finance and removing labor bargaining power just as manual labor and manufacturing jobs need to shift to services and information technology. Instead of enabling those workers in declining industries to move into the modern world, we have ignored them (or, as in Trump's case, promised to bolster their dying industries). At least this is what Sandbu believes, and he provides compelling arguments and examples to back it up. While his conclusions on why we have these problems are fairly incontrovertible, and thus somewhat obvious, I was more interested in seeing his proposed solutions -- this is where Sandbu would need to show his mettle.
In general his ideas fall on the financially liberal end of the spectrum, but are fairly creative and well thought out. His explanations on the benefits of minimum wage increases and universal basic income (two ideas that are common in the press today) are unique and provide a new way to look at them. His idea on supporting "places not just people" is interesting and probably deserves some further discussion. I am a little disappointed in his tax ideas, mainly just that taxes should be more progressive and we need a wealth tax, whereas he barely mentions the easier solution of tax simplification as a means to disarm the tax avoidance strategies of the wealthy. However, by far the riskiest aspect to his list of solutions is that they all need to be implemented in tandem in order to be effective. Sandbu himself states that half measures won't work, and in fact could cause negative results if individual policies are implemented in lieu of the whole lot. It is exactly what I was thinking while I read it, and I am glad he addresses it at the end.
All in all this book is what I was looking for: a strong analysis of our current predicament without any political opinions or hidden agendas. Unfortunately, it mainly provides evidence that this problem is complex and has no simple solution. Without action, it will probably get worse, with repeats in the near future of more social backsliding and backbiting, but the actions required to remedy it are complicated, expensive, and go against many of our bootstrap beliefs.
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