Category: Books

*The Great Reversal: How America Gave Up on Free Markets*

That is the new book by Thomas Philippon, and perhaps the title is a bit misleading, as the book covers both regulatory barriers and natural economic forces behind higher concentration levels.  I am a big fan of Philippon’s work, but I am not so convinced by his arguments in this book.  Most of all, he is trying to argue for systematically greater monopoly power in the American economy, but he is reluctant to provide much evidence for output restriction, the sine qua non of market power.

First note that market power does not seem to be up at the level of actual market competition.  And capital’s share of income does not seem to be rising in a manner consistent with the monopoly theory, see here and here.

I agree with him about health care, and also (highly regulated) cable television and thus internet connections.  I agree with all of his suggestions for removing regulatory barriers to entry, for instance by allowing foreign airlines to serve domestic U.S. markets.  From a policy point of view, I am quite close to his perspective.

But when it comes to monopoly power too much of his evidence is circumstantial. OK, there is greater stability for market leaders in many sectors, and weak investment aggregates, but all the time antitrust suits find evidence for output restrictions — so why doesn’t this book offer more of such evidence?  Here is one passage (p.39) that caught my attention:

…we see a sharp increase in concentration in the airline industry after 2010.  That is enough to trigger our interest, but not enough to conclude that competition has weakened.  We must first check that concentration has also increased at the route level.  We find that it has.  We can further show that it came together with higher prices and higher profits.

I have only a pre-publication copy, and perhaps some of the book is missing in my edition, but I don’t see the cited evidence presented, nor is it in the airlines section starting on p.137 (which does document increasing concentration at the national level).  To consider the contrary evidence, here is an excerpt from an earlier MR post:

As for output restrictions, here is the DOT series on aggregate miles flown.  No doubt, there are problems around the time of 9/11 and also the Great Recession, with 2008-2012 being a period of slight quantity contraction.  But in 1985 there were 275,864 [million] total miles flown, in 2006 it was 588,471, and 641, 905 in 2015.  I’ll ask again: if there is so much extra monopoly, where are the output restrictions?

Or look at the price index.  Overall prices are down considerably since 2008, and from about 2000 to 2016 they run from about 250 (eyeballing) to about 270, noting 1998-2010 saw a huge run-up in oil prices.

Since I wrote that post there is clearer evidence for a steady price decline since 2012 (he is claiming higher concentration since 2010), just look at the price index, which is FRED channeling BLS.  Now maybe those are the wrong numbers for some reason, but I don’t see anything in the Philipson book to counter them.  I don’t see output restriction considered at all.  I don’t see a price series presented at all.

That is only one sector, but it reflects my deeper worries about the book.  I just don’t see the evidence for output restrictions, or, in many cases I don’t see the evidence for higher prices.

The most sustained discussion of prices comes on pp.114-122, where it is shown that PPP-adjusted prices are higher in America than in Europe, and furthermore the gap is growing.  That is far too much aggregation for my tastes (“Europe”), PPP adjustments are not exactly scientific, it is not very direct evidence for market concentration being the culprit, and furthermore if I understand him correctly, the Big Mac index also has the United States becoming relatively more expensive, even though McDonald’s clearly has faced massive competition in recent years.

To be sure, if you believe in a productivity slowdown, as I do, you also have to feel that America’s economic sectors, in some counterfactual sense, could be much more dynamic, more prone to disruption, and yes more competitive.  It is a great disappointment to me that is not the case.  But that is far from the view that monopoly power is increasing in the American economy in an economically significant manner, across a wide variety of sectors (health care caveat noted, and even that is selective, as there has been a significant cost slowdown).

So I remain skeptical about the main claims in this book.

