Category: Books
Fischer Black’s classic 1986 essay “Noise”
Here is the pdf link, every now and then I feel I should put up an “oldie but goodie.” This is one of the essays that has influenced my thought the most, noting that Fischer had his own language and could be quite opaque. Here is the abstract of his 17 pp. essay:
The effects of noise on the world, and on our views of the world, are profound. Noise in the sense of a large number of small events is often a causal factor much more powerful than a small number of large events can be. Noise makes trading in financial markets possible, and thus allows us to observe prices for financial assets. Noise causes markets to be somewhat inefficient, but often prevents us from taking advantage of inefficiencies. Noise in the form of uncertainty about future tastes and technology by sector causes business cycles, and makes them highly resistant to improvement through government intervention. Noise in the form of expectations that need not follow rational rules causes inflation to be what it is, at least in the absence of a gold standard or fixed exchange rates. Noise in the form of uncertainty about what relative prices would be with other exchange rates makes us think incorrectly that changes in exchange rates or inflation rates cause changes in trade or investment flows or economic activity. Most generally, noise makes it very difficult to test either practical or academic theories about the way that financial or economic markets work. We are forced to act largely in the dark.
Both of Black’s books are worth studying, as well as the Perry Mehrling biography of Black.
*Incontinence of the Void*
That is the new, forthcoming Žižek book, here is one brief excerpt:
Peter Sloterdijk endorses Badiou’s thesis, from his Le siecle, that the defining feature of the twentieth century was “the passion for the real,” the gravitational pull toward the real basis of our lives (economic base, libido, will, etc.). What we witness is the reversal of the traditional relation between public theology and occult materialism preached in elite circles — today, materialism is public while gnostic theology grows in the underground…Passion for the Real is not just a realist-cynical stance of reducing ideological chimeras to their “actual base” (“it’s all really about the economy, power, sex”), it is also sustained by a messianic logic of extermination: the cobweb of (religious, moral, etc.) illusions has to be ruthlessly erased, and it has to be done now. The twentieth century was a time of extremis, of passage a’ l’acte, not of hope for some future. Sloterdijk, of course, for this very reason sees the twentieth century as the age of extremism and ethical catastrophes, from Nazism to Stalinism.
I have several other of his books in my pile to read; this latest one focuses much of its energy on Lacan and also the Slovenian theorist Alenka Zupančič. It turns out Žižek also is a big fan of Liu Cixin and The Three-Body Problem.
Young Americans are also less spiritual
Another common narrative about trends in American religious belief says that spirituality has replaced religion. …That might have been true at one time, but no longer. iGen’ers are actually less spiritual as well as being less religious. iGen’ers and late Millennials ages 18 to 24 are the least likely of all age/generation groups to say they are a “spiritual person,” showing a pronounced break even with older Millennials in their late twenties and early thirties…
Of course, these differences could be due to age instead of generation; perhaps younger people have always been less spiritual. However, slightly fewer 18- to 24-year-olds in 2014-2016 (48%) described themselves as a moderately or very spiritual person than in 2006-2008 (56%).
That is from the new and excellent Jean M. Twenge, iGen: Why Today’s Super-Connected Kids are Growing Up Less Rebellious, More Tolerant, Less Happy — and Completely Unprepared for Adulthood.
What I’ve been reading
1. George W. Bush, Portraits of Courage: A Commander in Chief’s Tribute to America’s Warriors. Not only are the paintings good, but this book is the perfect antidote to too much time spent on Twitter, especially if you read the text about all the injuries sustained.
2. Dennis C. Rasmussen, The Infidel and the Professor: David Hume, Adam Smith, and the Friendship That Shaped Modern Thought. A beautifully written book, with wonderful balance, about a beautiful friendship. Recommended.
3. Richard White, The Republic for Which It Stands: The United States During Reconstruction and the Gilded Age, 1865-1896. This will make the year’s “best of” list for sure. I’m not usually a fan of reading a 900 pp. plus survey book to cover a period of more than three decades. Usually too much stays superficial, and the author does not apply consistent quality standards to the whole work, if any of it. But this book is interesting and informative on virtually every page, and it is unfortunately all too relevant for the current day. Here is a good Kyle Sammin review.
