Category: Books
The Free Press summer reading list
I was asked to nominate so here goes:
Free Press columnist Tyler Cowen picks a biography of one of the finest poets of the 20th century, Paul Celan: A Life, by Anna Arno.
Could Celan be the very best poet of all time? When read in the German language, I think he might be. When read in English, he is still very good. No one has a poetic topic of more importance than the Holocaust. Contrary to Theodor Adorno, he decided it was possible to write poetry after it, and he took that mission very seriously.
Now we finally have a first-rate biography. Celan’s mother was killed in the Holocaust, and he took his own life in 1970, drowning himself in the Seine. How did he get to that point? How did he have the strength and wherewithal to write such powerful poetry in the first place?
I found this book gripping from start to finish. Given the topic I cannot call it a “fun” read, but it is absorbing and the translation is very accessible.
Is it possible that Anna Arno is one of our best intellectuals today? She has written on the German painter Paula Modersohn-Becker and the Polish writer and activist Konstanty Jeleński, and has done important work as a translator, including of Henry James—though those works are in Polish, and thus inaccessible to me. Can we get translations as soon as possible? In the meantime, you can start with this one.
The article has many other quality selections as well.
How did Stanislaw Lem imagine advanced computer intelligence?
…GOLEM’s behavior is unpredictable. Sometimes it converses courteously with people, whereas on other occasions any attempt at contact misfires. GOLEM sometimes cracks jokes, too, though its sense of humor is fundamentally different from man’s. Much depends on its interlocutors. In exceptional casese GOLEM will show a certain interest in people who are talented in a particular way; it is intrigued, so to speak, not by mathematical aptitude — not even the greatest — but rather by interdisciplinary forms of talent; on several occasions it has predicted with uncanny accuracy achievements by young, as yet unknown, scientists in a field which it has it self indicated. (After a brief exchange it informed T. Vroedel, age twenty-two and then only a doctoral candidate, “You will become a computer,” which was supposed to mean, more o less, “You will become somebody.”)
That is from Lem’s Imaginary Magnitude, an extraordinary book in parts, most of all see his Golem IV section on how n AGI (our term, not his) is likely to behave.
Orwell on Dickens and progress
What is more striking, in a seemingly ‘progressive’ radical, is that he is not mechanically minded. He shows no interest either in the details of machinery or in the things machinery can do. As Gissing remarks, Dickens nowhere describes a railway journey with anything like the enthusiasm he shows in describing journeys by stage-coach. In nearly all of his books one has a curious feeling that one is living in the first quarter of the nineteenth century, and in fact, he does tend to return to this period. Little Dorrit, written in the middle fifties, deals with the late twenties; Great Expectations (1861) is not dated, but evidently deals with the twenties and thirties. Several of the inventions and discoveries which have made the modern world possible (the electric telegraph, the breech-loading gun, India-rubber, coal gas, wood-pulp paper) first appeared in Dickens’s lifetime, but he scarcely notes them in his books. Nothing is queerer than the vagueness with which he speaks of Doyce’s ‘invention’ in Little Dorrit. It is represented as something extremely ingenious and revolutionary, ‘of great importance to his country and his fellow-creatures’, and it is also an important minor link in the book; yet we are never told what the ‘invention’ is! On the other hand, Doyce’s physical appearance is hit off with the typical Dickens touch; he has a peculiar way of moving his thumb, a way characteristic of engineers. After that, Doyce is firmly anchored in one’s memory; but, as usual, Dickens has done it by fastening on something external.
There are people (Tennyson is an example) who lack the mechanical faculty but can see the social possibilities of machinery. Dickens has not this stamp of mind. He shows very little consciousness of the future. When he speaks of human progress it is usually in terms of moral progress men growing better; probably he would never admit that men are only as good as their technical development allows them to be. At this point the gap between Dickens and his modern analogue, H.G. Wells, is at its widest. Wells wears the future round his neck like a mill-stone, but Dickens’s unscientific cast of mind is just as damaging in a different way. What it does is to make any positive attitude more difficult for him. He is hostile to the feudal, agricultural past and not in real touch with the industrial present. Well, then, all that remains is the future (meaning Science, ‘progress’, and so forth), which hardly enters into his thoughts. Therefore, while attacking everything in sight, he has no definable standard of comparison. As I have pointed out already, he attacks the current educational system with perfect justice, and yet, after all, he has no remedy to offer except kindlier schoolmasters. Why did he not indicate what a school might have been? Why did he not have his own sons educated according to some plan of his own, instead of sending them to public schools to be stuffed with Greek? Because he lacked that kind of imagination. He has an infallible moral sense, but very little intellectual curiosity. And here one comes upon something which really is an enormous deficiency in Dickens, something, that really does make the nineteenth century seem remote from us — that he has no idea of work.
