best book

What is the welfare cost of Amazon supply restrictions on books?

Maybe that welfare cost is not very high at all.   After all, if Amazon does not carry a book you can sign up at the Barnes & Noble website and that takes a few minutes at most.

There is a tension in most criticisms of Amazon.  On one hand, the critic wishes to argue that a “not carry” decision by Amazon has a big impact on how a book does.  On the other hand, the critic wishes to argue that the loss of access to particular titles is a big deal.  You cannot easily have it both ways.  If readers won’t switch to B&, they must not care very much about particular titles, in which case the Amazon refusal to carry (or delay in shipping) is small even relative to the size of the (small) trade in books.

Krugman’s column today, which covers Amazon vs. Hachette, appears terrible at first glance, but in fact he presents a new and original argument.  Get past the mood affiliation and you come to this:

…what Amazon possesses is the power to kill the buzz. It’s definitely possible, with some extra effort, to buy a book you’ve heard about even if Amazon doesn’t carry it — but if Amazon doesn’t carry that book, you’re much less likely to hear about it in the first place.

If I may fill in some blanks, one possible version of the hypothesis — to pull an idea from Gary Becker and Steve Erfle — is that readers consume both “books” and “buzz around books” as complements.  The marginal gains from books can be low but the marginal gains from the bundled package may be much higher and those higher gains will not be measured by the (high) price elasticity of book purchases.

In the early stages of this war, Amazon boycotts have often increased the buzz for a book, such as with Beth Macy’s Factory Man.  But if these practices continue, they will cease to be news stories and an Amazon refusal to carry or promote plausibly will damage how books will do, without much potential for upside.

How much of the value in a book/buzz package is due to the buzz?  65 percent?  That would explain the concentration of reading interest among bestsellers and books your peers are reading.  But if Amazon won’t carry or promote a book, does the total supply of buzz fall?  Or does the buzz simply transfer to other titles?  In the latter case we are again back to small welfare costs from an Amazon refusal to carry.  Krugman’s idea is fun, but I am still inclined to think the welfare cost of Amazon supply restrictions on individual books likely is small, again even relative to the size of the book sector, much less relative to gdp.

It is fine to argue that Amazon is being unfair to some authors and to object on ethical grounds.  The economist also should add that readers don’t seem to mind very much.  Most of the objections I am seeing are coming from authors and publishers, who of course in this sector are much less diversified in their interests than are readers.

The worst part of one of this year’s best pieces

I loved the Michael Hofmann review of Stephen Parker’s Bertolt Brecht: A Literary Life in the 15 August 2014 Times Literary Supplement.  Every paragraph of that review is a gem and Hofmann calls the book perhaps the greatest literary biography he has read.  I’ve ordered my copy.

Here is one part of that review, toward the end, which caught my eye:

I’m not really sure what the case against Brecht is.  That he treated women and co-workers badly?  That he played fast and loose with the intellectual property of others, but was litigiously possessive of his own?  That he wrote no more hit shows after The Threepenny Opera?  That he failed to crack America?  That he wouldn’t denounce the Soviet Union?  That he was drab and a killjoy?  That he had it cushy after settling back in East Germany in 1949?  That he was consumed with his own importance?

Perhaps the Parker book will change my mind, but for now file under “All of the Above.”

Addendum: Here is another superb Michael Hofmann review.

What is the summer’s most read and most unread bestseller?

You can get a good sense of this by seeing the distribution of “most marked” Kindle passages within the book itself.  For the winner, Donna Tartt’s The Goldfinch, “all five top highlights come from the final 20 pages.”  That suggests many readers actually finished the book (as did I, though I found it forgettable).  So that wins the prize as the most read bestseller this year, although it does not seem every single bestseller was sampled.  Not so well read are Kahneman’s Thinking Fast and Slow, Stephen Hawking’s A Brief History of Time, and coming in last (first?) overall is a book which has been covered rather frequently on MR as of late, can you guess the name?, 700 pp. or so and “the last of the top five popular highlights appears on page 26.”

The full article, by Jordan Ellenberg, is here.

The book culture that is Norway

So long as a new Norwegian book passes quality control, Arts Council Norway purchases 1,000 copies of it to distribute to libraries—or 1,550 copies if it’s a children’s book. (This comes on top of the libraries’ acquisition budgets.) The purchasing scheme, I was told, keeps alive many small publishers that could not otherwise exist. American independent presses would drool at the prospect. Another effect of the scheme is that it subsidizes writers as they build a career. They make royalties on those 1,000 copies—in fact, at a better royalty rate than the contractual standard. Books are also exempted from Norway’s value-added tax.

