Category: Books

David Henderson reviews the new Alan Blinder book

by  Tyler Cowen in

The review is here, here is one interesting paragraph:

Mr. Blinder omits a crucial fact about Lehman, one that, by itself, explains why the huge drop in value of Lehman’s mortgage-backed securities led to its collapse: the effect of changes in federal bankruptcy law. Thanks to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, when Lehman went bankrupt it could not simply, as in earlier days, pay holders of derivatives as much as possible with its assets. Instead, it had to give each derivative holder a new contract identical to the one it had signed with Lehman, but with a different counterparty. Lehman would also have to pay the transaction cost of the new contract. Such costs are typically about 0.15% of the contract’s total value. That’s small, right? No. When Lehman went bankrupt, the face value of Lehman’s derivative contracts was $35 trillion—with a “t.” The transaction costs alone were $52.5 billion. That is what sank Lehman.

The strange and indeed unjustified senior status of derivatives contracts remains an under-discussed area for financial reform.  Here is a relevant Bolton and Oehmke paper (pdf).  The Blinder book you can buy here.

Facts about cities

by  Tyler Cowen in

The average tract density of all these (U.S.) cities taken together declined in every decade since 1910, from 69.6 persons per hectare in 1910 to 14.6 persons per hectare in 2000, almost a fivefold decline.  Fitting an exponential curve to this average density in every decade from 1910 to 2000, we found that the average annual rate of decline for the entire period, assuming a constant rate, was 1.92 percent.  Declines in average tract density between any two consecutive censuses were registered in 124 of the 153 observations, or 81 percent of the time.

That is from the new and quite interesting Planet of Cities, by Shlomo Angel.  My takeaway is that the Avent-Yglesias push for greater urban density, which I sympathize with, is unlikely to happen on a significant scale.  If you are looking for hopeful signs, there is this:

…between 1990 and 2000, six cities in this group registered an increase in average tract density: New York, Washington, Los Angeles, St. Paul, Syracuse, and Nashville.  Hence, while average densities in U.S. cities have been in general decline for almost a century, they may now be reaching a plateau and even gradually increasing.

I definitely recommend this book to all those with an interest in urban issues.

*Catastrophic Care*

by  Tyler Cowen in

That is the new book by David Goldhill and the subtitle is How American Health Care Killed My Father — and How We Can Fix It.  I don’t actually like that subtitle, but still this is the best popular health care book from recent times.  It has a crystal clear account of what has gone wrong and how to fix it, with the author settling upon a version of the Singaporean system.  I would describe Goldhill as a market-friendly Democrat who is skeptical about ACA and for the right reasons.

Recommended.

Law and Literature reading list for 2013

by  Tyler Cowen in

The New English Bible, Oxford Study Edition

Billy Budd and Other Tales, by Hermann Melville.

The Metamorphosis, In the Penal Colony, and Other Stories, by Franz Kafka.

In the Belly of the Beast, by Jack Henry Abbott.

Conrad Black, A Matter of Principle.

Kate Summerscale, Mrs. Robinson’s Disgrace: The Private Diary of a Victorian Lady.

Glaspell’s Trifles, available on-line.

Sherlock Holmes, The Complete Novels and Stories, Sir Arthur Conan Doyle, volume 1.

I, Robot, by Isaac Asimov.

Moby Dick, by Hermann Melville, excerpts, chapters 89 and 90, available on-line.

Year’s Best SF 9, edited by David G. Hartwell and Kathryn Cramer.

Running the Books, by Avi Steinberg.

Death and the Maiden, Ariel Dorfman.

The Pledge, Friedrich Durrenmatt.

The Crime of Sheila McGough, Janet Malcolm

Errol Morris, A Wilderness of Error.

Leslie Katz, “John Keats’s Attitudes to Lawyers,” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1307146

Some additions to this list will be made as we proceed, mostly a few short articles.

We also will view a small number of movies on legal themes. You will be responsible for obtaining these or for viewing them in the theater.  These include:

Capturing the Friedmans

Anatomy of a Murder

A Separation

Memories of Murder

*Bleeding Talent*, the Tim Kane critique of the U.S. military

by  Tyler Cowen in

Here is a review from The New York Times:

In “Bleeding Talent” (Palgrave Macmillan, $30), Mr. Kane gives us a veteran’s proud, though acutely critical, perspective on the American military. He offers an illuminating view of the other “1 percent” — not the privileged upper crust, but the sliver of Americans who have accepted the burden of waging two of the longest wars in our history.