Two books I have only browsed, but both look good:
Lizzie Collingham, The Hungry Empire: How Britain’s Quest for Food Shaped the Modern World, with a slightly different title for the U.S. edition, and
Brian Fagan, Fishing: How the Sea Fed Civilization.
There is also:
Thomas S. Mullaney, The Chinese Typewriter: A History, is a thorough and informative treatment of what its title suggests. Here is a WSJ review.
John L. Campbell and John A. Hall, The Paradox of Vulnerability: States, Nationalism & the Financial Crisis, considers the state capacities of Denmark, Ireland, and Switzerland in responding to the financial crisis. I liked what was there, though wanted more.
Barry Riley, The Political History of American Food Aid: An Uneasy Benevolence, I have only perused bits, but it seems to be the book to read or own on this topic.
Why you should read more about religion
So many religious facts have a very long half-life for their relevance. Say you learn about how the four Gospels differ — that’s still relevant for understanding Christian divisions or Christian theology today. Reading about the Reformation? The chance of that still being relevant is much higher than if you were reading about purely secular divisions in internal German or Swiss politics in those same centuries.
Jews, Buddhists, Hindus, Sikhs, or Muslims? Facts from many centuries ago still might matter. And the odds are that people a few centuries from now still ought to read about the origins of Mormonism.
In few other areas do past facts stand such a high chance of remaining relevant for so long.
As an empirical matter, “rationalists” tend not to read so much about religion, but that is precisely the unreasonable thing to do.
If you’d like to see a potential counter, here is some poll evidence that many people don’t care so much about the divisions of the Reformation any more. It still matters a great deal whether you are in Catholic, Protestant, Orthodox, or “mixed” Europe.
I am indebted to a conversation with Bryan Caplan for the main point, though he is not liable for my formulation.
Intangible investment and monopoly profits
I’ve been reading the forthcoming Capitalism Without Capital: The Rise of the Intangible Economy, by Jonathan Haskel and Stian Westlake, which is one of this year’s most important and stimulating economic reads (I can’t say it is Freakonomics-style fun, but it is well-written relative to the nature of its subject matter.)
The book offers many valuable theoretical points and also observations about data. And note that intangible capital used to be below 30 percent of the S&P 500 in the 70s, now it is about 84 percent. That’s a big increase, and yet the topic just isn’t discussed that much (I cover it a bit in The Complacent Class, as a possible source of increase in business risk-aversion).
Here is one option Haskel and Westlake lay out, though I am not sure to what extent they are endorsing it, as opposed to merely presenting it:
1. More intangible capital means greater spillovers across firms. Consider Apple inventing the iPhone, and many other companies free-riding upon the original R&D. Of course Apple itself was free-riding upon earlier attempts to build smartphones and tablets.
2. In essence, free-riding companies receive more intangible assets, a kind of free lunch on the side of what otherwise would be expenditures on fixed costs. But receiving these intangible benefits itself requires a kind of scale, so they are not available to each and every potential entrant.
3. Corporate profits go up for some of the winners, but monopoly has not risen in the traditional sense. In fact, more companies are competing for the smart phone market.
4. Eventually those profits will fall, as for instance iPhone imitators will force Apple to lower prices for its devices. But that long-run can be quite far away, and as you probably know after ten years iPhone prices have pretty much held firm.
5. Now how big a productivity gain comes from those cross-firm externalities? It might depend on how many other firms are sufficiently well-scaled to receive the intangible external benefits from the first-mover innovators (this part of the argument in particular I am not sure I find in the book).
6. The so-called “superstar” firms are those that scale up to capture intangible externalities from many other sources, not just one or two. That includes Google and Facebook, but most firms don’t have the talent or cash pile to make that leap. Therefore these gains remain concentrated, income inequality goes up, both in general, and across business firms, as indeed we observe in the data. Since entry into “holding a position to capture a broad swathe of intangible externalities” to tough to accomplish, this state of affairs can persist for some while. Yet, still, in no particular market are mark-ups over marginal cost worse, nor are monopoly problems worse from the point of view of consumers. Profits of the superstar firms are much higher. Arguably that is a pretty decent description of the American economy today.
