Category Archives: Books

Alan Greenspan and Adrian Wooldridge – Capitalism in America: A History

Alan Greenspan and Adrian Wooldridge – Capitalism in America: A History

Deirdre McCloskey’s review is here. An economic history of the U.S. that is optimistic without being to starry-eyed. Greenspan and Wooldridge say wise things about two of my main policy interests. Early on, they have an excellent 30,000-foot level discussion of regulation. They don’t directly cite my colleague Wayne Crews or his Ten Thousand Commandments, but some of his numbers and many of his arguments appear prominently.

Later in the book, they give a defense of modern prosperity, complementing thinkers such as Julian Simon, Matt Ridley, Hans Rosling, and Deirdre McCloskey. They also draw on Cox and Alm’s ever-useful measure of how many hours an average person must work in order to afford a loaf of bread, a tv, a car, and other things. For the better part of two centuries, Americans have been getting more and better goods in return for steadily decreasing amounts of effort.

In between these two highlights is a fairly comprehensive business history of America, from roughly the founding up until now. Their discussion of the rise of the Carnegie, Rockefellers Vanderbilts, and Morgans of the world would have improved from a deeper discussion of competition theory that includes the Brandeisian view, the Borkian view, as well as the public choice critique of both (see Wayne Crews’ and my recent paper for that). Given Greenspan’s name recognition and Woodridge’s skilled writing and distillations, this is a book that will likely sell far better than the average of its genre, and hopefully will be more read as well. Not perfect, but good—much like the economy it studies.

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Nicholas R. Lardy – The State Strikes Back: The End of Economic Reform in China?

Nicholas R. Lardy – The State Strikes Back: The End of Economic Reform in China?

Lardy’s “core conclusion is that absent significant further economic reform returning China to a path of allowing market forces to allocate resources, China’s growth is likely to slow, casting a shadow over its future prospects.” In this case, Lardy largely echoes other recent works such as Elizabeth C. Economy’s The Third Revolution: Xi Jinping and the New Chinese State and Ronald Coase and Ning Wang’s How China Became Capitalist.

China has taken a decidedly dirigiste turn under Xi Jinping. If Xi continues down an increasingly statist path, China’s growth will slow. If market reforms continue, China will prosper. Given the outsize amount of power centralized in his person, this choice is up to him more than anyone else. This will remain the case regardless of whether the current U.S.-China trade war ends tomorrow or continues for years. U.S. presidents come and go, but Xi will likely be around for a long time. And if not him, then someone in his inner circle with similar policy views.

Lardy is an excellent economic analyst, parsing through China’s not-entirely-truthful official statistics as well as international data to give as accurate a picture of China’s trajectory as he can, given the sources. One of his major conclusions is that China’s state-run businesses are severely underperforming compared to the country’s private businesses. State-run enterprises consistently make more and larger losses, are more heavily in debt, and the ones that are profitable tend to be less profitable than their private counterparts. They are also concentrated in legacy industries; China’s growth is less in energy and manufacturing and more in services and technology—precisely where China’s private sector is strongest.

This sounds like good news, but the trouble is that under Xi, the poor-performing state-run share of the economy has been growing. Since government tends to make a hash of whatever it does, if Xi keeps this up, China’s growth will slow. This is an avoidable mistake, but it is an open question if Xi will be willing to admit it.

China has several massive white elephant projects that are wasting precious capital, such as its Belt and Road initiative. While this program and others like it scare China hawks in the U.S., they are weakening China. Government infrastructure projects worldwide are late, overpriced, and often of low quality. The Belt and Road initiative is no different, according to available evidence so far. Moreover, the billions of dollars Beijing is putting into it now cannot put into more productive ventures.

Lardy, like everyone else, is unable to guess which path China will take—state-run and poor, or free and prosperous. Unlike many analysts, Lardy is humble enough to admit that he cannot predict the future. He is hoping Xi will eventually decide to turn China’s policy momentum back towards liberalization. The Chinese people share this hope, and China observers of all stripes should hope the same, whether their politics are hawkish or dovish.

