Results for “space dangerous” 27 found
Email exchange on bank leverage, regulation, and economic growth
Emailed to me:
What do you think would happen if we returned to a world where commercial bank leverage was much reduced? (E.g. 2X max.) Or, maybe equivalently, if central banks didn’t act as a lender of last resort? Is that “necessary” for a modern economy?
Asset prices would fall a lot (presumably). What else? How much worse off would current people become? (Future people are presumably somewhat better off, growth implications notwithstanding—they are less burdened with the other side of all these out-of-the-money puts that central banks have effectively issued.) > > How should we think about the optimization space spanning growth rates, banking capital requirements, and intergenerational fairness?
My response:
First, these questions are in those relatively rare areas where even at the conceptual level top people do not agree. So maybe you won’t agree with my responses, but don’t take any answers on trust from anyone else either.
I think of the liquidity transformation of banks in terms of two core activities:
a. Transforming otherwise somewhat illiquid activities into liquid deposits. That boosts risk-taking capacities, boosts aggregate investment, and makes depositors more liquid in real terms. Those are ex ante gains, though note that more risk-taking, even when a good thing, can make economies more volatile.
b. Giving private depositors more nominal liquidity, but in a way that raises prices and thus doesn’t really increase real, inflation-adjusted liquidity for depositors as a whole. There is thus a rent-seeking component to bank activity and liquidity production.
Less bank leverage, you get less of both. In my view a) is usually much more important than b). For those who defend narrow banking, 100% fractional reserves, or just extreme capital requirements, a) is usually minimized. Nonetheless b) is real, and it means that some partial, reasonable regulation won’t wreck the sector as much as it might seem at first.
There is however another factor: if bank leverage gets too high, bank equity takes on too much risk, to take advantage of bank creditors and possibly taxpayers too. Or too much leverage can make a given level of bank manager complacency too socially costly to bear. This latter factor seems to have been very important for the 2007-2008 crisis.
So bank leverage does need to be regulated in some manner, and the better it is regulated the more the system can dispense with other forms of regulation.
That said, the delta really matters. Requiring significantly less bank leverage, at any status quo margin, probably will bring a recession. The recession itself may make banks riskier than the lower leverage will make them safer. In this sense many economies are stuck with the levels of leverage they have, for better or worse. It is not easy to pop a “leverage bubble.”
I don’t find the idea of 40% capital requirements, combined with an absolute minimum of regulation, absurd on the face of it. But I don’t see how we can get there, even for the future generations. We’ll end up doing too many stupid things in the meantime; Dodd-Frank for all its excesses could have been much worse.
I also worry that 40% capital requirements would just push leverage elsewhere in the economy. Possibly into safer sectors, but I wouldn’t be too confident there. And reading any random few books on “bank off-balance sheet risk” will scare the beejesus out of anyone, even in good times.
Now, you worded your question carefully: “commercial bank leverage was much reduced.”
A lot of commercial bank leverage can be replaced by leverage from other sources, many less regulated or less “establishment.” Overall, on current and recent margins I prefer to keep leverage in the commercial banking sector, compared to the relevant alternatives. It may be less efficient but it is socially safer and held within the Fed’s and FDIC regulatory safety net, probably the best of the available politicized alternatives. That said, there is a natural and indeed mostly desirable trend for the commercial banking sector to become less important over time, in part because it is regulated and also somewhat static in basic mentality. (Note that the financial crisis interrupted this process, for instance Goldman taking up a bank charter. I would still bet on it for the longer run.)
Obviously, VC markets are a possible counterfactual. This all gets back to Ed Conard’s neglected and profound point that “equity” is what is scarce in economies, and how many troubles stem from that fact. Ideally, we’d like to organize much more like VC markets, partly as a substitute for bank leverage and the accompanying distorting regulation, and maybe we will over time, but there is a long, long way to go.
One big problem with attempts to radically restrict bank leverage is that they simply shift leverage into other parts of the economy, possibly in more dangerous forms. Should I feel better about commercial credit firms taking up more of this risk? Hard to say, but the Fed would not feel better about that, it makes their job harder. This gets back to being somewhat stuck with the levels of leverage one already has, until they blow up at least. There are pretty much always ways to create leverage that regulators cannot so easily control or perhaps not even understand. Again this bring us back to “off-balance risk,” among other topics including of course fintech.
I view central banks as “lenders of second resort.” The first resort is the private sector, the last resort is Congress. I favor empowering central banks to keep Congress out of it. Central banks are actually a fairly early line of defense, in military terms. And I almost always prefer them to the legislature in virtually all developed countries.
I fear however that we will have to rely on the LOLR function more and more often. Consider how it interacts with deposit insurance. If everything were like a simple form of FDIC-insured demand deposits, FDIC guarantees would suffice.