Here is the full essay, excellent throughout.
My excellent Conversation with Katja Hoyer
Here is the audio, video, and transcript. Here is part of the episode summary:
Tyler and Katja discuss why communism made East Germans more loyal to the system while it bred dissidents in Poland and Hungary, how happy or unhappy life in the GDR actually was, Tyler’s own bleak day-trip to East Berlin in 1984, the underrated literature of the GDR (Christa Wolf, Brigitte Reimann), whether Good Bye, Lenin! got the era right, why it’s no coincidence that Richter and Polke came from the East, the strange coexistence of communist prudishness and Germany’s nudist culture, what Merkel’s East German background did and didn’t give her as a chancellor, why East Germans remain dramatically underrepresented in leadership positions today, what makes Weimar the cultural and spiritual heart of Germany, why relatively few Jews ever settled there, how much the citizens of Weimar knew about Buchenwald, what actually killed the Weimar Constitution, how she’d rewrite the Treaty of Versailles, Hitler’s citizenship problem, underrated German thinkers, the complacency behind Germany’s current economic decline, which side of the Weißwurstäquator she’d choose to live on, and much more.
Excerpt:
COWEN: Why did the Weimar Constitution fail?
HOYER: How much time have I got?
COWEN: Americans typically think it’s that the proportional representation system allowed too many small parties to enter into government. That’s one factor, but what else is there?
HOYER: There are plenty of factors, I think. Some of these are inbuilt flaws, like the proportional representation that you just mentioned. Another one that’s often referred to as Article 48, which was a kind of emergency article that was in the constitution that allowed the president to bypass parliament and the other democratic structures in time of emergency.
If you just follow down this route, then the fall of the Weimar Republic becomes inevitable. If you’re just assuming that there were all these flaws in the constitution already, so therefore it was bound to fail, I don’t think that is the case because when you study this closely, you do see all these kinds of forks in the road as to where things could have gone differently. I don’t think the system was set up to fail. I think these things contributed to the brittle nature of this. I think there was perhaps a degree of naivety there in 1919 to think that you could have this ultra-democratic system without any guardrails.
When you think how long it took the American Founding Fathers to sit there and really work out every angle, and “What if we got a mad president, what do we put in there to try and protect against that?” Those sorts of things. That process is so rushed in 1919 that they just put an ultra-liberal democracy in place, which allows extremists to hijack it. That is part of the reason. I think the other group of reasons is the circumstances under which the system is born. It’s basically born into crisis. It comes on the back of the First World War and then runs into economic trouble very quickly. That never really goes away despite the so-called gilded years in the middle. All of that’s propped up by American money, even the stability years of the middle 1920s. The moment that falls because of the Wall Street crash, you basically get the very economic foundation taken away again.
The subtitle I chose for the book, Life on the Edge of Catastrophe, I’m trying to hint at the fact that that’s how a lot of people felt. They were literally balancing constantly for this entire time, really, after 1919, on the edge of their own personal catastrophes. It was always unemployment, hyperinflation, trying to get enough food. People were dying of diseases. There’s the Spanish flu. There’s tuberculosis. It’s always something or other. People don’t feel that the system is giving them stability. I don’t think there ever really is a feeling that this can really work long term.
People do, at the slightest whim, think, “Oh, maybe we just need to go back to a system where someone makes the decisions.” The Weimar Republic actually dies in 1930, three years before Hitler comes into power, as a democracy. He takes over a system, I think, that’s already given up on being a democracy, even at that point. As I say, I could talk about this for two days and still be lining up factors. It is complex.
COWEN: The army is interfering in politics quite early and pretty frequently.
HOYER: Yes. They still think that because of the nature of the Prussian system previously, it’s often been said that “Prussia wasn’t a state with an army, but it was an army with a state.” That intrinsic self-confidence, if you want to call it that, of the army, that they are really calling the shots, that doesn’t really go away.
People also often forget that in the First World War, you have the so-called silent dictatorship, which is basically the army running absolutely everything under Hindenburg’s system, from the economy and culture to newspaper output and everything else. Again, that they don’t just suddenly turn that off in 1919. They do try and make their influence heard ongoingly.
