Category: Books

Caplan, Weinersmith, and Open Borders

Caplan and Weinersmith, in their splendid forthcoming graphic novel, present some rebuttals to the “cultural critique” of open borders.  For instance (and here I am presenting their views):

1. The average immigrant has political views which poll as pretty close to those of the average American.  They don’t even by huge margins favor more immigration.  (The author do admit that low-skilled immigrants do favor significantly less free speech, in any case on all of these points they do present actual numbers and visuals.)

2. Support for the welfare state remains strong in Western European nations, even as they have taken in many more migrants.

3. Open borders once before produced American political culture.

4. In “deep roots” terms, the United States already has a mediocre ancestry score, yet America has very high gdp and relatively strong political institutions.

5. There is an extended response to Garett Jones on IQ which I do not feel I can summarize well.  Toward the end, it is noted that babies adopted from poorer countries into richer countries typically do very well later in life.

6. The end of this chapter proclaims: “Open borders won’t destroy our freedom.  It’s going to bring freedom to all of mankind.”

I will again repeat my earlier point: the value and import of this new book does not very much depend on your actual opinion of open borders.  Still, if you would like to hear my views, I’ll repeat my earlier discussion:

And no I do not favor open borders even though I do favor a big increase in immigration into the United States, both high- and low-skilled.  The simplest argument against open borders is the political one.  Try to apply the idea to Cyprus, Taiwan, Israel, Switzerland, and Iceland and see how far you get.  Big countries will manage the flow better than the small ones but suddenly the burden of proof is shifted to a new question: can we find any countries big enough (or undesirable enough) where truly open immigration might actually work?

In my view the open borders advocates are doing the pro-immigration cause a disservice.  The notion of fully open borders scares people, it should scare people, and it rubs against their risk-averse tendencies the wrong way.  I am glad the United States had open borders when it did, but today there is too much global mobility and the institutions and infrastructure and social welfare policies of the United States are, unlike in 1910, already too geared toward higher per capita incomes than what truly free immigration would bring.  Plunking 500 million or a billion poor individuals in the United States most likely would destroy the goose laying the golden eggs.  (The clever will note that this problem is smaller if all wealthy countries move to free immigration at the same time, but of course that is unlikely.)

In any case, do buy the Caplan and Weinersmith book.  I have now begun to think there should be a book like this, or two, for every major political issue of import.

*Open Borders: The Science and Ethics of Immigration*

That is the already-bestselling graphic novel by Bryan Caplan and Zach Weinersmith, and I would just like to say it is a phenomenal achievement.  It is a landmark in economic education, how to present economic ideas, and the integration of economic analysis and graphic visuals.  I picked it up not knowing what to expect, and was blown away by the execution.

To be clear, I don’t myself favor a policy of open borders, instead preferring lots more legal immigration done wisely.  But that’s not really the central issue here, as I think Caplan and Weinersmith are revolutionizing how to present economic (and other?) ideas.  Furthermore, they do respond in detail to my main objections to the open borders idea, namely the cultural problems with so many foreigners coming to the United States (even if I am not convinced, but that is for another blog post).  Even if you disagree with open borders, this book is one of the very best explainers of the gains from trade idea ever produced, and it will teach virtually anyone a truly significant amount about the immigration issue, as well as economic analytics more generally.

There is more actual substance in this book than in many a purely written tome.

It will be out in October, you can pre-order it here.

Average annual change in total factor productivity between 1990 and 2014

Here are the estimates from Penn World Tables, only selected countries are presented:

Sri Lanka 2.48

China 2.40

Poland 1.70

Uruguay 1.61

Romania 1.61

United States 0.89

Brazil -0.12

South Africa -0.53

Mexico -0.82

Ukraine -1.20

A few points.  First, I still believe Sri Lanka is an undervalued development story, in spite of recent developments.  Second, the economy of Poland is not discussed enough.  Third, other sources confirm similar numbers for Mexico, arguably because misallocations of capital and labor have increased due to the growing size of the informal sector.  Fourth, there are far too many other nations in the negative column.

Those numbers are reproduced in “Productivity in Emerging-Market Economies: Slowdown or Stagnation?”, by José de Gregorio, in the new and interesting volume Facing Up To Low Productivity Growth, edited by Adam S. Posen and Jeromin Zettelmeyer.