*Because Internet: Understanding the New Rules of Language*

That is the new book by Gretchen McCulloch, here is one excerpt:

The passive-aggressive potential of the single period started being reported in thinkpieces in 2013…The string of dots got a thinkpiece in 2018, though it has been popping up in comment threads since at least 2006, while it cousins, the hyphen and string of commas, have been less extensively reported but have occasioned long comment threads on blogs and internet forums.  Despite the fears mongered by headlines, it’s not the case that the passive-aggressive meaning has killed all other uses of the period.  The linguist Tyler Schnoebelen, who’s definitely younger than the peak dot-dot-dot generation, did a study of periods in his own 157,305 text messages.  He found that, true, periods were rare in short, informal messages — ones less than seventeen characters or containing lol, u, haha, yup, ok, or gonna.  But they were still often found in messages longer than seventy-two characters or containing words like told, feels, feel, felt, feelings, date, sad, seems, and talk.  The added weight of the period is a natural way to talk about weight matters.

Most books on the internet I find vacuous, this one had some material of interest, though perhaps for some people it is too navel-gazing.  But if you are going to spent that much time staring at a screen, and typing text into little boxes, surely you might wish to understand it better.  Most of all, I enjoyed the discussion of how different generations have learned to use the internet somewhat differently, depending on when they started.

*Our Man: Richard Holbrooke and the End of the American Century*

By George Packer, I thought this book would be dull, but in fact it is interesting throughout.  Holbrooke, if you don’t already know, was a lifetime American diplomat, but much more than that too.  Here is one excerpt:

After the evacuation of dependents and the arrival of ground troops in 1965, South Vietnam became a vast brothel.  But even before there were half a million Americans, sex was an elemental part of the war.  “I have the theory that if the women of Vietnam had big copper spoons through their noses and looked like Ubangis,” a reporter once said, “this war wouldn’t have lasted half as long, and maybe wouldn’t have even started.”  The whole scene repelled the Boston Puritan Henry Cabot Lodge.  “I not only don’t wanna,” he said, “I don’t wanna wanna.”

A vivid passage to be sure, but two points.  First, why call the one sensible guy a “Puritan”?  (Yes, the Puritans in fact were great, but I don’t think the remark is to be taken in that spirit.)  Second, it seems to me that many Ubangi women are likely quite beautiful, and probably I saw some of them while in Ethiopia.  Furthermore, at least these days, it is optional whether they wish to take on the famed “lip plate.”

In any case, I would describe the book as “rollicking.”  You can order it here.

For the recommendation I thank Mr. C. Weber.

*Me the People: How Populism Transforms Democracy*

By Nadia Urbinati, I think of this book as the next step after Martin Gurri.  Here is one bit:

…the massive usage of the internet — which is an affordable and revolutionary means of interaction and information sharing by ordinary citizens — has supercharged the horizontal transformation of the audience and made the public into the only existing political actor outside institutions born from civil society.

But more significantly, populism is so diverse and the word is so often misused, how should we best understand it?  First, by breaking down parties, the new internet populism raises the status of personalized individual leaders, such as Trump and also AOC.  Thus:

…populism in power is actually a new form of mixed government in which one part of the population achieves a preeminent power over the other(s).  As such, populism competes with (and, if possible, modifies) constitutional democracy in putting forth a specific and distinctive representation of the people and the sovereignty of the people.

Populism also has a hard time giving up power, because the rhetoric is purifying, and the pretense is that the current government does in fact represent a more or less unitary “will of the people,” enemies of the people aside of course.  Elections are about revealing a majority opinion that (supposedly) already exists, and thus populism does not fit entirely easy into standard democratic practice.

Here is more:

As such, populism is more than merely a movement of contestation or mobilization, and it should not be confused with social movements in civil society.  Populism is a movement of contestation against the existing political establishment, but one that seeks a majority that would rule with unchecked ambitions and plan to remain power for as long as possible, though without revoking political liberty or eliminating adversaries.  The “benign” aspects of populism in power include its dwarfing of the opposition and minorities by humiliating them and creating an overwhelming propaganda campaign that endlessly reinforces the power of majority opinion.

Populism is not just a style of politics, so you can’t expect a successful and truly left-wing populism, nor will populists end up as a successful vehicle for “right-wing” ideas either.  Beware!

There is too much political science jargon in this book, and many of the paragraphs are too long or too circuitous, and furthermore much of the best content is difficult to summarize.  Nonetheless this book makes more sense to me than the treatments of populism I read in the mainstream press or in “intelligent” magazines, and I found it genuinely insightful throughout.  Recommended, at least if you are up for a particular kind of read.  You can pre-order the book here.

