Category: Books
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.
*The Long Divergence*
The author is Timur Kuran and the subtitle is How Islamic Law Held Back the Middle East. My previous and longer discussion of Timur is here. Here is a short excerpt from the book:
…several institutions…blocked evolutionary paths in the direction of modern banking: the Islamic law of commercial partnerships, the Islamic inheritance system, the waqf system, and the individualism of Islamic law. All were introduced earlier as causes of the region's other handicaps. Like the region's previously discussed symptoms of underdevelopment, delayed financial modernization was an unintended consequence of institutional choices that served laudable objectves.
This book avoids and indeed remedies two major problems often found elsewhere. First, many books on Islam are weak on law and economics or simply ignore the topic altogether. Second, many books on "the New Institutional Economics" give generalities and taxonomy, rather than concrete, historically well-founded analysis.
Arthur Schopenhauer on tetragamy
Was any major philosopher better than Schopenhauer at starting with genuine insight and turning it into an untenable conclusion?
Tetragamy adjusted marriage into an institution that would make life better for men and women, Schopenhauer theorized, because it accommodated the natural sexual and reproductive capacities of humans in ways in which monogamy did not. It also addressed the material and financial needs of all parties in a more rational way. Two young men should marry a young woman, and when she outgrew her reproductive ability, and thereby lost her attractiveness to her husbands, the two men should marry another young woman who would "last until the two young men were old." The financial advantage of this type of marriage would be considerable, Schopenhauer thought. At first, when the two young men's incomes were low, they would only have to support one woman and her small children. Later, when their wealth increased, they would have the means to support two women and many children…Schopenhauer never published his musings on tetragamy…
That is from David E. Cartwright's recent Schopenhauer: A Biography.
Don’t Play Games with Your Kids
Seeing that my 9-year old was reading The Mysterious Benedict Society and the Prisoner's Dilemma I thought this was an excellent opportunity to teach my kids some game theory. Thus, I explained the prisoner's dilemma and offered the 9 and 12 year old the opportunity to cheat or cooperate with substantial cash payoffs.
My kids are competitive so I didn't foresee any problems. Yet the kids kept cooperating. Did they not understand the game? Alas, it soon became clear that they understood all too well. Silly me. I had neglected to take into account that the opportunity to take money from Daddy greatly raised the payoff to (cooperate, cooperate). (As an aside this did increase somewhat my belief in Steve Landsburg's unusual interpretation of some experimental games).
Ok, I was losing money but no problem, I resolved to change the game on the fly greatly increasing the payoff to cheat. Only I miscalculated. In my eagerness to drive the kids to the (cheat, cheat) equilibrium I raised the payoff to cheat so high that they did best by (cheat, cooperate) followed by a side-payment to split the spoils. Of course the kids saw that right away. Daddy loses again.
Having satisfied myself that the kids understood strategic thinking, unfortunately even better than me, I ended the game. But now I was a substantial sum of money in the hole. What to do? I resolved to auction off some money with an all-pay auction. Success! As usual, I managed to sell a dollar for well over a dollar. Even the kids didn't see their way past that one.
Having regained some dignity I sent the kids to bed. Still the kids were up on net. What could I do? Finally, after some thought I figured out how I could rebalance our portfolios and at the same time teach the kids all about Ricardian Equivalence and (appropriately) the Rotten Kid Theorem. All I had to do was give them less for Christmas. Daddy wins!
(Well, at least until I explained my clever idea to my wife. Nuff said.)
Are bees more Bayesian?
It appears, therefore, that a swarm's scout bees do something sharply different from what humans do to reach a full agreement in a debate. Both bees and humans need a group's members to avoid stubbornly supporting their first view, but whereas we humans will usually (and sensibly) ive up on a position only after we have learned of a better one, the bees will stop supporting a position automatically. As is shown…after a shorter or longer time, each scout bee becomes silent and leaves the rest of the debate to a new set of bees. Figure 6.7 shows how this regular turnover in which scouts are dancing can help a swarm's scouts quickly reach an agreement…
In other words, the bee algorithms allow attrition (a time-honored process of improving the scientific community) to operate at an especially rapid pace.
