Category Archives: Books

Marginal Thinking about Theories

Some wise advice from p. 26 of Armen Alchian and William Allen’s superb economics textbook Universal Economics (free PDF):

Don’t make the intellectual mistake of asking whether the theory (the set of principles) is “true.” No theory is perfect. Ask instead, “Is it useful and reliable enough for my purposes? That is, will it lead to generally correct implications and guidance at sufficiently low cost without intolerable error?” That’s the question to ask in every discipline, whether Chemistry, Physics, Biology, or Economics.

Besides being good common sense, this is an excellent example of thinking at the margin.

Upcoming CEI Event: Bart Wilson on The Property Species

At noon ET on Thursday, February 11, CEI is hosting an event with the experimental economist Bart Wilson, author of The Property Species: Mine, Yours, and the Human Mind. He is also a frequent collaborator with former CEI Julian Simon Award winner Vernon Smith.

Near the end of The Property Species, on p. 194, Wilson shows how the custom of property is essential for natural conservation efforts (footnotes omitted):

When some people are allowed to say, “This elephant is mine,” they defend attacks against the elephant like they defend against attacks against their own person. In contrast, when government agents are tasked with defending elephants against attacks, they are not as effective—the evidence strongly suggests—in protecting elephants about which they cannot say, “These are mine.” Think about it natural-historically: Isn’t it astonishing that people who can say, “This elephant is mine” will protect and defend the life of a distantly related fellow mammal against members of their own species who wish that distant relative harm? Isn’t it furthermore prudent for such people to do so? And isn’t it then morally incumbent upon us to consider the possibility that property can save elephants from extinction? Consider, for the moment, the beautiful and humane thoughts made possible by mine.

CEI has a long history of supporting private conservation, and here Wilson makes a powerful point in its favor.

Wilson also discusses other concepts in the book, such as his view that property is not a right; it is a custom. This view avoids some of the problems of rights theory while emphasizing property’s inherently social and cooperative nature.

Property, Wilson argues, is not just the ability to say “this is mine.” Any dog with a bone thinks that. Property is the ability to also say “that is yours.” Dogs do not have that ability. Only humans have made this cognitive leap. Property is unique to us. It is also universal among us. Every society on Earth, without exception, has social customs that involve notions of both “this is mine” and “that is yours.” This human universal is what makes non-violent trade possible. Property is what lets people act on Adam Smith’s natural propensity to truck, barter, and exchange.

As Wilson argues on p. 179, “we have to be open to the possibility that commerce may be an integral part of that socializing and ethicizing process.” Property is a fundamental concept in designing sound public policy, and in enabling virtuous and prosperous societies to emerge. There is much more to property than armchair philosophizing.

There is also more to property than commerce. The custom of property gives a convincing answer to the question that all social scientists seek to answer: how people find ways to get along with each other. Many people view property as an exclusionary, anti-social concept. This is a mistake. It requires multiple people for the concept of property to even exist. And those people must cooperate with each other for it to work. It does no good to say “this is mine” if other people do not agree to respect that, and expect to have their own claims respected.

Property is an ongoing dialogue between people. it requires listening, not just speaking. There is a reason why economics and related disciplines–nearly all of which Wilson draws from in the book–are called social sciences.

Wilson, of course, has much more to say on the matter. Click here to register for the February 11 event. The book is here. I highly recommend both.

Book Review: Jennifer Traig – Act Natural: A Cultural History of Misadventures in Parenting

Jennifer Traig – Act Natural: A Cultural History of Misadventures in Parenting

Hilarious, and recommended by Let Grow founder and Free-Range Kids author Lenore Skenazy. Traig performs two valuable services for parents. One, she reminds them that everyone makes mistakes, and that’s ok. Do your best, use common sense, and your kids will be fine. Perfection doesn’t exist. Provided that you are loving, caring, and supportive, there is no need to stress yourself out over falling short of impossible standards.

The second service is historical. Our mistakes are nothing compared to the mistakes people used to make. Before freaking out about whatever threat to children is headlining the evening news tonight, it helps to have some context. Children today are safer, healthier, better fed, and better-parented than at any other time in history. Media freak-outs help ratings, but hurt parents and kids. Traig looks at how previous generations treated their kids, and is thankful that today’s kids have it better in almost every way. Some of our parents and grandparents’ shortcomings are hilarious; others are more tragic.

