Category: Books
The Spanish-language Kindle edition of *Stubborn Attachments*
The various subtleties of the title “Stubborn Attachments” do not translate well into Spanish, so here is “El imperativo moral del crecimiento económico: Una visión de una sociedad libre y próspera de individuos responsable.”
You can order it here, and I expect a print edition will be coming in due time.
I thank all of those involved for helping this project come to fruition, and thank Gonzalo Schwarz for doing the translation.
*The Deficit Myth* and Modern Monetary Theory
That is the new book by Stephanie Kelton and the subtitle is Modern Monetary Theory and the Birth of the People’s Economy. Here are a few observations:
1. Much of it is quite unobjectionable and well-known, dating back to the Bullionist debates or earlier yet. Yet regularly it flies off the handle and makes unsupported macroeconomic assertions.
2. Like many of the Austrians, Kelton likes to insist on special terms, such as the government spending “coming first.” You don’t have to say this is wrong, just keep your eye on the ball and don’t let it distract you.
3. “MMT has emphasized that rising interest income can serve as a potential form of fiscal stimulus.” You don’t have to believe in a naive form of Say’s Law, but discussions of demand should start with the notion of production. Then…never reason from an interest rate change! Overall, I sense Kelton has one core model of the macroeconomy, with a whole host of variables held fixed (“well…higher interest rates means printing up more money to pay for them and thus greater stimulus…”), and then applies that model to a whole series of quite general problems and questions.
4. She thinks “demand” simply puts resources to work, and in this sense the book is a nice reductio ad absurdum of the economics one increasingly sees from mainstream writers on Twitter. p.s.: The economy doesn’t have a “speed limit.” And it shouldn’t be modeled using analogies with buckets.
5. We are told that the U.S. “…can’t lose control of its interest rate”, but real and nominal interest rates are not distinguished with care in these discussions. The Fed’s ability to control real rates is fairly limited, though not zero, and those are empirical truths never countered or even confronted in this book.
6. The absence of a nominal budget constraint is confused repeatedly with the absence of a real budget constraint. That is one of the major errors in this book.
7. It still would be very useful if the MMT people would take a mainstream macro model and spell out which assumptions they wish to make different, and then solve for the properties of the new model. There is a reason why they won’t do that.
8. I don’t care what the author says or how canonical she is as a source, a federal jobs guarantee is not part of MMT.
9. Just because the economy is not at absolute full unemployment, it does not mean that free resources are on the table for the taking. Again, in this regard Kelton is a useful reductio on a lot of “Twitter macro.”
10. I am plenty well read in the “money cranks” of earlier times, including Soddy, Foster, Catchings, Kitson, Proudhon, Tucker, and many more. They got a lot of things right, but they also failed to produce coherent macro theories. I would strongly recommend that Kelton undertake a close study of their failings.
11. For all the criticisms of the quantity theory, I would like to know how the MMT people explain the Fed coming pretty close to its inflation rate target for many years in a row, under highly varying conditions, fiscal conditions too.
12. The real grain of truth here is that if monetary policy is otherwise too deflationary, monetizing parts or all of the budget deficit is not only possible, it is desirable. Absolutely, but don’t then let somebody talk loops around you.
You can order the book here.
That was then, this is now
Ali Akbar was two years younger than Robu [later named Ravi Shankar], but a couple of years ahead in his musical training. He has been through a brutal regime: Baba had even tied him to a tree and beaten him when his progress was unsatisfactory. Although Baba had arranged for Ali Akbar to marry at the age of fifteen, he still expected him to remain celibate — married to music. Twice Ali Akbar ran away. Ultimately the harsh discipline brought out his talent and made him into a master of the sarod, although one wonders about the emotional cost.
That is from Oliver Craske’s Indian Sun: The Life and Music of Ravi Shankar, which I am quite enjoying.
What I’ve been reading
1. Jordan Mechner, The Making of Prince of Persia: Journals 1985-1993. A memoir and game development journal from a game developer. The content is foreign to me, but this is one of the most beautiful and artistic books I ever have seen and I suspect some of you will find the narrative gripping. A product of Stripe Press — “Ideas for Progress.”
