What I’ve been reading

1. Ronald Bailey, The End of Doom: Environmental Renewal in the Twenty-First Century.  Good arguments all around, and he covers climate change too.  My worry is a political economy one: if we can’t handle small amounts of immigration or trade competition from China without flipping out, how will we fare with forthcoming environmental problems?

2. John Gimlette, Elephant Complex: Travels in Sri Lanka.  An informative and entertaining look at an under-covered country.  (If you’d like a critical review instead, try this one, but I followed up on some of the criticisms and was not persuaded by the attempted takedown.)  This NYT article suggests (correctly) that now is the time to visit Sri Lanka.

3. Sally Denton, The Profiteers: Bechtel and the Men Who Built the World.  A good history of one epicenter of crony capitalism.  I had not known what an important role Bechtel played in the early construction of nuclear power plants.  Here is a good T.J. Stiles NYT review of the book.

4. Joanna Masel, Bypass Wall St.: A Biologist’s Guide to the Rat Race.  Darwin plus Fred Hirsch on positional goods as applied to finance and portfolios.  Unorthodox, interesting.

5. Stephen Stigler, The Seven Pillars of Statistical Wisdom.  What are the seven foundational pillars of statistics?  Beautifully written.


Peter McPhee, Liberty or Death: The French Revolution.  More of a browse so far, but I have positive impressions of this new Yale University Press book.

Jeff Gramm’s Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism is a very useful and well-researched book, focusing on shareholder rights and control issues in the earlier history of corporate America.

Cecil E. Bohanon and Michelle Albert Vachris, Pride and Profit: The Intersection of Jane Austen and Adam Smith, my blurb refers to it as a “tour de force [which] ties the worlds of economics and literature together, leaving the reader delighted and informed along the way.”


A treasure trove of books.

Peter McPhee, no relation to John I take it, is quite the expert on 18th century France. He's written a number of books and this is no doubt a synthesis of his life's work, written for a lay audience.

1# "The end of doom" has the wrong link.

I highly recommend the Bailey book. I work in environmental policy, and this has challenged some of my assumptions. He is not opposed to environmental protection per se, but examines the evidence and consequences carefully.

1. It's a miracle Bailey doesn't suffer a serious case of whiplash he has changed his position on global warming so emphatically, going from climate warming denier and darling of the carbon set to a climate doomsayer and (at one time) supporter of a carbon tax - well, he's not a doomsayer but definitely a climate warming warner. I won't complain if wisdom arrives late. In this book Bailey presents himself the optimist, not only about man's ability to deal with global warming but man's ability to cure cancer, check overpopulation, and reduce air and water pollution. Of course, his premise, that resourceful individuals if left to their own devices - and free of government intervention - will solve all of our problems. Global warming? Don't worry your little heads, the libertarians will solve the problem. It's an interesting approach: agree there's a problem, but disagree about who and how to solve it. And who can argue with the results: if individuals fail to solve the problem, it must have been government's fault.

I'll call Bailey's approach the "Lying Eyes Manifesto", as in who are you gonna believe, the climate warming deniers or your lying eyes (with which you see Miami sinking into the ocean). I expect that in the future the Lying Eyes Manifesto will be applied to all kinds of problems that are denied today, from climate warming to rising inequality (how many financial crises do we experience before the Lying Eyes Manifesto is applied to inequality). Libertarians are gonna have a lot of work to do, and a lot of problems to solve, convincing non-libertarians that government can't solve the problems but will make them worse being the primary goal of the Lying Eyes Manifesto.

Do you actually see Miami sinking into the ocean? Do you even see Miami property prices tanking based on expectations? Of lenders refusing to make 30 mortgages on Miami real estate?

From sea level rise to satellite temperature records to frequency of hurricanes and other extreme weather events, somebody has a problem with seeing the actual data, but it's not 'lukewarmers' like Bailey or Matt Ridley.