There is more here, partly on Knausgaard, here is more TNR on Knausgaard, via Scott Sumner.

I would note that, other than Knausgaard, the merits of recent Norwegian literature are…subject to debate.

Hugo Lindgren asked me to explain to him why I think Los Angeles is the best city in the world

I wrote this email, which in the interests of varying the “voice” on this blog I have not in the meantime edited:

Best food in the US, no real comparison especially adjusting for price.

Best driving for classic routes and views and also availability of parking along the way (NYC is awful for the latter).

Best walking city in the US (really), and year round.

The city has its own excellent musical soundtrack, Beach Boys, Byrds, Nilsson, etc., has aged better than the SF groups I think.

Incredible architecture and neighborhoods, almost everywhere.

Everyone goes to the movies.

First-rate concert life, including classical and contemporary classical.

Very interesting art galleries.

Few book stores (though disappearing everywhere, these days) and the people have no real sense of humor, but nowhere is perfect!

A Few Favorite Books from 2013

Tom Jackson asked me for a couple of best books for his year end column. I don’t read as many books as Tyler so consider these some favorite social science books that I read in 2013.

In The Undercover Economist Strikes Back, Tim Harford brings his genius for storytelling and the explanation of complex ideas to macroeconomics. Most of the popular economics books, like The Armchair Economist, Freakonomics, Predictably Irrational and Harford’s earlier book The Undercover Economist, focus on microeconomics; markets, incentives, consumer and firm choices and so forth. Strikes Back is that much rarer beast, a popular guide to understanding inflation, unemployment, growth and economic crises and it succeeds brilliantly. Mixing in wonderful stories of economists with exciting lives (yes, there have been a few!) with very clear explanations of theories and policies makes Strike Back both entertaining and enlightening.

Stuart Banner’s American Property is a book about property law, which sounds like an awfully dull topic. In the hands of Banner, however, it is a fascinating history of what we can own, how we can own it and why we can own it. Answers to these questions have changed as judges and lawmakers have grappled with new technologies and ways of life. Who owns fame? Was there a right to own one’s own image? Benjamin Franklin, whose face was used to hawk many products, would have scoffed at the idea but after the invention of photography and the onset of what would later be called the paparazzi thoughts began to change. In the early 1990s, Vanna White was awarded $403,000 because a robot pictured in a Samsung advertisement turning letters was reminiscent of her image on the Wheel of Fortune. American Property is a great read by a deep scholar who writes with flair and without jargon.

On June 3, 1980, shortly after the Soviet Union’s invasion of Afghanistan, the U.S. president’s national security adviser was woken at 2:30 am and told that Soviet submarines had launched 220 missiles at the United States. Shortly thereafter he was called again and told that 2,200 land missiles had also been launched. Bomber crews ran to their planes and started their engines, missile crews opened their safes, the Pacific airborne command post took off to coordinate a counter-attack. Only when radar failed to reveal an imminent attack was it realized that this was a false alarm. Astoundingly, the message NORAD used to test their systems was a warning of a missile attack with only the numbers of missiles set to zero. A faulty computer chip had inserted 2’s instead of zeroes. We were nearly brought to Armageddon by a glitch. If that were the only revelation in Eric Schlosser’s frightening Command and Control it would be of vital importance but in fact that story of near disaster occupies just one page of this 632 page book. The truth is that there have been hundreds of near disasters and nuclear war glitches. Indeed, there have been so many covered-up accidents that it’s clear that the US government has come much closer to detonating a nuclear weapon and killing US civilians than the Russians ever did. Thankfully, we have reduced our stockpile of nuclear weapons in recent years but, as in so many other areas, we are also more subject to computers and their vulnerabilities as we make decisions at a faster, sometimes superhuman, pace. Command and control, Schlosser warns us, is an illusion. We are one black swan from a great disaster and if this is true about the US handling of nuclear weapons how much more fearful should we be of the nuclear weapons held by North Korea, Pakistan or India?

*The Power of Glamour*, the forthcoming Virginia Postrel book

The subtitle is Longing and the Art of Visual Persuasion.  I believe this is her best and most compelling book.  It is wonderfully researched, very well written, the topic is understudied yet of universal import, and the accompanying visuals are striking.

