Author
The Invisible HeartBy Russell Roberts Moral HazardBy Kate Jennings |
The Way We Live NowBy Anthony Trollope |
One of the ideas making the rounds
in economic education circles is the notion of fusion, or incorporating
economics into other disciplines. The trick is to describe a particular
economic concept during a math class, for example, that would do
two things—it would provide a
real-world application of an otherwise abstract mathematical principle and it would
teach some economics to boot. If economics classes are getting squeezed
out of curricula by a focus on fundamentals, then put some economics
into the fundamentals.
It's relatively easy to imagine how this might work in a math class, or a history or maybe even a science class, but what about in an English or, more broadly, a literature class? There is at least one inventive economics high school teacher in the Ninth Federal Reserve District who works with the school's English teacher when he has students prepare submissions to the Minneapolis Fed's annual essay contest. Perhaps it's no coincidence that the essays coming from that school consistently rank high. That's one way to fuse economics with English.
But the idea of joining these two seemingly disparate disciplines is more than just getting students to write more clearly about economic ideas—it's about finding those ideas in literature and applying the tools to analyze them or, more directly, using literature to teach those economic principles in the first place.
And the latter is nothing new. Fiction has been used since the early 19th century to teach economics, when Harriet Martineau issued a series of volumes that aimed to describe economic principles through storytelling. Illustrations of Political Economy kicked off the series beginning in 1832 (nine volumes), followed by Poor Laws and Paupers Illustrated (four volumes) and Illustrations of Taxation (five volumes). According to one writer, the prose was as deadly as the titles imply. But at least Martineau tried.
More recently, the mystery genre has been co-opted in the great cause of economic literacy. Murder at the Margin, In the Long Run We Are All Dead: A Macroeconomics Murder Mystery, The Fatal Equilibrium and Death on Demand were written between the late 1970s and mid-1980s with the beginning economics student in mind. In between Martineau and the mysteries, it's safe to claim that all the great social and realist novelists of the 19th and early 20th centuries, from Dickens and Trollope and Eliot, to Hugo and Balzac and Zola, to Tolstoy and Dostoyevsky and Chekhov, Dreiser and Sinclair and Lewis, and many others, penned novels that serve—in their often journalistic description of a particular time and place—as the basis for a discussion of economic principles. As evidence for this and for the continued relevance of those great works, a brief discussion of a Trollope novel occurs later.
But first, there are two current novels that follow in this literary
trend—one aims to teach economics, the other has been billed as
a business novel that weaves financial ideas into its story. We will
start with Russell Roberts' novel, The Invisible Heart, which
is subtitled An Economic Romance (from MIT Press, no less). For
most people, pairing the words "economic" and "romance"
is a pretty good definition of oxymoron, but such a reaction would just
reinforce Roberts' point: Most people don't really understand economics
and they don't appreciate the role economic thought plays in society.
And he's right. Roberts, as careful Region readers know (because
he is quoted in this issue in an article about a recent economic
literacy conference, appropriately enough), is an economics professor
at Washington University in St. Louis. He is also a commentator for
National Public Radio, where his insight into issues and his ability
to tell a story are put to good use.
The hero of The Invisible Heart is Sam Gordon, a high school economics teacher at a private school in Washington, D.C., who simply cannot control the urge to wax rhapsodic about economics. The man is a walking lectern. At one point, a fellow teacher and eventual love interest, approaches Sam while he is sitting at a bench:
"May I join you?" Laura asked.
"Sure," Sam said, frantically searching his mind for a topic
of conversation other than economics or public policy. He drew a blank.
In another scene, Sam frets:
He decided it would be a good idea to chat with Laura about something other than economics. But what could it possibly be?
For many Region readers these are laugh-out-loud lines—the rest of you will have to take our word for it—and Roberts is to be commended for his sense of humor in these instances and throughout the book. Of course, Sam has to go on and on about the efficacy of government welfare vs. private charities during an otherwise romantic repast because Roberts needs to teach some economics. That's the point of the book. It's a pedagogical tool; similar, although much less ambitious, to the 1990s bestseller Sophie's World, a novelistic tour through the history of philosophy written by Jostein Gaarder, who hails from Norway and who is a former high school philosophy teacher (talk about a course that has slipped from the core curriculum).
Roberts has an open, straightforward writing style that lends itself to his task; high school and intro college students would have an easy time moving through the story, and there is a clever sub-plot that allows Roberts to elucidate important themes. But the writing can be overwrought at times and, perhaps, careless.
Down the hall, Sam was pacing back and forth, eyeing the class mischievously.
He took a dollar bill from his pocket and put it on his desk.