Then the young Weimar Republic has to make a pact with the military because they defend them effectively against communists and also right-wing Putschers. They depend on the military in that way as well for security. They do try and build up a new military, but they never go Stalin-style and purge everybody who was there previously. They keep the existing elites largely in place, so they inherit an army that isn’t loyal to them, that’s still loyal to the old system.
I very much enjoyed Katja’s recent book Weimar: Life on the Edge of Catastrophe.
Stanislaw Lem foresaw drones
This was published in English (and Polish) in 1986 under the title One Human Minute:
So it was not humanoid automata that former the new armies but synthetic insects (synsects) — ceramic microcrustacea, titanium annelids, and flying pseudo-hymenoptera with nerve centers made of arsenic compounds and with stingers of heavy, fissionable elements…The flying synsect combined plane, pilot, and missile in one miniature whole. but the operating unit was the microarmy, which possessed superior combat effectiveness only as a whole (just as a colony of bees was an independent, surviving unit while a single bee was nothing).
…The nonliving, synthetic “locust” was incomparably more lethal, since it was made that way by its designers. It possessed a preprogrammed autonomy, so that communication with a command center was unnecessary.
…the microarmy was one giant flowing or flying aggregate of self-assembling elements. It started out dispersed, approaching its objective from many different directions, as strategy or tactics demanded, in order to concentrate into a preprogrammed whole on the battlefield. For this fighting material did not leave the factory in final shape, read for use, like tanks or guns loaded on a railroad flatcar; the mechanisms were microproductive blocks designed to fuse together into a war machine at the designated place. For this reason, such armies were called “self-bonding.”
…Amid a swarm of self-guided, programmed microarms, a man in uniform was as helpless as a Roman legionary with sword and shield against a hail of bullets. In the face of special types of biotropic microarms capable of destroying everything that lived, human beings had no choice but to abandone the battlefield, for they would be killed in seconds…
A microarmy could easily penetrate all systems of defense and go deep into enemy territory. It had no more trouble accomplishing this than did rain or snow. Meanwhile, high-powered nuclear weapons were proving more and more useless on the battlefield.
Lem is always worth reading.
Hayekian Literary Criticism
In economics, Marx is relegated to the history of thought as his ideas were an economic dead end and a political disaster. Yet Marx-influenced literary criticism is a dominant mode of analysis in nearly every English department in the country. It’s not that the English professors are all Marxists, it’s that even the non-Marxists reach for Marxian concepts–class, ideology, alienation, material conditions, commodification–when analyzing texts. These concepts may be useful for analyzing a Victorian novel of the landed classes but they have become a default economics for all of literature. That default is odd. Class analysis predates Marx and society can be divided into more than one set of classes; material conditions do not supersede all artistic agency; and capitalism contains figures—entrepreneurs, speculators, intermediaries, innovators, discoverers—who are great subjects for art yet fit poorly into the Marxist moral geometry. Not surprisingly, Marxism handles capitalism’s protagonists badly.
Is Marxian economics the only economic lens one can apply to literature? What would a Hayekian literary criticism look like? The place to start is the great Paul Cantor’s pioneering essay on Thomas Mann’s “Disorder and Early Sorrow,” a slight-seeming story set in Weimar Germany during the hyperinflation. Cantor shows that when one reads the novella through Hayek and Mises rather than Marx, the story opens up.
Start with inflationary psychology and its ramifications. Inflation shortens time horizons. When money loses value by the hour, saving is foolish and the rational move is to spend as fast as you earn—Mises’s “flight into real goods.” Prudence, discipline, and respect for the past become maladaptive. Speed, improvisation, risk-taking, and a certain youthful irresponsibility become survival traits.
Thus, Cantor/Mann tell us that inflation changes psychology and inverts the authority of age over youth. The old are set in their ways and often living on fixed incomes that inflation has wiped out; they cannot adapt. The young have known nothing but instability and go with the inflationary flow effortlessly. So the conservative virtues that once commanded respect are in decline while youthful recklessness starts to look like competence. Thus, Mann’s world has “gone mad in the worship of youth”: the children call their father by his first name, the teenagers are “the big folk,” and Professor Cornelius literally crouches down to his children’s height as the hierarchy collapses around him.
Money is a society’s primary measure of value, so Cantor/Mann argue that when you shake a people’s faith in their money, you shake their other faiths. Thus Cantor ties the conviction-less skepticism of Cornelius—and the broader Weimar nihilism and disequilibrium that helped feed the rise of Nazism—to monetary disequilibrium.