*The AI Does Not Hate You*

That is the new book by Tom Chivers, and the subtitle is Superintelligence, Rationality and the Race to Save the World.  Here is one excerpt:

Overall, they have sparked a remarkable change.  They’ve made the idea of AI as an existential risk mainstream; sensible, grown-up people are talking about it, not just fringe nerds on an email list.  From my point of view, that’s a good thing.  I don’t think AI is definitely going to destroy humanity.  But nor do I think that it’s so unlikely we can ignore it.  There is a small but non-negligible probability that, when we look back on this era in the future, we’ll think that Eliezer Yudkowsky and Nick Bostrom  — and the SL4 email list, and LessWrong.com — have saved the world.  If Paul Crowley is right and my children don’t die of old age, but in a good way — if they and humanity reach the stars, with the help of a friendly superintelligence — that might, just plausibly, be because of the Rationalists.

There is also material covering Scott Alexander and Robin Hanson, among others.  Due out in the UK in June.

What I’ve been reading

1. Patrick Bergemann, Judge Thy Neighbor: Denunciations in the Spanish Inquisition, Romanov Russia, and Nazi Germany.  A very specific, useful, and interesting account of actual denunciation practices during the above-mentioned episodes.  During the Inquisition, there was general immunity given to most denouncers, you can imagine the resulting incentives.  This book is becoming more relevant than it ought to be.

2. John L. Rudolph, How We Teach Science: What’s Changed, and Why It Matters.  I found this book boring, but it is the kind of book people should be writing and I suspect some readers and researchers will find it very useful.  A fact-rich, reference-laden history of American science education, still by the end I still was looking for more organizational principles.

3. Samme Chittum, Last Days of the Concorde: The Crash of Flight 4590 and the End of Supersonic Passenger Travel.  An excellent book on why the Concorde was in fact abandoned.  I hadn’t realized it was never so safe in the first place:  “They soon learned that Concordes operated by British Airways and Air France had been involved in a range of tire failures over the years.  No fewer than 57 such incidents had taken place since Concordes began flying in 1976, 47 were either burst or inflated tires, and 10 were instances in which tires lost tread.”

4. Broken Stars: Contemporary Chinese Science Fiction in Translation, translated and edited by Ken Liu.  I found the “hit rate” in this collection to be slightly over fifty percent, which is rare for a science fiction anthology, plus even the lesser stories give one some insight into China, so definitely recommended, at least if you think you might like it.  But don’t read this before The Three-Body Problem.

Ethan Pollock, Without the Banya We Would Perish: A History of the Russian Bathhouse, delivers what it promises.  The coup against Gorbachev was plotted in a banya, I learned.

Joshua Specht, Red Meat Republic: A Hoof-to-Table History of How Beef Changed America.  A good economic history of the “cattle-beef complex”: “Abilene, Kansas was the first major cattle town.”

Emily Oster, Cribsheet: A Data-Driven Guide to Better, More Relaxed Parenting, From Birth to Preschool is in my pile, it may someday be revised to cover older children.

Also in my pile is Julius Caesar, The War for Gaul, a new translation by James J. O’Donnell.  I can’t speak to this translation, but the book is a winner.

Slavery is usually worse than you think

The men were allowed to come on deck night and day if they wished, but it was the rule to whip the Negro men if they went in the hold with the women.  Aboard the Creole, sex was apparently (and, it turned out, wrong) deemed a greater threat than slave rebellion.  Gonorrhea, according to slaveholding commonplace, was a disease “generally contracted among Negroes en route who are brought for sale.”  A number of different traders had their slaves aboard the ship, and segregating them by sex was a way to keep one slaveholder’s slaves from diminishing the value of another’s by passing a disease — or starting a pregnancy.

That is from Walter Johnson, Soul By Soul: Life Inside the Antebellum Slave Market.

*The Competition to Control World Communications, 1900-1945*

That is the subtitle, the title of this very interesting book is News from Germany and the author is Heidi J.S. Tworek.  Here are a few things I learned:

1. “News agencies became the central firms collecting international news from the mid-nineteenth century.  The “Big Three” news agencies were all created in this period: Agence Havas in the early 1830s, Telgraphisches Bureau (Wolff) in 1849, and Reuters Telegram Company in 1851.”