Herman Wouk – The Caine Mutiny

Herman Wouk – The Caine Mutiny

This Pulitzer-winning 1951 novel is starkly relevant today. When a commander is clearly unfit for the job, at what point is it ok to depose them, and on what grounds? John Locke wrestled with this question. So did the American revolutionaries he influenced—as did their opponents. This book, set in World War II, explores the same question onboard the Caine, a fictional World War II U.S. navy minesweeping ship. The main character, who is something of a privileged twit though with redeeming qualities, enlists in the Navy and finds himself aboard an old bucket of a ship near the end of its lifecycle. The Caine‘s captain is as mediocre as his ship, and is eventually transferred elsewhere.

His replacement, with the Melville-esque name Captain Queeg, quickly establishes his popularity with the crew with his attention to details the previous captain had neglected, and boosts morale. But after the initial wave of good feeling, the mood quickly shifts. He is indecisive and wavering during several critical points of action, and nearly loses the ship and its crew more than once. He isolates himself in his cabin, avoiding both crew and duty. When they enter his cabin to bring him news, he is nearly always asleep, undressed, or unshaven. Captain Queeg resorts to harsh, arbitrary discipline, such as cutting the crew off from all non-subsistence water rations for 48 hours while the non-air-conditioned ship is sailing near the equator. The crew had earlier exceeded their water usage quotas by ten percent. This and other nonsensical measures, along with another panic attack during action induce the grumbling, frightened crew to relieve him of command.

The book is interesting because the case is not so cut-and-dry. During the court-martial trial that follows the mutiny, Queeg never exceeded his bounds of authority under regulations, and gives decent justifications. Despite showing some signs of mental illness, doctors refuse to formally diagnose him with anything that would render him unfit for command. Queeg is also able to give plausible justifications for his command decisions. Meanwhile, the crew clearly had an animus against him. There is clear evidence they conspired against Queeg in a premeditated mutiny, which the crew members admit to. After the trial, both of the mutinying crew members find themselves captaining the Caine at various points before its decommissioning. They find their performance in that difficult job to be not much better than Queeg’s.

The Caine Mutiny presents more questions than answers, on purpose. That is what makes it both an excellent novel and a good lesson for today’s predicament with President Trump. There are clear signs that his temperament is not suitable for the presidency, yet it’s not so cut-and-dry in a legal case. He has little respect for the rule of law, has an arbitrary, uncertain approach to policy, is an alienating diplomatic presence, and deliberately polarizes the electorate. His age and mental state are also tempting to question. But at the same time, does he meet the threshold for 25th Amendment action, or for impeachment? It’s not black-and-white, and both sides have good arguments. Moreover, Trump’s potential replacements from either party don’t necessarily guarantee improvement.

The weighty matter of mutiny is both leavened and paralleled in the main character’s romantic subplot. He comes from an upper-middle class WASP-ish upbringing. In his first post-Princeton job, as a nightclub pianist, he meets a young singer of poorer Italian-Catholic background. They genuinely love each other, but the main character’s reticence to marry outside of his class and religion, along with some mommy issues, complicate things. They are a cute couple together and the reader naturally wants to root for them, but both external circumstances and mutual idiocy keep them apart—though far more his than hers. At the end of the book, as with the question of mutiny, their relationship is unresolved, but it seems hopeful that things will work out.

James Dickey – Deliverance

James Dickey – Deliverance

As a long term project, I am slowly winding my way through the Modern Library’s highly subjective list of the 100 best novels. This entry was on sale for five dollars on Audible, so I took the plunge. I had previously seen the movie, but didn’t much care for it. Many years ago I also once went rafting on the same river where the movie was filmed, and didn’t much care for that. Perhaps unsurprisingly, the book wasn’t really to my taste, either.

The reason is likely that Deliverance is essentially sturm und drang that doesn’t let up. Angst and guilt are constant presences, but there isn’t a reason given for why that should be. They’re simply background conditions woven into the fabric of the book’s world. A good story contains both tension and release; this story has too much of one and too little of the other. Whereas I tend to prefer literature, music, and art that contain both light and shade, Deliverance is essentially monochrome.

As for the story, a rafting trip in rural Georgia among four city-dwelling friends goes about as wrong as it possibly can. The characters variously endure being brutally raped by a hillbilly, a broken leg, an arrow wound, and a drowning. The protagonists also kill two people, perhaps justifiably and perhaps not–the ambiguity is easily the most interesting part of the book.

