Growth in the British Economy: Treating Demographic Challenges with Indicative Planning

“Growth in the British Economy” is a book about an economy in relative decline. It is a story about a Government attempting to protect country’s share of the global economy.

This is also a program for growth reforms for Britain in early 1960-s prepared inside a think tank called Political and Economic Planning (PEP).

The authors suggest what they believe a set of issues holding back growth in Britain. These challenges are many:

  • cultural: may be the Brits do not value prosperity in a “vulgar” economic sense as much as an American or other European nations, may be growth is slow because they have other and higher priorities to pursue.
  • the regulation: one nationalized industry (railways) skews the competitive environment in the transpiration sector and lobbies for heavier taxation of the long distance tracks; declining coal demands cross subsidies from oil users etc.
  • demography: government tries to meet its social liabilities but faces of an ageing population and increasingly inadequate parameters of the pension system (pension age for women is 55, for men 60).
  • The oversized military myopically maximizes spending possibly undermining long term growth of the economy.

As is usual with such documents the diagnosis is much more elaborate than a proposed treatment.

Essentially the solution that the authors suggest is an afterthought, a small epilogue.

The solution they offer is some vague form of “indicative planning”, “enhanced industry coordination”, “guidance on the allocation of investment”. All these suggestions are heavily diluted by the disclaimers that this coordination should infringe on the market forces.

The book is part of a much broader argument for more direct involvement of the state in the market that raged through the late 50s and for most of the 60s. It ended with an ascent of Margaret Thatcher into the high office on the back of the disillusion with the gradualist labour recipes. A more aggressive privatisation and deregulation program followed.

So did the debates Did these policies promote growth and did the gradualist policies have subtracted from it? The series of real GDP per capita growth rates for 1800-1900 compiled by Angus Maddison suggests that the growth rate after the WWII has been roughly stable and has been averaging just above 2% per year.

Some quotes to take away:

Politics and growth, p.ix: “The existing political system, to which great value is attached in the West independently of its economic performance, may permit a rate of growth of, say, 4 to 5 per cent per annum, but may be destroyed if the attempt is made to achieve 8 to 10 per cent”.

The core values might not include prosperity, p.xi: “To be directly concerned with making money is still sometimes regarded as inferior to being one, preferably more, stages removed from industry or trade. […] But if the real reason why the British economy does not grow as fast as some other economies would be good to see this recognised and incorporated into the philosophy of British life.”

The labour market rigidities, p.xi: “The British worker is as persistent in his demands for higher wages as workers in any other country. But the crux is that he is not so prepared for example as the American is, to take risks, move to a new job, and fight for advancement.”

On the railroad vs. motor vehicle transportation, p.91: “Another factor which has probably increased the amount of regular heavy goods traffic sent by road is the system of motor vehicle taxation. There is evidence that, at present, it bears more lightly on the heavy road vehicles, which in fact are those which do the most damage to the road”.

On the tax system in the incentives to work, p.118: “The most striking finding of the survey was that only between 3 and 5 per cent of the male sample had sufficient knowledge of the tax system to be able to “take that factor accurately into account in deciding their working behavior”.

The disinflation, p. 191: “For at least three years while the Government pursued restrictive credit policies industrial output rose very little. What started as an attack on demand inflation continued as an attack on wage inflation into a period when several industries already had excess capacity”.

How tax system influences firm size distribution, p.214: “The tax system has given special concessions to farmers and craftsmen. Moreover, tax evasion is easier in small firms and is in fact widespread. Altogether, therefore, a small-scale operation is profitable from the tax point of view, even though it may be less efficient.”

Growth in the British Economy: Treating Demographic Challenges with Indicative Planning

Democracy for realists: Pointing at holes in academic electoral theory

Politics is daunting from a basic economics perspective (that’s where I usually stand): monetary and fiscal policy debates mostly overlook the distributive questions. Fiscal policy is usually viewed in terms of size of the deficit or the debt path stability. Allocation of spending is usually not discussed.