But what if a demand deposit is no longer so well-defined? What about money market funds? Repurchase agreements? Derivatives and other synthetic positions? Guaranteeing demand deposits is a weaker and weaker protection for the aggregate, as indeed we learned in 2008. The Ricardo Hausmann position is to extend the governmental guarantees to as many areas as possible, but that makes me deeply nervous. Not only is this fiscally dangerous, I also think it would lead to stifling regulation being applied too broadly.
But relying more and more on LOLR also makes me nervous. So I view this as a major way in which the modern world is headed for recurring trouble on a significant scale, no matter what regulators do.
I am never sure how much of the benefits of banking/finance are “level effects” as opposed to “growth effects.” It is easy for me to believe that good banking/finance enables more consumption at a sustainably higher level, in part because precautionary savings motives can be satisfied more effectively and with less sacrifice. I am less sure that the long-term growth rate of the economy will rise; if so, that does not seem to show up in the data once economies cross over the middle income trap. That said, if there were an effect, since growth rates slow down with high levels in any case, I don’t think it would be easy to find and verify.
Who should be shamed, and who not?
Let’s start with the distiction between people and their ideas and also their behavior. We might condemn the ideas of a person without condeming the person himself. Of course, if the ideas are very, very bad, sometimes we condemn the person too.
We seem to mind less when the bad ideas come from another time and space altogether. For instance, hardly anyone seems to mind if a Mexican migrant has incorrect and deeply offensive views on the Oapan-Sam Miguel land disputes. Those beliefs, even if they sanction violence against innocents for the purposes of land grabs, don’t impinge much on current American status competitions. Similary, I don’t see that many objections to intellectual “monuments” erected in favor of classical Athens, in spite of the significant role of slavery in that society. The pro-Athenian faction isn’t going to command any electoral votes the next cycle. Was Joan of Arc problematic?
How many people object if a high percentage of the best jobs for Indian-Americans go to members of higher castes? Does anyone push for affirmative action within the Indian-American community? Not that I am aware of. Those status contests aren’t salient for most of us.
I see many people who have behaved very badly — and here I mean legally convicted criminals — but where the prevailing “mood affiliation” among American liberal intellectuals is to favor their rehabilitation. For instance, if a company does not ask job applicants if they have criminal records, this is considered to be good, and maybe it is. For one thing, many of those criminals are the products of bad circumstances and we may have various (true) theories that help to excuse their behavior. So we don’t go to the nth degree to shame and disgrace those ex-criminals, even if they have been convicted of prior violent activities.
How are we then to feel about contemporary neo-Nazis? Most of them have not been convicted of anything at all. Yet right now we are going to great lengths to shame and disgrace them. We regard them as on a lower moral rung than the convicted criminals. But is wishing for violence that much worse than having committed it yourself?
Or sometimes those two qualities go together. If you are a neo-Nazi and you have committed a violent act, like the guy who drove that car into the crowd, it seems OK to put your photo on the internet in any kind of stereotypically despised, lookist, “white filth” portrayal that is possible, with maximum scorn and contempt. Should we cover a prisoner on Death Row the same way? What about someone who has been judged mentally ill? What if in the meantime we simply do not know?
There may be a good utilitarian reason for the distinctions we draw, namely that we wish to discourage neo-Nazi behavior, and the behavior of potential copycats, for future-oriented reasons. (Is that shaming even the most effective way to do so? We don’t seem to obsess over shame threats for convicted criminals, to keep them — and others — on “the right track.”). Perhaps shaming and disgracing them is necessary because they hold very bad ideologies, and perhaps potentially contagious ideologies, ideologies that most violent criminals do not seem to promulgate.
Maybe this utilitarian view is correct, namely that the shaming of an individual should depend on social context and political impact, and not just on the prior behavior of that individual. But then notice what we are doing, we are moving away from moral individualism ourselves, and treating the shamed person as a means in the Kantian sense. I even feel that such shaming makes me a slight bit like them, in a way I wish to avoid.
Do I have the option of just feeling sorry for the neo-Nazis, and at the same time dreading their possible social impact, in the way one might dread and hate a tornado? But not shaming or scolding them?
Or should I feel bad about benefiting from the shaming activities of others, and being a kind of free-riding Kantian moral purist?
What if deterrence is not your actual goal with the shaming, but rather you are shaming for the purposes of motivating your own “troops”?
Another group being shamed over the course of the last week has been the misogynistic EJMR posters. But I am curious as to the implicit theories held by the shamers here. Why do those men write such nasty things? Is it all just bad socialization, or might some of them them have a genetic inclination toward such behavior? But once we consider the latter, we seem dangerously into the kind of stereotyping we were objecting to just a moment ago, when we sought to shame them.
What if sexual bullying lies deep in male DNA? Not for everyone of course, but for some people. And those same people may well have grown up in disadvantageous circumstances, surrounded by the wrong kinds of nerds, and then they ended up sad and broken on EJMR, for lack of having had the right role models.