Afterwards the three survivors create a cover story, wrestle with guilt, and arouse some suspicion among wary locals, but aren’t caught. The river basin they went through is dammed and flooded as part of a federal infrastructure project, destroying any evidence, as well as their friend’s body. Back in Atlanta, they go on with their lives as best they can, but never quite return to normal. Two of them ending up buying rural cabins near the area where it all happened. This unsatisfying ending, with no release for the built-up tension, is in direct, and probably intentional, contradiction to Deliverance‘s title.

Keynes – The General Theory of Employment, Interest, and Money

Keynes – The General Theory of Employment, Interest, and Money

My undergrad macroeconomics teacher was an avowed Keynesian. Most of what he taught was in this book, except in the forms of Marshallian geometric analysis and Samuelsonian algebra. I could have saved 19-year old me a great deal of time and anguish by simply reading Keynes’ original, mostly verbal explanations of his ideas. In fact, that pedagogical experience was one reason I switched my undergrad major from economics to history, despite my much greater enthusiasm for economics. Depending on who teaches intro classes, economic ideas are sometimes taught more clearly outside of economics departments.

People often forget that Keynes worked from the same quantity theory of money framework his rivals Friedman and Hayek relied on—an insight I was never taught in undergrad, thanks in part to poor standard pedagogical practices.

Nearly all economists, regardless of ideology, agree that tinkering with the money supply can induce temporary booms and busts. Where they differ is that for monetarists and other free-market types, the fact that policymakers can mess with the price system does not imply that they should. There are tradeoffs a boom now comes at the price of a bust later. Picking up one part of the economy comes at the cost of dragging down other parts. Moreover, unintended consequences can be unpredictable, and harder to manage than the original problems.

Keynes and many of the economists he has influenced instead work with idealized models of economics and government. Economists, using increasingly sophisticated techniques, are increasingly able to foresee and adapt to changing circumstances and unintended consequences to maintain economic stability. Fiscal and monetary policies will never be perfect, but with careful management they can outperform unmanaged markets. Also in this model, politicians actually listen to economists. Even more fantastically, politicians use their boom-and-bust power in the public interest. They do not use it to influence their electoral prospects, or give favors to rent-seekers.

On the positive side, Keynes’ remarks about animal spirits remain insightful, though underappreciated. Here Keynes shared important common ground with economists from Adam Smith on down to his rough contemporaries such as Philip Wicksteed, Frank Knight, and F.A. Hayek, who all emphasized human psychology in their works over formal modeling.

Keynes’ followers pursued a different path after Paul Samuelson, preferring instead to confine themselves to quantifiable models, and to study Homo economicus rather than Homo sapiens. The old joke about Keynesians being more Keynesian than Keynes ever was is often true. Fortunately, the behavioral economics movement has done much to revive animal spirits in the wake of MIT-Harvard-Princeton’s sterilizing the profession, though many of them forget that human frailties also apply to policymakers and the policies they make.

This is not Keynes’ fault. But his unintentional legacy has harmed economics as a discipline, which has missed out on important insights and discoveries by largely walling itself off from other, less quantitative disciplines for several decades. Keynesian models have also acted as enablers for policymakers eager to hear justifications for things they want to do anyway, and for excuses to forget that can does not always imply ought.

Richard L. Currier – Unbound: How Eight Technologies Made Us Human, Transformed Society, and Brought Our World to the Brink

Richard L. Currier – Unbound: How Eight Technologies Made Us Human, Transformed Society, and Brought Our World to the Brink

I hastily bought this book on sale thinking it was a yet another Schumpeter-inspired history of technology by an economist. I was pleasantly surprised to find it is written from an anthropologist’s perspective, and most of the book has little to do with economics or markets. Moreover, it is excellently done.

Currier has packed Unbound with evolutionary, biological, social, and behavioral insights into how technology has influenced the human condition, and vice versa. Causality’s arrow points in both directions, with massive implications for everything from our anatomy to gender roles, sexual behavior, and even our species’ geographic range. Bipedalism freed up our hands to use weapons and tools. The extra food provided calories for larger brains to use and improve these tools. Larger brains meant longer gestations and tougher childbirths, which effectively made hunting a men-only activity; this is the origin of gender roles that are unique to our species, though obviously this dynamic does not apply as it once did. To tease out these insights, Currier ranges all the way back to our Australopithecine and Homo habilis ancestors, as well as other primates such as chimpanzees and bonobos.

Among the other things the reader learns is that our species’ relative hairlessness was a direct result of our taming fire. This had obvious safety benefits, and I was probably not the only reader to have a Gary Larson-inspired chuckle at how this may have affected some of our more hirsute ancestors as natural selection did its work.