7. You can think of these conditions, collectively, as arranging a big transfer to some leading businesses, yet without distorting too many other margins.
Now, I’ve put that all into my language and framing, rather than theirs. In any case, I suspect that many of the recent puzzles about mark-ups and monopoly power are in some way tied to the nature of intangible capital, and the rising value of intangible capital.
The one-sentence summary of my takeaway might be: Cross-business technology externalities help explain the mark-up, market power, and profitability puzzles.
You should all pre-order and then read this book, due out in late November. I thank PUP for the review copy.
Where should you fear private internet censorship the most?
Alex already has covered this topic. I am less worried than he is, and I’ll go through a list, but first here are a few general remarks.
Most of the ban attempts seem directed at versions of alt right ideas. Whether you like it or not, those ideas have benefited from the internet perhaps more than any other. I am seeing a small amount of that gain clawed back, but in a manner consistent with principles of liberty and free association and probably Coasean efficiency as well. The claim “the tech companies are way more open than the previous mainstream gatekeepers, but they have to spend more customer and employee goodwill to be all the more open yet” has some resonance with me, but I can’t say it is in the top 300 list of demands I wish to place on the world. It might not be in the top 1000.
It remains the case that the most significant voluntary censorship issues occur every day in mainstream non-internet society, including what gets on TV, which books are promoted by major publishers, who can rent out the best physical venues, and what gets taught at Harvard or for that matter in high school. In all of these areas, universal intellectual service was never a relevant ideal to begin with, and so it seems odd to me to pick on say Facebook. It’s still not nearly as important an influence as the above-mentioned parts of non-internet society, nor is it anywhere close to being as discriminatory.
That all said, I am happy when I see people complain about voluntary censorship, even when I disagree with the complaints, or think the complainer is being too pessimistic. Complaining > complacency. That said, here is my wee dose of complacency, in the form of a list across various parts of the internet:
1. On-line dating services. No fears here. Christian, Jewish, and other dating services are already set up to include some groups and exclude others. If OK Cupid excludes neo-Nazis, or supposed neo-Nazis, this seems entirely in order.
2. Amazon. You can order Mein Kampf on Amazon, and few seem to complain about that. Does it make sense to have a world where Hitler is available but Milo is banned? Well, a lot doesn’t make sense these days, but still I don’t ever expect that to happen. There are cultural and also business reasons why universal booksellers will be among the last to embrace voluntary censorship.
Can you order a swastika, of the evil kind, on Amazon? It seems not. Presumably that has been the case for a while, it doesn’t bug me, and I wouldn’t mind if Amazon selectively stopped carrying other political symbols as well. I bet Wal-Mart doesn’t carry them either.
3. Facebook. Here my worry quotient at least potentially rises, if only because Americans spend so much time on Facebook. Let’s say Facebook bans some neo-Nazi groups and communications, and then goes too far and keeps off some groups that offer valuable intellectual contributions, even if their quality might be too “high variance.”
Yet here’s the thing: given my mixed feelings toward Facebook, I see this as OK either way. If Facebook gets better, well, how bad can “better” be? But say the Facebook censors overreact, some groups are booted off, and Facebook gets worse. I don’t mind if Facebook gets worse! People will spend more time doing other things. And the unjustly banned group still have plenty of other outlets on the web. We know from history that every medium encourages some kinds of ideas and discourages others (TV for instance seems to let people think crime rates are pretty high, because crimes get covered on the evening news). Not long ago, there was no Facebook and those unjustly banned groups couldn’t get on the evening news either. Maybe that was bad, but it was hardly the end of the world, and even with an overly aggressive Facebook censor we are still far closer to a kind of neutrality across ideas than was the case twenty years ago.
4. Google. In China I found it very easy to switch to Bing, because Bing is a second or so quicker in China (that is using Google through VPN, otherwise you can’t). Now maybe Bing bans the same web sites. And maybe the lower-tier search engines are too crummy, or people are simply not used to using them.
On this issue I have modest fears. Still, what I’ve seen so far is a Google (and Bing) that want to be as universal as possible, and the constraints as coming from the regulators, such as the EU “forgetting” policy. Google covers so much material, I think of them as not wanting to devote many resources to adjudicating content. At the very least, they still seem quite willing to take me to Amazon selling Mein Kampf.
