Category Archives: Books

Charles C. Mann – 1491: New Revelations of the Americas Before Columbus

Charles C. Mann – 1491: New Revelations of the Americas Before Columbus

A difficult-to-put-down book about life in North and South America before Columbus. The author takes a bit of a gonzo journalism style, inserting himself into the story. This isn’t always very interesting, at least in his case. Mann is not a historian or a scientist, and it shows. This isn’t always a bad thing, but for a more rigorous treatment, readers will have to go elsewhere.

Mann also declines to tell a narrative history, chronological or otherwise. Again, this is not necessarily a bad thing. But if that’s what you’re looking for, you won’t find it here. Instead, Mann takes a thematic approach, with thorough investigations into smallpox, Pleistocene migration patterns, the domestication of maize, and more. I happen to enjoy this historiographical approach, though it leads to frequent Google searches to put names and events in their proper place. Other readers might not agree, so be warned.

One of the strengths of Mann’s journalistic approach is that he meets and interviews many of the historians, archaeologists, and scientists in the field, sharing their varying perspectives—and they don’t always agree with each other. Aside from Jared Diamond’s Guns, Germs, and Steel, this is the deepest dive I’ve yet taken into pre-Columbian American history. Despite the book’s flaws, Mann gives a quality introduction, and leaves the reader wanting more.


Where Does Progress Come From?

According to economic historian Joel Mokyr, progress comes from technological change–which can’t happen without pro-technology and pro-change cultural values. Science is necessary but not sufficient; same with culture. It takes both. Societies with one but not the other have their merits, but ultimately fail to progress. New advances will either fail to stick, or will be repressed. While respect for tradition is a normal and good thing, most cultures throughout history have gone too far with it and become outright neophobic.

Cultural rejection of progress goes at least as far back as the Greek poet Hesiod, who lived between 800-700 B.C. He described history as a continuous process of decay. The initial Golden Age of the gods degrades down to a still-divine Silver Age, then a Bronze Age. This is followed by a Heroic Age (think mortal half-gods such as Perseus and Heracles). History finally reaches the dull, rusting Iron Age where people now live. This is a rather different worldview than one finds in Enlightenment thinking or, say, Wired magazine.

More recently, China showed a spark of valuing progress during the Song dynasty, which lasted from 960-1279 AD. But the succeeding Ming dynasty shut the experiment down by destroying trading ships devaluing innovation, raising up values such as security and tradition instead.

Joel Mokyr, on p. 248 of his 2016 book A Culture of Growth: The Origins of the Modern Economy, offers that a rebellious youthful streak can in fact be a good thing in the long run:

The idea of progress is logically equivalent to an implied disrespect of previous generations.

Herbert A. Simon – Administrative Behavior, 4th Edition: A Study of Decision-Making Processes in Administrative Organisations

Herbert A. Simon – Administrative Behavior, 4th Edition: A Study of Decision-Making Processes in Administrative Organisations

Realistic, subjective, and humble—probably a reflection of Simon’s time at the University of Chicago. Rather than the typical snake-oil management guru who pretends to know everything, Simon that there is no perfect structure for an organization. Every possibility has at least some drawbacks. Simon instead emphasizes the need to treat organizational structure as an ongoing process, rather than a finished product. Often personnel will dictate what structures work best, and personnel change over time. Technology has its own impacts, and Simon even in 1947 saw that computers would have significant effects on the workplace. Part of trial is error, and wise managers will accept this as part of the process. The trick is being humble enough to admit mistakes and being flexible enough to try different approaches with more promise.

Randall G. Holcombe – Political Capitalism: How Political Influence Is Made and Maintained

Randall G. Holcombe – Political Capitalism: How Political Influence Is Made and Maintained

Excellent, though probably a difficult read for a layman. Most people have a two-axis view of politics—most countries are some blend of capitalism and socialism. Holcombe argues that there is a distinct third system, which he calls political capitalism. It has characteristics of market capitalism, such as private property and usually democratic political institutions. But political capitalism also features heavy control by elites. Because votes count for very little in any decent-sized election and because voters typically have low information, it is naturally easier for elites to control public policies with relatively little public accountability.

An underappreciated key point, first made by Mancur Olson, is that small groups have lower transaction costs than larger groups. A small group is easier to form, and it is easier to monitor members so they don’t shirk on the rest of the group.

Another point is that principled legislators have almost no chance of being influential under political capitalism. If a politician is known for sticking to their principles, other legislators will not bother trying to win their vote on bills. If they support a bill, they’ll vote for it no matter what. If they oppose it, their support cannot be bought, so it’s not worth spending resources on.

That means principled legislators aren’t offered choice committee assignments, fundraising assistance, or get introduced to powerful social connections. Principled legislators are doomed to ineffectiveness.

It is well known that political office naturally attracts certain undesirable personality types. Holcombe demonstrates that institutional structures actually reward them, so there is a natural selection process to put the worst on top.

Holcombe also makes several valuable contributions to the theory of rent-seeking. I wish I had known about these when Fred Smith and I were working on our 2015 rent-seeking paper, which would have greatly benefited from his insights. I will definitely be citing this book in the future.

