13 Books for 2020 – What A Year!

2020 is turning into quite the publishing year.

Perhaps every year is like this and I just haven’t been paying attention before. Now, as I actively scan publisher sites and newsletters for upcoming books, there seems to be an abundance of super-interesting new stuff: how is anybody – even someone like me who does this for a living – supposed to keep up?

#1: The year began at full (or stagnating…?) speed with University of Houston professor Dietrich Vollrath‘s Fully Grown: Why a Stagnant Economy is a Sign of Success, With praise by Tyler Cowen and reviews in The Economist and the Wall Street Journaland actually a lot of good discussions on Twitter – I’m sad that I haven’t taken time to read it. Later, perhaps, on the off-chance that nothing else on this incredible lists comes in the way.

#2: Next up was Diane Coyle‘s Markets, State, and People. Coyle, the endlessly interesting public intellectual/economist and newly(-ish) appointed Professor of Public Policy at Cambridge, is someone we all should read: she manages to be controversial and still balanced, provocative but still interesting. This book, however, seems to be in line with all the other “Third Way” books of last year: Acemoglu and Robinson’s The Narrow Corridor; Raghuram Rajan’s The Third Pillar; Branko Milanovic’s Capitalism, Alone. Crowded field. As I haven’t even gotten around to her previous book on GDP yet, I imagine I’ll read that one first whenever I carve out some time for Coyle.

The curse of modernity is quickly adding up.

#3: Changing gears somewhat at least in terms of topics I have started reading Charles Murray‘s Human Diversity: The Biology of Gender, Race, and Class and it’s exactly as provocative as you might think. Delivered, however, with the seriousness of scientific investigation and a massive chip on his shoulder. Still, exactly the kind of antidote to madness that fuels a lot of my priors. I’ll write up a comment or two whenever I finish this 528-page tome.

#4: In a similar vein is the Dutch writer and historian Rutger Bregman‘s Humankind: a Hopeful History, scheduled to be released in June. As Bregman isn’t somebody that I usually agree with, I’m very excited to read this take of his, which is hopefully a mix of Paul Bloom’s End of Empathy, Ruth DeFries’ The Big Ratchet and Paul Seabright’s The Company of StrangersSort of like Yuval Harari’s Sapiens but better (and no, I’m not on Team Harari despite this excellent long-read in The New Yorker).

#5: Going back a little bit to what I think is chronologically the next book to be released (on Tuesday March 10 in the U.S., but not until April in the U.K.) is Robert Bryce’s A Question of Power: Electricity and the Wealth of NationsHaving recently written a piece on electricity generation and being into the weeds about climate change and emissions, I’m very curious about this take on electricity as a critical source for our prosperity. I hope it reads a little like an improved version of Zubrin’s best chapters in Merchants of Despair.

#6: March is also the month for Angus Deaton and Anne Case‘s Deaths of Despair and the Future of Capitalism (Amazon says it’s already out in the U.K.) Their hugely successful and highly relevant pet project for the last few years, Deaton and Case’s case(!) for how rising morbidity rates indicate a collapse of the fabric of society is a pretty standard one by now: globalization, economic inequality, the hollowing-out of tight-knit communities and the various forces that may have fueled this.

The reviews are already popping up left and right (WSJ, Financial Times) and their session was the most exciting and most talked-about at the ASSA meeting in San Diego. As I understand it, the latest findings is that American life expectancy that pesky ever-increasing number that fell in recent years, in no small part due to overdoses and opioids has recovered and is now again on the up-tick. Maybe Deaton and Case’s book will be one for an odd historic event rather than foreshadowing “The Future of Capitalism” (also, what’s up with shoving ‘Future of Capitalism’ into your titles?!).

#7: In a similar topic, Robert Putnam yes, the Harvard professor famous for Bowling Alone and the idea of social capital is back with another sweeping analysis of what’s gone wrong with American society. The Upswing: How America Came Together a Century Ago and How We Can Do It Again, coming out in June, is bound to make a lot of waves and receive a lot of attention by social commentators.

#8: Officially published just yesterday is John Kay and former Bank of England Governor Mervyn King‘s Radical Uncertainty: Decision-Making for an Unknowable Future. Admittedly, this is the book I’m least excited about on this list. Reviewing King’s 2016 End of Alchemy where King discussed his experiences of the financial crisis and the global banking system for the Financial Times, John Kay discussed exactly that: the title? “The Enduring Certainty of Radical Uncertainty.” Somebody please press the snooze button. Paul Krugman’s 4000 word review of End of Alchemy ought to be enough; I’d be surprised if Kay and King brings something new to the table in thus poorly-titled release (though, of course the fringe already loves it).

The Really Good Stuff

While the above eight titles are surely worth at least some of your time, the next five are worth all of it.

#9: I’ll begin with my two biggest hypes: Matt Ridley‘s How Innovation Works: And Why It Flourishes in Freedom, coming out May 14th in the U.K. and May 19th in the U.S. The author of The Rational Optimist and The Evolution of Everything is back with another 400-page rundown of a deep-seated and hyper-relevant topic: how do societies innovate and progress? What conditions assist it, and which obstacles prevent it? 