Here is Virginia’s list of personas to help us distinguish glamour and charisma:

Glamour: Barack Obama, Che, Thomas Jefferson, Jackie Kennedy, Michael Jordan, John Lennon, Leonardo, Spock, Tupac Shakur, Joan of Arc dead, and Early Princess Diana.

Charisma: Bill Clinton, Castro, Andrew Jackson, Eleanor Roosevelt, Earvin “Magic” Johnson, Janice Joplin, Raphael, Kirk, Snoop Dogg, Joan of Arc alive, and Late Princess Diana.

Except she does it in a nice vertical table which I cannot replicate.

She lists Ronald Reagan, Nelson Mandela, and Steve Jobs as having had both qualities.  The book is definitely recommended, and it is out in early November.

Here is her TED talk on the power of glamour.

Book and movie splat

1. Ilya Somin, Democracy and Political Ignorance: Why Smaller Government is Smarter.  From my colleague at GMU Law, I have not yet read this one.

2. Damien Ma and William Adams, In Line Behind a Billion People: How Scarcity Will Define China’s Ascent in the Next Decade.  How often does a book have both a good title and subtitle these days?  The authors are more pessimistic about China long-term than I am, but nonetheless this is a very interesting take on The Middle Kingdom.

3. Clare Jacobson, New Museums in China.  Good text but mostly a picture book, I loved this one.  Stunning architecture, no art, full of lessons in multiple areas, think of it as a Straussian picture book with beauty on its side too.

4. John Durant, The Paleo Manifesto: Ancient Wisdom for Lifelong Health.  A useful overview of its topic, with an influence from Art DeVany, but you will not find recipes for either “grubs” nor “worms” here.

5. John Sides and Lynn Vavreck, The Gamble: Choice and Chance in the 2012 Presidential Election.  Good, sane tome on how the fundamentals matter and lots of campaigning ends up being cancelled out by the campaign of the other candidate.

From another direction, In a World… is a subtle and entertaining movie with much economics in it, most of all the economics of superstars in the “voiceover” sector.  The Autobiography of Nicolae Ceacescu is mesmerizing, like watching one of the great silent films of the past, and the scenes where the Chinese communists praise the Romanian communists are some of the best ever filmed.

*Securities Against Misrule*, the new Jon Elster book

The subtitle is Juries, Assemblies, Elections and the book focuses on the very Nordic concern of how to make better political decisions within a democratic framework.  Elster thinks that social choice theory presents insoluble dilemmas with ranking outcomes, so we should focus on improving how political decisions are made.  It’s all about “preventing the prevention of intelligence.”  He promotes secret voting, public deliberations, incorporation of diverse opinions, waiting until passions have subsided, and various methods of running better jury trials.  The influence of Bentham here is paramount, albeit a lesser-known Bentham, that of his own tract Securities Against Misrule, among other writings.

I found this one of the most stimulating social science books so far this year, and it has Elster’s impressive intelligence, breadth and clarity.  But I see many points quite differently, so I will pass along a few issues that come to mind:

1. I worry about the standard philosopher’s comeback to Elster’s proceduralism.  If we cannot very well judge or compare outcomes, how ultimately are we supposed to evaluate procedural changes?  Furthermore the theory of the second best suggests that procedures which “sound good” may not in fact lead to better outcomes.  We get stuck rather quickly.

2. I don’t myself find aggregation problems to be insuperable.  We all know that Norway is a great place, and cardinal information will get us over the usual Arrow problems , a’la Sen (1984).  A lot of the rest is what I call details.  Without intending any bias against explicit norms of rational discourse, the more fundamental question is how a country can enjoy the luxury position of debating such matters peacefully in the first place.  Ask Egypt.

3. If I think about the historical decisions which I consider wise and important, they very often are based on a certain amount of Machiavellianism, rather than on the standards for an ideal speech community.  The ratification of the U.S. Constitution is one obvious example.  Might Elster’s proceduralism work best at the micro level, when embedded in a broader realpolitik framework that already gives some Machiavellian control to “the good guys”?

4. Elster never considers markets or betting (apologies to Carow Hall) as mechanisms for preference revelation, though at one point he evinces skepticism about vote trading.

5. The idea of giving more influence to smarter people also is not on the table (see p.85 for a brief discussion, and also the bottom of p.5).