In short, inflation converts economic disorder into moral, social, psychological, and finally ontological disorder. Prices become unstable, then values, then identities, then reality. The modern feeling of absurdity and inauthenticity that critics reflexively pin on capitalism, Cantor/Mann argue is due to government-created inflation and paper money.
A Marxist could read the same story and find the inevitable contradictions of capitalism. Cantor reads it and finds the consequences of the state debasing the currency. Both are economic readings of literature. Only one of them has the economics correct.
Cantor is the place to begin but a Hayekian literary criticism could go much further. Atavism, the impossibility of social justice, products of human action but not of human design, spontaneous order, the fatal conceit, subjectivism, the sensory order–there is a lot of Hayekian ideas that literary interpretation could draw upon.
A Hayekian criticism would ask questions like how do characters acquire and process knowledge? Which institutions transmit information successfully, and which corrupt it? How do money, law, language, and custom function as social coordination mechanisms? Why do some attempts at rational redesign end in disaster? Read War and Peace as a critique of the great-man theory of history, Brazil and The Lives of Others as the fatal conceit degenerating into ignorance, fear, and absurdity. The Wire as a Hayekian epic of spontaneous order that demonstrates the illusion of social justice. Cantor’s essay on Mann shows the method, the broader project remains underdeveloped.
Hat tip: Hollis Robbins for discussion.
Addendum: Don’t forget my earlier WSJ piece, Capitalism: Hollywood’s Miscast Villain which gives an economic, one might even say Marxist, explanation for why film directors in particular disdain capitalists.
Rubber rationing in World War II
When during the meetings the Americans offered that at most they could convert 15 percent of U.S. auto plants to military production, Beaverbrook replies that 100 percent of British automobile factories had been converted, and encouraged Roosevelt to aim higher. He did, and on January 1 he ordered U.S. auto production halted by late Februrary. Within weeks the dearth of new cars became moot when rubber, 90 percent of which came from Malaya and Indonesia, was rationed. The U.S. had no synthetic rubber factories to make up the shortfall. Americans soon learned what Britons had long known: without a spare tire or three stashed in the garage, the family car had a very limited range. Passage by rail — where for fifty years the Pullmans had been Americans’ preferred means of conveyance — was soon limited to troops and businessmen on official war business. And then the airlines — their routes and the national fleet of 434 aircraft — were commandeered. By spring, gasoline ratioining, as a mean to preserve rubber more than oil, dribbed on to the Eastern Seaboard and in the following year spread nationwide, guaranteeing that Americans in the heartland could no longer take their vacations at east or west coast beaches even if their bald tires could carry them there. That proved okay with most because by summer, oil and bilge tar and decomposing bodies — the U-boats’ harvest — regularly washed up onto America’s eastern beaches.
That is all from the excellent The Last Lion: Winston Spencer Churchill: Defender of the Realm, 1940-1965. As I’ve said before, you can always keep on reading books about World War II and you will continue to learn interesting and important things.
*The Republic of Love*
The author is Martha C. Nussbaum, and the subtitle is Opera & Political Freedom. Martha decided she did not wish to do a podcast after all, so since I put some real prep time in I thought I would offer some thoughts on the book directly, in part because it is not receiving substantive reviews elsewhere. I suspect the number of people qualified to review the book, on the musical and philosophical and historical fronts, is pretty small.
Overall the book is very good, and if you think you might be interested you should buy and read it. It shows a significant knowledge of opera, in part from Nussbaum’s own efforts as performer and singer. Some of the operas considered at length include the major Mozart pieces, Verdi’s Don Carlo, Beethoven’s Fidelio, Benjamin Britten (Albert Herring, for one), and John Adams’s Nixon in China. For Nussbaum, “political freedom” is not exactly that of the classical liberal kind, but for at least eighty percent of the book those differences do not matter.
I do have some objections to her points. While each seems to be a smaller matter, I fear they reflect a larger reality where Nussbaum subordinates her understanding of the operas to her broader political and social agenda.
She is highly suspicious of Don Giovanni, considering it a “problem opera,” which for her I suppose it is. She cannot bring herself to admit that fair numbers of women might actually be attracted to the Don, instead suggesting it is their baleful economic plight that leads them into such liasions. That seems to me a grossly rigid misunderstanding of the work, at variance with centuries of high-level commentary on the piece. Kierkegaard’s understanding remains ahead of hers, as does that of the ordinary theatergoer.
