Category: Books
From Facebook
“XXXX is becoming more and more convinced that Tyler Cowen and Alex Tabarrok‘s textbook is the big news in the field of economics education. Hope to use it for my class soon, wish I had it when I was a student.”
The second editions are now out, Micro, Macro, and a consolidated book, more information here.
*The Start-Up of You*
That is the new book by Ben Casnocha and Reid Hoffman and the subtitle is Adapt to the Future, Invest in Yourself, and Transform Your Career. if you are starting a career, it is an excellent book for thinking through the practical issues you will face in branding yourself in what is becoming a more volatile and very different labor market. The book’s home page is here.
Dostoyevsky
Ken writes:
I was scouring your blog for Fyodor Dostoevsky and was surprised to see no mentions. I was just wondering your thoughts on him. Currently reading the Brothers Karamazov and it’s fantastic.
Brothers Karamazov spent seven or so years as my favorite book, starting in high school. I’m not suggesting it is juvenile, only that I find it hard to go back and enjoy things at lower levels than I did before (I also don’t like to eat in still-good but declining restaurants). I no longer find Notes from Underground interesting, as I regard its questions as a dead end. I’d sooner reread Pascal. I never got through The Idiot or Demons in the first place. About two years ago I read House of the Dead and liked it, though it felt like a respite from the more typical conception of Dostoyevsky.
How much can you like Dostoyevsky anyway? My sense is that he is probably underrated as a pure writer (much of it comes across as garbage in English translation, but perhaps is quite biting or comic or interestingly manic), and overrated as a source of the “novel of ideas.”
If you enter “Dostoyevsky” into the search function of Twitter, you don’t come up with much interesting these days.
Whence comes this sudden wave of economic determinism?
All of a sudden it is pulled out of the closest as a weapon against Charles Murray, such as by Paul Krugman (and here and here), Rortybomb, David Frum, and others. Bryan Caplan brings some sanity to the debate:
I’m baffled by people who blame declining marriage rates on poverty. Why? Because being single is more expensive than being married. Picture two singles living separately. If they marry, they sharply cut their total housing costs. They cut the total cost of furniture, appliances, fuel, and health insurance. Even groceries get cheaper: think CostCo.
These savings are especially blatant when your income is low. Even the official poverty line acknowledges them. The Poverty Threshold for a household with one adult is $11,139; the Poverty Threshold for a household with two adults is $14,218. When two individuals at the poverty line maintain separate households, they’re effectively spending 2*$11,139-$14,218=$8,060 a year to stay single.
But wait, there’s more. Marriage doesn’t just cut expenses. It raises couples’ income. In the NLSY, married men earn about 40% more than comparable single men; married women earn about 10% less than comparable single women. From a couples’ point of view, that’s a big net bonus. And much of this bonus seems to be causal.
More plausibly it is the rise in female income (among other factors, including the rise of birth control, read more here) which is behind the decline in marriage, but that doesn’t fit with traditional mood affiliation, which finds the rise in female income to be good (which it is), and the decline in marriage to be — neither good nor bad per se but not exactly worth celebrating. If you can blame capitalism and wage stagnation for the decline of the family among lower earners, so much the better for ideology but as a sociological proposition that is a very weak hypothesis (do you see convincing links to real sociological evidence, showing this to be the dominant factor? No) and as Caplan shows it doesn’t fit with the economics either.
Remind me again, how is wage stagnation supposed to explain the pronounced decline in religiosity, among lower earners, as shown by Murray? It’s well-known that a secular outlook is a normal good, and that on average poorer countries are more religious than wealthier countries.
I’m struck by how many people are offering negative comment on the new Murray book who have not read it, or who do not appear to have read it. I found it to be a much less controversial book than the commentary makes it seem, and actually I had stopped thinking about it, except for all the negative reviews I see it getting. It is unpopular because it disrupts current moral narratives about economic and social decline, as much on the right as on the left I might add, not because it is relying on dubious facts. It is simply redescribing inequality through a somewhat different lens. There’s much less at stake here than meets the eye.
