Here it is, that maddening yet brilliant book.
The worst part is the talk about the socialization of investment. My favorite parts — not the same as the best parts — are the notorious chapter 17 (remember all that talk of "own-rates of interest"?), the discussions of "animal spirits," and the short notes at the end about mercantilism and Silvio Gesell. This book is more poetic, and more image-rich, than just about any other economics tract. That is one reason why it it has been read in so many contradictory ways.
What is, after all, the central message? That aggregate demand matters? That wages and prices are sticky? That wages and prices are not always sticky but ought to be, to prevent an ever-worsening downward spiral? That monetary factors prevent the rate of interest from equilibrating ex ante savings and investment, thereby requiring income adjustments to equilibrate them ex post? That the rate of interest is simply too high? That the stock market can screw everything up? That expectations are the key to the macroeconomy? All of those?
Keynes’s great contribution was to create an economics in which a persistent Great Depression was possible. But on policy recommendations, I would stick with Milton Friedman, or for that matter Keynes’s earlier Tract on Monetary Reform. We can recognize the dangers of deflation without embracing Keynes’s seductive yet unworkably byzantine analytical framework.
Thanks to Brad DeLong for the pointer.
Then Suharto looked at [James] Wolfensohn. "You know, what you regard as corruption in your part of the world, we regard as family values."
That is from Sebastian Mallaby’s The World”s Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations. This study of Wolfensohn is not only the best book on the World Bank, but it is one of the best books on both leadership and the economics and politics of bureaucracy. It is also the most biting critique of NGOs I have read, and oddly, the most convincing extant defense of the Bank. Here is Dan Drezner on the book.
I’ve also been reading Orhan Pamuk’s Snow, a fictional tale of Turkish secularization and religious opposition. I’ll cite Pamuk, Jose Saramago, and W.G. Sebald as the Continental writers of the last thirty years who will still be read fifty years from now.
Randall Kroszner writes a very nice blurb for my new Markets and Cultural Voices: Liberty vs. Power in the Lives of Mexican Amate Painters:
Cowen is a cross between Vasari and de Soto, using the lives of artists in rural Mexico to challenge the development orthodoxy to illustrate how global markets and liberty are the friends, not the enemies, of the rural poor and their cultural expression. A stimulating interdisciplinary tour de force and a must-read for anyone who cares about development policy.
You can order the paperback here. Please do consider buying this book, noting that any royalties will go to the artists. I regard it as the most personal book I have written — recording the story of these artists, and integrating it with economic understanding — has been a personal quest of mine for almost a decade.
Yes I would prefer that this book is free like MR, but the publisher will not cooperate.
Freaknomics is now #2 on Amazon.com, or at least it was late Tuesday night when I wrote this. That is not number two for economics, that is number two overall.
Henry Hazlitt’s Economics in One Lesson is now on-line. The first economics book I read was The Incredible Bread Machine; I believe that Milton Friedman’s Capitalism and Freedom was number three. Then I tried some Galbraith and also picked up (and promptly put back down, I was only thirteen) Friedman and Schwartz’s Monetary History of the U.S.. Thanks to Mahalanobis for the pointer.
It’s sad to see a first-rate economist descend to the level of a third-rate politician. But saddened is what I feel after reading Sach’s response to Easterly’s review of The End of Poverty (see also Tyler’s comments).
Easterly’s simplistic approach fits well with many conservatives in
Washington, who would rather blame the poor than help them. Somehow the
world’s poorest people are made out to be our enemy. According to this
upside-down worldview, the people dying of malaria are out for our
money — all $3 per year that it would cost each person in the rich
world to help Africa mount an effective control program!
Easterly, of course, said no such thing. What he said is that the tinpot dictators of Africa and their cronies are out for our money and they often succeed in diverting it to their own pockets. Ignoring this reality is the simplistic approach.
…it isn’t famous people who drive the name game. It is the family just a few blocks over, the one with the bigger house and newer car. The kind of families that were the first to call their daughters Amber or Heather and are now calling them Lauren or Madison. The kind of families that used to name their sons Justin or Brandon and are now calling them Alexander or Benjamin. Parents are reluctant to poach a name from someone too near — family members or close friends — but many parents, whether they realize it or not, like the sound of names that sound "successful."
But as a high-end name is adopted en masse, high-end parents begin to abandon it. Eventually, it is considered so common that even lower-end parents may not want it, whereby it falls out of the rotation entirely. The lower-end parents, meanwhile, go looking for the next name that the upper-end parents have broken in.
