Category: Books
Where did game theory come from?
The best book to read on that topic is Robert Leonard's new and noteworthy Von Neumann, Morgenstern, and the Creation of Game Theory. Excerpt:
Von Neumann's seminal game paper was part of a rich contemporaneous discussion of the mathematics of chess and parlour games in the first three decades of the century, involving diverse contributors, from Lasker to Zermelo to Konig, Kalmár, and Borel. It was a multifaceted literature, embracing Lasker's philosophical probing of the place of struggle in business and war, Zermelo and the Hungarians' set-theoretic analyses of chess; and Borel's own attempt to create a novel form of social inquiry, blending probability and psychology.
Here is the book's home page, the non-cached copy is not available at the moment. Here are working papers by Robert Leonard, on the history of game theory.
Literary reputations
Somewhat on the way down:
Overall, in other searches also, I see a golden age for "high fiction" in the 1950-1970 period.
Holding steady:
Dwindling:
Up, but down since 2000
On the way up:
Other than very recent authors, these are harder to find than you might think.
Falling off a cliff:
Typing in "Arnold Bennett" is like shooting fish in a barrel.
Why are there so many toys in your bookstore?
Here are two relevant sentences, from Michael Rosenwald:
The only standalone toy store at Tysons Corner Center is Lego.
and:
About 40 percent of toy purchases aren't planned, according to the NPD Group.
The full article is here.
Best economics books for five- to ten-year olds
At FiveBooks, from Yana van der Meulen. The first pick is Cloud Tea Monkeys ("This book focuses on a woman who is very poor") and I have not heard of any of them so I cannot judge the list.
Between the ages of five and ten, I liked books on science, books with maps, and by age ten I liked books on chess and also on cryptography and mathematics, most of the Trachtenberg method of speed arithmetic. An alternative approach is to give your kid books which invest in analytical capacity, without trying to teach economics at all. Is economics a topic or a mode of thought? Perhaps it matters what age you are at.
By the way, did you know that the awesome FiveBooks has now merged with the awesome The Browser? Let's hope the antitrust authorities let that one proceed…
*Apollo’s Angels: A History of Ballet*
That is the new book by Jennifer Homans and it is one of the very best non-fiction works of the year, impeccably written and researched. Here is the excerpt of greatest interest to most economists:
None of the Russian ballet's many admirers, however, would be more central to the future of British ballet than John Maynard Keynes. Keynes is usually remembered as the preeminent economist of the twentieth century, but he was also deeply involved with classical dance and a key player in creating a thriving British ballet…
For Keynes…classical ballet became an increasingly important symbol of the lost civilization of his youth…With Lydia at his side, Keynes plowed his talent and considerable material resources into theater, painting, and dance, even as he was also playing an ever more prominent role in political and economic affairs on the world stage.
The couple's Bloomsbury home became a meeting place for ballet luminaries (Lydia's friends) and a growing coterie of artists and intellectuals who saw ballet as a vital art…When Diaghilev died in 1929, many of them joined Keynes in establishing the Camargo Society, an influential if short-lived organization devoted to carrying Diaghilev's legacy forward — and to developing a native English ballet. Lydia was a founding member and performed in many of the society's productions…Keynes was its honorary treasurer.
In the mid-1930s, Keynes also built the Arts Theatre in Cambridge, funding it largely from his own pocket…As Britain sank into the Depression, Keynes's interest in the arts also took on an increasingly political edge: "With what we have spent on the dole in England since the war," he wrote in 1933, "we could have made our cities the greatest works of man in the world."
I did, by the way, very much enjoy Black Swan (the movie), despite its highly synthetic nature, a few disgusting scenes, and its occasional over-the-top mistakes. So far it's my movie of the year along with Winter's Bone, the Israeli movie Lebanon, and the gory but excellent Danish film, Valhalla Rising.
My favorite recording of Swan Lake (and my favorite classical CD of 2010) is conducted by Mikhail Pletnev (controversial but there is a good review here), who was recently cleared of child abuse charges in Thailand.
*We Have Met the Enemy: Self-Control in an Age of Excess*
The author is Daniel Akst, a former guest-blogger at MR and the book is due out January 6. I should finish grading exams, but in fact I am writing this blog post…
Google ngram: the word “liberty”
For the pointer I thank Kevin Edwards. The link here allows you to see the full graph. In contrast, here is "freedom."
Showing that you don’t care
Christopher Buckley reports the following anecdote from one of his friends:
"Mom negotiated her cremation ahead of time. You'd be surprised how much the price comes down."
*The New Lombard Street*
The subtitle is How the Fed Became the Dealer of Last Resort (home page here) and the author is Perry Mehrling. The entire book is good but the paydirt comes in the last two chapters, where we are treated to a persuasive and original account of what the crash- and post-crash Fed is all about.
Mehrling tells us that the Fed is now committed to supplying liquidity in money markets through its role as a dealer, on both sides of its balance sheet, and that is a critical shift in the nature of central banking. He discusses (pp.126-127) how the collateral behind the shadow banking system relied on CDS markets for its pricing. In Mehrling's account, insurance companies (including AIG) were indirectly serving as dealers of last resort, believing that they held invulnerable positions but nonetheless exposed. Investment banks, on their side, thought they held matched books but the higher and lower CDO tranches turned out to be less similar than they had been expecting, based on historical price risk. None of these expectations survived contact with the reality of the crash.
Now it's the central bank which sells AAA protection because eventually, in Mehrling's view, this activity cannot forever remain a private function (for a start, which insurer is itself safer than AAA?). A good and indeed central question to ask anyone who is proposing a financial system is to ask who will sell AAA insurance.
To quote Perry, the new Fed principle seems to be: "insure freely but at a high premium."