Doctors performed quack remedies that were as likely to kill as to cure. School was even more drudgerous than it is now, and physical abuse was common. Parenting “experts” clearly had no idea what they were talking about, and many advocated what today would be considered abuse. Playground equipment was hazardous. Children’s literature, such as the Brothers Grimm, was often nightmare-inducing. Crib accidents used to be multiples more common due to poor design. Once kids were out of the crib, child labor was routine until the Industrial Revolution raised adult earnings enough for them to afford to put kids in schools instead of fields or factories.

Traig makes these serious points with laugh-out-loud humor and a conversational style. This book is excellent for nervous parents, nervous parents-to-be, and anyone else worried about what the world is coming to. As long as we put a little effort into it and stop freaking out about everything, our children and grandchildren will have better childhoods and better adult lives than we did, just as our lives have been healthier and wealthier than those of the generations before us.

Book Review: Bill Bryson – The Body: A Guide for Occupants

Bill Bryson – The Body: A Guide for Occupants

A fun tour of the human body and all its combined miracles and foibles. As with A Short History of Nearly Everything, depth is sacrificed almost entirely to breadth. There is a sensationalist undertone throughout, especially in parts involving cancer, obesity, and growing resistance to antibiotics. Bryson lets his sense of humor shine quite a bit, adding some charm to what can be a dreary subject. This is good for novices or people who want a lighter touch on a complicated and intimidating subject. Experts will likely shake their head at Bryson’s frequent overhyping of scary but low-probability events and health conditions.

Book Review: Marc Levinson – The Great A&P and the Struggle for Small Business in America

Marc Levinson – The Great A&P and the Struggle for Small Business in America

This is an excellent history that is playing out again in today’s antitrust revival. A&P was the first nationwide grocery store chain. Though it barely exists today, in its prime it was the nation’s largest retailer. A&P inspired fear among its competitors and outrage among populists.

People made many of the same arguments against A&P in the popular press and in antitrust cases that people make today against Walmart, Amazon, and other big companies. The word choices, hyperbole, and breathless tone are almost identical. And yet, A&P was no match for consumer preferences, which eventually shifted elsewhere. The company chose not to adapt, and today exists on roughly the same scale as Blockbuster Video, which is down to a single store in Oregon.

Some of the very same charges, such as A&P’s selling self-branded products at lower prices than outside brands, are being revived today against Amazon. A&P-era arguments are even being repurposed to argue against Apple and Google’s app stores and search results. Not only were their business practices never anti-competitive, they clearly weren’t enough to save A&P from the competitive process. Nor will it be enough to save today’s big tech companies. Consumers are harsh sovereigns, and as soon as someone does it better, they’ll move on.

History does not repeat itself, but it often rhymes. Levinson digs up some of the lost stanzas of a poem being rebooted all over Washington today. There are lots of lessons here for people on both sides of the antitrust revival.

Book Review: Marc J. Seifer – Wizard: The Life and Times of Nikola Tesla: Biography of a Genius

Marc J. Seifer – Wizard: The Life and Times of Nikola Tesla: Biography of a Genius

Seifer more than once goes into Freudian analysis of Tesla’s personality. I’m going to go ahead and guess that he is not a particularly rigorous biographer. I probably should have chosen a different volume, but this one was on sale. Seifer’s cringy Freudianism is enough to automatically make suspect his conjectures about Tesla’s more out-there research on things such as death rays, worldwide wireless transmissions, and his theories about faster-than light transmissions and extraterrestrial life.

These are better seen as products of Tesla’s time, similar to Isaac Newton’s forgotten works on alchemy and mysticism. In Tesla’s time, Einsteinian relativity wasn’t yet universally accepted or understood in the scientific community. Nor was its implication that light is an absolute speed limit well thought out. Reputable scientists were still searching for workarounds, and there was not yet the sheer preponderance of experimental evidence for the cosmic speed limit that we take for granted today.

Tesla’s scientific, business, and personal lives are stories worth telling. So is his rivalry with Edison. Seifer gives plenty of attention to all of these aspects of Tesla. And he is a good storyteller. But his Freudianism and other quirks hard to take him very seriously.