2. Jeffrey D. Sachs, The Ages of Globalization: Geography, Technology, and Institutions. This book is a series of lectures, based on Sachs’s earlier work on economic geography and development, yet somehow with a vaguely Yuval Harari sort of glow. Some parts are a good introduction to the earlier work of Sachs, other parts are pitched a bit too low or too generally. It is strange to see chapter subheadings such as “Thalassocracy and Tellurocracy.” As an economist, I still maintain that Sachs is considerably underrated.
3. Susanna Clarke, Piranesi. Yes this is a work of fiction. Clarke of course wrote Jonathan Strange and Mr. Norrell, a very long novel that I have read twice, an odd mix of fantasy, science, magic, and Enlightenment esotericism, the only novel I know with fascinating footnotes. I was thrilled to receive this one, and on p.51 I am still excited.
4. Mieko Kawakami, Breasts and Eggs. The hot new novel from Japan, it comes with a Murakami rave endorsement. To me it seems like “ordinary feminism” (not that there’s anything wrong with that), and so far it is a bore. If it doesn’t get better soon, I’ll write it off as a “mood affiliation text,” not that there’s anything wrong with that. It probably makes most sense read in a very specific cultural context.
5. Douglas Boin, Alaric the Goth: An Outsider’s History of the Fall of Rome is a fun look at one part of ancient history through alternative eyes. I always wonder what to trust about this era other than primary sources, and if you can’t understand them or grasp them intelligibly maybe that is itself the correct inference, namely that we have no idea what the **** went on back then. Still, as imaginary reconstructions go, this is one that ought to be done and now it is.
6. Ryan Patrick Hanley, Our Great Purpose: Adam Smith on Living a Better Life. Smith as a practical moral philosopher, this short volume pulls out the side of Smith closest to Montaigne and the Stoics. You can ponder Smithian sentences such as “The great source of both the misery and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another.”
7. Sonia Jaffe, Robert Minton, Casey B. Mulligan, Kevin M. Murphy, Chicago Price Theory. A very good intermediate micro text, patterned after how Econ 301 is taught at Chicago. Apparently in the current Coasean equilibrum, this book ends up published by Princeton University Press. Get the picture?
From a legal perspective there is Ron Harris, Going the Distance: Eurasian Trade and the Rise of the Business Corporation, 1400-1700.
*The WEIRDest People in the World*
That is the new 655 pp. book by Joseph Henrich, due out September 8, and yes it is “an event.” The subtitle is “How the West Became Psychologically Peculiar and Particularly Prosperous,” and that is indeed one of the very most important questions in all of social science.
“WEIRD” of course refers to “Western, Educated, Industrialized, Rich, and Democratic.” And is it not weird that we (some of us, at least) are WEIRD?
Here is an excerpt from the opening segment:
Let’s close by returning to the core questions of this book:
1. How can we explain the global psychological variation highlighted above?
2. Why are WEIRD societies particularly unusual, so often occupying the extreme ends of global distributions of psychology and behavior?
3. What role did these psychological differences play in the Industrial Revolution and the global expansion of Europe during the last few centuries?
If you are wondering how this material might differ from Henrich’s previous output, there is above all much more on marriage customs and monogamy, for instance:
…I’ll make the case that monogamous marriage norms — which push upstream against our polygynous biases and the strong preferences of elite men — create a range of social and psychological effects that give the societies that possess them a big edge in competition against other groups.
Obviously recommended, and you will be hearing more about this both from me and from others. You can pre-order here.
My Conversation with Adam Tooze
Tinges of Covid-19, doses on financial crises, but mostly about economic history. Here is the audio and transcript. Here is the summary:
Adam joined Tyler to discuss the historically unusual decision to have a high-cost lockdown during a pandemic, why he believes in a swoosh-shaped recovery, portents of financial crises in China and the West, which emerging economies are currently most at risk, what Keynes got wrong about the Treaty of Versailles, why the Weimar Republic failed, whether Hitler was a Keynesian, the political and economic prospects of various EU members, his trick to writing a lot, how Twitter encourages him to read more, what he taught executives at BP, his advice for visiting Germany, and more.
Here is one excerpt:
COWEN: Was Keynes right about the Treaty of Versailles? Was it as bad as Keynes said?
