Category: Books

*Affluence and Influence*

by  Tyler Cowen in

The author is Martin Gilens and the subtitle is Economic Inequality and Political Power in America.  A few points:

1. It is an interesting book.

2. It is poorly written and the first fifty pages should have been abolished.

3. It argues, using a comprehensive data set, that the preferences of poor and even middle income people are neglected or underrepresented in the policy process.  The preferences of the wealthiest ten percent seem to have more sway.

4. It should take greater care to distinguish the preferences of the (often ill-informed) poor across means and ends.  Say a poor or middle class person feels “I want tariffs” and also “I want prosperity.”  The elites then push through free trade to produce prosperity and for that matter to get reelected and perhaps also to serve commercial interests and donors.  Have they met or frustrated the preferences of the poor?  By the metrics of Gilens the poor did not get their way but that is not obviously the correct conclusion.  Matt makes a related point.

5. Many lower- or middle-income voters decide to vote retrospectively over outcomes (mostly), rather than over policy inputs.  That suggests we should judge the responsiveness of the system in terms of how well it aims toward those outputs, not whether it gives lower-income voters their preferred policy inputs.

6. What is wrong with this simple alternative hypothesis?:  Politicians seek some measure of redistribution-weighted prosperity to get reelected.  Wealthier voters are better educated and smarter, so they have a better sense of which policies will bring that about.  It seems the wealthier voters are getting their way on policy inputs, but a deeper look shows the pressures on politicians are quite general.

7. I would be falling prey to the fallacy of mood affiliation if I simply assumed the author wanted policy to be more responsive to the wishes of the poor and middle class.  Still I can ask whether this would be a desirable end.  Aren’t they less educated and less well-informed on average?  Don’t they also care about politics less and derive less of their status from political processes and outcomes?  Do I want them to have a greater say over social issues, including gay marriage?  No.

Here is a Boston Review symposium on the book, including many responses from the notables on the sidebar, along with a response from the author.

Thiel v. Schmidt

by  Alex Tabarrok in

Peter Thiel, taking the pessimistic view, and Eric Schmidt of Google, taking the optimistic view, both made good points in their debate over technology but Thiel had the knockout punch:

PETER THIEL: …Google is a great company.  It has 30,000 people, or 20,000, whatever the number is.  They have pretty safe jobs.  On the other hand, Google also has 30, 40, 50 billion in cash.  It has no idea how to invest that money in technology effectively.  So, it prefers getting zero percent interest from Mr. Bernanke, effectively the cash sort of gets burned away over time through inflation, because there are no ideas that Google has how to spend money.

ERIC SCHMIDT: [talks about globalization]

The moderator repeats Thiel’s point:

ADAM LASHINSKY:  You have $50 billion at Google, why don’t you spend it on doing more in tech, or are you out of ideas?  And I think Google does more than most companies.  You’re trying to do things with self-driving cars and supposedly with asteroid mining, although maybe that’s just part of the propaganda ministry.  And you’re doing more than Microsoft, or Apple, or a lot of these other companies.  Amazon is the only one, in my mind, of the big tech companies that’s actually reinvesting all its money, that has enough of a vision of the future that they’re actually able to reinvest all their profits.

ERIC SCHMIDT:  They make less profit than Google does.

PETER THIEL:  But, if we’re living in an accelerating technological world, and you have zero percent interest rates in the background, you should be able to invest all of your money in things that will return it many times over, and the fact that you’re out of ideas, maybe it’s a political problem, the government has outlawed things.  But, it still is a problem.

ADAM LASHINSKY:  I’m going to go to the audience very soon, but I want you to have the opportunity to address your quality of investments, Eric.

ERIC SCHMIDT:  I think I’ll just let his statement stand.

ADAM LASHINSKY:  You don’t want to address the cash horde that your company does not have the creativity to spend, to invest?

ERIC SCHMIDT:  What you discover in running these companies is that there are limits that are not cash.  There are limits of recruiting, limits of real estate, regulatory limits as Peter points out.  There are many, many such limits.  And anything that we can do to reduce those limits is a good idea.