That is from the fascinating book Honeybee Democracy, by Thomas D. Seeley. Here is the book's home page. Here is a good review of the book:
In the final chapter, Seeley suggests five lessons we could learn from bees.
†¢ Compose a decision-making group of individuals with shared interests. Here bees have a higher stake than us: all members of a colony are related (sisters) and nobody can survive without the group.
†¢ Minimise the leader's influence on the group. Here we humans have much to learn.
†¢ Seek diverse solutions to the problem. Humans realised only recently that diversity is good for a group.
†¢ Update the group's knowledge through debate. Here again, bees are superior to us, as each scout's "dances" become less effective with time, no matter how good a new site is, while stubbornness can lead humans to argue forever.
†¢ Use quorums to gain cohesion, accuracy and speed. Impressively, bees came up with this concept long before the Greeks.
As a departmental chair at Cornell University, Seeley says, he applies these principles at faculty meetings with great success.
Definitely recommended.
*The Bed of Procrustes*
The subtitle is Philosophical and Practical Aphorisms and the author is Nassim Taleb. Here are three of his aphorisms:
Your reputation is harmed the most by what you say to defend it.
Quite revealing of human preferences that more suicides come from shame or loss of financial and social status than medical diagnoses.
They will envy you for your success, for your wealth, for your intelligence, for your looks, for your status — but rarely for your wisdom.
Anthony Powell eBooks
U. Chicago Press informs me:
Next month we'll be publishing e-book editions of all the twelve individual novels that make up Anthony Powell's widely acclaimed epic novel of twentieth-century English life, A Dance to the Music of Time–and, for the month of December, we'll be giving away the first volume, A Question of Upbringing, free A Dance to the Music of Time is one of the most acclaimed novels of the twentieth century.
You can get the first one for free, here, or in other eBook locales. The rest of the volumes will be $8.00 apiece.
*The Phone Book*
The first American president to have a telephone on his desk was Herbert Hoover, who had one installed in 1929. The White House did have a telephone well before most of the country, as Rutherford B. Hayes had had one installed in the telegraph room of the executive mansion in 1878. It received little use at first, since so few other people had telephones at that time. The very first telephone book for the city of Washington, D.C. lists this presidential telephone simply as "No.1."
That is from the interesting and new The Phone Book: The Curious History of the Book That Everyone Uses But No One Reads, by Ammon Shea.
Here is a post on Chaim Weizmann's passport.
*Perfecting Parliament*
The author is the highly intelligent Roger Congleton (my colleague) and the subtitle is Constitutional Reform, Liberalism, and the Rise of Western Democracy. Here is the home page summary:
This book explains why contemporary liberal democracies are based on historical templates rather than revolutionary reforms; why the transition in Europe occurred during a relatively short period in the nineteenth century; why politically and economically powerful men and women voluntarily supported such reforms; how interests, ideas, and pre-existing institutions affected the reforms adopted; and why the countries that liberalized their political systems also produced the Industrial Revolution. The analysis is organized in three parts. The first part develops new rational choice models of (1) governance, (2) the balance of authority between parliaments and kings, (3) constitutional exchange, and (4) suffrage reform. The second part provides historical overviews and detailed constitutional histories of six important countries. The third part provides additional evidence in support of the theory, summarizes the results, contrasts the approach taken in this book with that of other scholars, and discusses methodological issues.
The book's introduction is here (pdf). It is the best public choice/historical account of the rise of democracy that I know of and there is also a very interesting chapter on Japan.
The last twelve years of reading fiction
A few weeks ago I shared a Mungowitz-organized meal with Michael Moses, whom I had not seen for about twelve (?) years. The question came up what truly impressive or startling fiction we each had read since our last chat, what had really stuck with us. My gut level, unreflective picks were the following, in no particular order:
Underworld, by Don DeLillo
Jonathan Strange and Mr. Norrell, by Susannah Clarke
The Obscene Bird of Night, by José Donoso
Alice Munro, short stories, various collections.
