Category: Books
*Replenishing the Earth*, by James Belich
How is this for a real estate bubble?
At peak in 1888, over 80 per cent of Victorian private investment went into Melbourne buildings. Expenditure on housing was even greater than that on rail, and many houses were built without people to live in them, or without jobs for those who did.
In the 1890s Melbourne was an impressive place. With 500,000 people, it was eighty percent bigger than San Francisco and nine hundred percent bigger than Los Angeles. Three hundred trains a day serviced the suburbs. The city had three hundred buildings with elevators and Melbourne was reputed to have more large public buildings than any British city outside of London. There were plans to build a replica of the Eiffel Tower.
That is all from James Belich's Replenishing the Earth: The Settler Revolution and the Rise of the Anglo-World, 1783-1939. I'll discuss this book more soon, but I'll tip my hand and say it is one of the very best non-fiction books of the year. Imagine Jared Diamond or Greg Clark (albeit more measured, in each case) but applied to the settlement of the colonies rather than to Europe itself. This book also has perhaps the best explanation as to why the Argentina growth miracle fell apart.
*Misadventures of the Most Favored Nations*, by Paul Blustein
The subtitle is Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trade System and the author is Paul Blustein.
I've enjoyed Blustein's books in the past and this one covers the WTO. It has interesting portraits of Dani Rodrik, Bob Zoellick, Pascal Lamy and others. Maybe I was in too analytic a mood when I read this book but still I recommend it; there's not nearly enough on the topic, even if I might have wanted something more wonkish on this topic. I would have liked more discussion as to whether the WTO matters at all (the Andrew Rose debate), or whether some countries should simply stay out for as long as possible, or a public choice take on how unbiased (or not) the whole thing really is. To be sure all these issues pop up, but I'd like to see Doug Irwin write this book too.
*Mathletics*
The subtitle is How Gamblers, Managers, and Sports Enthusiasts Use Mathematics in Baseball, Basketball, and Football and the author is Wayne L. Winston.
I read only the sections on the NBA. He proposes a four-factor model to evaluate teams: Effective Field Goal Percentage, Turnovers per Possession, Offensive Rebounding Percentage, and Free Throw Rate, or how often a team gets to the line. He claims you can raise your PER by taking lots of bad shots and for that reason PER isn't a great measure. Kevin Garnett was an underrated player. Playing four games in five nights hurts you by an average of four points. The raw data, unadjusted for the Lucas Critique, indicate that when you are up by three points, and there are less than seven seconds left, you should not foul the other team.
Some people will enjoy this book. Baseball receives the most attention. Each chapter simply ends and the author moves on to another topic without any overarching narrative other than the statistical method itself.
Here is some of his blogging.
*American Homicide* ($40, even though the release date is listed as 10/15)
This book has many good and quotable bits, for instance:
Anglos continued to kill Hispanics at a fairly high rate in the 1880s and 1890s. Hispanics were five times more likely than the Chinese to be killed in interracial homicides. They held a wider range of jobs than the Chinese did, moved more freely in society, and enjoyed full civil rights if they were citizens, so they came into contact with Anglos more often and posed a greater threat to them. They also responded in kind to Anglo aggression, killing Anglos at eight times the rate the Chinese did. But the Hispanic community, unlike the Chinese community, was becoming less homicidal.
That is from Randolph Roth's new and notable American Homicide (no subtitle, yay!). Here is a PW summary:
[Roth] distills his argument into several key statistics, all of which hinge upon the fact that Americans are murdered more frequently than citizens in any other first world democracy: U.S. homicide rates are between six and nine per 100,000 people. Roth refutes popular theories about why this is so (e.g., poverty, drugs) and lays out an alternate hypothesis: "increases in homicide rates" correlate with changes in people's feelings about government and society, such as whether they trust government and its officials and their sense of kinship with fellow citizens.
The demons think this is an important book and the genetic influences on my behavior do not appear to contradict that assessment. I found this bit interesting:
…although the FBI data are incomplete, there appears to have been a steady decline in spousal homicide in recent decades, from roughly 1.5 per 100,000 adults per year to 0.5 per 100,000.
This book is a treasure trove of historical nuggets, data, and clear writing. It's the single best source on early murder rates in the American republic. It's especially interesting on how the South evolved to be the most murderous region of the United States. "There's just a whole lot of people there who need killin'," I recall one man (in another book) opining about Texas and its high murder rate.
Book trade fact of the day
According to his publisher, Dan “Da Vinci Code” Brown’s latest book, The Lost Symbol,
sold more copies in its first 36 hours than any other adult hardback
sold in total. (A certain boy wizard is excluded by the artful
qualifier, “adult”.)