Overall I am not impressed by how most of you are writing and thinking about these issues. I wish to shame you a bit. Everyone wishes to shame someone. For me it’s you — sorry!
The Raudat Tahera and the Power of Religion to Induce Cooperation
You won’t find the Raudat Tahera, a beautiful mausoleum for two holy leaders of the Dawoodi Bohra sect of Ismaili Muslims, on any of the standard tourist guides to Mumbai. In part that is because the Raudat isn’t ancient (but like the Akshardham Temple people will be coming to this shrine for hundreds of years so why wait?) and in part because it isn’t a tourist site but an active and revered part of the Dawoodi Bohra community. Not many people seem to know about the Raudat Tahera and today it is literally hidden under a tarp to protect it from nearby construction (more about that later). Nevertheless, the Raudat Tahera is without question one of the best things to see in Mumbai and arguably in all of India.
The marble for the mausoleum was quarried from the same grounds as that used for the Taj Mahal. Most spectacularly, the entire Quran has been inscribed in golden letters on the inside walls with each of the ‘Bismillah’ inscribed using diamonds, emeralds, rubies and other precious stones. The interior is austere and beautiful but hard to capture in photographs (which aren’t permitted except for official purposes). Although of low-resolution the image below actually gives the best feel.
I visited with my wife and son. We came in the morning and we were told to return later that afternoon. When we returned we were treated very courteously and provided a guide, a student from Saudi Arabia. The local community is proud of the mausoleum and although they don’t encourage tourists I believe they were pleased that foreigners wanted to see it. Both men and women need to cover their head.
Aside from the architectural awe and religious interest my pilgrimage to the Raudat was motivated by economics. One of Mumbai’s great problems is that a lot of land is locked up in low-value uses. Rusted factories and ports generate little value on land worth billions, slums look out onto million dollar sea-views, land that could house thousands in sky rise apartments instead holds dozens in dangerously dilapidating structures. The complexity of ownership (who owns a second floor apartment that has been occupied by the same family for generations?), the chaotic land-titling system, the slow court system and the politicization of everything means that solving these problems requires little short of a miracle. Enter Syedna Mohammed Burhanuddin, the holy leader of the Dawoodi Bohra.
Burhanuddin built the Raudat Tahera for his father, the previous Dawoodi leader, and they are now buried there together. Burhanuddin was not just a spiritual leader. He was an astute businessperson and before he died be presented his vision to rebuild the Bhendi Bazaar, the 150 year old warren of crowded and narrow streets and shops behind the Crawford bazaar (hence “b hend i” bazaar) where a majority of the residents are Dawoodi.
ET: To an outsider, [Bhendi Bazaar] holds an old-world charm…But the neigbourhood is so congested and some streets so narrow that cars cannot enter. Virtually every open or unoccupied space has turned into a garbage dump. And almost all the 280 buildings in Bhendi Bazaar look shaky and dilapidated (80% have been declared unsafe).
Burhanuddin’s visionary redevelopment plan requires thousands of people to sell their homes and businesses to the Saifee Burhani Upliftment Trust. Trust, being the operative word. Then they will move out of their crumbling structures into temporary quarters while some 250 buildings spread across 16.5 acres will be torn down and redeveloped. After completion, the old owners will move back in to (part) of the now much larger and better planned area. It’s a big-push plan and, remarkably, it seems to be working.
So far, the Trust has bought 87% of the buildings in the area and construction is active (hence the Raudat Tahera being under a tarp). Holdouts can be a problem but every Dawoodi child who comes of age has to swear loyalty to the Dawoodi leader (now Syedna Mufaddal Saifuddin, son of Burhannudin and the 53rd in the line) and disobedience brings pressure and social boycott.
It’s no accident that the Raudat Tahera is the focal point of the planned new development. Towers of apartments and offices will rise from the Raudat in order of ascending height, framing the Raudat forever and giving everyone a visual reminder of where true power lies.

It’s only a slight exaggeration to say that all of India is looking to the Bhendi Bazaar redevelopment project and praying that it will succeed. Although the billion dollar plan is being funded and run by the private Trust, the Maharashtra state government and Prime Minister Modi have thrown their support behind the plan. The plan, of course, cannot be easily replicated. The Dawoodi are a small, close-knit, geographically concentrated, spiritual group devoted to a holy, charismatic and visionary leader and all of that has been key to solving the holdout problem and creating the trust necessary for large-scale cooperation. Many of the Dawoodi are also successful and well-connected business people. Adil Zainulbhai, former head of McKinsey India and consultant to the Modi government, for example, is counted among their members and sits on the board of the Trust. Nevertheless, even if the Bhendi Bazaar redevelopment plan cannot be easily replicated, if it succeeds the demonstration value of the wealth that can be unlocked with cooperation will be tremendous. And if the plan fails…well that is why people are praying.
