Category: Books
The Magician’s Book
A recent MR request asked me which book I wished I had written and now I have a recent answer: Laura Miller's The Magician's Book: A Skeptic's Adventures in Narnia. And I'm not even a big Narnia fan (this review aside). Most of all this is a book about what it means to love another book and how deep such a love can run. It also covers the gap between children and adults, how storytelling works, what theology means in art, not to mention it gives an excellent portrait of Tolkien. Every paragraph of this book offers something of value — how many books can claim that? Bravo, and again you needn't love or even know much about C.S. Lewis.
I'll buy Laura Miller's next book, sight unseen, no matter what the topic.
What I’ve been reading
1. The Aztec World, by Elizabeth Brumfiel and Gary Feinman. Long-time MR readers will know Aztec history is a special interest of mine. This book, a companion volume to the Aztec exhibit from Chicago’s Field Museum, is perhaps the best introduction to the Aztecs to date.
2. The Suspicions of Mr. Whicher: A Shocking Murder and the Undoing of a Great Victorian Detective. This achieved (justified) rave reviews in the UK but it has hardly made a dent in the U.S. market. It is non-fiction but written in a hybrid form and often feels more like a novel.
3. The Overflowing Brain: Information Overload and the Limits of Working Memory, by Torkel Klingberg. When push comes to shove, the author fails to establish his major thesis. Still, this book is way above average for how seriously it treats the actual science behind its argument. I learned a great deal from it.
4. Somewhere Towards the End, by Diana Athill. A scary and effective memoir about how Athill, a famous editor, dealt with aging and the end of her sex life.
5. Not John Steinbeck.
Here are predicted hot reads for 2009.
Exotic Ethiopian Cooking
That’s the book Yana gave me for Christmas. I hadn’t realized how much the cuisine relies upon red onion and how many of the dishes require a full cup of red pepper paste. Spiced butter is common too. The recipe for red pepper paste starts by suggesting "15 lbs." of New Mexico red chiles. I’m trying it with…15 red chiles. We’ll see how that goes; I’ve also scaled back the "5 lbs. fresh ginger" to 5 pieces of fresh ginger.
If you’re ready with the spiced butter and the red pepper paste (neither is totally simple), most of the recipes take 5-10 minutes and sound quite delicious.
The menu for tonight includes fesenjan chicken, Parsee sweet and sour fish, Parsee lamb with stewed apricots, Ethiopian sauteed beef with injera, and red lentils. I’ll also make Ethoipian pumpkin if I have red pepper sauce left over. Natasha is preparing Russian vegetable salads.
What I’ve Been Reading
1. The Uncrowned King: The Sensational Rise of William Randolph Hearst, by Kenneth Whyte. A detailed revisionist account, arguing Hearst was a better progressive and better journalist than his reputation.
2. Tim Blanning, The Triumph of Music: The Rise of Composers, Musicians and Their Art. An overview of the history of music, with many insights from an economic point of view.
3. Elsewhere, U.S.A., by Dalton Conley. Everything by Conley is worth reading. The subtitle to this one is: How We Got From the Company Man, Family Dinners, and the Affluent Society to the Home Office, Blackberry Moms, and Economic Anxiety. The focus is on technology and markets. Here are numerous earlier posts on Dalton Conley.
4. The Invention of Air: A Story of Science, Faith, Revolution, and the Birth of America (these subtitles are getting more and more all-encompassing!). The author is Steven Johnson, another author always worth reading. The topic is Joseph Priestley. Here is Johnson’s blog. Here is a good review.
5. East of Eden, by John Steinbeck. I’ve long resisted Steinbeck, so we’ll see how far I get in this one.
My Christmas present
It’s the best book of the year and not just because it was my Christmas present. It’s The Phaidon Atlas of 21st Century World Architecture (good photo excerpts at the link). The book is 812 pp. and also several times larger than a normal book so it is like getting a 2000 pp. book or more. (That’s why it costs $122!) It is very heavy to carry around and it comes in its own plastic case.
The book offers photos and information about the splendid works of architecture that have opened since the beginning of the millennium. It’s amazing how much there is (1037 structures, according to one review) and also you can compare one locale to another; why for instance has Medellin been so active in building innovative structures?