Peter Wallison – Judicial Fortitude: The Last Chance to Rein In the Administrative State

Peter Wallison – Judicial Fortitude: The Last Chance to Rein In the Administrative State

The main insight I took from this book is probably not the one Wallison intended, though it is one he makes several times. America’s founders did not foresee the rise of political parties, and this was their biggest mistake. They set up the federal government with checks and balances so that the different branches would compete against each other, not different parties. Having distinct federal and state levels of government provided an additional level of non-party competition.

This system does not work so well when powerful political parties exist. If one party controls both Congress and the presidency, those two branches do not compete with each other, they collude.

The first-past-the-post electoral system the founders established is also naturally conducive to a two-party system—and the two parties which usually oppose each other will cooperate to prevent rule changes that would allow additional competing parties.

This probably doesn’t matter so much; Europe’s experience with proportional representation has shown that most people coalesce around two polar ideologies, and most political parties represent various points on the spectrum between those two poles—meaning proportional representation doesn’t differ much from the U.S. system in terms of policy outcomes, muting its appeal. It merely has higher transaction costs for building coalitions, a separate issue well outside of Wallison’s subject matter. In the U.S. case, the dominant parties oppose proportional systems for their own organizations’ sake, rather than to promote conservative or progressive values.

The primary point Wallison does make is also compelling—judicial restraint and judicial activism are both ineffective safeguards against a regulatory state that lacks transparency and democratic accountability. A passive judiciary lets Congress and the executive make and enforce all sorts of crazy laws and regulations. This is a rather obvious problem. Legislation from the bench is also a problem; besides offending democratic sensibilities, repeal of judicial policy mistakes is extremely difficult.

Wallison instead prefers a judiciary with the fortitude to tell Congress what’s what when it passes unconstitutional legislation. More importantly, executive branch agencies issue thousands of regulations, guidance documents, and other regulatory “dark matter” outside of required legal processes. These policies lack transparency, democratic accountability, and in many cases are unconstitutional. The judiciary needs to gain the fortitude to strike such policies down when cases present the opportunity. Wallison also draws heavily on my colleague Wayne Crews’ research in developing this argument, which is a plus.

Manu Saadia – Trekonomics: The Economics of Star Trek

Manu Saadia – Trekonomics: The Economics of Star Trek

Saadia wrestles with some interesting questions, such as how people would behave in a world without scarcity, how an economy could work without currency, and more. But he comes up a little short, both in terms of economic analysis and some ideological narrowmindedness.

Even in a superabundant world like Star Trek with replicators, teleporters, and the like, scarcity still exists. Even if people enjoy a place high atop the pyramid of Maslow’s hierarchy of needs, they will still find things to want and aspire to. One of the first things economics students are taught is the non-satiation principle. This opens the door to a fruitful discussion of relative versus absolute abundance, and all the implications that has for social stability, the reason technological progress continues, and more. Saadia instead focuses more on making ideological arguments in favor of flat income distributions—focusing on ratios, rather than people (see Iain Murray’s and my 2016 paper, “People, Not Ratios,” for a more constructive view on the subject).

As for currency, it tends to spontaneously emerge. It cannot be successfully abolished. The transaction cost savings of using currency are too great for people to pass it up—especially since even in Star Trek’s mostly moneyless universe, people are well aware of the concept. Whether gold, paper, cowrie shells, cigarettes, credit, or digital data, currency’s superiority over barter holds, even in Star Trek’s world of superabundance.

This opens the door to a discussion of spontaneous order and how that works, but Saadia again declines the invitation. That said, he offers some interesting discussions of the money that does eventually appear in the Star Trek: Deep Space Nine series in the form of gold-pressed latinum, as well as the Ferengi merchant race that is the rare example of greed and commerce in the series. Regrettably, they are sometimes also a thinly-veiled Jewish stereotype, though some episodes give the characters some depth and empathy.

There is still a lot to like in here. Just don’t expect it to have the depth that the best of science fiction and of economic thought have to offer.

Vernon Smith and Bart Wilson – Humanomics: Moral Sentiments and the Wealth of Nations for the Twenty-First Century

Vernon Smith and Bart Wilson – Humanomics: Moral Sentiments and the Wealth of Nations for the Twenty-First Century

This is on my shortlist of best books of the year. Smith and Wilson combine insights from their experimental economics research with Adam Smith’s Wealth of Nations and especially his 1759 book The Theory of Moral Sentiments. Not only are the two systems compatible, they make each other stronger. Adam Smith’s insights into how empathy drives human behavior turn out to be confirmed by empirical lab experiments. Neither Adam nor Vernon Smith nor Wilson) is much on the fictional hyper-rational Homo economicus who lives in textbook perfect competition models. They are more interested in Homo sapiens, a much more subtle and demanding subject.

This book isn’t the easiest read for a layman. While Smith and Wilson do provide some brief explanations, a working knowledge of the more common game theory games is helpful, especially the Prisoner’s Dilemma and the Ultimatum and Dictator games. What the lab experiments find is that people, as they actually are, tend to be both happier and wealthier when they can make their own plans, rather than when they attempt to fulfill other people’s plans from above.