From the last section of the climate change chapter:

Despite the current pause in global warming and the real failings in climate computer model projections, the balance of scientific evidence suggests that man-made climate change could become a significant problem by the end of this century.... political progressives and environmentalists like Naomi Klein fervently promote the "climate crisis" as a pretext for radically transforming the world's economy in ways that ratify their own ideological predilections... As a response, lots of supporters of the free markets and economic growth tend to underplay the science that suggests the possibility that continued unrestrained emissions of greenhouse gases could have really undesirable effects on the planet's climate by the end of the century. Why, because they have fallen for the false dilemma posed by progressive environmentalists of supposedly having to choose between economic growth and averting the possibility of disruptive climate change. A far better strategy for challenging the radical progressive proposals is to advocate policies that further enable market-riven advances in science and technology to cut through the climate/energy conundrum... if one wants to help future generations deal with climate, the best policies are those that encourage rapid economic growth.

1. The possibility that climate change could become a problem by the end of the century--I think a lot of "lukewarmers" and I suspect a proportion of skeptics are perfectly ready to accept the claim given values of "possibility" and "could".

2. Despite his supposed "about face" on climate change, his actual policy preferences are close to those of the skeptics and lukewarmers in the book.

The "hiatus" theory is only promoted by those with very little understanding of statistics or volatile series.

1998 was an El Nino year. It was a previous high water mark in an inherenltly volatile data series. The general trends has been upward for quite some time, and 10 of the hottest years on record have come since 1998.

However, if one insists on focusing on single data points in volatile data series, 2015 is the new hottest year on record, which according to your preferred analytical method (not a good one, mind you), the hiatus is over and 2015 is incontrovertible evidence that things are warming (I prefer more nuanced/limited statements that this, but it is consistent with the analytical approach that sees 1998 as the high point and claims "hiatus").

The "save the world" mindset to AGW activism is not useful, though, in my opinion. Clearly the world will not implode entirely even if the worst forecasts come to pass. Rather, we will face very high adjustment costs (some of which to be faced by the world's most vulnerable people, and who had virtually zero contribution to creating the crisis), and taking out a moderately activist insurance policy can mitigate against these risks.

Just to be clear, the long passage in my post above is a quote from the book.

Having said that, I do see that for the skeptics, the so called hiatus comes out clearly when a graph is drawn. It's not about which year is "hottest" is kinda besides the point. It's about the rate of increase from around the turn of the century, vs the rate over the 15 years before that.

Sorry, I realized that after I wrote it. Apparently I didn't re-write thoroughly enough before actually posting to make clear that I understood that.

rayward: I'm not defending libertarians. But, on what planet do you exist? Your "denied" problems arose and worsened under big-government regimes. The world has had big and expanding government (Federal government discretionary action in everything) for the USA more than 100 years; but possibly beginning in the Civil War. For example, the 1913 Federal Reserve Act was intended to provide for an elastic currency and make extinct the boom/bust/panic business cycle. Look at the historical record and find out how well that has worked.

Here is an interesting thought I saw at Instapundit, "Analysis: True." "Because government is a force-multiplier for evil, a vote for the small government candidate is a vote for good." Bookworm Room blog.

"Government's manifest destiny, unless actively reined in, is to become tyrannical." Bookworm Room blog

As long as one recognizes that the climate change "cure" may be harsher than the disease . . .

OT. Let me see if I can name the seven pillars of post-modern statistics: delusion, distortion, exaggeration, fabrication, ideology, omission, over-aggregation.

Disparaging people for being slow to accept AGW, you must be young enough to have missed Paul Erlich, The Club of Roman and other 1970's and 80' Predictors of environmental doom. Otherwise you would probably among those slow to panic over AGW.

I take from your comments that this is recapitulated Hans Rosling, with a libertarian tilt? Whatever gets the good news out, I guess .. but 50 years of great improvement have come from many sources.

3. For a differing opinion:


So, any guesses whether Prof. Cowen read the book before or after writing the blurb?