So I was looking for some structure for thinking about electoral cycles.

As an outsider to the field I hoped for a source which recent, tells the general story at an introductory level and is written by authors well regarded in the field.

Democracy…” seemed to tick the boxes and after reading I would suggest the text to any curious outsider like me.

The book general thesis is that the current mainstream view of how elections work is flawed. The mainstream view or as authors call it the folk theory of democracy argues for one of the two mechanism through which elections match people’s preferences with the politicians willing to deliver policy outcomes:

  • Preference aggregation, i.e. elections aggregate policy preferences of the households across issues and push the polititians to the median of the political spectrum,
  • Retrospective disciplining, i.e. voters discipline the parties and candidates by evaluating their track record.

The first argument does not survive the theoretical critique, there are issues of scaling it to voting on multiple policies at once.

The disciplining mechanism does not have the support from the data. Authors show how the voters irrationally reward and punish candidates for droughts, floods and shark attacks – events that are beyond control of the political power. They also show how that the “memory” of the average voter probably extends just about two quarters before the elections.

How do the elections function then?

Authors do not provide a general positive theory – the critique of the current consensus is their main focus.

Nevertheless, they suggest that presiding over a significant recovery may have longer term effects (irrespective of the contribution to it). Authors use the great depression to show how irrespective of ideology and policy the voters punished the incumbent and committed themselves to the opposing party for decades to come.

Otherwise voting to the authors has more to do with the sociology and “identity” of history he voter: the vote goes to the candidate which stands for “people like me” irrespective of the particularities of the policy proposals.

Assorted quotes to keep:

Economy and voting, p.97: “He concluded that economic fluctuations – most notably, election-year changes in real per capita income – ‘are important influences on congressional elections, … accounting for something like half of the variance of the congressional vote, over the period considered'”

On optimal policy when shocks are large, p.104: “Indeed, as the magnitude of random forces increases, the incumbent’s equilibrium level of effort goes top zero (since no feasible exertion of effort can increase her chances of reelection by enough to be worthwhile)”.

The dilemma, p.109: “in that case incumbent politicians face a dilemma: should they implement the policies votes want or the policies that will turn out to continue to voters’ welfare?”

The surprise, p.110: “In a detailed study of politics and policy-making in Latin America, Stokes (2001) underlined the tension between post campaign promises and ‘neoliberalism by surprise’s once the winners took office”.

The bias, p.277: “For example, the 1988 ANES survey asked the respondents whether, ‘compared to the 1980, the level of inflation in the country has gotten better, worse or stayed about the same’. There correct answer top this question was clearly ‘much better’ – they inflation rate has fallen from 13.5% in 1980 to 4.1% in 1988. Almost half (47%) of “strong” Republicans gave c the correct answer, while only 13% said inflation had gotten worse. However fewer than 8% of strong Democrats aknowledged that inflation had gotten much better on President Reagan’s watch, while more than half claimed that it had gotten worse (Bartels 2002a)”

On partisanship, p.301: Partisanship arises because a party presided over an economic recovery from a devastating depression, or because the party embodies bonds of racial or ethnic or class solidarity, or simply because we have been taught since childhood that a particular party represents ‘people like us’. Issue congruence between parties and their voters, insofar as it exists, is largely a byproduct of these other connections, most of them lacking policy content”

Democracy for realists: Pointing at holes in academic electoral theory

The Reading List for 2017

The reading plan for 2017 is to read/reread and solve every exercise (if there are any) in the following:

  1. Brealey, Myers, Allen, Principles of Corporate Finance
  2. Sinkey, Financial Management in the Commercial Bank
  3. Stock, Watson, Introduction to Econometrics
  4. Berlin, The Proper Study of Mankind
  5. Harari, Sapiens
  6. Chiang, Fundamental Methods..
  7. Romer, Macroeconomics
  8. Favero, Applied Macroeconomics
  9. Ouliaris et. al., macroeconomic modelling

Most of it I’ve read or should have read, but I’m planning to revisit this year.