More generally, she is highly suspicious of romanticism, and she works hard to resist the notion that romanticism was a natural and perhaps even inevitable outgrowth of the classical spirit in music. Not surprisingly, Tristan is anathema to her — “I think Tristan is a tedious opera and that the view of love in it — all unsatisfied longing and no reciprocity — is adolescent and boring.” I would agree that virtually all Wagner operas, except perhaps Das Rheingold, are too long and thus have an element of tedium. Yet that is hardly an accurate understanding of the libretto or the love connection (no reciprocity??).
One would do well to supplement Nussbaum with Wayne Koestenbaum’s The Queen’s Throat. GPT Pro had a good summary of some of Koestenbaum’s quite contrasting perspectives:
“The operatic voice exceeds ordinary speech: it is too loud, too stylized, too bodily, too artificial, too emotional. That excess makes it politically charged because it disrupts norms of restraint, masculine self-control, realism, and “proper” social identity. Opera gives form to things that respectable culture often requires people—especially queer people—to hide: longing, hysteria, theatricality, shame, glamour, grief, fantasy, and desire……it is a place where identity is unstable, theatrical, mediated, and excessive. Opera is full of secrecy, codes, hidden meanings, displaced passions, and voices that say indirectly what cannot be said directly.”
By no means are those entirely illiberal tendencies, but they complicate any identifications of opera with liberalism or indeed any other foundational political set of views. In some fundamental fashion, opera is usually going a bit askew from strictly classical principles.
I take Beethoven to be modestly less liberal than she does, as I am concerned with the repeated sense of “culmination” in his work, and the implied notion of total communal integration as the final good. It is not Beethoven’s fault that even the Nazis staged Fidelio, but it does point to the poliitically Romantic strand in his music, a strand that Nussbaum pushes off center stage.
Why so little Rossini in this book? (He gets a brief mention on pp.303-304). He is arguably the essence of opera, and the carrier of the Mozartean tradition, yet he also was a supporter of the French monarchy and its restoration. Even Verdi was a conservative and monarchist, which puts his Don Carlo in a slightly different light. I am reminded of Carl Schmitt’s critique of Romanticism, namely that it could transfer loyalties so readily from revolutionary republicanism to reactionary monarchism. 19th century opera is not altogether innocent of this charge, and a deeper look at the material would have confronted this issue. Mazzini wrote a whole book on opera and saw it as supportive of nationalism above all else. A look at the history of Auber’s La Muette de Portici, the performance of which spurred Belgian nationalism and a revolt in 1830, is consistent with this view.
Nussbaum is too concerned with her own classificatory impulses, and insufficiently aware of how much opera itself — most of all the music — keeps on diverting our attention in other directions.
Overall, this is a very thought-provoking book, full of deep knowledge of both opera and philosophy. If it is afraid to follow down the path of where the music itself — and most of its major purveyors — were leading us, that makes it thought-provoking all the more.
80,000 Hours: The Book
Forty hours a week, fifty weeks a year, forty years: a career is about 80,000 hours. Yet it’s striking how little serious thought goes into career decisions relative to, say, choosing a mortgage. Indeed, you are almost supposed to tell a story about how a random incident changed your life. One summer a circus came to town—and that’s the whole reason I became an economist! (True story!). Career advice, when it exists, often amounts to the platitude of “follow your passions!” Ugh. If you ask people what their passions are, music, arts and sports top the list but guess what? There aren’t enough jobs in those categories to go around.
Benjamin Todd’s newly updated book, 80,000 Hours is a unique examination of careers that runs the numbers in a serious way. The book is framed along Effective Altruism lines and it has some good public policy material. Pandemics, for example,
The world has plenty of religious cults, despots and would-be school shooters who might decide they want to take everyone else down with them…. The world [c]ould be one lab leak away from catastrophe.
Given what we know about the pace and accessibility of bioengineering tools, the chance that there will be a pandemic that kills over 100 million people during the next century seems high, plausibly similar or greater than the risk of large-scale nuclear war or climate change above six degrees. An engineered pandemic could also kill over 90% of the population,suggesting its overall scale is significantly larger.
But risks from pandemics are, even now, far more neglected than either of these. In comparison to $6bn–$10bn of philanthropic funding for climate change, and $1.6 trillion of total climate finance, pandemic prevention only receives $1bn of philanthropic funding, and total spending aimed at reducing the chance of worst-case pandemics is probably under $10bn.
See also my paper Pandemic Preparation Without Romance on what to do about it.
