When you pick up this book by Tim Harford, the first thing that strikes you is the comment by Malcom Gladwell on the cover, saying every Harford book is ‘cause for celebration’. With the reviewer here also being a fan of the author, there would be another endorsement. Harford became famous with his book The Undercover Economist, which explained everyday occurrences in economic terms. His brand of economics is real, where he explains human behaviour in the context of micro-economic theory. He doesn’t use the label of being a ‘psycho or behavioural economist’ or any other fancy term, but explains in simple words why the coffee shop that you visit when you leave a station charges more than the one across the road. In Fifty Things That Made the Modern Economy, he takes a detour and chooses 50 things that he considers as inventions that were quite singular and made a significant impact on humanity. You could have your own choices, but can’t dispute his list.
What he does here is that he gives a little background to the invention in question and provides some trivia on the ‘thing’ and then goes on to explain its usefulness. Interestingly, he states that when you pick up a book, there are several inventions involved—each very unique in itself—which, when combined end-to-end, give a wondrous insight. There is paper to begin with, followed by printing, publishing and, finally, the concept of copyright—which are all special ‘things’. Each of these 50 ‘things’ is explained in four-five pages, which makes the book eminently readable.
There are seven sections under different headings, with around seven ‘things’ included under each heading. The first one is called ‘winners and losers’, a section that will catch your eye instantaneously. Among the seven on the list is ‘Googlesearch’. Now normally, one would talk of physical things, but we all know that this search engine is quite amazing and has transformed the way in which information is sought. He includes passports also in this list, which is again quite different, as it addresses issues of how people are identified across countries.
The second group is called ‘reinventing’ how we live and includes infant formula and the pill, besides interesting things like video games and market research that have added new dimensions to the way in which we plan, as well as do business. The same holds for the department store, where Selfridges was motivated to have a physical structure that has now caught on across the world. In fact, the store brought in the largest glass window to create a unique shopping experience, something that is today replicated in all shopping malls.
The third on ‘new systems’ has ‘things’ like dynamo, shipping container, cold chain, bookcase, elevator and, interestingly, the bar code and tradable debt. The bar code simplifies billing and also identifies products for the same. Tradable debt is a remarkable innovation in finance that has led to large-scale use of negotiable instruments and credit multiplication. The commonplace elevator is a physical thing that finds mention in the book and is pertinent, as it has actually made possible the construction of high-rise buildings, which would otherwise be inaccessible.
The book gets more innovative when he talks of ‘ideas about ideas’. Here, he includes things like double-entry book keeping that revolutionised the way we maintain accounts and how they can now be made uniform across companies and countries, which would not have been possible in the past. The same holds for limited-liability companies, which is a unique idea on how one does not have to own the business to run it and risk can be shared among a multitude of owners. Intellectual property is another amazing development that provides protection to those who invest in thinking and have the idea fructify. We all know that in the absence of such protection, there would be less incentive to come up with new things. The author also has space for management consultants who dominate the consultancy space, even though they often tell you what you want them to say, as it becomes easier to sell the idea to stakeholders. The example of McKinsey is described in some detail here.
Harford then gets into the ‘physical innovations’ space under the title ‘where do inventions come from?’ The iPhone, diesel engine, clocks, radar, batteries, etc, all find place here. These innovations are fairly straightforward and identifiable. Harford moves on to what he calls the ‘visible hand’ and gets in tax havens, bank and property registers, among others. This is interesting, as he traces the origins of banking and later takes us through
M-PESA, the revolutionary mobile-based banking system used in Afghanistan and Kenya. Similarly, the idea of property registers, which looks very obvious, was a major innovation. Even today in India, we lament property disputes due to absence of land records, which also comes in the way of any kind of land reforms. This can be avoided by having these registers in place. Similarly, different tax rates have given rise to the innovative tax havens concept, where people use all kinds of fronts to avoid tax, which is perfectly legal.
His last section is on inventing the wheel, where he includes things like paper, index funds, paper money, concrete and insurance. The Lloyds register is well-known, but the impact of concrete on health has some interesting trivia. Pouring concrete into houses in Mexico allowed homes to have cleaner floors and reduced the incidence of pests and insects, as homes could now be cleaned, which helped to better the health of children, in particular. The S-bend is another interesting innovation for the disposal of sewage and Harford talks about how this came about in England.
Reading along, one can’t possibly not find this book engaging, as it’s simple to read and easy to identify the ‘thing’. At times, the reader may feel like talking to the author just to ask why something was not put in. It is this kind of mental conversation that the reader would have with the author as she reads along.
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