I do expect news.google.com to become more mainstream over time, and indeed it already has. They are more careful about what pops up on the page. This too doesn’t bug me, it probably improves average quality, and furthermore it is still a more open forum than is the news on television.
Here you can read a long list of complaints against Google and affiliated services. Given how much data the company handles, and how many cases arise, I’m amazed they’ve done so well. Salil Mehta was just restored, by the way.
5. Twitter. For many people it might be an advantage to be banned from Twitter. Still, for some views Twitter is an important means of connecting with the audience, Donald Trump being the most prominent example. So I have a bit of a worry, but I don’t see Twitter as that powerful in the world of ideas. And overall I have a pretty fluid view of what is likely to matter. I do not think it is impossible or even implausible that some really important ideas, twenty years from now, are circulated using fanzines, or perhaps something like the old usenet groups. More generally, our ability as outsiders to judge the health and quality of an intellectual ecosystem just isn’t that great, so maybe we shouldn’t be so judgmental at each step along the way?
6. YouTube (owned by Google). Due to copyright law, YouTube is already in the business of making plenty of judgments about content and it has the infrastructure to do so. And unlike Google the search engine, content is posted directly on YouTube itself. YouTube is a hosting service, not just a search engine, though it is that too. YouTube search and recommendation algorithms drive a lot of views. If YouTube won’t host your videos, that is a problem.
But I am not very worried about “YouTube as we know it.” The forum seems to work quite well (no need to mention Jordan Peterson in the comments, his account was restored). I am happy that gangs can’t post videos of their killings, and the biggest problem remains government censorship of YouTube. If you google “banned from YouTube,” I do not see a long list of outrages, that said I would not have banned the Prager University videos. Whether you like it or not, it is easy to watch Milo on YouTube, even though the publishing world dropped his book like a stone. The tech companies still seem so much more open than the older media gatekeepers.
Cloudflare, and other internet choke point services: I worry about them a lot. They can in essence kick you off the entire internet through a single human decision not to offer the right services. I focus almost all of my worry on them, noting that so far all they have done is kick off one Nazi group. Still, I think we should reexamine the overall architecture of the internet with this kind of censorship power in mind as a potential problem. And note this: the main problem with those choke points probably has more to do with national security and the ease of wrecking social coordination, not censorship. Still, this whole issue should receive much more attention and I certainly would consider serious changes to the status quo.
A bit more
I hope the tech companies do not go further with voluntary censorship, but I don’t think it is obvious that they will. It seems they felt the need to do something, and now they are hoping the storm will pass. I do favor vigilance against further overreach, but let’s not overrate the importance of what are so far largely symbolic disputes.
By the way, what’s the deal with the Left favoring net neutrality but wanting all this voluntary internet censorship?
*Love, Africa*
The author is Jeffrey Gettleman, the subtitle is A Memoir of Romance, War, and Survival, and this travel romance of East Africa has taken a beating on Twitter and elsewhere, for its apparently “neo-colonial” approach. I bought the book, wondering if I might find a contrarian take to offer. I’ve only browsed it, but here was one random passage I ran across, noting the scene will culminate in the two making out (and perhaps intercourse?):
As my eye traveled across the faces, I kept coming back to the same one. It belonged to a girl with high cheekbones, wide-set eyes, heavy eyelids and dark hair; her features looked Eurasian, maybe even Eskimo. She was wearing a red dress that showed off her back; she was lithe and freckly. As she danced, the blacks of her eyes shone. There was something in them that I had seen before. She seemed deeply, freely happy, like those kids on Lake Malawi. I could tell she really dug dancing.
Now, I am not here to offer him a deserved bad writing award, nor to shame him, but still I consider this data and I am puzzling over what this data means. In a mere minute of browsing, I found several similar passages, and with a few more minutes they seemed to multiply endlessly. Nor was it easy to stumble across pages with lots of information about Africa on them. And yet he is a Pulitzer winner and a foreign correspondent for The New York Times, East Africa Bureau Chief for a decade.
But exactly which views do I need to revise? The NYT writers and journalists I have met are uniformly impressive. It is not easy to win a Pulitzer Prize.