V, by Thomas Pynchon.
The Year of the Death of Ricardo Reis, by Jose Saramago
Juan Rulfo, Pedro Paramo
Julio Cortazar, Hopscotch [Rayuela]
I also might have named Henning Mankell or David Grossman's latest book and perhaps I have forgotten other good picks.
Revaluing Hayek
There has been plenty of talk about how Hayek's predictions in Road to Serfdom have been falsified. Nonetheless, recent events in Ireland and the EU raise the value of some other Hayek books:
1. Monetary Nationalism and International Stability (free at the link!). This book isn't as clear as it might have been, and he is too skeptical about currency depreciation. One point is that bad international currency arrangements can distort relative prices and also drive boom-bust cycles. Partially globalized currency arrangements will prove counterproductive and possible unworkable. While I am more sympathetic to "monetary nationalism" than is Hayek, this 1937 short book reveals him to be a thinker with concerns very much in synch with the world of 2010. There is a reason for that, and it's not an entirely reassuring one.
2. Individualism and Economic Order, Counterrevolution of Science, and in particular Hayek's critique of rationalist constructivism, of which the EU and the euro are prime current examples. If you wish to know why the euro is failing, or why not every Obama policy will work out, this is the #1 place to go. The euro project was even driven by the French and resisted by the English, exactly as Hayek's approach would have predicted.
I still think that The Sensory Order is Hayek's most overrated book, though many call it his most underrated book, which in my view is where the overratedness comes from. I know the recent talk about "neural nets" and the like and you can claim Hayek was a precursor of the idea of the mind as an organ of classification. I simply think this is an empirical book more or less written in the 1920s about a field which has changed dramatically in the last ten to fifteen years, never mind in the last ninety years. And for an empirical book…it's not even empirical! A few weeks ago I asked Bruce Caldwell whether the book had a single true sentence…
David Brooks on Tolstoy
Tolstoy devoted himself to activism and spiritual improvement – and paid the mental price. After all, most historical leaders write pallid memoirs not because they are hiding the truth but because they’ve been engaged in an activity that makes it impossible for them to see it clearly. Activism is admirable, necessary and self-undermining – the more passionate, the more self-blinding.
Here is more. By the way, here is the Pope on padded pipes.
*Marketplace of the Gods*
The author is Larry Witham and the subtitle is How Economics Explains Religion. It's a good book, and my favorite passage was this:
[Larry] Iannaccone was born in Buffalo into a family of Italian immigrants. Earlier in the century, the family had broken from Catholicism to join a dissenting branch of the Jehovah's Witnesses, which itself had splintered off from the early Adventists. It was rich American church history, and young Iannaccone had a front-row seat on the sectarian religious experience for eighteen years of his life. Still, his father had a Columbia University Ph.D. in education. He was a "wandering academic," who went to jail as a conscientious objector, set up summer church camps, and taught at several universities. The family ended up at the University of California, Santa Barbara, and Laurence went off to Stanford to study mathematics. Then in 1977 he headed for Chicago, considering pure mathematics but not exactly enthused. Looking for alternatives, he had an interview with James Coleman, the noted sociologist. Coleman said that sociology was in utter disarray: "You should think in terms of economics," he advised. "Rational-choice economics."
Jordan markets in everything
At Sami Abu Hossein's cramped bookstore, the hundred or so book titles listed on a wall aren't bestsellers. They're banned.
And the cheery Abu Hossein can you get you any of them, sometimes in the few minutes it takes to sit down and drink a cup of thick-brewed Turkish coffee.
"There are three no-nos," the owner of Al Taliya Books explains with a big smile. "Sex, politics and religion. Unfortunately, that's all anyone ever wants to read about."
Hat tip goes to Steve Silberman.