Maybe I should not even be responding, but then again I am a determinist and does not Karl Smith have a good forecasting record to date?
*An Economist gets Lunch*
I am pleased that Publisher’s Weekly has offered a starred review to my forthcoming book:
Enlightened consumerism, not ideology, is the surest path to tasty and responsible dining, argues this yummy gastronomic treatise. Economist and restaurant critic Cowen (The Great Stagnation) takes readers along as he eats, shops, and cooks in a diversity of spicy settings, including a Nicaraguan tamale stand, the greens aisle at the Great Wall supermarket chain, backwoods barbeque pits, and his own kitchen, where he wrestles with Mexican cuisine. He focuses on how the interplay between creative suppliers and demanding customers produces good, cheap food, an approach that yields offbeat insights into, for example, why the menu item that sounds the least appetizing usually tastes great and why you should never eat in a place filled with beautiful people having a great time (that restaurant’s specialty, he reasons, is the scene, not the food). Cowen also offers a telling contrarian critique of high-minded food orthodoxies that extols agribusiness, debunks the environmental benefits of locavorism, and toasts genetically modified organisms. Cowen writes like your favorite wised-up food maven, folding encyclopedic knowledge and piquant food porn—“the pork was a little chewy but flavorful, and the achiote sauce gave it a tanginess”—into a breezy, conversational style; the result is mouth-watering food for thought.
You can pre-order the book on Amazon here. For Barnes & Noble here. For Indiebound.org here.
Book splat
Timothy Taylor, The Instant Economist: Everything You Need to Know About How the Economy Works is too elementary for most MR readers but it is well executed and would make a good gift for anyone needing an introduction to economic reasoning.
Larry Kotlikoff and Scott Burns have their new The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy, due out in March. I believe they are still fiscal pessimists.
There is Ruchir Sharma, Breakout Nations: In Pursuit of the Next Economic Miracles, due out in April.
I reviewed Ruth Grant’s new Strings Attached: When do Incentives Corrupt? here, for Science, university readers can get through the gate.
Alessandra Casella, Storable Votes: Protecting the Minority Voice, calls for a system where you can abstain from voting on one measure and receive an extra vote on something else.
Christopher Balding, Sovereign Wealth Funds: The New Intersection of Wealth and Politics is a useful overview.
Jo Guldi, Roads to Power: Britain Invents the Infrastructure State is a good and also conceptual history of 19th century road building.
I loved Arthur Schnitzler’s Casanova’s Homecoming, free on Kindle, which I never had read before. Alice James: A Biography, by Jean Strouse, is a very good look at her life (she is the sister) and the life of the James family.
There is The Southern Tiger: Chile’s Fight for a Democratic and Prosperous Future, by Ricardo Lagos, Elizabeth Dickinson, and Blake Hounshell, next up on my Kindle.
I recommend Michael Grabell, Money Well-Spent?: The Truth Behind the Trillion-Dollar Stimulus, The Biggest Economic Recovery Plan in History. It is a very good journalistic account of how the money was spent, and less scandal-mongering than the title might indicate. I found it to be quite an objective account. There should be more books like this, looking at the nuts and bolts of economic legislation.
Tony Judt’s new book *Thinking the Twentieth Century*
It is a wide-ranging dialogue with Timothy Snyder, you can buy it here. I will gladly recommend this book, but I have mixed feelings about it. It is Judt’s “deathbed conversations” with Snyder, when he was paralyzed.
Is it fascinating? Yes. Did I read it straight through without pausing? Yes. Did I learn a lot? Yes.
Yet it doesn’t show Judt in such an overwhelmingly favorable light. He is cranky, unfair to his intellectual opponents, and he repeatedly misrepresents thinkers such as Hayek on some fairly simple points. He conducts unsubstantiated attacks on various New York Times columnists, as if they had once beaten him in a debate and this was his revenge. It shows his lifelong and mostly unhealthy obsession with what Daniel Klein has called “The People’s Romance.” Unlike in some of his previous writings, his proposals for a one-state solution to the Israel-Palestine problem come off as an irresponsible and somewhat flip symbolic gesture, easy enough to make because he doesn’t have to live with the outcome. As a reader and reviewer it is hard to not wonder whether/how Judt was medicated during these conversations, and how well he had thought through his lack of editing options before publication. Or is this the real Judt? Are we all really like this? Pondering that question is as interesting as the dialogue itself.