I expect a lot of spontaneous order-type arguments, debunked Great Man fallacies, and some Mariana Mazzucato take-downs.

#10: The second hype, William Quinn and John Turner‘s Book and Bust: A Global History of Financial BubblesSince John first told me about this book over a year-and-a-half ago, I’ve been super excited – I’m a big fan of his work and I’m looking forward to receiving my review copy in the next couple of weeks. Publication date: August.

#11: For somebody who writes about bubbles and financial markets more than most people think healthy, I’m gonna get a warm-up in MIT professor Thomas Levenson‘s Money for Nothing: The South Sea Bubble & The Invention of Modern CapitalismWhat’s with all these books on historical financial bubbles? Yes, you’re right: 2020 marks the three-hundred year anniversary of the South Sea Bubble, that iconic period of John Law in France and the similar government funding scheme in England will surely receive a lot of attention this year.

#12: Some environmental stuff at last: Bjørn Lomborg, the outspoken author and voice of reason in the climate change space announced that his False Alarm: How Climate CHange Panic Costs Us Trillions, Hurts The Poor, and Fails To Fix the Planet will be published in June this year! While possibly the least boring book on this list, the title receives lowest possible marks. What overworked publisher decided that this page-long subtitle was a good idea?!

#13: Also, Alex Epstein of the Centre for Industrial Progress and host of Power Hour (one of my all-time favorite podcasts) has been working on an update to his hugely popular The Moral Case for Fossil Fuels. As far as I understand, we’re to receive an updated and revised version in August the Moral Case for Fossil Fuels 2.0!


So. The next six months have at least thirteen pretty interesting books coming up. I imagine there are a bunch more for the rest of the year and a few I have completely overlooked.

Also, after this burst of links, Amazon should probably offer Notes On Liberty an affiliate program.

In sum: you can see my fields of interests overlapping here: (1) financial history and financial markets; (2) environment, climate change, and its solutions; (3) Big Picture society stories, preferably by interesting or quantitatively savvy authors. Not enough on the fourth big interest of mine: (4) money and monetary economics – particularly in historical contexts. Perhaps not, as David Birch’s Before Babylon, Beyond Bitcoin is on my desk, and I’m currently re-reading William Goetzmann’s Money Changes Everything both first released in 2017.

Also: the absence or underrepresentation of women (or ethnic minorities or any other trait you care a lot about) might disturb you: 2 out of 17 authors women (4 out of 27 authors mentioned) Needless to say, it must be because I’m sexist.

Post-script: Ha! As I just heard about Stephanie Kelton‘s upcoming book The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy, I’m gonna quickly add it to the list and satisfy both of my qualms above: not enough women (now: 3/18 authors!), and not enough monetary economics. Splendid!

Happy reading, everyone!

Elite Anxiety: Paul Collier’s “Future of Capitalism”

Paul Collier, the controversial Oxford professor famous for his development work and his acclaimed books Exodus and The Bottom Billion, is back. But the author of Exodus and The Bottom Billion is long gone. The compelling writing and carefully reasoned world that made Bottom Billion impossible to put down has somehow disappeared. In The Future of Capitalism, Collier is tired. He is bitter. And he is sometimes quite mad – so mad that his disdain for this or that group of thinkers or actors in society consumes his otherwise brilliant analytical mind.

Instead of having his editors moderate those of his worst impulses, he doubles down on his polemic conviction. Indeed, he takes pride in offending people in all political camps, believing that it supports the book’s main intellectual point: ideologues of every persuasion are dangerous, one-size-fits-all too constricted for a modern society and we should rather turn to a communitarian social democratic version of pragmatism – by which he means some confused mixture of ideas that seem to advocate “what works” on a case-by-case basis.

Yes, it’s about as nutty as it sounds. And he is all over the place, dabbling in all kinds of topics for which he is uniquely unqualified to offer advice: ethics, finance, education, family, social policy and on and on and on.

One reason The Future of Capitalism went awry might have been the remarkable scope: capturing all the West’s so-called ‘Anxieties’ – and their solutions – in little over 200 pages of non-academic prose. Given the topic, a very unfitting sort of hubris.

Apart from the feeble attempt at portraying a modern society that has “come apart at the seams,” there’s no visible story, no connection between the contents of one paragraph and the next and hardly any connection between one chapter and another. Rather, it’s a bedlam of foregone conclusions, appeals to pragmatism, dire stings to ideological ‘extremists’ on either side and a hubris unfitting for someone like Collier. I guess this is a risk that established academics run at the end of their careers, desperately trying to assemble all their work into One Grand Theory.