2. There were very high fixed costs in telegraphic news gathering, and the telegraph was essential to being a major international news service.  Those costs included financing a network of correspondents abroad and the expense of sending telegrams.

3. The three companies colluded, in part to lower the cost of news collection, and maintained a relatively stable cartel of sorts, running from 1870 up through the outbreak of World War II.  World War I was a hiatus but not a break in the basic arrangement.  The AP was added to the cartel in 1893.

4. These news agencies, being well-identified and somewhat monopolistic, were susceptible to political control, especially from Germany.  But note that the British censored information coming from the Boer War.

5. The post WWII era was an exception, and throughout most of modern history it has been difficult to turn a profit by selling news coverage.

Recommended.

Robert Wenzel reviews *Big Business: A Love Letter to an American Anti-Hero*

Anecdotally, he provides us with this gem:

“How is this tweet, from “Dina,” for showing lack of gratitude toward business? “If you think about it. People with glasses are literally paying to use their eyes. Capitalism is a bitch.” Shortly after it was posted, it had accumulated 257,000 likes, surely with more to come.”

What to do?

What Cowen has done is write this very important book, taking on the charges against capitalism/big business.

There is more at the link.

My Conversation with Margaret Atwood

She requires no introduction, this conversation involved a bit of slapstick, so unlike many of the others it is better heard than read.  Here is the audio and transcript.  Here is the opening:

COWEN: Just to start with some basic questions about Canada, which you’ve written on for decades — what defines the Canadian sense of humor?

MARGARET ATWOOD: Wow. [laughs] What defines the Canadian sense of humor? I think it’s a bit Scottish.

COWEN: How so?

ATWOOD: Well, it’s kind of ironic. It depends on what part of Canada you’re in. I think the further west you go, the less of a sense of humor they have.

[laughter]

ATWOOD: But that’s just my own personal opinion. My family’s from Nova Scotia, so that’s as far east as you can get. And they go in for deadpan lying.

[laughter]

COWEN: In 1974, you wrote, “The Canadian sense of humor was often obsessed with the issue of being provincial versus being cosmopolitan.”

ATWOOD: Yeah.

COWEN: You think that’s still true?

ATWOOD: Depends again. You know, Canada’s really big. In fact, there’s a song called “Canada’s Really Big.” You can find it on the internet. It’s by a group called the Arrogant Worms. That kind of sums up Canada right there for you.

The burden of the song is that all of these other countries have got all of these other things, but what Canada has is, it’s really big. It is, in fact, very big. Therefore, it’s very hard to say what is particularly Canadian. It’s a bit like the US. Which part of the US is the US? What is the most US thing —

COWEN: Maybe it’s Knoxville, Tennessee, right now. Right? The Southeast.

ATWOOD: You think?

COWEN: But it used to be Cleveland, Ohio.

ATWOOD: Did it?

COWEN: Center of manufacturing.

ATWOOD: When was that? [laughs] When was that?

COWEN: If you look at where the baseball teams are, you see what the US —

And from her:

ATWOOD: Yeah, so what is the most Canadian thing about Canada? The most Canadian thing about Canada is that when they ran a contest that went “Finish this sentence. As American as apple pie. As Canadian as blank,” the winning answer was “As Canadian as plausible under the circumstances.”

And a question from me:

COWEN: But you’ve spoken out in favor of the cultural exception being part of the NAFTA treaty that protects Canadian cultural industries. Is it strange to think that having more than half the [Toronto] population being foreign born is not a threat to Canadian culture, but that being able to buy a copy of the New York Times in Canada is a threat?

In addition to Canada, we talk about the Bible, Shakespeare, ghosts, her work habits, Afghanistan, academia, Peter the Great, writing for the future, H.G. Wells, her heretical feminism, and much much more.

Firefighting: A Plea for Discretion

Firefighting, the new primer on the financial crisis by the all-star team of Ben Bernanke, Timothy Geithner and Henry Paulson (BGP), is a well written, short overview of the consensus position on the U.S. financial crisis. The book has a number of good lines:

…financial institutions, unlike other businesses whose success depends primarily on the cost and quality of their goods and services, are dependent on confidence. That’s why the word “credit” comes from the Latin for “belief,” why we say we can “bank” on things we know to be true, why some financial institutions are called “trusts.”

…the most damaging problem with America’s capital rules was not that they were too weak, but that they were applied too narrowly.

Risk, like love, will find a way.