The Reading List for 2017

Anton Gorsky: Russian Middle Ages

In this day and age when humanity apparently declared total war on sudoscience, however innocent or inconsequential, it is time admit that some crypto-sci-fi is on balance furthering the task of educating of mankind. It does so by creating an opportunity for knights of uncompromising scientific rigour re-emerge from their dungeons to clear general public’s confusion (once again). One illustration of this dynamic is Anton Gorsky’s “Russian Middle Ages: What do Fomenko and Nosovsky conceal?”.

Putting Anatoly Fomenko, a mathematician turned science fiction writer, into the subtitle is no more than a marketing trick as the explicit mentions of Fomenko or his ideas are absent in the main text of the book.

The fourteen essays that constitute the book are attempting to address some of the more common misconceptions mediaeval Russia. I found them enjoyable but disparate. While being written clearly it seems to come from the class of books that include “100 largest bridges” and “799 mysteries of haunted houses”. It might be more properly named “14 things everybody gets wrong about mediaeval Russia”. The familial curse of such books is that they rarely if ever have ideas or thoughts that you walk away with. But mostly are structured along the lines of “this is wrong, what is correct we probably won’t ever know because it was long ago, but here is another nice fact which is not entirely related with the initial theme”.

Having said that I found the four part essay on the relationship between proto-Russia and the Golden Horde most illuminating.

Overall this is definitely not a coherent source on medieval Russia (it does not pretend to be), nor it is a retaliation against works of Fomenko. It is probably just a a mind candy for the “let’s again discuss how wrong and misguided Fomenko followers are” type of readers.

Anton Gorsky: Russian Middle Ages

Berlin, I.: The Crooked Timber of Humanity

I’ve first hear Isaiah Berlin being cited some seven or eight year ago in the Adam Curtis’s “The Trap. We Will Force You to be Free” documentary [1]. The essay that Curtis references is The Two Concepts of Liberty. In this essay Berlin explores to concepts which he calls ‘positive’ and ‘negative’ liberty’. I remember being impressed by the Curtis’s resume and making a mental note explore further, may be read the original.

Fast forward some two-three of years. I was reading the opening pages of the Nate Silver’s The Signal and the Noise which the author opens up by citing Berlin’s essay The Hedgehog and the Fox. This is now very interesting, I though, I should probably read the original paper.

Fast forward to now. I finally got hold of the collection of Isaiah Berlin’s essays “The Crooked Timber of Humanity”… which incidentally contains neither “The Two Concepts..”, nor the “The Hedgehog..”.

The more I read and reread the essays the less I find it possible to provide any kind of summery to this incredible collection. One reason is Berlin’s dense in compressible writing style which makes it hardly possible even to extract a stand alone quote let alone provide a resume of the whole note. Instead I’ll simply keep a couple of extracts below. The book itself is immensely intellectually entertaining. I especially like the notes on Joseph de Maistre which are also available as Berlin’s lecture recordings below.

The decline of Utopian ideas in the West, p.24-25: “Let me put them [the main assumptions of the western thought] in the form of three propositions, a kind of three-legged stool on which the central tradition of western political thought seems to me to rest. […] The first proposition is this: to all genuine questions there can only be one correct answer, all the other answers being incorrect. If there is no correct answer to it, then the question cannot be a genuine one. […] The second assumption is that a method exists for the discovery of these correct answers. Whether any man knows or can, in fact, know it, is another question; but it must, at least in principle, be knowable […]. The third assumption, and perhaps the most important in this context, is that all the correct answers must, at the very least, be compatible with one another. […] At best, these truths will logically entail one another in a single, systematic, interconnected whole; at the very least, they will be consistent with one another […]”.