Hat tip: David Moo.
Claire offers a Hayekian approach to transgender issues
In response to my post on transgender issues, I was sent this in an email, by a very good economist, it is lengthy so I am putting most of it under the fold, but do please read the whole thing.
First of all, I would like to thank you for contributing to this debate and for consistently sticking up for trans people and LGBT people more generally. We need more people like you who can engage in good, reasoned debate.
I would like to make a few observations in order to summarize this debate, and to use this summary to push for a fourth alternative–a sort of Hayekian alternative, which involves building upon the spontaneous order that we already have. This is assuming that there will always be a legal definition (or several overlapping definitions) of gender, ruling out option 1. Option 2 (overlapping definitions) is already a reality, which we can use to build on. Seen in that light, option 3 (the current debate) seems like a step backward, driven by emotions rather than reason.
A little background about me: I am one of three (to my knowledge) “out” trans* economists, and one of two “out” trans women. As such, I have followed the debate about trans* people since I was young, since this debate is about my very survival. In addition, I think that it is useful to look at this debate through the lens of economics and moral philosophy, since that lens helps us to see some of our blind spots.
The facts are as follows. Trans people have been going to the bathroom or using changing rooms since there have been trans people, which has been basically all of human history. This has led to a kind of tacit order in which people use bathrooms according to the binary gender nearest their own gender presentation, and this has led to no problems for the majority of the cis (i.e. not trans) population. In my own experience, the problems that trans people have faced using the bathroom are in direct proportion to the degree that one is read as trans. In my case, I tend to get read as “German lady,” and I have never had a problem using the women’s room or locker room. I know people who have had problems–this is especially a problem for trans men, butch women, and very androgynous-looking people. This has become more of an issue as people with non-binary gender identities and presentations have started to become more visible.
However, the increased visibility of trans people, the success of the LGB part of the LGBT movement, and a sense that trans people are scary deviants have led to some of the backlash that we see. This backlash is strongest among people who are just learning about our existence, or among those who think of us as sex objects–objects of desire but also of danger to their sense of masculinity or to their sense of the natural order of things. My own guess is that these people are projecting some of their own hang-ups on to us. Importantly, this backlash has been coordinated in the background by some anti-trans groups–look at the same, clunky language featured in each of these bathroom bills–and this backlash has aimed to drive trans people entirely from public spaces. I would argue that this backlash is motivated by fear and disgust, and these emotions can’t be reasoned with. However, they can be reasoned around.
To see what’s gone wrong, let’s start by looking through the lens of Jonathan Haidt’s moral foundations theory, which is a bit like a modern-day version of virtue ethics. Haidt identifies six moral foundations, which closely map on to the classical virtues: (1) care/harm, (2) fairness/cheating, (3) loyalty/betrayal, (4) authority/transgression, (5) sanctity/degradation, and (6) liberty/oppression. Each of these moral foundations has implications for the debate surrounding the rights of trans people to exist and to be seen in public. Furthermore, these foundations motivate a lot of the, um, motivated reasoning that we see. Let’s focus on the main motivations for the backlash, which have to do with (4) and (5). Basically, they think that we’re disgusting, disordered perverts.
To understand (4), let’s turn to the language of all of these bills. These bills cite three separate definitions of sex or gender, none of which necessarily lines up with any other. These definitions are gender assigned at birth, the gender on one’s birth certificate (which can sometimes, but not always, be revised), and one’s chromosomal makeup (which is not usually observed at birth). All of these definitions are based on the idea that trans people transgress some kind of divine or natural authority, and that we need to bring them back into line. These definitions do not allow for people to medically transition–trans women with vaginas would have to use the men’s room and trans men with penises would have to use the women’s room–instead they amount to an admonition of, “man up, faggot.” Not surprisingly, some of the leading of these advocates of these bills have been evangelical organizations and advocates of “reparative therapy” (i.e. imprisonment and/or torture) for LGBT people.
To understand (5), let’s turn to the other main justification given by the (mostly male) supporters of these bills: to protect their wives and daughters (not so much sons, I wonder why) against using the same restrooms as us. This is because they see trans women in particular–even those with vaginas–as filthy deviants whose presence is inherently degrading, while they see trans men as an amusing curiosity, if they see trans men at all. Think of the main ways in which trans women have been depicted over the past 30 years in film–as cannibal serial killers, as something to throw up at, as sexual predators, and as dead bodies found in dumpsters. Literally as trash. The current backlash feeds into a lot of these tropes, particularly the sexual predator one, while if anything, trans women have a lot more to fear from straight men, and straight men have a lot more to fear from high-school wrestling coaches turned Republican politicians.
(Meanwhile, the model response I’ve received from other women has been, “so what?”)