That is for the UK I believe (the U.S. book market is in fact less intelligent), where some copies of the book have been selling for less than five pounds.
In case you were wondering: free review copies
The regulators have spoken and they require disclosure. I would guess that about one fifth of the books reviewed here are advance review copies which I did not pay for. They were sent to me for free, by demons who wish to addict me. If am reviewing a book before its publication date, it is almost certainly an advance review copy, sent to me for free.
If I am reviewing a book past its release date, it is only rarely a free review copy. Very often I visit the free public library and walk away with ten or twelve books in my arms. Just this week I ordered two new books for $40 a piece and I would not have bought them otherwise, but for my desire to please MR readers with my timely reviews (which are forthcoming).
I hardly ever receive works of fiction. I am never sent toys or given free trips to Disneyland.
It is reported:
For bloggers, the FTC stopped short of specifying how they must
disclose conflicts of interest. Rich Cleland, assistant director of the
FTC's advertising practices division, said the disclosure must be
''clear and conspicuous,'' no matter what form it will take.
Beware! You have been warned in a clear and conspicuous manner that the demons control me and I do not in turn control the demons.
Addendum: You might wish to read Tyrone on free will. The real scandal is that we (possibly) live in a frozen four-dimensional space-time block and that the content of my reviews has been fully determined by the initial conditions of the universe.
Markets in everything, philosophers’ edition
Essays on Derek Parfit's On What Matters, edited by Juissi Suikkanen and John Cottingham. This book is due out shortly in late October.
The Amazon description reads, aptly:
In Essays on Derek Parfit's On What Matters, seven leading moral philosophers offer critical evaluations of the central ideas presented in a greatly anticipated new work by world-renowned moral philosopher Derek Parfit.
An Amazon.com search, or for that matter a Google search, reveals no pending release date for On What Matters. Perhaps the editors have dabbled in the Newcomb problem? Or have they simply read too much David Lewis?
For the pointer I thank Alex T., a loyal MR blogger.
Economic development and mental illness
Subsequent studies have confirmed that patients in the developing world are much more likely to recover from severe mental illness than patients in the richer countries, well served by psychiatrists and clinical psychologists.
That is from Richard P. Bentall's Doctoring the Mind: Is Our Current Treatment of Mental Illness Any Good? You can think of this book as an updated, more traditionally empirical, less polemic version of Thomas Szasz. It makes large claims which are difficult to evaluate. Ultimately I don't find that it offers a persuasive alternative framework for thinking about either mental illness or "mental illness." Nonetheless the book is stimulating, it relies on substantive argument, and it will induce skepticism about a lot of what passes for treatment these days. Here is one review of the book, here is another.
Leningrad during the Nazi siege
In 2002 secret police records were released. They reveal that during the siege at least 300 people were executed for cannibalism and over 1,400 imprisoned for it.
That is from Michael Jones's compelling Leningrad: State of Siege.
*The Fight for Fairfax*
That's a new book by Russ Banham and the subtitle is A Struggle for a Great American County. It is published by George Mason University Press. Excerpt:
Among the incorporated towns was Falls Church, which claimed 1,100 citizens and an excellent connection to Washington, D.C., via the Washington, Arlington, and Falls Church Electric Railway. Electric trolley lines also connected commuters from the towns of Fairfax, Herndon, Vienna, and Clifton to the District.
That was in 1907. Does anyone know how fast these electric trolleys were? This source suggests speeds were up to 20 mph. Is it possible that a mass transit trip from Fairfax or Clifton to DC was quicker in 1907 than today? With stops, how fast does a bus go at 8:30 a.m.?
*SuperFreakonomics*
Doing the math, you find that on a per-mile basis, a drunk walker is eight times more likely to get killed than a drunk driver.
The subtitle of the book is Global Cooling, Patriotic Prostitutes, and why Suicide Bombers Should Buy Life Insurance and you can pre-order it here. The authors are…come on guys…need I tell you?
The Harper and Collins press blurb offers this summary:
"SuperFreakonomics challenges the way we
think all over again, exploring the hidden side of everything with such
questions as:
- How is a street prostitute like a department-store
Santa? - Why are doctors so bad at washing their
hands? - How much good do car seats do?
- What's the best way to catch a
terrorist? - Did TV cause a rise in crime?
- What do hurricanes, heart attacks, and highway
deaths have in common? - Are people hard-wired for altruism or
selfishness? - Can eating kangaroo save the planet?
- Which adds more value: a pimp or a
Realtor?"
I would stress different angles. My favorite part of the book was the presentation of the List-Levitt critique of experimental economics. In particular the authors discuss whether the subject participants are more cooperative to begin with and also whether they are primed to please the experimenter. The biographical information on John List is fascinating. There is a very good revisionist account of the Kitty Genovese story; the neighbors didn't perform as miserably as many people think. Terrorists are especially likely to rent rather than buy, especially unlikely to take out life insurance (which doesn't pay off in cases of suicide), and likely to have a large number of cash withdrawals relative to other transactions.