TOOZE: No. I’m a confirmed liberal Keynesian in my broad politics, and my understanding of politics and the way expertise ought to relate to it, and the operations of modern democracy. I think his political writings in Essays in Persuasion are brilliant. But I regard The Economic Consequences of the Peace as disastrous because, essentially, it enhanced and gave arguments to the German nationalists who —
COWEN: But that doesn’t mean Keynes was wrong, right? It may have had that effect, but he’s writing at a time where the wealth-to-income ratio is especially low, so a given measure of debt burden is much worse for an economy than what we might be used to.
TOOZE: Absolutely, but the evidence of the 1920s is that, with the right framework, the Weimar Republic was, in fact, perfectly capable of bearing a reasonable burden of reparations — 2 percent to 3 percent were doable. The fact of the matter is the German political class had no interest in accepting that responsibility and was quite determined to do a variety of different things to escape that burden.
And there is no doubt at all that the front-loading of the demands, which is very understandable from the point of view of the financial needs of the French in particular, caused a huge bottleneck, if you like, early on in the history of the Weimar Republic when it was most fragile. And that’s, as it were, the moment when I think the critique is most valid.
And that’s why, for me, really, the hidden agenda of the economic consequences of the peace is an appeal, to the Brits but above all to the Americans, for large-scale debt concessions, on which one could only agree with Keynes that this was, in fact, absolutely critical, that market economies have unspoken fundamental political preconditions, which, in the aftermath of the massive war, have been disrupted.
And:
COWEN: Speaking of Hitler, was Hitler, in fact, the Keynesian?
TOOZE: No. Hitler personally — absolutely not. Hitler’s personal monetary ideas are very, very conservative. He’s an anti-inflation hawk. He has to be persuaded to engage in large-scale monetary financing.
Somebody like Schacht is a contemporary of Keynes, and that’s Hitler central banker and an adventurous monetary thinker. He’d learned to think outside the monetary box, if you like, in the efforts to stabilize Weimar’s currency in 1923–24. And he’s certainly an expansionary. He’s not afraid of monetary finance and of using off-balance-sheet vehicles to provide liquidity and to provide credit for an underemployed economy.
And quite reasonably, no one’s worried about inflation in 1933 because Germany has massive unemployment. So, in that sense, they are adventurous, macroeconomic, monetary economists.
They’re not Keynesians for the simple reasons that Keynesianism, classically, of course, is a liberal economic politics. It believes in a multiplier, and the multiplier’s the be-all and end-all really of Keynesian economics because what it suggests is that small, intermittent, discretionary interventions by the state — relatively small — will generate outside reactions from the economy, which will enable the state to serve a very positive role in stabilizing the economy but doesn’t require the state to permanently intrude and take over the economy.
That’s a post-1945 kind of vision of a mixed economy. Keynes himself — that’s why he wants the multiplier to be three because if the multiplier is three, then $1 by government spending generates $3 of private economic activity.
You can think of government intervention as sporadic. It’s emergency medicine. It’s not chronic care. That, of course, is the antithesis of what the Nazis are doing because they are ramping up government spending, not across the board, but highly focused on rearmament because what they’re doing is not just creating jobs, though they do create jobs as a side effect. What they’re doing is restructuring the economy towards building the foundation for rearmament in a war economy.
What they’re actually trying to do is systematically repress the multiplier because they do not want people employed in armaments factories to go out and buy clothing and fancy food, which requires imports. They want the money to be circled straight back into the armaments effort. Saving various types of financial oppression is the order of the day. They’re macroeconomists, the Nazis. They’re adventurous macroeconomists. They’re doing massive intervention, but they’re not Keynesian.
Tooze’s discussion of his own career and interests, toward the end, is hard to excerpt but for me the highlight of the conversation. He also provided the best defense of Twitter I have heard.
Definitely recommended.
*Good Work if You Can Get It: How to Succeed in Academia*
That is the new Jason Brennan book, just out yesterday, here is a summary:
This candid, pull-no-punches book answers questions big and small, including
• Should I go to graduate school—and what will I do once I get there?
• How much does a PhD cost—and should I pay for one?
• What kinds of jobs are there after grad school, and who gets them?
• What happens to the people who never get full-time professorships?
• What does it take to be productive, to publish continually at a high level?