Firefighting offers a summary, consensus view of the causes of the crisis:

…the basic problems were too much risky leverage, too much runnable short-term financing, and the migration of too much risk to shadow banks where regulation was negligible and the Fed’s emergency safety net was too inaccessible. There were also too many major firms that were too big and interconnected to fail without threatening the stability of the system, and the explosion of opaque mortgage-backed derivatives had turned the health of the housing market into a potential vector for panic. Meanwhile, America’s regulatory bureaucracy was fragmented and outdated, with no one responsible for monitoring and addressing systemic risks.

Consult Adam Tooze’s magisterial Crashed for a more European and global view of the crisis,  Hetzel’s The Great Recession for an explanation of the crisis based on monetary rather than financial disorder and Larry Ball’s The Fed and Lehman Brothers: Setting the Record Straight on a Financial Disaster for an exhaustive and different accounting of the politics especially around the decision not to bail out Lehman.

Given that the book takes a consensus view and given that all three authors have written previous books on the crisis, one might wonder why BGP wrote Firefighting. The answer is in two parts. Most importantly, Firefighting is a plea for discretion. At one point BGP write surprisingly directly if euphemistically:

The Fed also reinterpreted its emergency lending authority in creative ways to avert catastrophic collapses of Bear Stearns and AIG…

In other words, the Fed broke the law. That, at least, is how many in Congress saw it after the fact which is why Congress asserted its authority over banking by rewriting the rules but also removed a lot of discretionary authority from the Federal Reserve and the Treasury.

Overall, while the United States has much stronger safeguards against the occurrence of panic than it had before the crisis, it has weaker emergency authorities for responding when a panic occurs. Its crisis managers lack the power to inject capital, guarantee liabilities, or purchase assets without going to Congress…the Fed has lost its power to rescue individual firms and faces new constraints on its lending powers, while the Treasury has lost its ability to use the Exchange Stabilization Fund for guarantees.

What Congress takes it can also give but BGP are not sanguine about the effectiveness of American democracy:

…when an epic crisis does arrive, Congress would have the power to undo the preemptive limitations it has placed on crisis managers. But that is easier said than done in a nonparliamentary democracy where legislative changes require support from the president, the House of Representatives, and a filibuster proof majority in the Senate…it’s hard to look at the bitterly polarized politics of modern America and feel confident that a bipartisan consensus for unpopular but necessary actions would emerge when it mattered most.

Thus, BGP come down solidly on the side of technocracy and discretion rather than democracy and rules.

I believe the second reason that Bernanke, Geithner and Paulson wrote Firefighting is that they want their account of the crisis to be the history taught to the next generation. To that end, Firefighting is indeed a useful guide for teaching the crisis and is particularly good on timelines, major events and policy actions. About a third of Firefighting is a series of standalone charts (which aren’t even referenced within the text). Oddly, however, the book never tells you that the charts are available online, neither does the book’s homepage, but a little Google sleuthing uncovers that the charts were produced in cooperation with the Brookings Institution and can be found here. Anyone wanting to teach the crisis will find what they need in the charts supplemented of course with the discussion of financial intermediation in Modern Principles and the MRU videos on the Great Recession and the various Business Cycle Theories.

Compensating differentials

And even though [David] Crosby underwent a liver transplant in 1994, all four are active today. Does this mean we’ll see them together onstage again? [Graham] Nash stated in an interview not long ago that the band was offered $100 million to go on tour. But that’s not going to happen, he said, for one simple reason: “We don’t like each other.”

That is from David Kirby’s review of the other CSNY biography to have come out this month, also a good book.

*An Economist Walks into a Brothel*

That is the new Allison Schraeger book, the subtitle is And Other Unexpected Places to Understand Risk, and here is one excerpt:

In many ways, the brothel is like any other workplace.  There are weekly staff meetings (in a departure from the tradition at most companies, the women often wear outlandish hats and drink tea), access to financial advisers, performance bonuses, and even corporate housing…

But where Hof [the owner-manager] provided value was by reducing risk for both buyers and sellers of sex.

The top-earning woman at that brothel pulls in about $600,000 a year, and about half of that goes to Hof.  And to audition for the brothel, women have to invest about $1500 in upfront costs (travel, clothing), with no guarantee of a job at the end of the process.

Here is an NPR interview with Allison.