Category: Books
New books and notes on China
1. Run of the Red Queen: Government, Innovation, Globalization, and Economic Growth in China, by Dan Breznitz and Michael Murphree. This book argues that China is not on the verge of making major product innovations, but is coming up with a healthy stream of product-cheapening process innovations. Here is a good interview with one of the authors. Reading it is not always a thrill, but it is full of substance and an important book. It provides lots of evidence — from novel corners — for the “China as more decentralized than we think” view.
2. Tom Orlik, Understanding China’s Economic Indicators: Translating the Data into Investment Opportunities. A very useful book, the title is much more accurate than the last three words of the subtitle. I wish the book had more on believability, however.
3. Aaron L. Friedberg, A Contest for Supremacy: China, America, and the Struggle for Mastery in Asia. I have yet to read this one.
Here are some interesting estimates:
Data from UBS show China’s bank-sector credit—a measure that includes bank loans and holdings of bonds—as a share of gross domestic product rising from 121% in 2008 to close to 150% in 2010. Taking account of banks’ off-balance-sheet lending, the number is even higher, closer to 180%, and the rate of increase in the last year sharper.
Such a rapid expansion in credit is risky. UBS points out that a 35 to 40 percentage-point increase in the credit-to-GDP ratio of other economies over a five-year period has often coincided with the arrival of a crisis. In China, fault lines in loans to the property sector and local governments are already starting to emerge.
As important, China is getting less growth bang for its credit buck than it used to. From 2003 to 2008, total social finance—a Chinese government measure that includes on- and off-balance-sheet lending by the banks as well as bond and equity issuance—expanded on average by 18% a year, supporting growth in nominal GDP of 17% a year. In 2009 and 2010, finance exploded 33% a year on average, but GDP growth slowed to 12%.
How to make audio books work for you
Stuart Torr asks:
I get an audio book free with my Kindle. Do you have any tips about what type of book works as an audio book? Fiction or non-fiction? Short stories or something like War and Peace?
I would be curious to hear your answers., and also if you have an underlying model of the audiobook experience…
Don Peck’s new book
It is Pinched: How the Great Recession has Narrowed Our Futures and What We Can Do About It. Here is his Atlantic cover story on the future of the middle class, think of it as TGS from a more left-wing point of view, excerpt:
“I’m deeply concerned” about the prospects of less-skilled men, says Bruce Weinberg, an economist at Ohio State. In 1967, 97 percent of 30-to-50-year-old American men with only a high-school diploma were working; in 2010, just 76 percent were. Declining male employment is not unique to the United States. It’s been happening in almost all rich nations, as they’ve put the industrial age behind them. Weinberg’s research has shown that in occupations in which “people skills” are becoming more important, jobs are skewing toward women. And that category is large indeed. In his working paper “People People,” Weinberg and two co-authors found that interpersonal skills typically become more highly valued in occupations in which computer use is prevalent and growing, and in which teamwork is important. Both computer use and teamwork are becoming ever more central to the American workplace, of course; the restructuring that accompanied the Great Recession has only hastened that trend.
There is an Atlantic symposium on Peck’s issues, here is my opening contribution, and there is a link to the whole thing.
Just pre-ordered
Daniel Yergin, The Quest: Energy, Security, and the Remaking of the Modern World.
811 pp. of fun, fun, fun.
What I’ve been reading
1. Jo Nesbø, The Redbreast. These days it’s odd to read a fictional book about neo-Nazi cults in Norway, including a murderous villain who leaves behind a manuscript explaining his ideas and purpose. I didn’t love it, but I liked it and I never considered putting it down; I will likely try another book by Nesbø. The author, by the way, graduated from the Norwegian School of Economics.
2. Félix J. Palma, The Map of Time. Spanish speculative fiction, now in English. It never feels deep, but finally we have a time travel novel chock full of new (and good) ideas. Recommended to all those who find that sufficient, but not for those who don’t.
3. Tim Congdon, Money in a Free Society. Neo-monetarist tract! With plenty on all the different notions of the liquidity trap out there, which are often confused.
4. Kate Christensen, The Astral: A Novel. About marriage, self-deception, and general decay and destruction. Her best book so far.
5. Isaac Asimov, Franchise. Only a short story, but available in stand-alone form. Asimov considers a future world where AI is so advanced that elections can be settled by asking a few questions to a computer-identified “typical” voter and adding that input to the calculations of the computer. One of his deepest works, recommended for all students of public choice.
Sentences to ponder markets in everything
Only children’s books or specialist scuba diving titles currently boast to be fully water-resistant.
A waterproof paperback book will be hitting the market next year, hat tip goes to Bookslut, who knows of one other waterproof title.
And here is another Markets in Everything, hat tip to TW.