The Austrians will be happy when Judt writes: “The three quarters of century that followed Austria’s collapse in the 1930s can be seen as a duel between Keynes and Hayek.” Yet he has the odd view that free market ideas were “imported to the U.S. in the suitcases of a handful of disabused Viennese intellectuals.” Others may underrate the importance of central/eastern Europe but in these dialogues he overrates it.
One does not have to agree with Hayek’s Road to Serfdom to find this an unfair characterization:
Hayek is quite explicit on this count: if you begin with welfare policies of any sort — directing individuals, taxing for social ends, engineering the outcomes of market relationships — you will end up with Hitler.
My favorite part of the book comes at Kindle location 1294, here is part of that discussion:
But even when Blunt was outed as a Soviet spy, in 1979, his standing in high society, and in the distinctive codes of that society in England, still protected him…Thus Blunt — a spy, a communist, a dissembler, a liar and a man who may have actively contributed to the exposure and death of British agents — was nonetheless deemed by some of the his colleagues to be guilty of no crime serious enough to justify depriving him of the fellowship of the British Academy.
If you are seeking to “normalize” this review, I consider Judt’s Past Imperfect to be one of the best books of the last few decades, his Postwar to be one of my favorite books ever, and his late essays to be some of the best writing, in any genre, in a long time. (Though I didn’t like Ill Fares the Land.) I can recommend this too, as something worth consuming and pondering and spending money on, but I still have a slightly queasy feeling in my stomach.
Assorted Launching Links
Paul Howard of the Manhattan Institute talks with me about innovation in a fun podcast (mp3) and here is my earlier Econ Talk with Russ Roberts. I was also interviewed by Davin O’Dwyer for the Irish Times. Launching also has a new cover, shown at right. Here is one bit from the Irish Times:
The new normal is that we’re going to go back to where China and India are going to be playing huge roles. That definitely means that our relative status is going to fall. We’re not going to be, either the US or Europe, the powerhouse we once were. We’re not going to be the giant in the land of the Lilliputians. But, in an absolute sense, we can continue to do well and even better than before. I like to say that if you invent a cure for cancer, that’s great, that’s fantastic. If your neighbour invents a cure for cancer, that’s almost as great.
The new Charles Murray book
Kevin Drum offers comment:
…is it really true that back in 1963 the “upper tribe” and the “lower tribe” were more similar than they are today? It might seem that way in retrospect, but it sure didn’t at the time. It didn’t seem that way to Gunnar Myrdal or Michael Harrington, anyway. Overall, I can pretty easily buy the “Apart” piece of the title, but I’m a lot less sure about the “Growing” piece. For every example of a way in which top and bottom have diverged over the past 50 years, I suspect that you could also find an example of ways in which they’ve converged. It’s just that Murray wasn’t looking for any of those.
Perhaps electronic communications is one example, or maybe air conditioning, paging Don Boudreaux. Sharing a greater number of absolute benefits is an extra commonality, for instance sharing “telephone plus internet” is more in common than just “everyone has a telephone,” even if the absolute number of differences is rising too.
This “mood affiliation” review is from a Rortybomb pointer I believe, excerpt:
Murray can’t tell you what really caused the class divide in marriage because the class-based changes in families he laments closely track the class warfare of the 1%. Up through the mid-’80s, upper class and working class divorce rates rose and fell together. Starting in 1990, the lines diverged, with the divorce rates of college graduates falling back to the level of the mid-sixties (before no-fault divorce) while the divorce and non-marital birth rates of everyone else continued to rise.