• What does it take to teach many classes at once?
• What does it take to succeed in graduate school?
• How does “publish or perish” work?
• How much do professors get paid?
• What do search committees look for, and what turns them off?
• How do I know which journals and book publishers matter?
• How do I balance work and life?This realistic, data-driven look at university teaching and research will make your graduate and postgraduate experience a success.
Here is my blurb:
“In Good Work If You Can Get It, Jason Brennan tells it like it is. You will get the truth, the whole truth, and nothing but the truth. This is the one book to read about trying to become a professor.”
Self-recommended. And here is Bryan Caplan’s excellent review.
What I’ve been reading
1. Ethan Sherwood Strauss, The Victory Machine: The Making and Unmaking of the Warriors Dynasty. On top of everything else this is an excellent book on management, and the random events along the way to making a team (the Warriors once wanted to trade both Curry and Thompson for Chris Paul). Kevin Durant ends up as the fall guy, recommended to those who care.
2. Valerie Hansen, The Year 1000: When Explorers Connected the World — and Globalization Began. Worth reading, my favorite part was the discussion of how Cahokia in Mississippi was connected to the Mayans. And Chichen Itza is probably the world’s best preserved city from the year 1000.
3. Zena Hitz, Lost in Thought: The Hidden Pleasures of an Intellectual Life. “Drawing on inspiring examples, from Socrates and Augustine to Malcolm X and Elena Ferrante, and from films to Hitz’s own experiences as someone who walked away from elite university life in search of greater fulfillment, Lost in Thought is a passionate and timely reminder that a rich life is a life rich in thought.”
4. Alaine Polcz, One Woman in the War: Hungary 1944-1945. I am surprised this book is not better known. I found it deeper and more gripping than many of the more broadly recommended wartime memoirs, such as Viktor Frankl. And more honest about the toll of war on women.
5. Adam Thierer, Evasive Entrepreneurs and the Future of Governance: How Innovation Improves Economies and Governments. A very good libertarian, “permissionless innovation” look at tech.
I have browsed Judith Herrin’s Ravenna: Capital of Empire, Crucible of Europe, and it seems to be the definitive book on the early history of that city (one of my favorite one-day visits in the whole world).
What should I ask Ashley Mears?
Ashley Mears is an American writer, sociologist, and former fashion model. She is currently an associate professor of sociology at Boston University. Mears is the author of Pricing Beauty: The Making of a Fashion Model, and is regularly quoted in media as an academic expert in the culture and economics of fashion.
I am also a big fan of her forthcoming book Very Important People: Status and Beauty in the Global Party Circuit, which is one of my favorite books of the year.
So what should I ask her? Here is more about Ashley on Google.
Comfort foods make a comeback
Comfort foods from big brands are seeing a resurgence, executives say, as consumers seek familiarity and convenience amid the coronavirus pandemic.
Many shoppers have favored fresh and specialty brands over Big Food’s processed products in recent years, while others have opted for cheaper store brands. Now, the world’s largest makers of packaged foods say frozen pizza, pasta sauce, and mac and cheese are rising in favor as consumers in lockdown eat at home.
Nestlé SA NSRGY 3.04% became the latest to detail the trend Friday when it reported stronger organic sales growth for the first quarter driven by Americans stockpiling its DiGiorno pizza, Stouffer’s frozen meals and Hot Pockets sandwiches. Baking brands like Toll House and Carnation also performed well, it said…
Overall, U.S. store sales of soup rose 37%, canned meat climbed 60% and frozen pizza jumped 51% for the week to April 11, according to research firm Nielsen…
“We’ve seen time and time again that big brands tend to do well when people are feeling anxious and under threat,” Chief Executive Alan Jope said. He added that he expects the shift to larger brands to last a couple of years.
I wonder how general this trend is. I have seen data that readers are buying more long classic novels, and I am struck by my anecdotal observations of satellite radio. I am driving much less than before (where is there to go?), but per minute it seems I am more likely to hear “Hey Jude” and “In My Life” on the Beatles channel than in times past. Who wants to go out for their periodic 20-minute jaunt and have to sit through 6:34 of George Harrison’s “It’s All too Much”?