Book Review: Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

Erik Brynjolfsson and Andrew McAfee – The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: W.W. Norton, 2014)

This book from two MIT professors is part big-picture history, and art techno-optimism. McAfee is also the author of the excellent 2020 book More from Less, which is better-argued from a public policy perspective.

The opening chapter sets the historical stage. Living standards were poor and stagnant for nearly all of human history, from our birth as a species until about 1750 or so. If you put human well-being on a graph, it runs almost perfectly flat for thousands and thousands of years. Then it spikes sharply upwards starting around 1750-1800, like a hockey stick on its side. This giant wealth explosion is still happening today, and the authors believe it will continue for some time to come. This is one of the biggest changes in human history.

What caused it? Brynjolfsson and McAfee think it was technology. More specifically, it was the steam engine. Even more specifically, it was James Watt’s iteration of the steam engine. Steam power existed as early as ancient Rome, but it was mostly used for amusement purposes, and not industry. That changed in Watt’s lifetime. This was the start of Bynjolfsson and McAfee’s First Machine Age.

The Second Machine Age is the computer revolution. The First Machine Age revolutionized physical power. The Second Machine Age is revolutionizing mental power. Just as Watt’s steam engine took time to influence manufacturing, technological development, government, and culture, so too is the Second Machine Age. It is far enough along where they argue its fundamental difference from the First Machine Age is clear. But it is also early enough where its impact is only beginning to be felt. The future has almost limitless potential—and some tradeoffs.

The larger arc they draw is the right shape, though I don’t know that their need for two separate Machine Ages is much more than a useful gimmick for talking about technology. I would also submit that the true cause of both revolutions goes a level deeper than just technology. Yes, steam engines and computers are necessary for the two machine ages. Necessary, but not sufficient.

They need another ingredient in the mix: culture. Larger cultural values are difficult to quantify, which is why economists and many other social scientists do not use them. They are still significant, even if they are immune to regression analysis and other quantification. Statistically significant? No. Real-world significant? Very.

Culture shifted in the centuries leading up to Watt’s generation. People were gradually becoming a little more open to change, progress, and improvement. It showed in literature, trade patterns, philosophy, and a new prestige for science and its discoverers. That is why a technology that was already around now began to be used more differently—people allowed it, approved of it, and were willing to countenance large fortunes being made from it.

After setting up their two-machine-ages framework, Brynjolfsson and McAfee go on a tour of new and emerging technologies to see where the Second Machine Age might take us. They take a ride in one of Google’s self-driving cars, among other highlights, and draw encouraging pictures of some of the things new technologies could do for people over the next few decades.

One area where they fall short is their discussion of inequality. They are so focused on the mathematical ratio of the differences between rich and poor peoples’ incomes, that they forget to ask how people at the bottom are actually doing. They also focus almost solely on wage income, which is a significant mistake. This leaves out non-wage income such as employer-sponsored insurance, tuition assistance, free meals, company cars, and other perks that do not show up in income data.

More to the point for a book about technology, Brynjolfsson and McAfee should have asked a question similar to one Don Boudreaux likes to ask: would you rather have 1970-quality medical care at 1970 prices, or today’s health care at today’s prices?

Very few people would rather have 1970’s health care, even at its lower price. That means people view themselves as better off with today’s options. Most people would similarly answer related questions about televisions, computers, cars, appliances, and many other products that both rich and poor people consume.

In fact, society today has substantial consumption equality. Most low-income households have cars that drive at the same speeds on the same roads as wealthy people. They watch the same television shows and have similar Internet connections. More tellingly, rich people are not substantially taller or longer-lived than poor people. In the olden days, one could tell nobles and peasants apart at a glance by their height. Children of nobility got enough to eat, while peasant children were often so malnourished that their growth stunted. There were also substantial differences in infant mortality and life expectancy.

While the very wealthy have orders of magnitude more wealth than ordinary people do, they don’t consume very much of it. Nor do they keep it in a Scrooge McDuck-like vault. They invest it, in an unexpected type of income redistribution. When it’s invested, borrowers use that money to buy homes, go to college, and start businesses. The wealth doesn’t just sit there, people make use of it. It is a subjective question how much of this type of wealth is the “right” amount. But this positive use of wealth is something inequality scholars need to account for, and rarely do. In fact, invested wealth is where most of the capital that funds the amazing technologies Brynjolfsson and McAfee discuss in this book comes from.