That is from Steve Levitt’s Freakonomics, with Steven Dubner, here is my previous post on this excellent book. Here is the CD version of the book. Levitt, by the way, picks "Aviva" as a girl’s name ready to "break out," but even I wouldn’t name my kid after an insurance company.
If the transformation of eggs by heat seems remarkable, consider what beating can do! Physical agitation normally breaks down and destroys structure. but beat eggs and you create structure. Begin with a single dense, sticky egg white, work it with a whisk, and in a few minutes you have a cupful of snowy white foam, a cohesive structure that clings to the bowl when you turn it upside down, and holds its o wn when mixed and cooked. Thanks to egg whites we’re able to harvest the air, and make it an integral part of meringues and mousses, gin fizzes and souffles and sabayons.
The full foaming power of egg white seems to have burst forth in the early 17th century. Cooks had noticed the egg’s readiness to foam long before then, and by Renaissance times were exploiting it in two fanciful dishes: imitation snow and the confectioner’s miniature loaves and biscuits. But in those days the fork was still a novelty, and twigs, shreds of dried fruits, and sponges could deliver only a coarse froth at best. Sometime around 1650, cooks began to use more efficient whisks of bundled straw, and meringues and souffles start to appear in cookbooks.
That is from Harold McGee’s superb On Food and Cooking: The Science and Lore of the Kitchen. Imagine the writing and expository skills of a Richard Dawkins, but applied to applied chemistry in the kitchen, and maintained at a consistent and gripping level for 809 pages. The only problem with this book is that the magnitude of the quantity and quality is simply overwhelming.
Dan Klein and I used to have a saying: "You so much learn the whole book." In marked contrast is Roger Penrose’s The Road to Reality: A Complete Guide to the Laws of the Universe. Penrose remains a brilliant scientist and writer. But never before have I seen a book that so clearly consists of material that I either a) already know, or b) will never know.
In the newly revised, more accessible edition of the New International Version of the Bible, “stoned” has been changed to “stoned to death” for fear that modern readers may get the impression that the reward for adultery is a big spliff.
What five terms in a housing ad correlate with higher prices?
3. Corian [read here, I didn’t know what it was either…]
And what correlates with lower prices?
5. Great neighborhood
In economics language, it is the costly signals which carry real value. You use general words when you have nothing better to say, and remember that for next Valentine’s Day.
The list is from the new Freakonomics: A Rogue Economist Explores the Hidden Side of Everything [you can pre-order, Amazon lists May 1 but it hits the stores April 12], by Steve Levitt and Steven Dubner. Imagine the best of Levitt put into readable form by an excellent journalist. When it comes to the popular exposition of contemporary economic research, this book is a milestone. Why do drug dealers still live with their moms? How do we know that sumo wrestlers cheat? Here is Alex’s previous post on Levitt and names and race. Here is my previous post on Levitt and teacher cheating.
The bottom line in one sentence: "People lie, numbers don’t."
Public Finance and Public Policy, the new textbook by Jonathan Gruber, is not only the best public finance textbooks I’ve ever read it is one of the best textbooks I’ve read in any field. Gruber and Worth Publishers have clearly put a huge amount of money and effort into this book – the content is superb and so is the presentation (graphs, organization, supplementary material – e.g. check out these cool powerpoint presentations.).
Gruber is especially good at discussing empirical research. What is the effect, for example, of social security on private savings, on the living standards of the elderly, on the incentive to retire? What do we learn from the international evidence?
(Quick answers: Social security crowds out about 35 cents of private savings for every social security dollar. As a result, social security has reduced the eldery poverty rate although not quite as much as naive trends would suggest. Social security does reduce the labor force participation rates of the elderly but less so in the United States than in most European countries where there are huge disincentives for working beyond the normal retirement age. (Get the book or this powerpoint presentation for more details – note you need to view the PP in SlideShow mode to get the full effect.)
Gruber covers all the major programs – education, social security, unemployment insurance, Medicaid and Medicare, the tax system etc. – and in each case he carefully explains the institutional details and then he evaulates the empirical evidence focusing on the most telling pieces of evidence (rather than trying to cover everything that has ever been written as in a review paper).
Gruber is so good on the empirical research that this book would be a useful supplement to an applied econometrics class. Just flipping through it and reading the boxed Empirical Evidence sections gives a good feel for what the cutting edge questions and techniques are in empirical research.
Congratulations to Gruber on a tour de force!