Geo-engineering, as a response to global warming, receives more pages than any other single topic.
This book is recognizably in the style of Freakonomics, a book I suspect you already have made up your mind about. I will say only that SuperFreakonomics is a more than worthy sequel, a super sequel you might say. If you're a fan of Freakonomics, you'll like this too. This really is the fall season of big, big books.
*Too Big to Save*, by Robert Pozen
For the last two years I've been receiving requests — email and otherwise — for a readable, educating book on the financial crisis. And while various books on the crisis have had their merits, no one of them has fit that bill. Until now.
Robert Pozen's Too Big to Save: How to Fix the U.S. Financial System is the single best source for figuring out what happened. It is the go-to book if you are a non-specialist and want to understand: how credit default swaps work, the significance of Basel II, mark-to-market, how the various Fed bailouts operated, the meaning of the toxic asset plans, and many other matters.
This is not so much a presentation of a macro narrative on the crisis as an education manual on the moving parts. Its value stands above and beyond any particular partisan view. Pozen, by the way, offers policy recommendations at the rough rate of about one a page and most of them are quite micro. Even if I do not agree with everything he says, his proposals are unfailingly reasonable and well-argued and grounded in fact in some manner.
You can pre-order the book here.
Here is my previous post on the book.
By the way, Pozen does refer to blogs and he even cites blog posts.
What I’ve been reading
1. Arvind Panagariya, India: The Emerging Giant. Why didn't this book get more attention? It's by far the best treatment of the economics of contemporary India.
2. Dancing in the Dark: A Cultural History of the Great Depression, by Morris Dickstein. I put it down. I care about the topic but so much of the content is going through the motions rather than framing the argument around the author's original insights.
3. To Serve God and Wal-Mart: The Making of Christian Free Enterprise, by Bethany Moreton. It sounds like one of those whiny books on Wal-Mart. But I found it insightful throughout and also well-written; the main point is that Wal-Mart can be understood as driven by a Christian service ethos. Parts of it serve as a good economic history of the South and of chain stores and big box stores.
4. Ben Casnocha summarizing The Time Paradox.
5. Nicholson Baker, The Anthologist. Sometimes Baker hits the spot, but this one didn't hold my interest. Poets might like it.
In the pile is Robert Service's Trotsky, which is self-recommending. On DVD, I very much enjoyed watching Tyson, which is chockful of social science in narrative form.
Mullah maximization
It turned out the Shah's curators knew what they were doing. They had bought some outstanding contemporary paintings — including Warhol's Suicide (Purple Jumping Man) and the stellar Woman III — to fill the museum that was never built. Say what you want about the Ayatollah, but despite his public rhetoric about the decadence of the West, his regime knew valuable assets when it saw them. The regime hung onto the paintings, rather than burn them along with the American flag.
That is from Richard Polsky's new and fun i sold Andy Warhol (too soon). The book is a sequel of sorts to Polsky's earlier I Bought Andy Warhol. I am also a fan of Polsky's earlier Art Market Guides.
Eric Falkenstein’s *Finding Alpha*
The subtitle is The Search for Alpha When Risk and Return Break Down. I definitely liked this book. It's the best readable summary I know of why CAPM fails (see my comments here). Market data do not, upon examination, show a close connection between risk and return, at least not once you start moving out on the risk spectrum beyond T-Bills and the like. It's not just the famous Fama and French papers, it is worse than you think. I also like the author's "relative status" theory for why many people enjoy risk; it reminds me of Reuven Brenner, a neglected economist to this day.
More controversially, Falkenstein believes the equity premium is zero or near zero. I see it as positive but equilibration does not occur for at least two reasons. First, people don't like the thought that they are losers, and second, their spouses can criticize their investment decisions when temporary nominal losses come and last for years. In this sense my non-EFM view differs from his.
I recall someone in the blogosphere asking why this book does not overturn modern finance. It is a very good book. For it to "stick" it would need a clear empirical test of the relative status model of risk-taking vs. other models. We don't yet have that and I am not sure we ever will. There are too many conjectures consistent with Beta not much mattering for stock market returns and I am not sure the relative status model offers unique predictions within the realm of financial theory. The relative status model offers plenty of testable, and often confirmed, predictions elsewhere, but once we drop EFM we're in a world where choice and risk are context-dependent and we still have to prove it is relative status-driven risk-taking which regulates equity returns. That's very hard to do.
Here is one summary of the book. Here is Eric Falkenstein's blog.