The opening chapters present the EA framing but most of the book has good advice even for the purely selfish–advice on building skills, networking and how to actually get a job. From what I have said so far, one might get the impression that the idea is to rationally choose your career at age 16 and then optimize your life around that plan. Not so! Todd rightly divides career paths into explore, build and deploy categories. Most people under-explore. It’s ok to jump around jobs and places, especially when you are young, so long as you are building skills and not just accumulating items for the CV. There’s evidence, for example, that scientists’ best work tends to follow periods of exploration with exploitation.
I also appreciate that Todd specifically warns about about armchair theorizing. Pro-and-con lists, for example, are ok but far less useful than getting out of the chair and actively exploring. Go talk with people, try something for a week, go somewhere. Look for cheap tests.
Start with what’s easiest. We often find people who want to, say, try out economics, who then apply for a master’s degree. That’s a huge investment of time. Instead, think about how you can learn This could mean first reading an economics textbook, or taking a single course.
You can think about creating a ‘ladder’ of tests. Start with the cheapest ways to test your options, then after each step, re-evaluate. A ladder might look like this:
a. Read our relevant career reviews, all our research on a given topic, and talk to LLMs about what the jobs are like (two to five hours).
b. Speak to someone in the area (two hours).
c. Speak to a friend to get an outside perspective on what’s best (two hours).
d. Speak to three more people who work in the area and read one or two books (twenty hours).
e. Given your findings, look for a relevant project that might take one to four weeks of work – like applying to jobs, volunteering in a related role, or doing a side project in the area – to see what it’s like and how you perform.
f. Only then consider taking on a two- to twenty-four month commitment – like a work placement, internship or graduate study. Being offered a trial position with an organization for a couple of months can be ideal because both you and the organization want to quickly assess your fit.
80000 Hours is The Random Walk Down Wall Street of career advice, the one book that really matters.
Explore, build rare and valuable skills, point them at a meaningful problem, and passion will follow rather than lead. And for those who don’t want to read a book, speak to an 80,000 Hours advisor. It’s a very cheap test.
My excellent Conversation with Toby Wilkinson
Here is the audio, video, and transcript. Most of all, we cover Ptolemaic Egypt. Here is part of the episode summary:
Tyler and Toby cover how Alexander took over the empire almost without a fight, why Alexandria became the Manhattan of the ancient world, whether the era was as philosophically fertile as it was scientifically, whether your ancient doctor’s visit had positive expected value, what Egypt was actually exporting and selling, whether living standards rose above subsistence or stayed Malthusian, how the ethnic divide between Greek rulers and Egyptian subjects shaped society, what constrained the Ptolemaic Empire from becoming the next Rome, whether Cleopatra has been overhyped, what Julius Caesar was really thinking when he sided with her over her brother, the new frontiers in archeology, whether Herodotus can be trusted, what ancient Egypt knew about Israel and India, when Egyptian jewelry peaked and why, what triggered the sudden emergence of civilization across the ancient world, why a six-year-old Tyler knew King Tut better than Napoleon, and much more.
Excerpt:
COWEN: Either technologically or institutionally, what is it that the Persians had that the Egyptians did not?
WILKINSON: The Persians had a pretty formidable army. Their military technology was certainly superior to the Egyptians at the time that they conquered Egypt originally in the 6th century BC. Like many empires, I suppose, throughout history, they overreached themselves. They overextended themselves, and they found it increasingly hard to hold together this empire stretching all the way from the Aegean to the borders of India. Bits of the empire started to fragment and pull away. Egypt had always had this very strong sense of its own identity. When it had a chance to throw off the Persian yoke, it took it.
COWEN: Let’s think about some of the achievements of Ptolemaic Egypt as an era. Infrastructure. What did they do that was most impressive?
WILKINSON: Build Alexandria. Alexandria the city was a new foundation established by Alexander the Great to bear his name. Unlike all previous ancient Egyptian cities, it was a city built from the outset for commerce. It was a city built on the Mediterranean coast with a great natural harbor, with facilities for loading and offloading ships. It had a great lighthouse guarding the entrance to its harbor, which became one of the wonders of the world. The whole city was really designed from the get-go as a great commercial center looking outwards to the Mediterranean, rather than inwards to the rest of Egypt.
COWEN: Canals, artificial lake. What else did they do?
WILKINSON: They built a city quite unlike anything previously seen in the valley of the river Nile. In fact, any inhabitant today of a modern city would recognize the grid iron pattern of streets. Streets intersecting at right angles, that was something completely unheard of until this point in Egypt with vast public buildings. This was the Manhattan of the ancient world, if you like, in scale, in grandeur, and in the level of commercial activity.