Do all the other social indicators follow this same pattern? Did religiosity decline because of privileges for the wealthy and class warfare? Are we supposed to think that broadly stagnant incomes for the lower classes caused more divorce for those individuals? Didn’t stagnant incomes set in around 1973, with parts of the 1990s being relatively good times for the labor market? In other words, those divorce rate and other social indicator changes are not the fault of the top one percent as this review would have you believe. This latter point in the review makes more sense to me, though I don’t read it as contra Murray:
Third, women’s employment increased in the same period and women’s wages gained the most vis-à-vis men at the bottom of the income scale. As recently as 1990, women of all educational levels earned about the same percent of the hourly wages of men with the same education. To the extent the gendered “wage gap” varied, college educated women enjoyed slightly more parity with men than working class women. By 2007, the wage gap varied dramatically by class. College-educated women earned a smaller percentage of the hourly income of their male counterparts, while the wage gap between working-class men and women shrunk substantially.
…The result: a change in family norms. College-educated women postpone childbearing, invest in their careers, and conduct a long search for a compatible and reliable mate.
But does he have the stones to write “A hypergamy theory of changing social indicators”?
The liberation of American women also damaged the quality of public education, by removing the implicit subsidy of so many “captive” and smart female laborers. I would say that the non-wealthy did not have good norms to deal with women’s liberation and maybe they could not have had such norms. It’s time to come to terms with that history. I am willing to embrace it, though I am not sure Murray is.
I’ve now read the book and I think it is very good, very well-written, and considerably more bulletproof than some of the critics are suggesting. That said, not much in it surprised me or changed my views; admittedly these are areas where I’ve been doing a lot of reading lately.
David Brooks on the new Charles Murray book
Roughly 7 percent of the white kids in the upper tribe are born out of wedlock, compared with roughly 45 percent of the kids in the lower tribe. In the upper tribe, nearly every man aged 30 to 49 is in the labor force. In the lower tribe, men in their prime working ages have been steadily dropping out of the labor force, in good times and bad.
People in the lower tribe are much less likely to get married, less likely to go to church, less likely to be active in their communities, more likely to watch TV excessively, more likely to be obese…
It’s wrong to describe an America in which the salt of the earth common people are preyed upon by this or that nefarious elite. It’s wrong to tell the familiar underdog morality tale in which the problems of the masses are caused by the elites.
The truth is, members of the upper tribe have made themselves phenomenally productive. They may mimic bohemian manners, but they have returned to 1950s traditionalist values and practices. They have low divorce rates, arduous work ethics and strict codes to regulate their kids.
Members of the lower tribe work hard and dream big, but are more removed from traditional bourgeois norms. They live in disorganized, postmodern neighborhoods in which it is much harder to be self-disciplined and productive.
Remember when “rage” used to mean “Radical Alternatives to Government Enterprise”? Murray’s book will bring rage of a different kind, because it strikes rather directly at how political views are based on emotional feelings about the deserved status of various social groups (RH: “Politics isn’t about policy.”) Here is more. If you are wondering, my copy of the book arrives today. Perhaps my review will consider whether economic forces are driving the social ones, or vice versa.
Rewarding Virtue
In the Elizabethan period, business was sneered upon. In Shakespeare’s plays, the only major bourgeois character, Antonio, is a fool because of his affection for Bassanio. There is no need to dwell on how the other bourgeois character in “The Merchant of Venice,” Shylock, is characterized.
She contrasts this with attitudes 200 years later. When James Watt died in 1819, a statue of him was erected in Westminster Abbey and later moved to St. Paul’s cathedral. This would have been unthinkable two centuries earlier. In Ms. McCloskey’s view, this shift in perceptions was central to the economic take-off of the West.
From a profile of Deirdre McCloskey in the WSJ.