These are the two “moral foundations” generally used to oppose letting trans* people use the restroom. While the anti-trans movement also sometimes uses the language of care (saving us from ourselves, which has been discredited since the work of Harry Benjamin in the 1960s) and liberty/oppression (seeing themselves as the aggrieved victims of political correctness or axe-grinding about “World War T”, particularly on the alt-right), their hearts are not really in it.
So, how should the law respond to recognize the genders of trans people, while also dealing with those marginal cases of women with penises or men with vaginas using the locker room, and at the same time trying to defuse some of the violent hatred faced by trans people? Let’s start by recognizing that this is all complicated, and that the law is a blunt, often violent instrument. No single legal definition of gender can cover all relevant cases. Instead, we can build on what we already have, and we can maybe even make things a little bit easier. Furthermore, the best thing that we can do is sit back, take a deep breath, and let our emotions cool down a bit. High emotions make bad decisions.
To start, we currently have a tangle of federal, state, local, and extralegal definitions of gender. For the federal government, the genders on one’s social security card, passport, selective service registration, etc., may all differ from each other. Add to that state drivers’ licenses, state IDs, voter IDs, original and/or revised birth certificates, university documents, tax records, and whichever gender someone reads me as while showing me to the restroom. For some people this even varies over the course of the day. Some states allow for a change of legal gender (such as California), while other states deny that legal gender is really a thing (such as Illinois). On the governmental side, this setup is inconsistent and a bit Kafkaesque, although I personally have had enough resources and luck to successfully navigate that system.
Most countries get around this by having a centralized personal registry (Germany’s Personenstandregister, for instance, which is simple but difficult to change, or the Danish version, which is easier to change). For Americans, setting up a centralized registry and/or national ID would represent a significant intrusion in personal liberty, and it would further complicate our patchwork system.
However, there are things that can be done, like making it possible to leave one’s gender on an ID or passport blank (or a third option ‘X’), as Australia and India have done. And, at the state and local level, a lot can be done to remove hurdles to getting proper documentation. Here would be where a Personenstandregister would make sense, with full faith and credit applied for all federal documents. People would be able to change their register entry by affidavit, as in Ireland or Denmark. However, there would likely be some civil rights issues in the ways that certain states would apply this idea.
The idea here is to remove bureaucratic hurdles and especially not to involve the police, which can be very dangerous for trans women in particular–particularly those who are black, Latina, disabled, involved in sex work, or poor. Current practice in many jurisdictions is to arrest visibly trans women on sight and charge them with “manifesting prostitution,” or to charge _them_ with a crime when they call the police for help, as in the case of a black trans woman in Minnesota who defended herself from an attack by a drunk Nazi. Or there are cases where the police fail to prosecute murder or attempted murder against trans women, and in fact, they sometimes collaborate with murderers. We need to do more to actively combat this type of bias and to reduce the amount of contact that trans people have with a biased legal system.
All of this can be done while realizing that our binary gender system is just a shorthand model that people use to navigate a more complex world. Since this world is complex, day-to-day decisions are best made at a low level, which is why Gov. Daugaard vetoed South Dakota’s bathroom bill. A good motto for this would be, “Get the government out of our bathrooms.” This approach is Hayekian at its heart, and it can even appeal to a large number of right-thinking conservatives.
For instance, my conservative Republican father managed a trans woman employee a few years ago, well before I “came out”. This woman had to use the bathroom and locker room at work. To make this work out, the company called a meeting of all of the female employees, and they led a respectful conversation about what was going on. This effort resulted in the other women accepting the trans woman as one of their own; she got to use the locker room; and nobody felt threatened or disgusted. It was a win-win for everyone involved, and it also sent a positive message.
We need more, not less, of this kind of virtuous approach.
Very well put. From elsewhere, here is a very good Jacqueline Rose piece on trans issues. One of the best pieces I have read this year. And here is a very good update on where various public disputes stand.
Monday assorted links
1. The Hillary Clinton autism plan seeks to diagnose everybody: not a good idea.
2. “In June 2015, officials in Wisconsin changed the rules on therapy animals after a woman walked into a fast food restaurant with a baby kangaroo.” Link here. Photos you are not expecting, recommended, it’s not Thanksgiving.
3. David Warsh reports on the AEA meetings. Chris Bertram reports on Ferrante.
4. The European Commission will launch formal “rule of law” procedures against Poland. A sign of a broken system…both of them.
5. Claims about fraud in tennis (speculative), and pushback from Djokovic and Federer.
Best non-fiction books of 2015
These are in the order I read them, more or less, not in terms of preference. And I would say this year had more good entries than ever before. Here goes, noting that most of the links go to my earlier reviews of them:
First, here are the economics books:
Mastering ‘Metrics: The Path from Cause to Effect, by Joshua D. Angrist and Jörn Steffen-Pischke, technically late 2014 but it was too late to make that list.
Dani Rodrik, Economics Rules.