"Let's play a game," he said, his eyes full of mischief.
A bit too much mischievousness about the eyes, for my tastes. There are other instances of word repetition, a phone number that changes inexplicably, and such purplish prose as "lines of poetry coursing through her with the rhythm of the waves," and "he could not tear his glance away from the purity of her face as the words poured out of her." I'd watch, too, with all that going on.
But this feels like nitpicking; this is a romance, after all, so some florid prose is probably in order, and heaven knows a good editor is hard to find. So let's talk about comparative advantage here: Roberts is an economist and a teacher and, if his book and his recent talk before the National Summit on Economic Literacy are any indication, he's good at both. The book is full of clear descriptions of key economic concepts—from that old "no free lunch" war horse (first appearance is on page 23) to trade and the market value of labor, among many others. The opening classroom scene has Sam telling the class that there is no such thing as an oil shortage, and he has the economic principles to prove it.
Sam is an unabashed conservative economist who dwells in that swamp of left-leaning politics—Washington, D.C.—and this makes him a marked man. His teaching style and the philosophy he imparts (an economic way of thinking too radical for the school) get him in trouble with the school board and the administration. Sam is persecuted for his beliefs, but remains stoic throughout his trials. As he says early on: "And if you had my views, you would be lonely and embattled, but you could take solace in being right."
Way right, that is; Laura, on the other hand, is decidedly left-leaning in her world view, as are her family and friends, which makes for explosive dinner conversation. For Laura and her ilk, Sam is practically from another planet. The trouble for the Lauras of the world may be that they view economists, at least those of the Smithian stripe personified by Sam, as specialists with a narrow view who have little to offer when it comes to making complex policy. This recalls a passage from Louis Menand's recent book, The Metaphysical Club, when describing the ideas embroiling America circa 1900 and the frustration that some felt about the influence of the economics profession: Economists provided little expertise if their answer to every question was, "Let the markets decide."
Of course, markets are more complicated than that; but even so, the beauty of markets, properly understood, is that they often provide little gratification to the special interest group or the politician who wants something done now, and not at some theoretical clearing point, and who espouses certain values, not just those of efficiency, and who wants something done by someone, and not some inanimate, amorphous idea. You can't hold an idea accountable. You can't vote against the market, and you can't force it to testify before a congressional committee.
Damn the unexpected consequences, in other words, full regulation ahead! Of course, if one is so inclined to tinker with the economy, unexpected consequences are not necessarily a problem, rather they are an opportunity to fine tune and make things even better; in that regard they're not even unexpected, they're a part of the system.
As Laura might tell Sam: It is in human beings' nature to try to fix things; and Sam might say OK, that may be true, but let them fix them on their own, not by government directive; and Laura might say that the government is the people and people get the government they want; and Sam might say no they don't, they often get the government that they don't intend, and besides ... and then they kiss.
Or do they? Being an economic romance, the main plot of Roberts' book is the intellectual tete-a-tete between Sam and Laura. Is there more going on here than the mere exchange of ideas? Does love, on the margin, make economic sense to Sam? Can Laura even bear the thought of a relationship with a guy who would ask such a question? In truth, Sam doesn't ask that question, and this review won't spoil the fun and divulge the outcome of their romance; suffice to say that they're an engaging couple, despite that the main purpose of their relationship is to serve as a springboard for Sam's lectures.
True to the purpose of the book, Roberts provides a list of sources and further readings, helpfully arranged by chapter and in the order in which the ideas appear. So, for example, if the reader wants to further pursue Sam's line of reasoning regarding airbags, the environment, moving workers to Mexico, the social responsibility of business and many more topics, it's easy to flip back and find further discussion on the subject.
Contrast Roberts' annotated section with the note provided at the end of Moral Hazard, a novel by Kate Jennings; her reading list is all of one sentence long and aims to help "readers unfamiliar with finance" by recommending five books (including Roger Lowenstein's When Genius Failed, reviewed in the December 2000 Region), and offering no other explanation or description for the subjects described in the book. The difference is telling, and appropriate: Roberts is out to teach, Jennings to tell a story.
But this contrast also reveals itself in Jennings' writing: spare, stylish and, for all its sarcastic asides, surprisingly shallow in its description of the world of finance. As a novel, this may be art, but as a novel about business, it's artifice.