Unintentionally, the book is a paean to the now-passed global real estate bubble. It is an amazing feeling to turn the pages and see how much effort and creativity mankind has put into building. Homes were considered profitable investments and state and local governments had plenty of funds for public buildings. Today, many projects are on-line as half-baked cakes but, overall, the next eight years won’t be anything like these.
Highly recommended.
Lords of Finance
The author is Liaquat Ahamed and the subtitle is The Bankers who Broke the World but no it’s not about today it’s about the 1920s:
This book traces the efforts of these central bankers to reconstruct the system of international finance after the First World War. It describes how, for a brief period in the mid-1920s, they appeared to succeed; the world’s currencies were stabilized, capital began flowing freely across the globe, and economic growth resumed again. But beneath the veneer of boomtown prosperity, cracks began to appear…The final chapters of the book describe the frantic and eventually futile attempts of central bankers as they struggled to prevent the whole world economy from plunging into the downward spiral of the Great Depression.
The 1920s were an era, like today’s, when central bankers were invested with unusual power and extraordinary prestige. Four men in particular dominate this story: at the Bank of England was the neurotic and enigmatic Montagu Norman; at the Banque of France, Emile Moreau, xenophobic and suspicious; at the Reichsbank, the rigid and arrogant but also brilliant and cunning Hjalmar Schacht; and finally, at the Federal Reserve Bank of New York, Benjamin Strong…
I am enjoying this book very much, though it terrifies me as well. I hadn’t known that Norman, later in his life, thought he could walk through walls. Nor did I know that in the 1920s one-third of the population of the state of Colorado lived there as a (supposed) respite from tuberculosis. You can buy it here.
Keynes’s General Theory, chapter six
Keynes does all this huffing and puffing about terms and finally he stumbles into his mention of Hayek. Hayek had written some now-obscure articles about net investment and measures of the capital stock, reprinted in Profits, Interest, and Investment. (Here is an excellent Lawrence H. White essay on this part of Hayek’s thought.) Keynes wants to show he doesn’t have to worry about these debates. Keynes is also trying to liberate himself from his previous (1930) two-volume Treatise on Money, a disappointing work. At the end of section (i) you get the clincher: "For this reason, and also because I no longer require my former terms to express my ideas accurately, I have decided to discard them — with much regret for the confusion which they have caused."
Again, in part ii the bombshell comes, unannounced. Keynes decides that he will declare savings to be a "mere residual." Consumption and investment alone will determine income and savings is defined as whatever is left over to make the national income equations balance.
At the time this was considered by many to be an enormous sleight of hand. The Austrian and Swedish traditions focused on the question of whether planned savings was going to equal planned investment and what happens if not. Keynes has just banished such questions to the woodshed and he has done so by a terminological maneuver.
Whether or not you think that the Austrian and Swedish traditions lead anywhere fruitful, Keynes is on shaky ground here. He is using definitions to favor one causal account of macro over another. That’s not right. You can still make a plausible argument that Keynes is right on empirical grounds that planned savings is not an important force for understanding business cycles. But so far no such empirical argument has been clinched.
In the second to last paragraph Keynes realizes that in his system savings does not and cannot constrain investment. He notes that if animal spirits were wild enough, the price of output could fluctuate between zero and infinity. Neither interest rates nor savings plans perform any of their traditional constraining or equilibrating functions. At least Keynes realized how far out on a limb he was going.
Due to popular request, we’ll resume with the Keynes symposium in January but take a break for the close of the semester.
Discover your Inner Economist, Italian edition
Here is one place to buy it and here. Here are other relevant purchase sites. I believe it is available in both hardcover and paperback, although don’t hold me to that claim.
The mid-title — Scopri l’economista che è in te — still resembles "Discover Your Inner Economist." But now the book has a new lead title : "No Crac" ["No Nonsense"?] and a new subtitle, something like "How to survive the great depression and be happy," or so I am told by Maria Pia Paganelli.