Chapters on tools, fire, clothing, and language give way to agriculture, transportation and eventually industrial production, around which point the book changes tone. By the 19th century or so the book begins to read less like an anthropology story and more like a history of business and technology, along the lines of Walter Isaacson’s The Innovators. The eighth and final technology is the emerging digital age, which is still maturing as we speak. Even at this early stage, Currier is correct about how the Internet, digitalization, and rapid globalization are having a transformative impact on par with the other great technologies.

There is another abrupt change in the final chapter, which is mostly paint-by-numbers hysterics over mass extinction and environmental apocalypse. This is alluded to in the book’s subtitle, though mostly absent until this point. Here, Currier shows that he has not often ventured outside his disciplinary home of anthropology. He would have benefited from an understanding of more diverse thinkers such as Julian Simon, Hans Rosling, Johan Norberg, Deirdre McCloskey, Matt Ridley, Steven Pinker, Joel Mokyr, Bjorn Lomborg, and other scholars from a range of disciplines from statistics to economic history to psychology, who are more adept in the study of progress.

Unlike the rest of an otherwise carefully written book, this final chapter reads like it was written in a single caffeinated cram session. Cautious words like “could” and “might” gradually morph into more certain proclamations such as “will” and “have” as the chapter proceeds. The very end also oddly mentions the 1930 Smoot-Hawley tariffs, but Currier correctly identifies tariffs as harmful policies, and his emotions carry him in favor of international openness and inclusion. At the very end, Currier suddenly goes through another mood swing and ends on an optimistic note about. Unlike just a few pages before, Currier now argues that dynamism and progress might forestall the coming environmental apocalypse after all. Before he can change his mind again, the book ends. In all, that odd journey reminded me of the occasional all-nighter I pulled back in undergrad trying to finish term papers on time.

Despite the weird rollercoaster ending, Unbound was one of my better reads of the year. It is almost like a wider-ranging sequel to Richard Wrangham’s excellent Catching Fire: How Cooking Made Us Human, which Currier cites liberally in his early chapter about fire. It also pairs well with Arthur Diamond’s Openness to Creative Destruction: Sustaining Innovative Dynamism, though that book’s Pollyanna-ish tone is a bit much even for this optimist.

Charles J. Halperin – Russia and the Golden Horde: The Mongol Impact on Medieval Russian History

Charles J. Halperin – Russia and the Golden Horde: The Mongol Impact on Medieval Russian History

Halperin focuses more on the Russian side than on the Golden Horde. These Mongol descendants of Genghis and Batu Khan left behind comparatively few written sources, but Halperin still gives them plenty of attention.

The big picture periodization of this era of Russian and Central Asian history goes roughly like this: Russia had its first post-classical flowering in the Kievan Rus period, which lasted from roughly the 9th to 13th centuries. This came to an end with the 13th century Mongol invasions. After Genghis Khan, Mongol conquerors split into a number of different groups. The one that ruled over most of Russia from about 1240-1480 was called the Golden Horde. Other Mongol dynasties reigned in India (Mughal; note the resemblance to “Mongol”), Yuan China, which displaced the comparatively liberal Song dynasty; and much of the Middle East.

The Golden Horde ruled over Russia more than two centuries, surviving even the late-1300s wrath of Tamerlane attacking them from the south. They lasted until about 1480, when the tsarist government began to assert itself in earnest under Ivan III (his grandson was Ivan IV, better known as Ivan the Terrible). This 1240-1480 period is Halperin’s primary focus. There was not a single clean-line event when the Tatars ceded power to the tsars, which is why the periodization is not precise. The handover was a gradual process, and happened to different degrees and at different times in different places. Both cultures may well have been unaware of their trajectories at the time, which is a common theme in history.

Halperin shows a keen eye for how to interpret sources. One of the key concepts of written Russian sources of this period is the ideology of silence. Basically, there was a taboo among Russians against acknowledging that Mongols had ever conquered them. They used linguistic workarounds, which Halperin dissects, omitted important events only revealed by other sources, and emphasize smaller events and puff up minor victories.

One price of this was that they also had to downplay the big victories that eventually led to Russians shedding the Tatar yoke, which ordinarily would become the stuff of legend. This was apparently a price chroniclers were apparently willing to pay.