What I’ve been reading

1. Christopher Tyerman, The World of the Crusades: An Illustrated History.  The best and most engrossing history of the crusades I have read.  By the way, the “children’s crusade” probably didn’t have that much to do with children.  The periodic topic-specific two-page interludes are especially good.

2. Tobias Straumann, 1931: Debt, Crisis, and the Rise of Hitler covers a critical episode in European history, and one which has not entirely faded into irrelevance.  The author is a financial historian rather than an economist, so think of this book as scratching your history itch, in any case recommended.

3. Jim Auchmutey, Smokelore: A Short History of Barbecue in America is the most current of the best histories of barbecue and it is more bullish on the barbecue future than most treatments.

4. Chris Miller, The Struggle to Save the Soviet Economy: Mikhail Gorbachev and the Collapse of the Soviet Economy.  One of the best books on the beginnings of the reform era, with a special focus on whether the Soviets could have chosen a Chinese path (no, too many embedded interest groups, so does that mean Mao is underrated?).

5. Katherine Eban, Bottle of Lies: The Inside Story of the Generic Drug Boom.  A “worth reading” look at what the title promises, but all the best parts are about how the FDA tries to regulate generic drug production in India.

6. Roger L. Geiger, American Higher Education Since World War II.  Not as sprightly as I might have wished for, nor does it cover the controversial issues in the conceptual fashion I was hoping to find, but nonetheless an extremely useful resources for teaching you the basic facts of how the sector has evolved.

New out from Princeton University Press is Robert J. Shiller, Narrative Economics: How Stories Go Viral & Drive Major Economic Events.

There is Heather Boushey’s new How Inequality Constricts Our Economy and What We Can Do About It.

Yale has published a new translation of Book of Job, translated by Edward L. Greenstein, very likely worth a read.

My favorite things New Hampshire

1. Musician.  I don’t love Steve Tyler/Aerosmith, so what am I left with?

2. Author: I find John Irving unreadable, so does it come down to Russell Banks?  Who else is there?  Salinger lived in New Hampshire for a long time, so I’ll pick him, though it is also pretty far from my favorite.  Here is my Catcher in the Rye review.

3. Sculptor: August Saint-Gaudens.

“Law Supported by Power and Love”


4. Adam Sandler movie: The Waterboy, Happy Gilmore.

5. Poet: Robert Frost, who seems to be clear winner for the whole state.  There is a scholastic version of Frost which is quite dull, don’t be put off if that is all you know of him.

6. Movie director: Brian DePalma, Dressed to Kill and Mission to Mars being my favorites.

7. Painter: Maxfield Parrish.  I feel I’m being forced into many of these choices — I simply can’t think of anyone else.

8. Secretary of the Treasury: Salmon P. Chase.  Chase is one of the few people to have had a major position in the executive branch, served in Congress, and sat on the Supreme Court.

9. Free trade economist: Douglas Irwin.

The bottom line: For all of my grumbling, for such a small state it does pretty well.

*Escape from Rome*

The author is Walter Scheidel and the subtitle is The Failure of Empire and the Road to Prosperity.  Imagine a whole book on what he calls “the second Great Divergence,” namely that China developed a large, relatively unified hegemonic state early on, while Europe remained (mostly) politically fragmented.

Have you ever wondered why the Roman empire did not, in some manner, re-form in the Western part of Europe?  And how did it matter that China had a tradition of having to defend against the steppe while Europe did not?  Here is one brief excerpt:

…East Asia was characterized by a unipolar or hegemonic political system for 68 percent of the years between 220 BCE and 1875.  This pattern presents a stark contrast to the prevalence of a balanced system in Europe for 98 percent of the years from 1500 to 2000, or indeed at any time after the demise of the mature Roman empire.