Mehrling also suggests that looking at the Fed's balance sheet, or its transactions, is misleading. The key question is what kind of liquidity dealing option the Fed is promising to the market.
I continue to ponder Mehrling's main claims, but in any case this is an important book about the new Fed.
*The Big Ditch*
The authors are Noel Maurer and Carlos Yu and the subtitle of this excellent book is How American Took, Built, Ran, and Ultimately Gave Away the Panama Canal. In the old days they might have called this book The Panama Canal. Excerpt:
In 1920, when the Panama Canal first opened to commercial traffic, real freight rates between Britain (Liverpool) and the West Coast of the United States (Portland, Oregon) dropped 27 percent. In 1921, the canal's first year of operation, real shipping costs dropped another 35 percent…by 1922, shipping costs had fallen 31 percent below their prewar average.
Within a few years, oil prices in California and Texas had converged. The authors estimate a social rate of return of nine percent for the first two decades of the canal's existence and they do include the costs of defending it.
In my view, whether as tourists, economists, or historians, people do not spend enough time thinking about the Panama Canal. Here is the book's home page.
Affiliation vs. charity
Or are people trying to encourage the production of a public good? Here is David Sedaris:
"A couple of books ago, I put a tip jar on my signing table and I made over $4,000 on my tour … I told people it was all for me to spend on candy. They were delighted because it’s funny to give money to someone who doesn’t need it. If there had been a beggar outside the bookstore, at the end of the evening, he might have had 75 cents. Whereas at the end of my best evening in Dallas [I had] $530 in tips."
For the pointer I thank Bob Cottrell.
*Rush: Why You Need and Love the Rat Race*
The author is Todd Buchholz and it offers a valuable corrective to many accounts of zero- and negative-sum games:
I began to tear apart my old book manuscript and develop a new and controversial idea: the happiness comes from the rushing around. We feel better chasing the tails, even if we never catch them. The hunt makes us happier. I began to write at a furious pace, feeling that I was knocking down false prophets who speak from pulpits, pits, classrooms, and yoga mats and make their followers feel guilty about trying to to eke out some success in a chaotic world.
You can pre-order it here. I agree with the main thesis. My question is this: if there is some value in butting your head against the wall, do the "false prophets" and their preaching make us happy too?
What I’ve been reading
1. Supermac: The Life of Harold Macmillan, by D.R. Thorpe. I'm not one of these people who enjoys reading a lot of long tracts about British politicians, but this is one of the best non-fiction books of the year. It's full of good information, offers useful context for British economic and political debates, has plenty of original research, and is as suspenseful as a very good novel. Most of all, it brings its world and character to life. Highly recommended.
2. J.P. Singh, Globalized Arts: The Entertainment Economy and Cultural Identity. The definitive book for updating coverage on its topic, including the best and most comprehensive history of the UNESCO Convention on Cultural Diversity.
3. James K. Glassman, Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence. p.11: "Reduce the proportion of stocks in your portfolio."
4. Alan Taylor, The Civil War of 1812: American Citizens, British Subjects, Irish Loyalists, and Indian Allies. "The civil war had four overlapping dimensions. In the first, Loyalists and Americans battled for control of Upper Canada. Second, the bitter partisanship within the United States threatened to become a civil war, as many Federalists served the British as spies and smugglers, while their leaders in New England flirted with secession. Third, Irish republicans waged a civil war within the British empire, renewing in Canada their rebellion, which the British had suppressed in Ireland in 1798. Invading Canada, Irish-American soldiers faced British regiments primarily recruited in Ireland, for thousands of Irishmen had fled from poverty by enlisting in the royal forces. Fourth, the war embroiled and divided native peoples…In the North American civil war of 1812, Americans fought Americans, Irish battled Irish, and Indians attacked one another. They struggled to extend, or to contain, the republicanism spawned by the American Revolution." Some of this book has too much detail for my interests, but overall it is good.
5. Thomas Bartlett, Ireland: A History. I liked the cover so much that I also enjoyed the book more. I also liked the weight of this book a great deal; it was just right. In any case a fine one-volume introduction.
How rich was Ireland really?
Not as rich as they thought. I've been reading Fintan O'Toole's excellent Enough is Enough: How to Build a New Republic. Mostly it is an expose of Ireland's crony capitalism and bad political institutions. On economic issues, chapter five offers up the following:
1. During the boom years, property accounted for 72 percent of all assets.
2. For infrastructure, Ireland ranked 26 out of 28 OECD countries.
3. Ireland had a higher share of slow fixed internet connections than in any other comparable country.
4. In terms of R&D or patents, Ireland was well below the OECD average in per capita terms.
5. In the OECD "human and income poverty" rankings, Ireland was 23 out of 25 countries, sandwiched between the United States and Mexico.
6. The country's health care and educational systems are considered subpar.
The author asks: "Did anyone seriously believe the Irish were sixty percent richer than the Germans?" Income is not wealth.
Unfortunately, the second half of the book collapses into polemics and generalities, but some of the earlier discussions are useful, important, and not available in most other sources. Here is a review of the book.
*Bourgeois Dignity*
The author is Deirdre McCloskey and the subtitle is Why Economics Can't Explain the Modern World. It is on the cultural and intellectual foundations of the Industrial Revolution and I am convinced by the major thesis. Here is one version of it:
My libertarian friends want liberty alone to suffice, but it seems to me that it has not. Changing laws is not enough (though it is a good start — and rotten laws can surely stop growth cold.) True, from 1600 on the new dignity and the new liberty normally reinforced each other, and such a reinforcement is one possible source of the economist's "non-linearities." Dignity and liberty are admittedly hard to disentangle. But dignity is a sociological factor, liberty an economic one.
Here is a very good interview with McCloskey about the new book.