By the way, the (possible) salt water flows on Mars were in part discovered by a 21-year-old Nepalese undergraduate, and it seems he had the key contribution.
Was Jared Diamond right about the collapse of Easter Island?
The excellent Charles C. Mann reviews a new book on the history of Easter Island, The Statues That Walked, excerpts:
“Rather than a case of abject failure,” the authors argue, “Rapa Nui is an unlikely story of success.” The islanders had migrated, perhaps accidentally, to a place with little water and “fundamentally unproductive” soil with “uniformly low” levels of phosphorus, an essential mineral for plant growth. To avoid the wind’s dehydrating effects, the newcomers circled their gardens with stone walls known as manavai. Today, the researchers discovered, abandoned manavai occupy about 6.4 square miles, a tenth of the island’s total surface.
More impressive still, about half of the island is covered by “lithic mulching,” in which the islanders scattered broken stone over the fields. The uneven surface creates more turbulent airflow, reducing daytime surface temperatures and warming fields at night. And shattering the rocks exposes “fresh, unweathered surfaces, thus releasing mineral nutrients held within the rock.” Only lithic mulching produced enough nutrients—just barely—to make Rapa Nui’s terrible soil cultivable. Breaking and moving vast amounts of stone, the islanders had engineered an entirely new, more productive landscape.
Mann sums up:
People have done lots of environmentally destructive things, heaven knows. But there are surprisingly few cases in which societies have permanently laid waste to their own subsistence. The history of Easter Island suggests that humans generally do have a long-term capacity to work with natural systems, even in extreme cases.
I just bought the Easter Island book, Mann’s new book, which I devoured immediately, is out soon.
Facts about Leon Walras
1. He twice failed the entrance exam at the Polytechnique in Paris because of his weak math skills.
2. He enrolled in a mining engineering school, wrote novels, and was an art critic for a while.
3. He was self-taught in economics.
4. Walras thought he deserved a Nobel Peace Prize, though he failed to win one.
That biographical information is from Cocktail Party Economics: The Big Ideas and Scintillating Small Talk about Markets, by Eveline J. Adomait and Richard G. Maranta. I can imagine this book as a good supplement to an undergraduate economics class with a very good basic text; it is mostly basic analytics with scattered interesting features throughout the book. Here is a short interview with one of the authors.
*The Economic Origins of Roman Christianity*
That is the new book by Robert B. Ekelund, Jr. and Robert D. Tollison; I have not yet read it. It is listed as due out August 15th, although Amazon seems to have one in stock now.
What I’ve been reading
1. Gavin Maxwell, A Reed Shaken: Travels Among the Marsh Arabs of Iraq. One of my favorite travel books. It avoids both being too impressionistic and being too didactic. It never assumes that the writer’s state of mind is interesting to the reader per se. It brings a little-known and by now largely destroyed corner of the world to light.
2. Ludwig Mises on the exhuastion of the reserve fund. I first read that passage when I was fourteen years old and I was scared.
3. Dubner’s excellent memoir, largely about religion, will become a movie.
4. Henry Mayhew, London Labour and the London Poor. There is a splendid new Oxford University Press edition. Browsing or reading this book is one of the best ways to get a feel for Victorian England (circa 1850-51), or for how labor markets have changed.
5. The Last Werewolf, by Glen Duncan. Half of this is quite fun, the other half is quite stupid. Your call, but half fun is actually a lot.
I’ve also relented and finally tried Game of Thrones. I’m just at the beginning; we’ll see whether it ends up owned or liberated.
New and excellent manuscript on the economics of the family
By Martin Browning, Pierre-André Chiappori, and Yoram Weiss, you will find it here, on-line and free. Perhaps in this post-Freakonomics era you are jaded and feel you have seen too many “economics of the family” books. This is a scholarly rather than popular manuscript, and it is full of data and (simple) models. At some point it will come out from Cambridge University Press.
For the pointer I thank Scott Cunningham; “All of the models of household production, bargaining, sorting in marriage and dating, and the numerous other strands within this literature have been finally brought together into one place.”
*Stealth of Nations*
The author is Robert Neuwirth and the subtitle is The Global Rise of the Informal Economy. Excerpt:
The merchants here are Chinese. But most of the customers, like Chief Arthur, are from Africa. The trade is generally brisk — on Fridays it can be overwhelming — and it’s accompanied by what seems like a permanent sound track: the rasp of unspooling packing tape and the whir of currency counters. Each box that leaves the market is heavily sheathed in plastic tape — to ensure a secure seal and to make it hard to tamper with. And the economy here, as in almost all haphazard markets around the world, is cash-only. All payments are made in yuan, and, as the largest denomination in Chinese currency is one hundred yuan — worth about $14 — people making big deals carry massive bundles of cash. Chief Arthur, for instance, who was carrying a wad of four hundred hundred-dollar bills, had to convert them into almost three thousand hundred-yuan notes — a stack of bills large enough that he needed a briefcase or duffel bag to carry it around.