The decline of Utopian ideas in the West, p.36: “In due course the humiliated Germans began feebly to imitate their French models, and this, as often happens, was followed by a cultural reaction. The wounded national consciousness asserted itself, sometimes in a somewhat aggressive fashion. […] This is common enough response on the part of backward nations who are looked on with too much arrogant contempt, with too great an air of conscious superiority, bu the more advanced societies. By the beginning of the eighteenth century some among the spiritual leaders in the devout, inward looking German principalities began to counter-attack. This took the form of poring contempt on the worldly success of the French: these Frenchmen and their imitators elsewhere could boast of only so much empty show. The inner life, the life of the spirit, concerned with the relation of man to man, to himself, to God – that alone was of supreme importance; the empty, materialistic French wiseacres had no sense of true values – of what alone men lived by”

The decline of Utopian ideas in the West, p.48: “Immanuel Kant, a man very remote from irrationalism, once observed that ‘Out of the crooked timber of humanity no straight thing was ever made.’ And for that reason no perfect solution is, not merely in practice, but in principle, possible in human affairs, and any determined attempt to produce it is likely to lead to suffering, disillusionment and failure.”

European Unity and its Vicissitudes, p. 197: “Few things have played a more fatal part in the history of human thought and action than great imaginative analogies from one sphere, in which a particular principle is applicable and valid, to other provinces, where its effect may be exciting and transforming, but where its consequences may be fallacious in theory and ruinous in practice. It was so with the romantic movement and its nationalist implications.”

The bent twig, p.261: “Nationalism to many liberals and socialists in the west appears to be mere  chauvinism or imperialism, part and parcel of the ideology of that very establishment which has robbed the victims of their birthright. […] Is this not one of the best illustrations of the Marxist thesis that one of the greatest wrongs the ruling class does to its subjects is to blind them to their true interest, to infect them with its ideology, dictated by its own interests, as if they were identical with those of the oppressed?

Berlin, I.: The Crooked Timber of Humanity

Paxman, J., The English: A Portrait of the People

1480976451377-94fd5e8b-b35e-4942-b200-6c1592592412-01Paxman’s “The English..” is a collection of essays that discuss what sets apart those who call themselves ‘English’ as regards their values, heritage, aspirations. The comparison is mostly done against other peoples of the UK and the West.

The author attempt at identification of these differences is done in three ways:

  • by trying to see the English from the foreigners’ eyes, i.e. by citing the reports and diaries of the notables who visited England, including Dostoevsky;
  • by looking at the English stereotypes of the foreigners to understand what the image of the Other tells about the English themselves;
  • by understanding what is the perception of the ideal England by the English themselves is, which terms to be a ‘pseudo-cottagey’ misty hill utopia.

The discussion is seemingly intentionally inconclusive, and the goal seems to be discussion itself, rather than actually trying to find ‘the answer’. The style of the text matches its (lack of any particular) goal: the narrative advances by historical anecdote and the odd statistic, and when you’ve heard a couple of dozen of the the book simply ends.

Some of the reviewers of the book cited Paxman’s lack of focus and less (significantly less) than scientific approach as the weak points of the book. But then again this is basically the question of expectations: the author is neither a historian, nor a sociologist, and he does not pretend to be.

He some times makes statements such below, producing a whole new general theory of  democracy and city growth in two sentences:

On isolation and freedom, p. 34: “Freedom from the fear of sudden invasion also promoted individual freedoms: more vulnerable countries justified strong, top-down systems of government which could summon an army at day’s notice. The fact of being an island even dictated the shape of English cities: when there was a natural defense in the sea, there was no need for towns to be contained within walls; the consequence was that they grew higgledy-pigggledy”.

And it can be argued that this statement has little basis except for the authors opinion. But the book is explicitly not serious and for entertainment purposes only. Having this in mind, I would say that this is a quite enjoyable light reading.