PETER THIEL:  But, then the intellectually honest thing to do would be to say that Google is no longer a technology company, that it’s basically ‑‑ it’s a search engine.  The search technology was developed a decade ago.  It’s a bet that there will be no one else who will come up with a better search technology.  So, you invest in Google, because you’re betting against technological innovation in search.  And it’s like a bank that generates enormous cash flows every year, but you can’t issue a dividend, because the day you take that $30 billion and send it back to people you’re admitting that you’re no longer a technology company.  That’s why Microsoft can’t return its money.  That’s why all these companies are building up hordes of cash, because they don’t know what to do with it, but they don’t want to admit they’re no longer tech companies.

ADAM LASHINSKY:  Briefly, and then we’re going to go to the audience.

ERIC SCHMIDT:  So, the brief rebuttal is, Chrome is now the number one browser in the world.

In my mind, the revealed preference of our technological leaders is the best and most depressing argument for the great stagnation.

*Savage Continent*

by  Tyler Cowen in

That is the new book by Keith Lowe, with the subtitle Europe in the Aftermath of World War II.  Excerpt:

The number of sexual relationships that took place between European women and Germans during the war is quite staggering.  In Norway as many of 10 percent of women aged between fifteen and thirty had German boyfriends during the war.  If the statistics on the number of children born to German soldiers are anything to go by, this was by no means unusual…

Resistance movements in occupied countries came up with all kinds of excuses for the behaviour of their women and girls.  They characterized women who slept with Germans as ignorant, poor, even mentally defective.  They claimed that women were raped, or that they only slept with Germans out of economic necessity.  While this was undoubtedly the case for some, recent surveys show that women who slept with German soldiers came from all classes and all walks of life.  On the whole European women slept with Germans not because they were forced to, or because their own men were absent, or because they needed money or food — but simply because they found the strong, “knightly” image of the German soldiers intensely attractive, especially compared to the weakened impression they had of their own menfolk.  In Denmark, for example, wartime pollsters were shocked to discover that 51 per cent of Danish women openly admitted to finding German men more attractive than their own compatriots.

Nowhere was this need more keenly felt than in France…

You can buy the book here.

The new John Broome book

by  Tyler Cowen in

Climate Matters: Ethics in a Warming World.  Excerpt:

What is the role of experts in democracy?…Their views, supported by arguments and evidence, help individuals and their representatives to form judgments.

This is not how economists typically see their democratic role.  They do not see themselves as participants in public deliberation, helping people to make their judgments.  Instead, they think their role is to help ensure that the preferences of the people prevail.  They do this by basing their valuations on market prices, which reflect people’s preferences.

*The Great Persuasion*

by  Tyler Cowen in

That is the new book by Angus Burgin and the subtitle is Reinventing Free Markets since the Depression.  As I had suspected, it is interesting.  Here is the core thesis:

To Hayek and the other founders of the Mont Pelerin Society, Friedman’s ascent within its orbit reflected the collapse of its attempt to integrate a restrained defense of free markets into a traditionalist worldview.  In the broader social environment Friedman’s rise portended, and precipitated, the triumphant return of laissez-faire.

One thing which strikes me reading this book, as it does when I reread Friedman’s 1962 Capitalism and Freedom, is how much market-oriented writers of that era were not focused on the problems of old people, even though today those problems take up a huge chunk of the budget of the federal government.

I found this excerpt interesting:

In stark contrast to the early post-war years, Friedman would conclude near the end of his career that “there are too many damn think tanks now,” adding that they simply “don’t have the talent for it.”

*Keep from All Thoughtful Men: How U.S. Economists Won World War II*

by  Tyler Cowen in

That is a new book out by Jim Lacey.  Here is one good review by Christopher Tassava:

…Lacey (a retired U.S. Army officer and current writer on defense matters) describes the bureaucratic fights between civilian experts and military staff over the extent and speed to which the American economy — hardly firing on all cylinders as war began in Europe — could be reoriented to produce the munitions necessary for a serious military effort. At the center of Lacey’s story are three economists who, he shows, had far-sighted views of the true capacity of the American economy: the reasonably well known Simon Kuznets and two nearly forgotten figures, Robert Nathan and Stacy May.