Here is a review from Laura Seay, she is harsh but it seems to me probably fair. Is Derek Parfit right about the self after all? At the very least, my opinion of the political correctness scolds went up a bit today. And I once again ask myself whether I should spend more or less time writing negative reviews of books (mostly I don’t, though this week’s reading was pretty meh).
Please advise.
Indian caste system bleg
What should I read to better understand the Indian caste system? I thank you all in advance for your assistance.
That was then, this is now — churchyard burial edition
Although all church fees were wrong, argued Francis Sadler in a much-reprinted 1738 tract, “selling” one part of the churchyard for three times the price of another “to keep Rich and Poor asunder as if there were a difference in their dust” was especially ridiculous.
Within the courtyard, “the chancel was a better address than the center aisle, which was, in turn, preferred to the side aisles.” And lead coffins cost ten times more than coffins of wood.
That is from the excellent The Work of the Dead: A Cultural History of Mortal Remains, by Thomas Laqueur. Here is a truly splendid Marina Warner review of the book.
What I’ve been reading
1. Karl Ove Knausgaard, Autumn. While this volume of very short essays does reflect a literary sensibility, I didn’t find it fun or insightful to read. By the way, “Vomit is usually yellowish and can range from pale yellow to yellowish-brown, with certain areas of quite different colours, like red or green.” So I suppose the Knausgaard canon really is just the first two volumes of My Struggle.
2. Alex Millmow, A History of Australasian Economic Thought. A very good introduction, New Zealand too. There is no problem filling a book with substance on this topic, in fact it left me wanting more.
3. Robert B. Ekelund, Jr., John D. Jackson, and Robert D. Tollison, The Economics of American Art: Issues, Artists, and Market Institutions. A useful overview and survey of the role of economics in the development of art markets in American history.
4. Cynthia Estlund, A New Deal for China’s Workers? The best book I know on labor unions and labor policy in China: “It surprises many Westerners to learn that the labor standards established by Chinese law on the books, apart from actual wage levels, track modern Western (especially European) labor standards rather closely in many respects…Professor Gallagher has described China’s labor standards regime as one of “high standards-low enforcement.””
5. Beowulf, translated by Stephen Mitchell. I cannot judge veracity, but to read this is in the top tier of Beowulf renderings to date. The Old English is presented on the opposing page, this book I will keep.
6. Orhan Pamuk, The Red-Haired Woman. Eh. Contrived.
Arrived in my pile are:
Robert Wuthnow, American Misfits and the Making of Middle Class Respectability.
Jean Tirole, Economics for the Common Good, with nary an equation in sight.
The conservation of coercion?
These aspects raise an uncomfortable possibility for libertarians: is there a sort of law of conservation of coercion in well-functioning societies? A community with a minimal state can only function if it is thick enough and homogeneous enough to enforce sanctions for antisocial behavior that are almost state-like in their severity, and, furthermore, can make them stick. Freeing individuals from their smothering parochialisms will lead to a compensating increase in the scope and reach of the state as people search for a new solution to social dilemmas formerly handled via informal means. Conversely, attempts to suddenly curtail state power may lead to chaos in the intervening period when social institutions have not yet reasserted themselves. Principled libertarians might still have good reasons to prefer the non-state forms of compulsion—among them the arguments from public choice economics and a federalist preference for decisions being made at the lowest feasible level, where actors are most likely to have relevant information. But “increased freedom” may not be one of them.
Here is more:
Kuznicki thinks the engineering mindset in political theory is an antidote to what he sees as a philosophical tradition of abstract theorizing that puts the state on a pedestal and makes it into an almost metaphysical nexus of the human condition. But as I look around, much of the vapid theorizing seems to be in favor of liberalism writ large, while the best current example of a state built on hard-nosed pragmatism is Singapore. Kuznicki himself is a representative of a currently fashionable sort of cosmopolitan libertarianism that has never existed in governmental form, and which I suspect is the least likely form of government ever to exist. What if a practical politics that took account of human frailty implied a world formed from a combination of cosmopolitan but illiberal city-states, unified but homogeneous nation-states, and sprawling empires that vacillate between centrifugal and centripetal tendencies? In fact, this is the world that has existed for most of recorded history. Perhaps the real ideological blinders are those which tell us that we have transcended this condition and can replace it with something else.