The military is perhaps as selfless an institution as our society has produced. But in its current form, Mr. Kane says, it stifles the aspirations of the best who seek to serve it and pushes them out. “In terms of attracting and training innovative leaders, the U.S. military is unparalleled,” he writes. “In terms of managing talent, the U.S. military is doing everything wrong.”

The core problem, he argues, is that while the military may be “all volunteer” on the first day, it is thoroughly coercive every day thereafter…

ACCORDING to Mr. Kane, “the root of all evil in this ecosystem” is the Defense Officer Personnel Management Act, enacted by Congress in 1980 to standardize military personnel policies. But the system has defied efforts by successive defense secretaries to bring about change.

That act binds the military into a system that honors seniority over individual merit. It judges officers, hundreds at a time, in an up-or-out promotion process that relies on evaluations that have been almost laughably eroded by grade inflation. A zero-defect mentality punishes errors severely. The system discourages specialization — you can’t expect to stay a fighter jock or a cybersecurity expert — and pushes the career-minded up a tried-and-true ladder that, not surprisingly, produces lookalikes.

Tim is a frequent (unofficial) member of the GMU lunch crew, and you can buy his book here.  Here is Tim’s Wikipedia page.

*The Bankers’ New Clothes*

by  Tyler Cowen in

That is the new book by Anat Admati and Martin Hellwig and the subtitle is What’s Wrong with Banking and What to Do about it.  Here is their bottom line:

We have argued that if banks have much more equity, the financial system will be safer, healthier, and less distorted.  From society’s perspective, the benefits are large and the costs are hard to find; there are virtually no trade-offs.

I agree with the proposal, though not with the claim that this is virtually costless, as is laid out in their chapter seven (oddly they focus on the question of whether debt and equity “require” comparable rates of return, rather than the general notion of opportunity cost).  In any case this is a major net work on banking and its regulation.  Here is the book’s home page.  Here is Admati on YouTube.

*The World Until Yesterday*

by  Tyler Cowen in

The author is Jared Diamond and the subtitle is What We Can Learn from Traditional Societies?

This is a difficult book to review.  It is well written and intelligent, yet I struggle to find the novel propositions or the traction.  Much of the book is description of the author’s earlier work in Papua New Guinea.  These sections I enjoyed, though I did not find them revelatory or even mildly gripping.  They also did not much incorporate more recent research on these communities.  Other parts of the book repeat probably correct but tired points about privacy, obesity, the role of the elderly, and the like, comparing the modern world to earlier times.  The discussions of the Pygmies — the hunter-gatherer community I know most about — seemed fine but not insightful.  Beneath the surface is the question of how much different “hunter-gatherer” societies are alike or can be subject to generalization.  Diamond never makes objectionable claims in this regard but ultimately the very premise of the book seems to require some objectionable claims, even if they are never put on paper.

If I had to place this book into the “good book” pile or “bad book” pile, I wouldn’t hesitate before putting it into the former.  But I could not describe it as essential reading either.  Perhaps I would have liked it more if I had expected less.  In any case, I would have preferred a “more wrong” book that made me think more.

Here is a Chicago Tribune review of the book.

Markets in everything

by  Tyler Cowen in

Instead of long beards and robes, they wear track suits and T-shirts. Their tablets are electronic, not hewn of stone, and they hold smartphones, not staffs. They may not look the part, but this ragtag group of Israelis is training to become the next generation of prophets.

For just 200 shekels, about $53, and in only 40 short classes, the Cain and Abel School for Prophets says it will certify anyone as a modern-day Jewish soothsayer.

The school, which launched classes this month, has baffled critics, many of whom have dismissed it as a blasphemy or a fraud.

Here is more, and for the pointer I thank Asher Meir.  By the way, I found this to be an especially odd and ineffective response:

“There is no way to teach prophecy,” said Rachel Elior, a professor of Jewish thought at Jerusalem’s Hebrew University. “It’s like opening a school for becoming Einstein or Mozart.”

I wonder what Bryan Caplan will think of this line:

Hapartzy can’t guarantee his course will give his students a direct line to God. But, he says, the syllabus provides the essential tools to bring out the prophet in anyone.

Here is another oddly incorrect statement:

 Roie Greenvald, a 27-year-old tennis instructor attending the classes, also showed some skepticism. While he expressed interest in the spiritual development the course offers, one crucial detail stands in the way of his religious elevation.

“I’m not going to become a prophet,” he said. “I don’t think it pays very well.”

The school takes on all comers and it is run by a Russian immigrant and software engineer.