And:
EN: What were the main exports of the Alexandria region? What are they selling, making?
WILKINSON: Oh, the two big exports that account for the lion’s share of Egypt’s wealth at the time are gold and grain. Gold has been mined in Egypt for millennia up to this point, but it’s still the place in the ancient world that produces large quantities of gold. Of course, gold has always been a great currency of international commerce.
Then Egypt is famed as the breadbasket of the ancient world. It produces a superabundance of grain thanks to the fertility of the Nile and the benign climate. It produces more than it needed for its own consumption, by comparison with poorer agricultural regions in Greece and Asia Minor, which struggled to produce enough food. Yes, gold and grain were the absolute engine of Egyptian prosperity.
COWEN: There’s metalwork, there’s glass. What else is there, manufacturing, as we would call it today?
WILKINSON: Oh, yes. There’s a big ceramics industry, so producing not just pots, but terracotta statues and votive objects. There’s glassmaking, as you’ve said. There’s advanced metallurgy, goldsmithing, ironworking, copper and bronze foundries. There’s what we might call the decorative arts, so sculpture, painting. All of these things thrived in ancient Alexandria.
COWEN: Do they have living standards sustainably above subsistence, or is this a Malthusian equilibrium, where they get some wealth and then more people survive and the wage falls again, and it doesn’t get much above what is required to keep people alive?
Recommended, informative and interesting throughout. And I am very happy to recommend all of Toby’s books, including his latest
What should I ask Richard Hanania?
Yes, I will be doing a Conversation with him. Richard does have a new book coming out, Kakistocracy: Why Populism Ends in Disaster. While I liked the book (and blurbed it), I do not feel our conversation about the book would be that interesting — too much beating up on the stupidities of other people, which is an activity not in short supply. So we agreed to (mostly) discuss Joseph Conrad’s Nostromo instead. Given that, what should I ask Richard?
*How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy*
That is the new Soumaya Keynes book, out today. I was happy to have blurbed this book, and here is an essay, on export restrictions, based on the book.
A Beautiful Theory Falls to Ugly Data
My latest paper, A Test of the Coase Conjecture Using Prices of Electronic Books, with the excellent Tim Groseclose, has just been published. The Coase Conjecture is another one of Coase’s little ideas — the original paper is six pages — that has spawned hundreds of follow-up papers and thousands of citations.
The idea is simple. A monopolist of a durable good has a time-inconsistency problem. Set the monopoly price in period 1 and he will be tempted in period 2 to cut the price and mop up the customers whose valuations sit between the period-1 price and MC. But the same logic applies in period 2, and again in period 3, and so on — eventually the price unravels to MC. Consumers see this coming, the monopolist knows the consumers see it coming, and so the monopolist cuts price to MC in period 1. And since a “period” is just the interval between price changes, the whole unraveling happens — in Coase’s phrase — “in the twinkling of an eye.”
The theorists, most notably Gul, Sonnenschein and Wilson and Fudenberg, Levine and Tirole, formalized Coase’s insight and showed that under quite general conditions the logic goes through. Which is rather surprising, since, as Tim and I point out, Coase’s conjecture implies that many patents and copyrights are essentially worthless — a prediction wildly at variance with the facts. Other theorists, including Stokey, Ausubel and Deneckere, and Board and Pycia, have offered variants under which the Coase outcome does and does not obtain.
For all this theory, there have been almost no direct tests of the Coase Conjecture apart from a handful of lab experiments. Ours is one of the first papers to take the conjecture to the real world. We look at e-books, an unusually clean setting: digital goods are durable, marginal costs are low, resale is limited, and prices can be changed quickly. Using the prices of e-books that are in the public domain as a proxy for marginal cost, we ask: (a) do prices rapidly fall to MC, and (b) does the market clear in the first period? The answer to both is no. E-book prices begin well above MC, sales continue over many periods, and prices don’t even decline monotonically.
We reject the Coase Conjecture decisively.
The paper has an interesting history. The theorists (or the referees we guessed were theorists) praised the paper for taking the theory seriously but inevitably had a fillip to offer, distinguishing the world of pure theory from empirical tests. The empiricists, on the other hand, said our tests were too simple since no one takes the theory that seriously. It’s good to see the paper find a home!
We reject the Coase Conjecture decisively, but it remains to say why. We can rule out some explanations — it’s not rising MC, and it’s not the finiteness of buyers (which can support a perfectly price-discriminating Pac-Man equilibrium).