*The Age of Austerity*
That is the new book by Thomas Byrne Edsall, here is my WaPo review. Overall I thought his treatment was not deep enough, and that too frequently he substituted caricature for insight. Here is one excerpt from my piece:
I wished for more discussion of the elderly. The two biggest government programs — Medicare and Social Security — are almost exclusively for them, with a significant chunk of Medicaid going to the elderly as well. By about 2030, America as a whole will have the age structure currently found in Florida. That means the elderly, who vote at above-average rates, are very likely to keep winning political battles. The real question about our fiscal future is not Republicans vs. Democrats but rather whether any coalition can limit benefits to older people. It is already unlikely that the Republicans will gut Medicare or Social Security or get very far in trying. The last major expansion of Medicare came under the Bush administration, and, despite the tough talk of Rep. Paul Ryan’s plan, the Republicans are unable to enact fundamental Medicare cost control because they are too dependent on the white elderly vote.
There is a Matt Yglesias review here. Here is a WSJ review.
The Innovation Nation versus the Warfare-Welfare State
We like to think of ourselves as an innovation nation but our government is a warfare-welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision. Innovation, however, is not a priority of our massive federal government.
Nearly two-thirds of the U.S. federal budget, $2.2 trillion annually, is spent on just the four biggest warfare and welfare programs, Medicaid, Medicare, Defense and Social Security. In contrast the National Institutes of Health, which funds medical research, spends $31 billion annually, and the National Science Foundation spends just $7 billion.
That’s me writing at The Atlantic drawing on Launching the Innovation Renaissance. Here is one more bit:
Our ancestors were bold and industrious–they built a significant portion of our energy and road infrastructure more than half a century ago. It would be almost impossible to build that system today. Could we build the Hoover Dam today? We have the technology but do we have the will? Unfortunately, we cannot rely on the infrastructure of our past to travel to our future. Airports, an electricity smart grid that doesn’t throw millions into the dark every few years, ubiquitous Wi-Fi — these are among the important infrastructures of the 21st century, and they are caught in the regulatory thicket.
Putting innovation at the center of the national vision is not simply about spending more, it’s about how we approach all problems. Read the whole thing for more discussion of regulation and other issues.
Some new books in my pile
I am learning a good deal from Stephen Bainbridge’s Corporate Governance After the Financial Crisis:
There seems little doubt that the monitoring model has influenced board behavior. In 1995, only one in eight CEOs [of those stepping down] was fired or resigned under board pressure. By 2006, however, almost a third of CEOs were terminated involuntarily. Over the last several decades, the average CEO tenure has decreased, which also has been attributed to more active board oversight.
I cannot say I am personally so interested in the topic of Ed Leamer’s The Craft of Economics: Lessons from the Heckscher-Ohlin Framework, but he is a master of exposition for complex economic results and this book is no exception.
Daniel Hausman’s Preference, Value, Choice and Welfare reflects his characteristic intelligence and judgment and it should be read by anyone with an interest in economic methodology.
Johan van Overtveldt’s The End of the Euro is a very good book on the background leading up to the current euro crisis; also useful is David Marsh’s The Euro: The Battle for the New Global Currency.
I still think Michael Nielsen’s Reinventing Discovery: The New Era of Networked Science is an important book on an important topic.
*Life in the Sick-Room*
This neglected gem of a book was written by Harriet Martineau, best known for her 19th century tracts on political economy. Now I learn she was a forerunner of behavioral economics, occupying a space somewhere between Burton’s Anatomy of Melancholy and the pain meditations of Dan Ariely, excerpt:
I have spoken of the relief afforded by visitations of severe pain. These really the vital forces, and dismiss the temptation, by substituting torture for weariness — at times a welcome change. The healthy are astonished at the good spirits of sufferers under tormenting complaints; and the most strait-laced preachers of fortitude and patience admit an occasional wonder that there is no suicide among that class of sufferers. The truth is, however, that the influence of acute pain, when only occasional, and not extremely protracted, is vivifying and cheering on the whole. The immediate anguish causes a temporary despair: but the reaction, when the pain departs, causes a relish of life such as the healthy and the gay hardly enjoy. Though a slow death by a torturing disease is a lot unspeakably awful to meet, and even to contemplate, there can be no question to the experience, that illness in which severe pain sometimes occurs is less trying than some in which a different kind of suffering is not relieved by such a stimulus and its consequent sensations.
The Wikipedia page on Martineau is especially good.