Richard H. Thaler, Misbehaving: The Making of Behavioral Economics. Self-recommending.
Garett Jones, The Hive Mind. Why national IQ matters.
Scott Sumner, The Midas Paradox. Boo to the gold standard during the Great Depression.
Greg Ip, Foolproof: Why Safety Can be Dangerous, and How Danger Makes Us Safe.
And the rest, more or less the non-economics books:
Robert Tombs, The English and Their History.
R. Taggart Murphy, Japan and the Shackles of the Past. The last section is brilliant on current Japanese politics.
Michael Meyer, In Manchuria: A Village Called Wasteland and the Transformation of Rural China. Adam Minter has a very good and useful review of a good book.
Ian Bostridge, Schubert’s Winter Journey. Will improve your listening.
The Mahabarata, by Carole Satyamurti. Rewritten and edited to be easier to digest, intelligible and rewarding. As “an achievement,” this book does have some claim to be number one.
Avivah Gottlieb Zornberg, Bewilderments: Reflections on the Book of Numbers. You can never read enough commentary on the Torah.
Daniel Tudor and James Pearson, North Korea Confidential, how things really work there (speculative), rain boots for instance are a fashion item and black markets are rife.
Serhii Plokhy, The Gates of Europe: A History of Ukraine, a good general history of the country.
Guantánamo Diary, by Mohamedou Ould Slahi. He’s a very smart guy.
Ashlee Vance, Elon Musk: Tesla, Space X, and the Quest for a Fantastic Future.
Sebastian Strangio, Hun Sen’s Cambodia. Goes deep into a place most people are ignoring.
Michael Booth, The Almost Nearly Perfect People. The Nordics, that is.
Timothy Snyder, Black Earth. He succeeded in writing an original book about the Holocaust, which is hard to do.
Emmanuel Todd, Who is Charlie? Background on France being screwed up.
Niall Ferguson, Henry Kissinger, vol. I. Background on America being screwed up.
Landmarks, Robert Macfarlane. How to talk, think, and write about the British countryside.
Andrea Wulf, The Invention of Nature: Alexander von Humboldt’s New World. The best of the various recent books on Humboldt.
Frank McLynn, Genghis Khan. Background on a whole bunch of other places being screwed up.
Daniel P. Todes, Ivan Pavlov: A Russian Life in Science. I didn’t have time to read all of this book, but it seemed very good in the fifth or so I was able to read. By the way, the whole salivating dog at the bell story is a fiction.
Pierre Razoux, The Iran-Iraq War, readable and useful.
Charles Moore, Margaret Thatcher: At her Zenith: In London, Washington, and Moscow, vol.2 of the biography, 1984-1987. This one I haven’t finished yet. I ordered my copy advance from UK Amazon, it doesn’t come out in the U.S. until early January. There is some chance this is the very best book of the year.
I don’t quite see a clear first prize. If I had to pick, I would opt for a joint prize to the biographies of Musk, Kissinger, Thatcher, and Genghis Khan. This was the year of the biography.
Sorry if I forgot yours, this list is imperfect in various ways! And the year isn’t over yet, so I’ll post an update on the very good books I read between now and the end of the year, probably on December 31.
Sunday assorted links
1. If you would like another point of view, here is Krugman’s defense of Tsipras.
2. Joshua Gans on the sharing economy and compensation mechanisms.
3. The best economics podcasts? What is missing?
5. Alex redux on the dangers of space travel; I agree with him.
Sorted Turkish links
1. What’s up, and a Business Week survey.
2. Brain surgery in Turkey 5000 years ago.
3. Turkish problems with trade deficits and credit creation.
4. Why Turkey is backsliding on women’s rights.
5. What is the future of press freedom?
One possible take on the current situation is that Turkish liberties are eroding in a dangerous manner and the country will slide into some version of an Islamic state, through not-fully-democratic means yet sanctioned by the ballot box. A second take is that the liberties were not quite ever there in the first place, and Turkish society is moving to a more coherent and more sustainable equilibrium of state, religion, and citizen. Islam in Turkey is finding a way toward a more comfortable public space, albeit with bumps and mistakes along the way, and lasting radical secularization was never possible anyway. The rising middle class and Turkey’s historic uniqueness, and separation from the Persian and Arab worlds, will keep it on a “good enough” track. I incline toward the second and more optimistic view.
Central Turkey is more economically advanced than I had expected. It is downright nice here, and standards of living are reasonably high. Imagine the per capita income of Mexico or Brazil but with greater equality and stronger social cohesion. Food is even better than in Istanbul, namely it is spicier and has fresher raw ingredients.
Turkey will prove to be an important test case for whether a rapid influx of foreign capital can be done in a stable manner. It’s funny how a lot of the same economists who distrust a rapid capital influx in an international development context (“the hot money comes and goes”) are entirely happy to trust a rapid influx of capital into U.S. Treasury securities.