Remoteness from the bulk of the Eurasian steppe was a constant, invariant across Europen history.  Just as it did not matter if Latin Europe’s states were weak, it also did not matter if a large empire was in place.  Unlike Chinese dynasties, the Roman empire did not bring forth a nomadic “shadow empire”: there was no ecological potential for it.  The Pontic steppe, where Sarmatian tribes might have coalesced in response to the inducements of Roman wealth, was too detached from the Roman heartlands that lay behind the Carpathians, the Alps, and the Adriatic.  To the west of the plains of Eastern Europe, both components of the “steppe effect” were conspicuous by their absence: and so — at least after Rome — was empire-building on a large scale.

If you wish to read a book to ponder the second Great Divergence, this is the one.  You can pre-order it here.

*The Body: A Guide for Occupants*

That is the title of the new Bill Bryson book, and it delivers in all the ways you would expect a Bryson book to do.  Here is one sample paragraph:

Before penicillin, the closest thing to a wonder drug that existed was Salvarsan, developed by the German immunologist Paul Ehrlich in 1910, but Salvarsan was effective against only a few things, principally syphilis, and had a lot of drawbacks.  For a start, it was made from arsenic, so was toxic, and treatment consisted in injecting roughly a pint of solution into the patient’s arm once a week for fifty weeks or more.  If it wasn’t administered exactly right, fluid could seep into muscle, causing painful and sometimes serious side effects, including the need for amputation.  Doctors who could administer it safely became celebrated.  Ironically, one of the most highly regarded was Alexander Fleming.

By the way:

…the average grave is visited for only about fifteen years…

You can pre-order the book here, I would be interested to read more about Bryson’s work, writing, and research habits.

My Conversation with Neal Stephenson

Here is the transcript and audio, and here is the CWT summary:

If you want to speculate on the development of tech, no one has a better brain to pick than Neal Stephenson. Across more than a dozen books, he’s created vast story worlds driven by futuristic technologies that have both prophesied and even provoked real-world progress in crypto, social networks, and the creation of the web itself. Though Stephenson insists he’s more often wrong than right, his technical sharpness has even led to a half-joking suggestion that he might be Satoshi Nakamoto, the shadowy creator of bitcoin. His latest novel, Fall; or, Dodge in Hell, involves a more literal sort of brain-picking, exploring what might happen when digitized brains can find a second existence in a virtual afterlife.

So what’s the implicit theology of a simulated world? Might we be living in one, and does it even matter? Stephenson joins Tyler to discuss the book and more, including the future of physical surveillance, how clothing will evolve, the kind of freedom you could expect on a Mars colony, whether today’s media fragmentation is trending us towards dystopia, why the Apollo moon landings were communism’s greatest triumph, whether we’re in a permanent secular innovation starvation, Leibniz as a philosopher, Dickens and Heinlein as writers, and what storytelling has to do with giving good driving directions.

Here is one excerpt:

COWEN: If we had a Mars colony, how politically free do you think it would be? Or would it just be like perpetual martial law? Like living on a nuclear submarine?

STEPHENSON: I think it would be a lot like living on a nuclear submarine because you can’t — being in space is almost like being in an intensive care unit in a hospital, in the sense that you’re completely dependent on a whole bunch of machines working in order to keep you alive. A lot of what we associate with freedom, with personal freedom, becomes too dangerous to contemplate in that kind of environment.

COWEN: Is there any Heinlein-esque-like scenario — Moon is a Harsh Mistress, where there’s a rebellion? People break free from the constraints of planet Earth. They chart their own institutions. It becomes like the settlements in the New World were.

STEPHENSON: Well, the settlements in the New World, I don’t think are a very good analogy because there it was possible — if you’re a white person in the New World and you have some basic skills, you can go anywhere you want.

An unheralded part of what happened there is that, when those people got into trouble, a lot of times, they were helped out by the indigenous peoples who were already there and who knew how to do stuff. None of those things are true in a space colony kind of environment. You don’t have indigenous people who know how to get food and how to get shelter. You don’t have that ability to just freely pick up stakes and move about.


COWEN: What will people wear in the future? Say a hundred years from now, will clothing evolve at all?

STEPHENSON: I think clothing is pretty highly evolved, right? If you look at, yeah, at any garment, say, a shirt — I was ironing a shirt today in my hotel room, and it is a frickin’ complicated object. We take it for granted, but you think about the fabric, the way the seams are laid out.