Here is the full WSJ story by Saabira Chaushuri. As for food, I am more inclined to consume items that can be easily shipped and stored, and if need be frozen. That favors meat and beans, and disfavors fresh fruit and bread. Frozen corn is a big winner, as are pickles. The relative durable cauliflower and squash do better than some of the more fragile vegetables, such as leaf spinach. I am not desiring comfort food per se, but I do wish to cook dishes requiring a relatively small number of items (otherwise maybe I can’t get them all), and that does almost by definition overlap with the comfort food category.
My Conversation with Philip Tetlock
Here is the audio and transcript, here is part of the summary:
He joined Tyler to discuss whether the world as a whole is becoming harder to predict, whether Goldman Sachs traders can beat forecasters, what inferences we can draw from analyzing the speech of politicians, the importance of interdisciplinary teams, the qualities he looks for in leaders, the reasons he’s skeptical machine learning will outcompete his research team, the year he thinks the ascent of the West became inevitable, how research on counterfactuals can be applied to modern debates, why people with second cultures tend to make better forecasters, how to become more fox-like, and more.
Here is one excerpt:
COWEN: If you could take just a bit of time away from your research and play in your own tournaments, are you as good as your own best superforecasters?
TETLOCK: I don’t think so. I don’t think I have the patience or the temperament for doing it. I did give it a try in the second year of the first set of forecasting tournaments back in 2012, and I monitored the aggregates. We had an aggregation algorithm that was performing very well at the time, and it was outperforming 99.8 percent of the forecasters from whom the composite was derived.
If I simply had predicted what the composite said at each point in time in that tournament, I would have been a super superforecaster. I would have been better than 99.8 percent of the superforecasters. So, even though I knew that it was unlikely that I could outperform the composite, I did research some questions where I thought the composite was excessively aggressive, and I tried to second guess it.
The net result of my efforts — instead of finishing in the top 0.02 percent or whatever, I think I finished in the middle of the superforecaster pack. That doesn’t mean I’m a superforecaster. It just means that when I tried to make a forecast better than the composite, I degraded the accuracy significantly.
COWEN: But what do you think is the kind of patience you’re lacking? Because if I look at your career, you’ve been working on these databases on this topic for what? Over 30 years. That’s incredible patience, right? More patience than most of your superforecasters have shown. Is there some dis-aggregated notion of patience where they have it and you don’t?
TETLOCK: [laughs] Yeah, they have a skill set. In the most recent tournaments, we’ve been working on with them, this becomes even more evident — their willingness to delve into the details of really pretty obscure problems for very minimal compensation is quite extraordinary. They are intrinsically cognitively motivated in a way that is quite remarkable. How am I different from that?
I guess I have a little bit of attention deficit disorder, and my attention tends to roam. I’ve not just worked on forecasting tournaments. I’ve been fairly persistent in pursuing this topic since the mid 1980s. Even before Gorbachev became general party secretary, I was doing a little bit of this. But I’ve been doing a lot of other things as well on the side. My attention tends to roam. I’m interested in taboo tradeoffs. I’m interested in accountability. There’re various things I’ve studied that don’t quite fall in this rubric.
COWEN: Doesn’t that make you more of a fox though? You know something about many different areas. I could ask you about antebellum American discourse before the Civil War, and you would know who had the smart arguments and who didn’t. Right?
And another:
TETLOCK:
…I had a very interesting correspondence with William Safire in the 1980s about forecasting tournaments. We could talk a little about it later. The upshot of this is that young people who are upwardly mobile see forecasting tournaments as an opportunity to rise. Old people like me and aging baby-boomer types who occupy relatively high status inside organizations see forecasting tournaments as a way to lose.
If I’m a senior analyst inside an intelligence agency, and say I’m on the National Intelligence Council, and I’m an expert on China and the go-to guy for the president on China, and some upstart R&D operation called IARPA says, “Hey, we’re going to run these forecasting tournaments in which we assess how well the analytic community can put probabilities on what Xi Jinping is going to do next.”
And I’ll be on a level playing field, competing against 25-year-olds, and I’m a 65-year-old, how am I likely to react to this proposal, to this new method of doing business? It doesn’t take a lot of empathy or bureaucratic imagination to suppose I’m going to try to nix this thing.
COWEN: Which nation’s government in the world do you think listens to you the most? You may not know, right?