They make another lapse in quoting a professional trade association for civil engineers in calling for more infrastructure spending. Of course civil engineers want more infrastructure spending, they have a vested interest in it! This is basic public choice theory. While they briefly acknowledge this conflict of interest, they also do not acknowledge the seriousness of the point, or look at data from less self-interested sources.

Their promotion of a Universal Basic Income (UBI) is similarly idealistic. This model, essentially a straight cash grant, is an objectively better system of poverty relief than the current welfare state. A UBI is easier to administer and more flexible for the recipients. A UBI also makes it more difficult for nanny statists to tell the poor what they shall eat, what things they may and may not buy, what types of health care they may receive, or where they shall educate their kids.

The trouble is politics. Again, a little public choice theory would go a long way in this discussion. Replacing the current welfare state with a UBI would be a fantastic tradeoff, both for the poor and for taxpayers. But the way politics works in practice, this would not happen. A UBI would be negotiated in a Congress led by people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them in a few years. Real-world politicians are unlikely to enact a well-functioning UBI, nor will their constituents let them. Public sector unions whose members administer the current system will block any reform they possibly can.

Tis means any politically-possible UBI would be added on top of the current system, preserving the current system’s flaws and minimizing a UBI’s advantages. Unless this problem is addressed, a UBI risks causing more harm than benefit.

Brynjolfsson and McAfee are consistently a little too idealistic. Some of the technologies they explore in this 2014 book turned out to be flops, and others are still materializing. Similarly, they assume that their political reforms will actually work as they intend them to.

They are certainly right about the larger arc of progress and prosperity. And though I take their technological hyper-optimism with a grain of salt, it is also inspiring. Books like this one and by other thinkers such as Kevin Kelly give me confidence that my daughter’s life will be richer, longer, healthier, and frankly, cooler than mine. This is a source of happiness for me, and gives me inspiration to continue my work on improving economic policy and defending liberalism against populists who would tear it down for no good reason.

Book Review: Arthur C. Clarke – A Fall of Moondust

Arthur C. Clarke – A Fall of Moondust

A good old-fashioned disaster story, set on the moon. A moon rover carrying a group of well-heeled tourists across the Sea of Thirst gets swallowed into a sinkhole. The passengers are unable to radio for help–the regolith (moon soil) blocks their transmissions. They have few provisions, since they were on a short trip. Worse, the heat buildup inside the vehicle, plus a limited oxygen supply, means that help needs to arrive fast. Fortunately, the passengers include a world-famous retired astronaut who was trying to take a low-key trip, among other people with unexpected talents. Some clever scientists back at the base and on Earth are also able to suss out what happened to the missing vehicle, and are able to finagle a dramatic rescue.

The plot is formulaic and the characters are cheesy. But the setting is remarkable, the science is enjoyable—though I don’t think the bits about the moon’s surface hold up very well—and it’s a lot of fun. Not as substantial as Clarke’s usual fare, but if you’re in the mood for something light, one could do worse.

Book Review: Tom Wolfe – The Right Stuff

Tom Wolfe – The Right Stuff

I saw the movie years ago without knowing it was based on a Tom Wolfe book. I’d never previously read any Wolfe, mainly owing to a lack of interest in 1960s counterculture beyond some of the music. This turns out to have been a mistake, at least regarding Wolfe. He was a fantastic writer, if a bit earthy. Much as I love the science and the spirit of discovery that many other writers have emphasized, Wolfe showed that it had a more visceral side. For the test pilots and astronauts, it was a thrill and an adrenaline rush. It took a certain kind of personality to want to fly to the moon and back. That, as much as the mission itself, is Wolfe’s topic, and he explores it about as compellingly as a writer can.

That said, Wolfe spends an inordinate amount of time writing about NASA’s bizarre anal fixation. They put the early astronauts through some bizarre probing tests that didn’t always have much to do with space or gravity, and Wolfe describes them in great detail.