The novel tells the story of Cath, an "unreconstructed left-winger" well-versed in literature who must stoop to peddle her writing skills on Wall Street—as a speechwriter for capitalist plutocrats—to support her ailing husband, who is suffering from Alzheimer's. The novel's title refers to that phenomenon in the insurance industry wherein people—once they have insurance—take on more risk than they otherwise would. (When we use the term here at the Minneapolis Fed, we usually mean the risks that banks might take because the deposits they hold are insured by the government, and we eagerly await Jennings' follow-up: Too Big To Fail.) This moral hazard theme, which explicitly fits the Wall Street world wherein Cath works, seems strained when implicitly applied to her personal affairs.
But again, as we absolve Roberts of literary sins, we must forgive Jennings for not upholding the standards of economic literacy. She is out to write a novel of literary design, after all, and the contrast between the greed and ego of Wall Street and the love and despair at home is lucidly, if not expansively, described. Here is Cath, who narrates the novel, on Alzheimer's:
I learned the obvious: Without memory, we are nothing. I also learned that the disease wasn't a slow slide, a long good-bye into nothingness, but more like descending in a malfunctioning, bumpy elevator into something else approximating childhood. [...] the disease affects people differently, some pacing and cursing as if the hounds of hell were after them, others sinking into immobility and sweetness—but he would, as they all do, forget to remember. Bailey would erode like a sandstone statue, becoming formless and vague, reduced to a nub. This would take, oh, about seven years.
This is a nice bit of writing—descriptive in an evocative, not literal, way—made more powerful by the matter-of-fact last sentence that reminds us of the narrator's direct, almost acerbic, character. But this same type of evocation, when used to describe financial instruments such as derivatives, can leave the reader wanting more:
... So I ventured a last offhand question. "What do you really
think of derivatives?" Worth a try.
He quickened. "The mathematics can be awesome. You have to admire
the mathematics. And they can be an excellent risk-management tool ..."
He trailed off, obviously wondering whether he should continue. "Well
it helps to look at derivatives like atoms. Split them one way and you
have heat and energy—useful stuff. Split them another way, and
you have a bomb. You have to understand the subtleties." Understand the subtleties. God is in the details. Cracks me up.
Right. Well, it may be true that you have to understand the subtleties, but before you can do that, you have to get a better handle on those nasty details. Derivatives and other Wall Street arcana are much-discussed in this short novel, but rarely with more depth than illustrated above. Granted, we don't want a textbook definition of derivatives in this book (the publishers hope to sell more than a few, after all), but the persistent hip wisecracking from Cath makes one wonder if she really understands what she's writing about in her speeches, or if she just tries to sound like it.
One thing's for sure, Cath does not like bankers, conservatives or, for that matter, is not particularly enthused with markets of any kind. She makes The Invisible Heart's Laura look like a moderate Republican. Suffice to say that if Sam from The Invisible Heart and Cath ever crossed paths, the book that would ensue would most certainly not be a romance—but more likely a murder mystery.
Finally, Moral Hazard tries to be a commentary on the age—it begins in the winter of 1993-94: "financial services companies were shrugging off the recession induced by the excesses of the eighties and ramping up for excesses of the nineties"—but it is much too slim, in length and depth, for the job (just 175 well-aired pages). Instead, for the best commentary on the late 1990s, or for almost any boom-bust period in economic history, there is really only one novel—Anthony Trollope's The Way We Live Now, first published in 1875.
Trollope wrote this novel following a return to England from a trip to the colonies. The London to which he returned appalled him: Greed ruled the city's financial institutions and unabashed social climbing marked its inhabitants. This was an era of great speculations gone bad and big bubbles that burst. There was, Trollope writes, "a certain class of dishonesty, dishonesty magnificent in its proportions, and climbing into high places, has become at the same time so rampant and so splendid that men and women will be taught to feel that dishonesty, if it can become splendid, will cease to be abominable."
Hmmm, sounds familiar. But the novel is no rant. It's a precise delineation of a particular age and a class of people that clocks in at 767 pages, Trollope's longest and, critics contend, his best. It also has the merit of describing a railroad swindle, perhaps the best historical allusion to the current troubles in U.S. corporate governance. In addition, the board of directors described in The Way We Live Now is a perfect send-up for the "yes man" boards of today. As Frank Kermode describes the era in his Penguin introduction, it was a time when money begat money without the production of actual goods; which so excited people that they decided to forgo money and create wealth through issuing paper; which meant that promises, or words, became the hottest currency. And with promises as bargaining chips, dishonesty soon attained splendor. The con was on.
But there is no cause here to review The Way We Live Now. You don't stay in print for over 125 years and need another glowing review (although, like so many great works, the novel was not appreciated in its day). It was chided by some for its presumptuous title when first published, but it has proven prescient for many a succeeding generation, and likely will remain so.
Bottom line: Roberts for economics, Jennings for prose and Trollope for all that and a whole lot more.