Keynes’s General Theory, chapter five
Part i shows that Keynes had digested the Austrians, and especially the Swedes, far more than he let on. He goes through considerable machinations to show that his main argument is consistent with the Swedish long vs. short-run, ex ante vs. ex post analysis that ruled Stockholm at the time, as found in Myrdal, Lindahl, Ohlin and others. For all of Keynes’s periodic dismissiveness of his precursors, I read him as actually quite intimidated by them. In this section he’s "looking for their approval," if only in his own mind.
In Part ii Keynes presents two bombshells, more or less from out of nowhere:
a) For the short-run, the common default expectation is that "recently realized results will continue"; this precludes entrepreneurial creativity and creation as a way out of a bad situation. You’ll note the influence of Cambridge epistemology here, namely that we do not recreate our entire basic picture of the world de novo every day. G.L.S. Shackle is mostly a Keynesian but on this issue his emphasis on the creative imagination of the individual is a significant revision of Keynes.
b) Long-term expectations do not adjust smoothly but rather become more bullish or bearish in volatile leaps.
Furthermore a) and b) are held together, which implies at some margin a sharp disjunction between the short-run and long-run. I do not regard Keynes’s two assumptions as absurd, but they are hardly a "general theory." Note that you need a) to choke off various processes of recovery and you need b) to get investment demand to be so volatile in the first place. Let’s say you think b) is reasonable, then in my view you should also believe in possible "cascade" effects which can pull you out of a downturn in the short run. But for Keynes, no.
Here is a comment on last week’s session. Chapter six will be going up this afternoon. On short vs. long-term expectation, Felix Salmon has some good points.
Tips for scoring with the opposite sex
Yes, reading:
"The men polled said they would be most impressed by women who read
news websites, Shakespeare or song lyrics. Women said men should have
read Nelson Mandela’s biography or Shakespeare."
Here is the link. 46% of the surveyed men lie about what they have read — to impress partners — and 33% of the surveyed women admit to lying about their reading habits. In fact it’s the second most likely form of lying (or so people say) for purposes of sexual conquest, with lying about one’s own sexual past as the most likely form of lying.
And for teenagers? (presumably British):
Top of the list to impress a teenage boy are Facebook and MySpace
followed by text messages, Harry Potter and song lyrics. Magazines like
Zoo and Nuts are number seven. To impress a teenage girl, it is the
same top two, followed by song lyrics, cookery books and Harry Potter.
Reassuringly, Jane Austen is number seven.
Here are the actual lists but of course I believe people are lying about those too.
Prudie on husbands who write books
Trudie chuckled when she read these two sentences from Prudie:
I can’t tell if your husband’s fantasies are sweetly pathetic or disturbingly delusional.
…and…
You don’t need to crush your husband—you’re right, the marketplace will take care of that task…
The highly egalitarian Trudie believes that everyone deserves a chance. What would Immanuel Kant’s wife (it is no accident he didn’t have one) have said about his draft of Critique of Pure Reason? Trudie offers the husband — if he can be located — the following deal, maintaining his anonymity if he so wishes. I’ll read the manuscript, or at least try to, and tell everyone what I really think.
Keynes’s General Theory, chapter three
The material on Say’s Law is good but J.S. Mill understood similar points as early as the 1840s.
In section ii Keynes wrote: "This particular relationship, which corresponds to the
assumptions of the classical theory, is in a sense an optimum
relationship. But it can only exist when, by accident or design,
current investment provides an amount of demand just equal to the
excess of the aggregate supply price of the output resulting from full
employment over what the community will choose to spend on consumption
when it is fully employed."
That is one of the most important passages in the book. Consumption
is stable and investment is the volatile variable. For equilibrium to
obtain, C + I (forget about G for now) must absorb Y. But "I" is ruled
by fickle forces and there is no guarantee it will play its required
role. Consider this one of Keynes’s basic models.
Garett Jones suggested to me that Keynes is postulating a vertical
AD
curve in this chapter. The question is why Say’s Law doesn’t
have more force, namely why supply increases don’t translate into
aggregate demand. Keynes thought it was the liquidity trap –receipts
get soaked up in hoards rather than spent — but I think the key
problem has to be a broken banking system. Holdings of currency just
aren’t large enough and otherwise the held money
would end up being invested through intermediation. In the model
Keynes is often looking for ways to "break the circular flow" but he
didn’t always succeed.
Section iii has some lovely prose.