Wolfe also does not shy away from the danger of test pilot culture, and how it influenced the early space program. It was thrilling and it was risky. But there were also funerals, and families. They were part of the story, too. The deaths of Gus Grissom and two other astronauts on the Apollo 1 launch pad were particularly jarring. Their capsule on top of a rocket caught fire, and a poor design to the hatch door left them unable to escape.

In the earlier days of test-piloting experimental aircrafts, pilots’ wives knew what happened every time they heard emergency sirens making their way towards the local Air Force base, which was often. It was a roll of the dice which one of them would receive a phone call, and another roll of the dice whether the news was a close call, or something much worse.

The book and the movie are both excellent. Wolfe especially excels at combining thrill, danger, and risk with levity and tragedy. The space race was multifaceted, and so should be the histories by which we remember it.

Book Review: Bruce Bueno de Mesquita and Alistair Smith – The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics

Bruce Bueno de Mesquita and Alistair Smith – The Dictator’s Handbook: Why Bad Behavior is Almost Always Good Politics (New York: Public Affairs, 2011)

The rise in populism over the last decade has birthed a bumper crop in books on dictators, with contributions from Frank Dikötter, Daniel Kalder, and others. Bueno de Mesquita and Smith’s entry is a quality addition. The reigning classic in the genre, though, is Gordon Tullock’s early work on the public choice theory of autocracies, which is collected in The Social Dilemma, which is volume 8 of his Selected Works.

Bueno de Mesquita and Smith work from the discipline of foreign policy, rather than from economics, law, or political science. They belong to the realist school, which is in some ways the current incarnation of Machiavellianism and realpolitik. Foreign policy realists have quite a bit in common with public choice economics—politicians respond to incentives, and tend to behave in self-interested ways.

The Dictator’s Handbook is a popular-level distillation of a larger theory of autocratic behavior Bueno de Mesquita and Smith have explored in numerous academic works. Dictators often show strong ideologies in public. These are often various forms of socialism, nationalism, theocracy, or some mixture of the three. In private, dictators may sincerely believe in their ideology. And it will influence their policy choices. But, just as public choice theory argues, when self-preservation conflicts with the ideology, self-preservation nearly always wins.

This self-preservation instinct explains why so many dictatorships look so similar. Military support is essential to maintaining power, which is why dictatorships often have lavish and showy military budgets, even if they do not have any intention of going to war. Well-paid soldiers are less likely to rebel, especially in poor countries where other career opportunities are limited. A highly visible military projects power, which scares off rebels inside and outside of the palace. And a well-fed and well-feted general is less likely to pursue his own coup.

Gaudy personal styles and decorating styles are another common dictator trait; nearly every dictator’s residence, whether in Belarus or Libya, is almost indistinguishable from Donald Trump’s apartment in Trump Tower. It’s another way of projecting power, if not taste.

A dictator’s inner circle is often unstable. This is both caused and countered with a culture of excessive honorifics and ostentatious wealth—with obvious gradations to signify an official’s place in the hierarchy. Taking privileges away is a sign that someone is falling out of favor.

Dictators rarely have a formal succession plan. This is another reason why they usually have a garish, privileged court culture. Dictatorships are typically in very poor countries. Officials who enjoy a Western standard of living—courtesy of the dictator, they are constantly reminded—are less likely to overthrow the dictator. Moreover, when aspirants are competing against each other, they are not competing against the dictator himself. When generals have a comically large number of lapel pins on their epaulet-laden uniforms, there is a reason for it. They are status signals in their competitive game against each other. They are not just marks of favor from the leader.

Bueno de Mesquita and Smith run a risk of stereotyping by pointing out how alike so many dictators are. But they are well aware that each country, and each dictator, has their own situation and cultural factors in play. At the same time, their commonalities show a kind of convergent evolution: successful dictators stay in power because they have discovered “best practices” that apply widely. Dictators that did not adopt these practices did not stay in power, so the only remaining examples have strong militaries, garish styles, elaborate court cultures, no formal succession plan, and so on. While the world as a whole has been tending towards democratic liberalism since the end of World War II, there are still plenty of illiberal countries. It is important to understand them if their people are to become free.

It is also important to know warning signs when we see them, as the tragedy of President Trump’s late-term coup attempt shows.