6. There is occasional talk of the private sector, such as the stipulation that Norwegian corporate boards appoint 40% women.  Yet there is no systematic discussion of how private companies or private non-profits run meetings, conduct elections, obtain board consensus, or otherwise reach decisions.  This point is not unrelated to #5.  I’m not suggesting government can be “run like a business” but it is odd to write as if private sector experience with decision-making is irrelevant.  It is those procedures which have to pass some kind of market test.  So more Hayek, less Habermas.

7. At the end of the day, the losers in these dialogues will suffer under coercion and the winners will exercise power.  This limits what kind of upfront discourse is possible.  I wished for this topic to receive more attention.

Elster has been writing excellent books for over thirty years, and you can buy this book here.

Thailand book bleg

From Chris Acree:

I’m planning a trip which will take me through Thailand, Cambodia, and Vietnam. I recently began selecting a few books about each country to read to cover the history, culture, or other interesting aspects of the area. In particular, my favorite books in this vein are Country Driving and China Airborne, both about China.

However, in searching, I’ve found Cambodia has plenty of literature (Cambodia’s Curse by Pulitzer winner Joel Brinkley seems a good starting point), and Vietnam has at least a couple good books (I picked up Vietnam: Rising Dragon at your recommendation), whereas Thailand seems bereft of strong English-language histories or non-guide travel books. Amazon searches return almost exclusively books targeted towards sex tourists, and the Economist article here is mostly over 10 years old. Kindle availability is also unavailable for most of their selections, which, while not a necessity for me, hints at books that aren’t aging well or being actively updated.

Has no reputable author written a great Thai travel book in the last 10 years? If not, why not? What books would you recommend on Thailand?

How about this biography of Bhumibol AdulyadejFalcon of Siam is historical fiction of note.  Thailand — Culture Smart! is good for browsing.  You can read a variety of books on Jim Thompson, and speaking of Thompson this cookbook by David Thompson is a must.  Uncle Boonmee Who Can Recall His Past Lives is one of the best movies ever made; watch these too, noting that Syndromes and a Century offers insight into the Thai health care system.  I am not recommending use of such services, but perhaps the best of the books for sex tourists are interesting too?  Siamese Soul is a good retro collection of Thai popular music from the 1960s through 1980s, hard on some ears but I like it.

Here is where Amazon sends you.  Here is where Lonely Planet sends you.  While you’re at it, why not read about Skyping with elephants in Thailand, in the service of science of course.

People, what else do you recommend?

*On Politics, book one*, by Alan Ryan

I picked up these two volumes on the basis of a very favorable review reproduced on The Browser, by Noel Malcolm.  Yet the books sat around the house for months.  I figured this was another overwrought survey by a famous person, valuable mainly as an introduction for those who don’t know much about the topic.  The subtitle of volume one, by the way, is A History of Political Thought Herodotus to Machiavelli. Volume two picks up from there.

Overall I have been pleasantly surprised.  When it comes to readability, interest, and integration of the intellectual narrative with actual history, I give volume one an A or A+.  Along multiple dimensions, it would count as the very best book of the year.  I do, however, have one major reservation.  Whenever Ryan writes about a deep political philosopher, such as Plato, he makes that thinker sound prosaic and thus seem second-rate and shallow.  Not terrible, just ordinary.  Reading Ryan only, you would never know what all the fuss is about.

It is thus hard to assess the book as a whole, but I will continue with volume two.  Ryan himself is a fairly deep thinker.  Allan Bloom was a less deep thinker, and yet perhaps for that reason Bloom much better captured the depth of Plato.

Higher frequency (book) trading: Walras, collusion, or both?

High-speed trading tools pioneered in the stock market are increasingly driving price movements on Amazon’s website as independent sellers use them to undercut and outwit each other in a cut-throat online market place.

Product prices now change as often as every 15 minutes as some of the 2m sellers on Amazon’s site join the online retailer in using computerised tools – often developed by former data miners at investment banks – to lure shoppers with the best deals.

…Amazon sellers – using third-party software – can set rules to ensure that their prices are always, for example, $1 lower than their main rival’s.

…Some sellers have even created dummy accounts with ultra-low prices to deliberately pull down those of rivals so they can corner a market by buying their goods, say pricing experts. That practice violates Amazon’s rules of conduct.

Here is more, “Amazon robo-pricing sparks fears.”

Which are the best walking cities?

I will nominate London, Paris, and Buenos Aires as leading contenders.  New York is for me too familiar for me to judge objectively and so I exclude it.