4 - The blurb on Amazon makes me think the author has a not so sophisticated understanding of investment:

"Pundits urge you to save more money for retirement. But you can’t eat piles of saved money; unless this money is used to increase our ability to produce food, medicine and nursing, the money might as well be destroyed today and reprinted later. How is money saved today converted into something that will be useful decades from now?"

How many odd assertions can you make in a few sentences?

I think this is just an odd way to say that investing is different than "saving money," and for most of us investment is necessary.

I think the question "How is money saved today converted into something that will be useful decades from now?” is very interesting. I'd like to think that I've got a much better than average understanding of how investment works, both in terms of capital allocations in an economy and how banking/finance work to facilitate efficient allocation of capital. Sometimes I get a bit confused about bond markets, but in principle I get how central banks can influence these things.

But, the notion that cash today can influence things so far into the future ... it would be interesting to read a play-by-play portrayal with lots of statistics and illsutrative anecdotes of how this plays out in the real world. I am very far from people able to do that myself. I agree with one of the (only two) reviews at Amazon that the advice proposed in the book is actually extraordinarily risky. I personally see high and regular levels of human capital investment as a good long-term strategy.

However, a) as the reviewer points out, this is only likely to play well for certain segments of society, and moreover has its own inherent risks because you cannot always predict what will be in demand in 10-20 years time, and b) investing entirely in human capital and a small business exposes you to huge risks, largely relating to physical and/or mental health as you get older - if not combined with a good insurance policy or large traditional investments, "catastrophic" tail risk can run rather high (not really "catastrophic" because there is a moderate social safety net).

For what to do, all you need is Bogle, Common Sense on Mutual Funds.

For what this blurb is really about:

The medial prefrontal cortex exhibits money illusion/a>

Excellent experimental method. The sample size is very small (n=24), but the results are still convincing due to the method (fMRI showing clear differences depending on treatment).

Interesting that the money illusion appears in the fMRI results, but that the highly informed and prepped subjects are nevertheless virtually equally able to make the correct rational decisions regardless of high/low nominal prices which are the identical real prices. Apparently we can learn our way out of the money illusion, regardless of our initial cognitive bias.

I don't understand why they didn't include a control group who received zero prepping on rational comparisons of nomina vs. real pricing, however. That would have made for a much more interesting and policy-relevant outcome (I hypothesize).

I could imagine resistance to incorporating lessons from this widely into education, because it would make monetary policy less effective.

Judging by the Amazon reviews, the book is a bad case of Messrs Dunning & Kruger being right again

Of course home production of capital allocation is preferable to the market because the tools seem to be already there for anybody to use. It IS true that anyone CAN allocate his/her capital. What can possibly go wrong?

If I close my eyes and can't see the monsters -- they can't see me, right?

>how will we fare with forthcoming environmental problems?

Do you even read the links you post?

Forthcoming environmental problems will be smaller than existing and previous environmental problems.

I read that to mean that while the world is getting better, not universally so, and sometimes we are our worst enemies.

We saved many cancer deaths with education, but we would have saved more with a tobacco ban. Many more.

There can be rather perverse incentives from the perspective of the tax man when tobacco is taxed but health costs are private. Even worse when tobacco companies are state-owned but health costs are private.

I've you've read Bailey on climate change then you should probably read at least two books by people who know the first thing about the subject. One to eradicate the complete rubbish that he writes (assuming the tosh he puts up over at reason.com is any guide) and one to replace it with worthwhile knowledge, since by reading Bailey you're probably less well informed than if you'd read nothing. He clearly spends far too much time with people like his "good friend" Matt Ridley and the rest of the GWPF to have allowed any of the actual science to percolate into his brain. You should start with David Archer's "The climate crisis" for a decent overview of the subject by someone who knows their arse from their elbow when it comes to geophysics.

not an entertaining book, but very well written about the Lankan civil war and the aftermath


Comments for this post are closed