That’s just one example, of course, but you take any — shirts, shoes, any kind of specific item of clothing you want to talk about — once you take it apart and look at all the little decisions and innovations that have gone into it, it’s obvious that people have been optimizing this thing for hundreds or thousands of years.

New materials come along that enable people to do new kinds of things with clothing, but overall, I don’t think that a lot is going to change.

COWEN: Is there anything you would want smart clothing to do for you that, say, a better iPad could not?

STEPHENSON: The thing about clothing is that you change your clothes all the time. So if you become dependent on a particular technology that’s built into your shirt, that’s great as long as you’re wearing that shirt, but then as soon as you change to a different shirt, you don’t have it.

So what are you going to do? Are you going to make sure that every single one of your shirts has that same technology built into it? It seems easier to have it separate from the clothing that you wear, so that you don’t have to think about all those complications.

There is much more at the link, including discussions of some of his best-known novels…

Pessoa, *Philosophical Essays*

The half-sceptic speaks like Socrates, I know only that I know nothing.  The whole sceptic speaks like Francisco Sanches: Haud scio me nihil scire, I do not even know if I know nothing.


The end of reason is a weariness of thinking.  Yet reason is so strong that even its weariness is a part of its strength and we dream rationally if we have learnt reason.

Those bits are from this (uneven) volume.

*Fentanyl, Inc.*, by Ben Westhoff

The slightly misleading subtitle is How Rogue Chemists are Creating the Deadliest Wave of the Opioid Epidemic.  Why misleading?  So many substance abuse books are a mix of hysterical in tone and a disappointing “paint by numbers” in their execution, but this one really stands out for its research, journalism, and overall analysis.  To give just one example, it is also a great book on China, and how China and the Chinese chemicals industry works, backed up by extensive original investigation.

Start with this:

Americans take more opioids per capita — legitimate and illegitimate uses combined — than any other country in the world.  Canada is second, and both far outstrip Europe.  Americans take four times as many opioids as people do in the United Kingdom.

And this:

For many years, Chinese organized-crime groups known as triads have been involved in the international meth trade.  But experts familiar with triads say their influence appears to be waning in the fentanyl era.  “They’re a shadow of their former selves,” said Justin Hastings, an associate professor in international relations and comparative politics at the University of Sydney…Though ad hoc criminal organizations continue to move drugs in China, major trafficking organizations are rare there, and cartels basically nonexistent.  This leaves the market wide open for Chinese chemical companies, who benefit from an air of legitimacy.

As for marijuana and cocaine, they are used by only about one in every forty thousand individuals in China.  But the book covers the entire U.S. history as well.

Definitely recommended, this will be making my year-end “best of” list for non-fiction.  And yes I did go and buy his earlier book on West Coast rap music.

*The Narrow Corridor: States, Societies, and the Fate of Liberty*, the new Acemoglu and Robinson book

Due out in September, by Daron Acemoglu and James Robinson, here is an excerpt from the Amazon summary:

State institutions have to evolve continuously as the nature of conflicts and needs of society change, and thus society’s ability to keep state and rulers accountable must intensify in tandem with the capabilities of the state. This struggle between state and society becomes self-reinforcing, inducing both to develop a richer array of capacities just to keep moving forward along the corridor. Yet this struggle also underscores the fragile nature of liberty. It is built on a fragile balance between state and society, between economic, political, and social elites and citizens, between institutions and norms. One side of the balance gets too strong, and as has often happened in history, liberty begins to wane. Liberty depends on the vigilant mobilization of society. But it also needs state institutions to continuously reinvent themselves in order to meet new economic and social challenges that can close off the corridor to liberty.

You can pre-order here.

A simple American tale of travel and books

At Colorado Springs airport, on my way to Denver:

TSA official at security [pre-check, for that matter]: “We have to search your carry-on, it is suspicious that you have so many books.”

They searched every book.

TC: “Thank you, sir!”

I had fewer books in my carry-on than usual.

The heaviest book I had was Vasily Grossman’s Stalingrad, which is why I had fewer books than usual.