Some assorted quotes:

On the selectivity of the historical memory, p. 64: The image engraved on the hearts of patriots was that of General Gordon making his last steps of a fort in Khartoum, as heathen savages overwhelmed the gallant British garrison. In fact, what made Britain rule the worlds was better displayed at the battle of Omdurman twelve years later. […] what determined the outcome was the fact that the British happened to have six Maxim guns. As the Dervish forces rushed the lines, the gunners had only to get the range. The casualty figures tell it all: 28 British dead for 11,000 Dervish. “It was not a battle but execution,” wrote an eyewitness.

On peacetime heroism, p.79: “The magazine [This England] has its own ‘Silver Cross of St George’, awarded to heroes nominated by readers, like the retailer who defies regulations by continuing to sell paraffin by the gallon, instead of in liters.”

On the strictness of the religious dogma, p.95: “I once asked the Bishop of Oxford what do you needed to believe to be a member of his Church [of England]. A look of slight bafflement crossed his face. ‘An intriguing question’, he answered, as if it had not occurred to him before. […] When the bishop went on, he opened with an inevitable English preface, ‘Well it rather depends’.

On the latter theme there’s a quite characteristic episode of ‘Yes, Minister’.

Paxman, J., The English: A Portrait of the People

B. Oakley, A Mind for Numbers: How to Excel at Math and Science

img_20161204_080424-01B. Oakley’s  “A Mind for Numbers” [ru, en] is one of those books which make you feel embarassed to admit purchasing and worse still reading them. I’m coming clean now admitting that I’ve done both.

One extenuating circumstance would be that I’ve been again in a rush an in need of an airplane companion. Another is that I saw Oakley’s class at the Coursera  and thought that a book might be its useful substitute.

I won’t write much because there isn’t much to write about.

Book’s content is neither related to math, nor sciencce despite the title.

It is another one of the hoards of self help books. Its message is also simple and does not require the 200+ pages the author devotes to it (spoilers): if you want to learn something than a) do your homework, b) exercise consistently as you are not going to acquire persistent k owledge in a learning blitz, c) may be use a pomodoro technique.

The bottom line is that the book is worth neither time, nor money it costs.

B. Oakley, A Mind for Numbers: How to Excel at Math and Science

Pizano, D.: Conversations with Great Economists

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Overexcited Colombian and the 20th century Greats talk past each other.

So the other day I was preparing for a short flight and sadly this is the time when your choice of book companion is influenced by its size. On this front the tiny tome of “Conversations…” has a certain competitive edge.

The genre of “economist interviews another economist” is well established and I’ve encountered few cabinets lacking “Inside the Economist’s Mind“.  So I looked forward for hopefully more of the same: light talk on the issues of the day with occasional comment on the ongoing theoretical debates.

What I found out that this book is something quite different.

On the surface of it, the book indeed contains interviews with seven top 20th century economists. However, the style of these interviews is peculiar. The root cause of this peculiarity is the author.

Diego Pizano as he introduces himself is a son of the co-founder of the Universidad de los Andes Fransisco Pizano while in the interviews he mentions that he works on “the possibility of making the dynamic input-output tables for Colombia”. However, as it soon transpires his true passion is different.

His main goal is to make it as clear as possible that he “believes that one ought to distinguish between ideological and epistemological propositions”. The interviews more or less are centered on this statement to which his interviewees typically respond as did Leonid Kantorovich: “I cannot get into detailed analysis of all the ideas you have presented and thus I prefer to state my own position”.

The author also makes quite a few statements like this: “I do not know if Keynes followed the debates connected with the differences that can be established between Die Natur und Kultur oder Geistwissenschaften. But it is paradoxical that he ended up closer to Shakespeare, Nietzsche and Kierkegaard than to Descartes and Mill” to which he gets a reserved reply such as Joan Robinson’s “The line of research you have presented is interesting and I am of the opinion it could be fruitful and illuminating to continue to analyze those aspects of Keynes’s work”.