Two theories remain: 1) sellers can commit not to lower prices, and 2) the outside-options model of Board and Pycia. I prefer the former, my co-author prefers the latter. To me, commitment just isn’t that hard. The standard story is that profits are like cookies on the table and the monopolist can’t resist — but at least the people tempted by cookies get to eat the cookies! The Coase profits are illusory: the monopolist races to MC in period 1 precisely because they know they won’t resist later and as a result they don’t even get a taste of profit! Too clever by half. I say, show some backbone. Firms are *all about* commitment — to workers, consumers, contractors. Why not to a price? My co-author points out, however, that this is more Tabarrok-vibe than carefully laid out theory.
Tim likes the Board and Pycia model which begins with the plausible idea that consumers have outside options — if they don’t buy the book today, they will buy another book, rent the movie, or borrow from the library — and crucially, once they take the outside option, the consumer never returns to the market. You might think outside options would make it *harder* for the firm to set a high price, but Board and Pycia show in a very clever but extended argument that when you carefully work out the full equilibrium the opposite holds: outside options give firms a time-consistent incentive to set and keep a high price. Tim explains the argument further here (see also our paper for an intuitive breakdown).
In any case, the Coase Conjecture — at least as modelled by the theorists — fails in an environment most conducive to it.
A beautiful theory falls to ugly data.
What I’ve been reading
1. Paul Mendes-Flohr, Martin Buber: A Life of Faith and Dissent. A beautifully written, first-rate intellectual biography of Buber. It is hard to imagine finding a better book on him.
2. Robert C. Austin and Artan R. Hoxha, Enver Hoxha: Twentieth-Century Tyrant. How did this strange story end up happening? This book offers the best set of explanations I have seen. But Hoxha himself remains a psychological cipher at the end of it all? It turns out he never thought Mao was much of an ideologue, being too influenced by Chinese culture and thought. Also I had not previously realize how much Albania’s growing youth population — with the most natalist demographics in Europe at the time — was considered a major threat to the regime.
3. Malachi Haim Hacohen, Karl Popper: The Formative Years 1902-1945. Such an excellent and high-level work. And the author is not afraid to accuse Popper of making everything about himself, and also writing on topics (Plato, Hegel, Marx) where he was less than well-informed. I had not known that Popper hated Toulmin’s Wittgenstein’s Vienna book, feeling that the actual Viennese environment at the time was far more positive and forward-looking than most intellectual historians were inclined to grant. Nor had I known how cut off Popper was during his New Zealand years, as there were no plane connections, New Zealand news did not cover foreign affairs very much, and the mail was painfully slow. Popper also wanted to turn the Mont Pelerin Society into a coalition group, including socialists. That did not happen.
4. Frank Callanan, James Joyce: A Political Life. An excellent, lengthy study, I now see Joyce as intensely political whereas I did not before. “His fiercely Parnellian critique of Ireland and Irish nationalism is only politically intelligible as written from within Irish nationalism. It is an argument addressed to Irish nationalists. The paradox of Joyce’s nationalism is that it is in his critique of nationalism that his nationalism is most evident.” As Italo Svevo once stated: “Joyce is twice a rebel, against England and against Ireland.”
5. Suzy Hansen, From Life Itself: Turkey, Istanbul, and a Neighborhood in the Age of Erdoğan. An insightful look into Erdoğan, Turkish Islamism, parts of Istanbul, and most of all how Turkey slid into autocracy. One of the best case studies I know of on how a fragile democracy can go away.
All of these books are very good. I’ve been seeing complaining in the press lately, and on social media, about the paucity of book reviews these days. Well, no one is stopping you from reviewing books! Just do it.
The carousel trade (arbitrage)
Imagine two companies which are secretly controlled by the same people. If company A imported some phones, then sold them to company B, it charged VAT on the deal. If company B then exported the phones, it reclaimed — from the government — the VAT it had paid to company A. the integrity of the VAT system depends on the two totals balancing out. The money that A pays in is equl to the money that B takes back. The scam lay in A disappearing and not handing over the money it owed, but B till claiming it. The hidden owners of the two firms therefore earned for themselves 17.5 per cent (the rate at which VAT was then charged) of the value of the shipment of the phones. The more phones you sold to yourself, the more money you made.
That is John Lanchester in the LRB, citing Oliver Bullough’s Everybody Loves Our Dollars: How Money Laundering Won.