Definitely recommended.
What should I ask Adam Tooze?
I will be doing a Conversation with him, no associated public event. He has been tweeting about the risks of a financial crisis during Covid-19, but more generally he is one of the most influential historians, currently being a Professor at Columbia University. His previous books cover German economic history, German statistical history, the financial crisis of 2008, and most generally early to mid-20th century European history. Here is his home page, here is his bio, here is his Wikipedia page.
So what should I ask him?
Fiction and classics to read under lockdown
A number of you asked me for a list of books to read during lockdown, mostly novels and fiction (like Plato, right?). Here is a list I drew up maybe fifteen (?) years ago, with only slight revisions since. I feel a current list might be quite different, but actually the early list is perhaps closer to most of your tastes? Here it is. It starts with classics and then goes through more recent novels maybe up through 2000 or so.
My Conversation with Emily St. John Mandel
I am a fan of her two latest novels Station Eleven (about a post-pandemic world) and The Glass Hotel, and many other smart people like them too. Here is the audio and transcript. Here is the CWTeam summary:
She joined Tyler to discuss The Glass Hotel, including why more white-collar criminals don’t flee before arrest, the Post Secret postcard that haunts her most, the best places to hide from the Russian mob, the Canadian equivalent of the “Florida Man”, whether trophy wives are happy, how to slow down time, why she disagrees with Kafka on reading, the safest place to be during a global pandemic, how to get away with faking your own death, how A Canticle for Leibowitz influenced her writing, the permeability of moral borders, what surprised her about experiencing a real pandemic, how her background in contemporary dance makes her a better writer, adapting The Glass Hotel for a miniseries, her contrarian take on Frozen II, and more.
By the way, I would fake my own death by going on a cargo vessel and bribing them to claim I fell overboard. Here is one bit about the pandemic:
COWEN: Have people been more or less cooperative than you had thought?
ST. JOHN MANDEL: My impression — and the problem is, we don’t see people anymore — but my overall impression is they’ve been more cooperative.
Definitely in the literary community, I’ve seen a lot of people really trying to support their independent bookstores, which has always been a thing. But I think there’s been a greater awareness that if you don’t buy your books from your independent bookstore — and by the way, they do all sell online mostly — then that store might not be there when all of this ends. So I see people pulling together like that, to try to support the businesses they love. That’s been a major one.
I wish I could see people and bring back a report from actual humanity, [laughs] but that is my impression. There’s been more cooperation.
And:
COWEN: In so many postapocalyptic novels, it seems that people wander a lot. Do they wander too much? Should they just stay put?
ST. JOHN MANDEL: I had this conversation with another postapocalyptic novelist. Would everybody stop walking? Why is everybody wandering endlessly in a postapocalypse?
And:
COWEN: How good is Frozen II, if I may ask?
ST. JOHN MANDEL: It’s pretty good.
COWEN: Pretty good?
ST. JOHN MANDEL: Yeah. This is a controversial statement. I know a lot of parents who hate it, but I find it more interesting than Frozen I.
Perhaps I like The Glass Hotel a wee bit better than Station Eleven, but maybe Station Eleven is better to read first?
*Markets, Minds, and Money: Why America Leads the World in University Research*
One of the best books on the history of American higher education, author Miguel Urquiola of Columbia argues for the importance of market competition in the rise and dominance of the American system. Strongly argued and full of good evidence and stories, here is one excerpt I found of interest:
That Columbia would be among the first successful American research universities would have surprised many observers around 1850, as the school had seen real oscillations in its fortunes. For the first decades after its creation in 1754, Columbia was a wealthy but small school. In 1774 it had the highest collegiate endowment, but only 36 students, while Harvard and Yale had four or five times as many…in 1797 the college had eight faculty members, during most of the 1800s it had four. In 1809, an inquiry warned that Columbia College “was fast becoming, if it has not become already, a mere Grammar School”; between 1800 and 1850, even as New York City grew, the school’s enrollment stagnated, and even in 1850 the average entering age was 15.
And this:
Among wealthy countries, the United States is unusual in letting its university sector operate as a free market. Self-rule, free entry, and free scope are much less prevalent in Europe.
Recommended, you can pre-order here.