Should it be illegal to park facing the wrong way?
Jeff writes:
Economic theory suggests that penalties should be attached to behaviors that are correlated with crime and not necessarily to criminal behavior itself. For example, price fixing may be impossible to detect, but conspiracy to fix prices may be much easier. It makes sense to make cheap talk a crime even though the talk itself causes no harm.
When you car is parked facing the wrong way its a sure sign that A) you previously committed the crime of driving the wrong way and B) you will soon do it again.
Is this another of his elaborate jests? The web suggests that Texas has begun to enforce this law only recently, to shore up Medicaid, but the resulting policy uncertainty adds to our current output gap. It also violates Keynesian strictures not to raise taxes during a recession. Up until now, of course, there has been strong net mobility into the state of Texas, so was the previous lack of enforcement so bad?
The practice of parking the wrong [sic] way is at least as safe as turning across lanes of oncoming traffic.
One fear is that traffic will slam into your parked car if your rear reflectors are not facing the proper way. Yet if everyone parks facing the wrong way, does not this risk diminish and indeed a benefit can be seen? And is not a car, if parked for long enough, infinitely dangerous in any case? And are not wrong way parkers the most likely to hurry in and out of a spot quickly, thereby lowering stationary collision probabilities? Or is the argument that a parked car safer is in any case safer than a moving car, and that wrong way parking allows more cars to park more readily, thereby lowering the average velocity of automobiles? In any case, the Peltzmann effect suggests that wrong way parking, and the concomitant dangers, will discourage drunk driving, thereby saving lives. Furthermore the relevant alternative to “wrong way parking” is usually an extremely reckless, immediate, illegal U-turn.
I once “parked the wrong way” in Falls Church City. The policeman told me he could not give me a ticket, since he had not seen me do it, but that there was no way I could leave the space legally. (I so enjoy a dare.) Here in Virginia, or at least in Falls Church City, the rule of law reigns; the policeman recognized the car might have been there forever, or might have been parked by a computer (that’s illegal too, but let him try to prove the computer did it), or might have materialized there through quantum effects. A game of waiting ensued.
Privacy in Germany, it’s for banks too
Until now, Berlin has resisted the US-style publication of information about banks’ capital cushions because it feared the results could be manipulated, could send the wrong signals, and break German laws about commercial secrets.
The government’s U-turn is likely to rouse the anger of German banks, which have been in lock-step with Berlin so far in resisting the publication – and under German law they would have to approve any public use of their own data.
Deutsche Bank chief executive Josef Ackermann last week warned that publishing the results of stress tests would be “very, very dangerous” if there were no “backstop facilities” in place to allow stressed banks to draw on new capital.
The full story, which includes information on Spain, is here. The last paragraph may sound slightly ridiculous to an American reader — why make such an admission of vulnerability? Yet in Germany privacy norms and laws are quite strong and virtually everyone will grant you the right to assert privacy. If you are waiting at an ATM, you had better stand very far back, behind the person at the machine, otherwise you will hear about it. Everyone at the university keeps their office doors closed, although not for the American reason of avoiding students. The goal is to have a closed door and a private space between you and the rest of the world. German blog readers who see you in public will talk less to you than would American blog readers. "Direct mail" is considered not only a nuisance, but also a privacy violation. People work next to each other for twenty years, and it's still just "Frau Mueller," etc.
The end of insight?
The story goes like this: Sometime in the 1940s, Enrico Fermi was talking about the possibility of extra-terrestrial intelligence with some other physicists. They were impressed that our galaxy holds 100 billion stars, that life evolved quickly and progressively on earth, and that an intelligent, exponentially-reproducing species could colonize the galaxy in just a few million years. They reasoned that extra-terrestrial intelligence should be common by now. Fermi listened patiently, then asked simply, "So, where is everybody?". That is, if extra-terrestrial intelligence is common, why haven’t we met any bright aliens yet? This conundrum became known as Fermi’s Paradox.
The paradox has become more ever more baffling. Over 150 extrasolar planets have been identified in the last few years, suggesting that life-hospitable planets orbit most stars. Paleontology shows that organic life evolved very quickly after earth’s surface cooled and became life-hospitable. Given simple life, evolution shows progressive trends towards larger bodies, brains, and social complexity. Evolutionary psychology reveals several credible paths from simpler social minds to human-level creative intelligence. Yet 40 years of intensive searching for extra-terrestrial intelligence have yielded nothing. No radio signals, no credible spacecraft sightings, no close encounters of any kind.
So, it looks as if there are two possibilities. Perhaps our science over-estimates the likelihood of extra-terrestrial intelligence evolving. Or, perhaps evolved technical intelligence has some deep tendency to be self-limiting, even self-exterminating. After Hiroshima, some suggested that any aliens bright enough to make colonizing space-ships would be bright enough to make thermonuclear bombs, and would use them on each other sooner or later. Perhaps extra-terrestrial intelligence always blows itself up. Fermi’s Paradox became, for a while, a cautionary tale about Cold War geopolitics.