General Theory, chapters one and two
I am repeatedly struck by Keynes’s skill as a literary stylist. Usually this praise is denied the General Theory but I consider the book his Finnegans Wake; the most difficult passages are often the most charming but of course they are not for everyone.
I see three main themes in the book as a whole:
1. Income effects are more important than substitution effects.
2. Expectations matter.
3. The private and social returns to liquidity are very different.
#1
(as applied to macro) and #3 were most original in his time. The book
as a whole circles around these themes and repeats them in varying
combinations, not always coherently or consistently. You could also
add the claims that 4. monetary factors render a "natural rate of
interest" problematic and 5. labor markets are special. Chapter two is
essentially about #1 and #5.
Keynes did go beyond the classics,
even if he did often caricature them. (Keynes is brilliant as a
historian of thought when praising but almost always wrong when
criticizing.) Since Keynes never gives us a truly coherent model —
not even verbally — it is easy to pick holes in the GT.
Keynes had so many exciting new ideas that he never decided what his
main point was or exactly under which conditions it would hold.
Much
of chapter two is devoted to establishing the proposition that workers
cannot in any direct way choose a lower real wage. For Keynes nominal
wage flexibility doesn’t solve the
main problem. If nominal wages fall across the board in an economy,
prices will fall and real wages will remain high. Unemployment will
continue while the economy enters a downward spiral. I’ve already
discussed that point here but to sum up my view Keynes is presenting a special case not a general case.
p.9 puts forward a version of the doctrine of money illusion.
p.15
defines involuntary unemployment, namely if the economy can be inflated
into a higher level of employment. This pragmatic definition reflects
that Keynes was never sure why workers minded inflation, and a cut in
the real wage, less than they minded a cut in the nominal wage. But
that is one of his behavioral postulates and it has survived into macro
to this day.
The "neo-Keynesian" models are not so loyal to Keynes. Keynes held sticky nominal wages to be a policy prescription, but not necessarily a good description of the world.
Chapters
one and two are stunning, as they announce that we are now living on a
different economic terrain. But we’ve yet to see whether the main
arguments are truly sound.
On Thursday we’ll be doing chapters
three and four — be ready! And I encourage other bloggers to follow
along and offer their own commentaries.
What I’ve Been Reading
1. Stephen Schwartz, The Other Islam: Sufism and the Road to Global Harmony. Islamic theology is a reading interest of mine and I don’t mean the stuff that the terrorists promote. This book is not a comprehensive introduction to Sufism but it is interesting throughout and most of all excellent on the sadly neglected topic of Albanian Bektashi theology.
2. Alexander Dolgin, The Economics of Symbolic Exchange. A long, sprawling, and often creative and interesting overview of cultural economics, especially as it relates to issues of symbolic goods.
3. Michael Bérubé, Life as We Know It: A Father, A Family, and an Exceptional Child. About the author’s Down syndrome child; this is a very good book and it is also conceptual, not your usual concrete-bound memoir.
4. Heraldo Muñoz, The Dictator’s Shadow: Life Under Augusto Pinochet. This book fills in a lot of back detail about the Pinochet years. It is not perfect, but it is far more objective and useful than I had been expecting, especially given that the author was persecuted by Pinochet.
5. Elena Ferrante, The Lost Daughter. Translated from the Italian, this short novel is one of my favorite fictional works of the year; it is a favorite of Bookslut (and others) as well.
6. Speaking of Bookslut, Jessica Crispin’s favorite fiction book of the year was the Hungarian Metropole, by Ferenc Karinthy. I read it some time ago and inexplicably forgot to mention it. The feel is Kafkaesque and the premise is that a man wakes up in a world where suddenly he cannot understand any of the languages being spoken and has no way of communicating with anybody.
Joe the Plumber and his favorite books
Joe reads economics:
The Theory of Money and Credit (Ludwig von Mises): "It brought
monetary theory into the mainstream of economic analysis. It is
important reading for these troubled times."
My theory is that someone in Ron Paul’s camp told him to say that. Here is the full list of his favorite books. Here is my source. Here is an on-line version of TOMAC. Scrolling through it a bit, it is more readable than my recollection and it remains one of the better 20th century books on monetary theory.