My impression is that most of the notable comments in the book are made despite the efforts of the author, not because of the them.

Overall, would not recommend this book, it will only suit the most devoted followers of any of the seven Greats who would like to tolerate author’s interviewing techniques.

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Pizano, D.: Conversations with Great Economists

A.J.P. Taylor: The Course of German History

It is actually disturbing how little German history I knew before taking up AJP Taylor’s “Course..”.  I hope this might be a fairly common ‘home bias’ in historical awareness, i.e. tending to know history of other countries in as much as it does overlap with the history of your own in some generally tragic manner.

Before opening the book it is worth spending just a bit of time looking up the author, an ‘An Unusual Kind of Star‘ of the British TV and the ‘only really anti-German British historian‘. It would help the reader to prepare for a sharp take off in the first chapters.

The book itself is a very opinionated narrative of the German history covering the period from early XIX to mid XX.  There are certain interesting details about European economic history, for example the Zollverein customs union, but what I liked most were the following two more general ideas:

  • Ambitious foreign policy tends to come at price of less liberal policies at home (p.185): “[…] it served only to underline the contradiction of German wishes: the great majority of Germans wanted a Germany overwhelmingly strong, asserting by means of this strength her claim to ‘a place in the sun’, and basing her security on Power, not agreement with her neighbors; at the same time they wanted a constitutional system inside Germany and resented the arrogance and predominance of the military caste. few Germans felt the absurdity of desiring to dominate all Europe and yet to escape domination themselves […].”
  • Stable distribution of rights and political powers tends to be a result of the reluctant compromise, it cannot be bestowed from above or imported: (p.146): “If social security had been won by political struggle, it would have strengthened the confidence of the working-class movement to make political claims; as it was, the workers seemed to have received social security as the price of political subservience, and the drew the moral that grater subservience would earn a year greater reward”.

Some more quotes:

On German liberals in 1792-1814 (p.25): The German liberals had no agrarian program and no sympathy with the property-less masses, whom they despised as obscurantist and reactionary; nor had they any feeling that liberal institutions needed to be fought for and defended – they expected them to be bestowed from above.

On 1848 revolution (p.36): In other countries the revolution gave the people universal suffrage; in Prussia it gave them universal military service.

…and some more on 1848 (p.69): German history reached its turning-point and failed to turn. This was the faithful essence of 1848.

…and yet more (p.71): The revolution of March 13th in Vienna and the revolution of March 18th in Berlin, which together cleared the way for the German revolution, were both glorified unemployed riots.

On the decline of parliament (p.120): The abdication of the Prussian liberals and the defeat of parliamentary government had a profound social result. Parliament did not control the state; therefore it could never be for the individual the path to power. Henceforth only man of the second rank went from the middle classes into politics. The intellectual ability of the politicians steadily, relentlessly, declined; all that survived was the gift of sterile negative criticism. Political parties became inevitably interest groups, solely concerned to win concessions from the state, but never supposing that they might have to accept responsibility. The really able and ambitious members of the middle class shunned politics and turned exclusively to industry and finance.

On creative destruction (p.139): The financial crash of 1873 was a normal event of the age of capitalism […]. In England when the speculative bubble burst, those who had blown it took the consequences […]. But the German industrialists had not the long tradition of self-help which made British capitalists fend for themselves until long into the twentieth century. Besides, they had made an implicit bargain with Bismarck: they had renounced political power in return for economic wealth, and now they expected Bismarck to keep his bargain.

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A.J.P. Taylor: The Course of German History

C.Clark: Sleepwalkers. How Europe went to war in 1914

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I have reservations about an extent to which studying history is ‘useful’ from the applied perspective. Historical method, in my view, has limited potential to identify more or less general and reliable regularities in the social mechanics from the economic policy point of view.