Much of this book draws from Nigeria, China, and Ciudad del Este in Paraguay. Black markets are a well-worn topic, but I found a lot of the material here to be fresh and vital. The book is due out in October.
The 11th Commandment?
At the conference I attended in Israel, Shimon Peres said that if he could, he would add an 11th commandment, “Respect your sons and daughters.”
I would go for “Thou shalt not spread my word with the sword,” which sounds appropriately biblical and might have done some good.
If you could write an 11th commandment what would it be?
*The Other Barack*
The author is Sally H. Jacobs and the subtitle is The Bold and Reckless Life of President Obama’s Father. But forget about “our Obama” and read this as a biography of colonialism, the 1960s, interracial relations, and most of all the East African intelligentsia. In addition to being a life story, it’s an excellent treatment of those topics. Here is one of the soggier excerpts:
As suddenly as it began, however, his ascent was over. Six years after he returned from the United States, Obama had been let go from one promising job and was fired from another, his career abruptly dead-ended. All three of his marriages had failed, and he was barely on speaking terms with any of his children. Penniless and increasingly dependent on his beloved Johnnie Walker Black, he collapsed at night on the floor at a series of friends’ homes and lived for periods alone in a solitary hotel room. It was a monumental fall.
…”He didn’t commit a crime. He didn’t do anything wrong particularly. He just didn’t finish the race. As schoolboys, we were always taught that you must finish the race no matter what. But he didn’t. He just collapsed.”
Barack Obama Sr. spent two years in the Harvard economics Ph.d. program and had a very good knowledge of econometrics. Edward Chamberlain, Robert Dorfman, Roger Noll, Sam Bowles, Lester Thurow, and John Dunlop make cameos in this part of the book. Barack wanted to write his Ph.d. thesis on an econometric investigation on the staple theory of development, but after two years he lost his departmental funding and had to leave, eventually having to leave the U.S. as well. Harvard was upset that he seemed to be married to two women at once and they looked to ease him out of the program; it’s an ugly story.
There are interesting bits on his time working at Shell, at the tourism bureau, his four months in traction following a major auto accident, his connection to domestic Kenyan political disputes, his role as a Kenyan urban planner, and how he would chat up women. This book was very extensively researched.
Definitely recommended to anyone interested in East Africa. Here is David Garrow’s review of the book.
From Ilya N.
Blog fan here.
I wanted to inform you that there will be a new book published called “First Thing We Do, Let’s Deregulate All the Lawyers” by Robert W. Crandall, Clifford Winston and Vikram Maheshri. I thought you and your fellow GMU economists would be very interested in this book. I provide you a link and a quick summary, if you are interested. Best wishes!
http://www.brookings.edu/press/Books/2011/firstthingwedoletsderegulateallthelawyers.aspxLawyers are prominent among the 20 percent of the U.S. labor force that needs to obtain a government license to practice their profession. Even people who have a legal education are prevented from practicing law in all but a few states unless they graduated from a law school accredited by the American Bar Association (ABA). ABA regulations also prevent licensed lawyers who work for firms that are not owned and managed by lawyers from providing legal services to parties outside of their firm. At the same time, a slate of government policies has increased the demand for lawyers’ services. Basic economics suggests that entry barriers to the legal profession, regulations on the type of legal services that firms and individuals can provide, and government-induced demand for lawyers will raise the price of legal services.
In First Thing We Do, Let’s Deregulate All the Lawyers, Clifford Winston, Robert Crandall, and Vikram Maheshri argue that this higher price cannot be justified as the “cost” of ensuring that uninformed consumers of legal services are served by competent lawyers and that socially desirable policies are implemented and executed. Instead, the forces that reduce the supply of, and increase the demand for, lawyers create significant social costs from higher legal fees, less innovation by law firms and lawyers, misallocation of the nation’s labor resources, and socially perverse incentives for attorneys to support inefficient policies that preserve and enhance their wealth.
To address those costs and improve social welfare, the authors propose that it is desirable to deregulate entry by individuals and firms into the legal profession. This will force lawyers to compete more intensely with each other and to face competition from nonlawyers and firms that are not owned and managed by lawyers. Allowing an ABA monopoly on law school accreditation is not necessary to facilitate informed decisions by consumers of legal services, and neither are statewide licensing-exam requirements.
The book provides a much-needed analysis of a profession whose services have long been seen as enormously expensive. Too little has been done to identify a large source of the costs to consumers and to explain that the system of regulation enables those costs to persist.
The Amazon link is here.