I suggest a different, even darker solution to Fermi’s Paradox. Basically, I think the aliens don’t blow themselves up; they just get addicted to computer games. They forget to send radio signals or colonize space because they’re too busy with runaway consumerism and virtual-reality narcissism. They don’t need Sentinels to enslave them in a Matrix; they do it to themselves, just as we are doing today.
The fundamental problem is that any evolved mind must pay attention to indirect cues of biological fitness, rather than tracking fitness itself. We don’t seek reproductive success directly; we seek tasty foods that tended to promote survival and luscious mates who tended to produce bright, healthy babies. Modern results: fast food and pornography. Technology is fairly good at controlling external reality to promote our real biological fitness, but it’s even better at delivering fake fitness — subjective cues of survival and reproduction, without the real-world effects. Fresh organic fruit juice costs so much more than nutrition-free soda. Having real friends is so much more effort than watching Friends on TV. Actually colonizing the galaxy would be so much harder than pretending to have done it when filming Star Wars or Serenity.
Fitness-faking technology tends to evolve much faster than our psychological resistance to it. The printing press is invented; people read more novels and have fewer kids; only a few curmudgeons lament this. The Xbox 360 is invented; people would rather play a high-resolution virtual ape in Peter Jackson’s King Kong than be a perfect-resolution real human. Teens today must find their way through a carnival of addictively fitness-faking entertainment products: MP3, DVD, TiVo, XM radio, Verizon cellphones, Spice cable, EverQuest online, instant messaging, Ecstasy, BC Bud. The traditional staples of physical, mental, and social development (athletics, homework, dating) are neglected. The few young people with the self-control to pursue the meritocratic path often get distracted at the last minute — the MIT graduates apply to do computer game design for Electronics Arts, rather than rocket science for NASA.
Around 1900, most inventions concerned physical reality: cars, airplanes, zeppelins, electric lights, vacuum cleaners, air conditioners, bras, zippers. In 2005, most inventions concern virtual entertainment — the top 10 patent-recipients are usually IBM, Matsushita, Canon, Hewlett-Packard, Micron Technology, Samsung, Intel, Hitachi, Toshiba, and Sony — not Boeing, Toyota, or Wonderbra. We have already shifted from a reality economy to a virtual economy, from physics to psychology as the value-driver and resource-allocator. We are already disappearing up our own brainstems. Freud’s pleasure principle triumphs over the reality principle. We narrow-cast human-interest stories to each other, rather than broad-casting messages of universal peace and progress to other star systems.
Maybe the bright aliens did the same. I suspect that a certain period of fitness-faking narcissism is inevitable after any intelligent life evolves. This is the Great Temptation for any technological species — to shape their subjective reality to provide the cues of survival and reproductive success without the substance. Most bright alien species probably go extinct gradually, allocating more time and resources to their pleasures, and less to their children.
Heritable variation in personality might allow some lineages to resist the Great Temptation and last longer. Those who persist will evolve more self-control, conscientiousness, and pragmatism. They will evolve a horror of virtual entertainment, psychoactive drugs, and contraception. They will stress the values of hard work, delayed gratification, child-rearing, and environmental stewardship. They will combine the family values of the Religious Right with the sustainability values of the Greenpeace Left.
My dangerous idea-within-an-idea is that this, too, is already happening. Christian and Muslim fundamentalists, and anti-consumerism activists, already understand exactly what the Great Temptation is, and how to avoid it. They insulate themselves from our Creative-Class dream-worlds and our EverQuest economics. They wait patiently for our fitness-faking narcissism to go extinct. Those practical-minded breeders will inherit the earth, as like-minded aliens may have inherited a few other planets. When they finally achieve Contact, it will not be a meeting of novel-readers and game-players. It will be a meeting of dead-serious super-parents who congratulate each other on surviving not just the Bomb, but the Xbox. They will toast each other not in a soft-porn Holodeck, but in a sacred nursery.
Why has transportation progressed so slowly, relative to expectations?
"What Bill Buckley once called the "hysteresis effect". When he was traveling around the world on the Concorde, some years back, he observed that–although long-haul transportation as such had gotten much faster in his lifetime–the total amount of time actually needed to get from point A to point B had not diminished proportionately, because of the increasing amount of distance (and therefore time) between the point of departure and the point of embarcation: that whereas when trains were the done thing, it took maybe 10-20 minutes to get from your front door to the station; with prop aircraft and downtown airports, maybe 30-40 minutes; with jet aircraft and "modern" air terminals, an hour or two; and that–speculatively–if there were ever hypersonic transports capable of going from Los Angeles to Tokyo in 45 minutes, it would take three to four hours at each end to travel to and from the spaceport…"