In my new book, Break, Blow, Burn, I offer
line-by-line close readings of 43 poems, from canonical Renaissance
verse to Joni Mitchell’s Woodstock, which became an anthem for my
conflicted generation. In gathering material, I was shocked at how weak
individual poems have become over the past 40 years. Our most honoured
poets are gifted and prolific, but we have come to respect them for
their intelligence, commitment and the body of their work. They ceased
focusing long ago on production of the powerful, distinctive,
self-contained poem. They have lost ambition and no longer believe they
can or should speak for their era. Elevating process over form, they
treat their poems like meandering diary entries and craft them for
effect in live readings rather than on the page. Arresting themes or
images are proposed, then dropped or left to dribble away. Or, in a
sign of lack of confidence in the reader or material, suggestive points
are prosaically rephrased and hammered into obviousness. Rote formulas
are rampant – a lugubrious victimology of accident, disease, and
depression or a simplistic, ranting politics (people good, government
bad) that looks naive next to the incisive writing about politics on
today’s op-ed pages. To be included in this book, a poem had to be
strong enough, as an artefact, to stand up to all the great poems that
precede it. One of my aims is to challenge contemporary poets to
reassess their assumptions and modus operandi.
the 1990s, poetry as performance art revived among young people in
slams recalling the hipster clubs of the Beat era. As always, the
return of oral tradition had folk roots – in this case the incantatory
rhyming of African-American urban hip-hop. But it’s poetry on the page
– a visual construct – that lasts. The eye, too, is involved. The
shapeliness and symmetry of the four-line ballad stanza once structured
the best lyrics of rhythm and blues, gospel, Country and Western music,
and rock’n’roll. But with the immense commercial success of rock music,
those folk roots have receded, and popular songwriting has grown weaker
Thanks to www.politicaltheory.info for the pointer.
The Big Picture: The New Logic of Money and Power in Hollywood, by Edward Jay Epstein. Why is opening weekend so important? "The benefits of prolonging a film’s run in the theaters are now negated by the loss that would be sustained by delaying its video opening past the point at which it can benefit from the movie’s advertising campaign." This is the best available work on the economics of cinema. How many books cite both Arnold Schwarzneger and Mises’s discussion of non-pecuniary goods?
King Lear: This is about my fifth reading. I had never fully realized that Lear had incestuous relationships with at least one of his daughters (for instance check out 1:2, 150-152, 1:4, 176-182, plus the entire Oedipus analogy). Furthermore he was ready to sell out his country to the French. Edmund, Goneril and Regan were not so bad after all.
Handbook of Economic Sociology, second edition, edited by Neil Smelser and Richard Swedberg. Yelp if you wish, but I see sociology as the most underrated social science. It is (some) sociologists who are the problem. Most of the advances in economics over the last fifteen years have actually come in sociology done by economists. Just look at Steve Levitt or behavioral economics. Since economists have not discovered any new "core mechanisms" since herd behavior (circa 1989 or so), I expect quantitative sociology to whup our collective behinds over the next twenty years. The only question is who will be doing it, us or them.
Art: A Field Guide, by Robert Cumming. This has been my favorite bedtime reading book of the last twenty years. The book gives two or three succinct paragraphs on why each of about 1500 famous artists is good, bad, or somewhere in between. No cultural relativism here, and obviously the guy should start a blog. Few good pictures are included, so you do need to know the works of the artists.
Pol Pot: Anatomy of a Nightmare, by Philip Short. One of the best studies of the anatomy of evil, the psychology of colonialism, and twentieth century Cambodian history.
What I wish I was reading: Going Sane, by Adam Phillips. I read all his books the day they fall into my hands. Phillips, a psychoanalyst for children, is the master of witty and paradoxical observations about human nature. I am told that this new book offers a partial "recipe for contentment," but so far it is available only in the U.K. and perhaps Commonwealth countries.
I’ve been enjoying Choice: The Best of Reason. Reason magazine’s byline has always been Free Minds and Free Markets but perhaps it ought to be Free Minds, Free Markets and Fun. Here’s Drew Carey (from long before Janet Jackson’s wardrobe malfunction):
The government is really into ‘protecting people’. The Federal Communications Commission (FCC) says you can’t broadcast certain words and certain pictures. It says it’s protecting citizens. But I’m sitting in my home with DirecTC and can watch whatever I want. I can afford the best pornography – laser-disc porn! The government’s not protecting me from anything.
All the government’s doing is discriminating against poor people. It thinks poor people are like cows, that poor people can’t think straight: If we let them hear dirty words or see dirty pictures, there’s going to be madness! If you’re poor and all you can afford is a 12-inch black-and-white TV and can’t pay for cable – you’re so protected. You’d probably be happier if you could see some pornography, a pair of titties, once in a while on free TV. But a pair of titties on free TV? The government figures if you saw that, you’d just explode!