Lacey capably uses archival and secondary sources to show that these three men, along with a small group of other civilians inside the federal bureaucracy, were able to use social-scientific methods, including, crucially, statistical techniques, to assess how large the U.S economy could grow, how quickly that growth could occur, and how much war materiel the economy could produce for use by the U.S. and Allied militaries. Lacey persuasively shows that Kuznets, Nathan, and May were able to forecast in late 1942, before the first anniversary of Pearl Harbor, that June 1944 would be the moment at which the American “arsenal of democracy” would be able to produce sufficient materiel to launch a substantial invasion of Europe.

I wonder if this is actually true

by  Tyler Cowen in

Researchers who have scanned books published over the past 50 years report an increasing use of words and phrases that reflect an ethos of self-absorption and self-satisfaction.

“Language in American books has become increasingly focused on the self and uniqueness in the decades since 1960,” a research team led by San Diego State University psychologist Jean Twenge writes in the online journal PLoS One. “We believe these data provide further evidence that American culture has become increasingly focused on individualistic concerns.”

Their results are consistent with those of a 2011 study which found that lyrics of best-selling pop songs have grown increasingly narcissistic since 1980. Twenge’s study encompasses a longer period of time—1960 through 2008—and a much larger set of data.

Here is more.

*Climbing the Charts*

by  Tyler Cowen in

The author is Gabriel Rossman and the subtitle is What Radio Airplay Tells Us About the Diffusion of Innovation.

In other words, there is lots of payola.  My blurb is:

Gabriel Rossman is the leading researcher in the sociology and economics of the music industry, and this book shows him at the top of his research and exposition powers.

You can buy it here.  Rossman blogs here, and he is on Twitter here.

*Rome: An Empire’s Story*

by  Tyler Cowen in

That is the new book by Greg Woolf.  Could it now be the best single-volume introduction to the history of ancient Rome?  It is conceptual yet avoids the pitfalls of overgeneralizing, a difficult balance to strike.  It also has a superb (useful rather than exhaustive) bibliography.  A good measure of books such as this is whether they induce you to read or order other books on the same topic and this one did.

A sure thing to make my “Best Books of 2012” list.

Markets in everything durable goods monopoly edition add urgency to your reading

by  Tyler Cowen in

Argentina-based publisher Eterna Cadencia has released El Libro que No Puede Esperar – which translates as ‘The Book that Cannot Wait’ – an anthology of new fiction printed in ink that disappears after two months of opening the book.

The link is here, check out how the title looks on the cover, and for the pointer I thank Michael Rosenwald.

Richard Perle reviews *An Economist Gets Lunch*

by  Tyler Cowen in

In Commentary magazine, not on-line, I especially like the end:

The only problem with this splendid book is where to put it in one’s library, with the food books or the economic books? It’s really two books with a common quality: Thinking can make things better.

Here is a short excerpt from the review, and the gate is there for subscribers.  You can order the book here.

*Face Value: The Entwined Histories of Money & Race in America*

by  Tyler Cowen in

That is the new book from Michael O’Malley, a colleague of mine in the history department.  Here is one of the book’s most controversial passages:

It should come as no surprise, then, to find that right-wing libertarians and proponents of the free market often tend to favor genetic accounts of identity.  The heroic individualism many libertarians imagine requires a self freed from all social constraints, but at the same time founded in nature — in natural rights and natural talents.  The libertarians account of individualism rests on imagining a person free of social and political power.  Ayn Rand’s The Fountainhead ends with her visionary ego-driven architect standing above the city: “there was only the ocean and the sky and the figure of Howard Roark.”  That is, nothing but nature and the heroic individual, standing above society: an intrinsic self entirely in possession of itself.  In this sense libertarianism embraces not freedom but a kind of genetic determinism, in which “merit” derives not from social whims but from intrinsic qualities and, again in which all hierarchies are “natural.”  Rand’s clunky Atlas Shrugged imagines a world in which all the creative and productive people have fled to a secret location, leaving the rest of us, “looters” and “parasites,” flailing helplessly like ants bereft of the queen.  Right-wing libertarianism in this way again bears a close relationship to its nineteenth-century antecedent, social Darwinism.  It stresses freedom, but also imagines nature as a set of stable confines and success as the proper reward for genetic superiority.

The book also offers an interesting discussion of the role of the gold standard in 19th century thought.  There are also sections which Brad DeLong would quote at length.

I was surprised to just learn that O’Malley has an interest in Eddie Lang.  I didn’t know anyone else still thought about Eddie Lang, there is YouTube here.