That is from William Wilson in American Affairs, hat tip goes to Garett Jones and Rogue WPA Staff. Here is Jason Kuznicki’s new book, which I have not yet seen.
Tim Harford’s *Fifty Inventions that Shaped the Modern Economy*
Tim reaffirms his status as one of the great (greatest?) contemporary popular writers on economics, this time turning his attention to technology. From a Smithsonian interview:
So what made you decide to write a book looking at the modern economy through specific inventions?
I think it was a slight sense of frustration. I’m an economist, and economics often feels abstract and very impersonal, even though I don’t think it’s abstract or impersonal. As an economics writer, I’m also looking for a way to tell a good story and get some ideas across. I realized if I produced a kind of technological history with lots of ideas and examples I could teach some economics lessons through these very specific stories.
What’s your favorite invention in the book?
It varies, but right now it’s paper. I just loved the realization that there was an alternative to talking about the Gutenberg press. Obviously I have nothing but admiration for the Gutenberg press – it’s a tremendously important innovation. But everybody told me, ‘oh, you’ve doing fifty inventions that shaped the world, you must do the Gutenberg press.’ And I thought, ‘yeah, but it’s so obvious.’ Then I was looking at the Gutenberg Bible in the New York Public Library, and thinking, ‘this bible is printed on something. It’s not printed on nothing. It’s printed on a surface.’ It turns out that the Gutenberg press works perfectly well with parchment, technologically speaking, but economically speaking it doesn’t make any sense without paper. Parchment is just too expensive to produce a long print run. So as long as all you’re doing is handwriting bibles and making them look beautiful, there’s no need to use paper at all. But with paper you’ve got a mass-produced writing surface. It’s often the very cheap inventions that get overlooked, but nevertheless change the world.
Here is an adaptation from the book on the history of barbed wire. Here is another BBC adaptation on why electricity did not change manufacturing more quickly. You can pre-order the book here.
*The Dawn of Eurasia*
By Bruno Maçães, due out in January. I was asked to blurb it, I’m going to go “off the reservation” and call it so far the best and most important book I’ve read so far this year. From Amazon:
In this original and timely book, Bruno Maçães argues that the best word for the emerging global order is ‘Eurasian’, and shows why we need to begin thinking on a super-continental scale. While China and Russia have been quicker to recognise the increasing strategic significance of Eurasia, even Europeans are realizing that their political project is intimately linked to the rest of the supercontinent – and as Maçães shows, they will be stronger for it.
The Kindle edition at least you can pre-order.
Who is the modern-day Frantz Fanon?
Chris Blattman tweets:
Is there a modern day Fanon or Memmi writing about dvpt & globalizn as they wrote about colonialization? Doesn’t only have to be leftist.
Hardi and Negri come up in the mentions, but I am underwhelmed. There is the alt right, mostly on the internet rather than in books of note. To whatever extent they are objectionable, keep in mind Fanon was a Marxist, and in any case agreement is not the metric here.
I also nominate Alexander Dugin. There is plenty in Islamic theology too, and the environmental movement would be yet another direction.
On the academic and also more liberal side, there is Joe Stiglitz and Dani Rodrik. Is Roberto Unger going too far back? Three-quarters of the Bengali intelligentsia? Arundhati Roy? Or maybe you think Naomi Klein is not serious enough, but the lower quality of at least some of these answers is itself data. Does the writer have to be from a developing nation?
Frank Fukuyama would be a subtle answer, as would be “the government of China.” I am reluctant to categorize Slavoj Žižek, but he is not irrelevant for this question by any means.
And let’s not restrict ourselves to non-fiction. How about Roberto Bolaño’s 2666? Jia Zhangke’s A Touch of Sin? Neill Blomkamp? Michel Houllebecq of course.
What do you all think? I know I am missing a great deal. That said, if you look for a very direct parallel and just google “leading Algerian intellectuals,” little of relevance comes up, focus maybe there on rai music and theology.
I would stress that the nature of intellectual fame has changed, and if there are few exact parallels to Fanon it is for that reason. I do not think there is a more general vacuum in this area of inquiry.