Reasonable safety is a prerequisite, and then we have the following dimensions:

1. Chance of seeing a striking yet non-famous piece of architecture.  All three cities are strong here.

2. The right mix of broad boulevards and narrower streets.  Ditto.

3. The chance of spontaneously encountering good bookstores or excellent dark chocolate:  London wins the former, Paris and Buenos Aires win the latter.

4. Cheap, convenient cabs, and places to sit and drink sparkling water: Buenos Aires is #1 on these.

5. Strangers are willing to talk to you: Tough to call, though NYC would win hands down if it were in the running.

6. Strategic and frequent use of historic plaques: London wins; yesterday I saw “George Canning lived here” and “Clive of India lived here,” among others.

B.A. loses points for imperfect safety and also capital confiscation, though it has by far the warmest weather of the trio.  Overall I am inclined to pick London as first, perhaps because I prefer English to French for bookstores.  Paris offers fewer surprises, even if it has a higher average level of beauty.  Paris is also worse for spontaneous cheap dining in restaurants, though it has far better food stores for urban picnics.  Berlin is perhaps the best city right now for living, but it is too spread out, and with too many broad boulevards, to be the best walking city.  It is an excellent city to take a cab in.

Walking cities on the rise: Istanbul.  I suspect it’s long been splendid, it’s now reaping the gains of being modern.

Underrated walking cities: Moscow, Mexico City, Toronto, parts of northern England, Los Angeles.

Overrated walking cities: Budapest, Krakow, Munich.

Best city to take the subway through: Tokyo.

If I had to pick a fourth in line: Barcelona.

*The Occupy Handbook*

I have an essay in that book co-authored with Veronique de Rugy.  Other contributors include Paul Krugman, Robin Wells, Michael Lewis, David Graeber, Peter Diamond, Emmanuel Saez, Ariel Dorfman, Barbara Ehrenreich, Jeff Sachs, and Nouriel Roubini, among others.

Our essay is an…outlier…in the volume.  Here is one bit:

Wall Street has contributed to some very real problems, but the core issues for poor Americans are often health care, education, and the cost of renting an apartment of buying a house.  The best way to improve living standards and increase options for future success is to move toward greater competition and accountability in each of those areas, areas that usually have little to do with the financial sector per se.

Our goal is to propose an alternative vision for what OWS should focus on.  You can buy the book here.

Matt’s new book

As I had predicted, it is very good.  Most of all I like the suggestion that the economy is becoming more Ricardian with higher resource rents.

I am assuming that most of the United States will not follow Matt’s policy prescriptions, which are unpopular with homeowners to say the least.  Which secondary adjustments and rent-seeking losses will result?  If you cannot easily live in Manhattan, next to the stylish people, how will you respond?  One option is to damn them and tune into NASCAR.  Instead you might compete more intensely for their attention and approval.  Write a blog.  Send them ads.  Try to chip away at the privileged status of their attention and capture some of that value for yourself.  Either way cultural polarization seems to increase.

For all their other virtues, lower rents also help satisfy the demand for affiliation.  I know people who are proud just to live in San Francisco and not only because it signals their income and status.  It sounds cool.  At what level of zoning is this consumer surplus maximized?

What is the most serious estimate of how much denser agglomeration — boosted by lower rents — would increase productivity?  I do not take the urban wage premium as the correct measure here, since at the margin the extra worker currently does not move in.  I would like to read a good study of this issue, which I have discussed with Ryan Avent as well.

Is this available improvement a level effect or a rate effect?

If people were the size of ants, without encountering any absurdities of physics or biology, how would the “public choice” of urban building change?  Would urban centers be equally exclusionary?

How much space do we need to live?  Say you have a 3-D printer nanobox which can produce (or obliterate) any output on demand.  Is a studio apartment then enough?  Just print out your bed come 11 p.m., or summon up your kitchen equipment before the dinner party.  How much of the demand for space is for storage and how much is for other motives?  My personal demand for space is highly storage-intensive, but I may be an exception in this regard.

If zoning stays too tight, are there (second best) general negative externalities from storage?

I don’t recall Matt calling for the widespread privatization of government-owned land, but would he agree this is the logical next step?  It’s hardly as important as freeing up more urban and suburban building, but is there any good reason for government to own all that turf?  I don’t think so.  Let’s keep the public works and military facilities and national parks, and sell most of the rest.

Here is Matt’s summary of the book.