Thus the criteria on which books, such as Clark’s Sleepwalkers, should be judged are literary and entertainment value. Anyway judging it more rigorously is well beyond my expertise.  Instead of providing a review of the book (which was done by many more qualified individuals) I’ll just share three ideas that I pondered when reading the book:

  • Civil/military divide within the government. Clark provides an overview of the military-civil conflicts within the governments of the Entente and the Triple Alliance. The story is the same across Austro-Hungarian Empire, Russia, France and UK: the defense minister is lobbying for higher tax revenue to be allocated for modernization of the military while the finance minister more or less vigorously opposes military spending build up. The conflict lost none of its topicality in one hundred years it seems. There’re some interesting details on the Russian situation with the clash between the P.Stolypin successor PM&Finance Minister Kokovtsov and Defense Minister Sukhomlinov. Clark quotes Nicolas II telling Kokovtsov (p.218): “In your conflicts with Sukhomlinov you are always right. But I want you to understand my attitude: I have been supporting Sukhomlinov not because I have no confidence in  you, but because I cannot refuse to agree to military appropriations”.
  • Monarchy. The idea itself is quite original: let’s employ the same techniques that we use to improve domesticated animals to selection of country leaders. Why would anyone accept it as normal? The power of status quo, I suppose. However, what Clark argues is that at the operational level the monarchs’ discretion has been materially limited by late XIX century. As far as I understood, the web of blood relationships between the monarchs of Europe served as an alternative less formal diplomatic communication channel, however the messages that have  been transmitted were formulated or at least heavily influenced by professional bureaucracy. The same goes for internal affairs. The telling quote is on p.184: “Nicholas II could favor this or that faction or minister and thereby undermine the cohesion of the government, but was unable to set the agenda, especially after the fiasco of the Russo-Japanese War”.
  • Ideological homophily. What the book illustrates is how persistent are personal opinions. For the likes of Franz Conrad von Hötzendorf no amount of evidence could challenge the necessity of aggressive action against Serbia. What’s worse is the ability of such individuals to strategically influence the composition of their own ministries and the government in favor of others who share their vision or avoid challenging it. The result seems to narrow the ‘field of vision’ and the set of alternative courses of action.

Overall the book is highly recommended reading. Probably the last time I’ve enjoyed the book so completely was ‘Farewell to Russia’ by A.Levandovsky (thanks to VG for this).

Otherwise, just a handful of quotes:

  • On international finance, p.30: ” […] fragile debtors like Serbia […] could secure loans on reasonable terms only if they agreed to concession of fiscal control that amounted to the partial hypothecation of sovereign state functions. For this reason among others, international loans were a political issue of the highest importance, inextricably wound up with diplomacy and power politics.”
  • On investor relations, p.231: “Early in 1905, the Russian were distribution GDP8ooo a month to Parisian press, in the hope of stimulating public support for a massive French loan. “
  • On fiscal priorities, p.32: “In 1905, pressed to ratify a new revenue source, the peasant dominated assembly of Skupstina chose to tax school books rather than home distillation. The result was a strikingly low rate of literacy, ranging from 27% in the northern districts of the kingdom to only 12% in the south-east”
  • On the choice of the assassination target, p.49: “[…] the archduke was not targeted on account of any alleged hostility to the Slavic minorities in the Austro-Hangarian Empire, but, on the contrary, because, to borrow the words of his assassin, Gavrilo Pricip, ‘as future Sovereign he would have prevented our union by carrying through certain reforms’. […] The targeting of the archduke thus exemplified one abiding strand in the logic of terrorist movements, namely that reformers and moderates are more to be feared than outright enemies and hardliners.”
  • On the use of press by officials, p.195: “From behind the scenes key officials lime maniacally Germanophobe Maurice Herbett […] used his extensive newspaper contacts to sabotage negotiations by leaking potentially controversial conciliatory proposals to the French press before the had been seen by the Germans. […]”

Short resume of the book  by the author:

C.Clark: Sleepwalkers. How Europe went to war in 1914