The most charitable thing I can say about Collier’s attempt is that it offers a lot of policy prescriptions – tax unearned land rents, tax-and-redistribute productivity increases, expand housing supply through local governments, have governments direct the Silicon Valley-clusters of tomorrow, cap mortgage finance, benefits for families, expand ethical responsibilities of firms, encourage marriage, create a new G6 (EU, US, Russia, India, Japan, China) that could overcome the global collective action problem (good luck with that!), expand Germanic vocational training and workers’ representation on company boards, embrace patriotism but never nationalism, detach ownership from control and place control with stakeholders (workers, suppliers, local homeowners).

The common denominator seems to be an imperative to do all these things that seem to have worked well in some time or place or utopia, conveniently ignore institutional or cultural reasons, while espousing all ideological positioning and political capture.

Just voicing the suggestions ought to spark at least some fruitful conversations.

Chapter 8, ostensibly concerned with the Class Divide, is an illuminating case study. It takes Collier about 36 pages (out of 37) to mention ‘class’ (not that I blame him: the concept is way too nebulous and politically infected to be meaningfully dealt with in such short space). Instead, Collier discusses all kinds of topics whose relevance to class is quite unclear: public policy for single mothers, German vocational training, lawyers and the rule of law, a Yorkshire project to encourage reading in school kids – not to mention a ten-page digression into the institution of marriage for stable families.

When his polemics, dry writing, unsupported analysis or incomprehensive treatment of a topic hasn’t put me off (I gave up on the book at least four times during the last couple of months), some of the picture Collier paints does resonate with me. There is a social and geographical divide in Britain: the economically flourishing South-East, dominated by the well-educated English and the cosmopolitan accents of almost every language on the planet, is posited against the collapsing towns of the backward Midlands or the North. If this divide is real – in support of which Collier offers next-to-no evidence – it is not clear to me that it wasn’t already captured in, say, David Goodhart’s The Road to Somewhere or Branko Milanovic’s Global Inequality, or for that matter the countless of magazine articles trying to outline the fractures that Brexit unearthed about British society. Considering the effort those authors put into mapping their divides, Collier’s attempt seems frivolous.

He can do better. Much better.
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My fellow Notewriter Rick is organising a summer reading group around Feyerabend’s Against Method. The equivalent Collier reading group could be aptly named Against Ideology.

Conservative Parties and the Birth of Democracy

Understanding how political parties function is an area where recent research in political science has contributed major insights. Political parties are a fairly recent phenomenon. Prior to the 19th century, there were factions and loose groupings – the Optimates and Populares in Republican Rome, Tories and Whigs in late 17th century England, and Girondins and Jacobins in the French Revolution – but not organized parties. They were looser groupings that centered around dominant individuals – a Marius or Sulla, a Lord Shaftsbury, or a Brissot or Robespierre; but not parties with structured platforms and a deep well of local support.

I recently reviewed Daniel Ziblatt‘s recent book Conservative Parties and the Birth of Democracy for the Journal of Economic History (gated and ungated). Ziblatt provides new insights into the key role played by conservative parties in the formation and stabilization of democracy in Western Europe. Ziblatt’s thesis is that where conservative parties were able to become entrenched and organized political forces, the prospects for liberal democracy were fairly good. But where conservative parties remained weak, democracy was likely to remain poorly institutionalized. Under these circumstances, elites simply had too much to lose from acquiescing in universal suffrage.

Ziblatt contrasts the fate of England where a popular conservative party did take on solid roots in the late 19th century with that of Germany. As I write in my review:

“The central insight Ziblatt emphasizes throughout is game theoretic: the absence of a party to organize around meant that economic elites lacked the ability to strategically defend their interests and hence became willing to ally with any forces that might help them protect their property. While in Britain, the well-institutionalized Parliamentary Conservative party moderated and sidelined the more reactionary and xenophobic elements in British life, the absence of such a strong party meant that in Germany, the right tended towards antisemitism and other forms of extremism . . . “

“. .  . Stable and lasting democratization required “buy-in” from old regime elites and this buy-in can only occur if there are institutional mechanisms in place that are capable of assuaging their fears and moderating the influence of extremists. In late 19th and early 20th century Europe, strong professional conservative parties served this purpose. In the absence of such a party the transition to democracy will likely be temporary and unstable.”

Do read the full review.

Pinker wrote a nice rejoinder

Steven Pinker, the Harvard professor, recently published Enlightenment Now. The Case for Reason, Science, Humanism, and Progress.

NOL Pinker Edwin
Buy it

It is a fine book that basically sets out to do what its subtitle promises. It does so covering a wide range of ideas and topics, and discusses and rejects most arguments often used against Enlightenment thought, which Pinker equates with classical liberalism.

Those who know the work of Johan Norberg of the Cato Institute, the late Julian Simon’s writings, Jagdish Bhagwati’s magisterial In Defense of Globalization, or last but not least, Deirdre McCloskey’s Bourgeois Trilogy will be updated on the latest figures, but will not learn much in terms of arguments.

Those new to the debate, or searching for material to defend classical liberal ideas and values, will find this a very helpful book.

What is the best book about Argentina?

A couple of days ago, Tyler Cowen asked which is “the best book about each country:”

To count, the book must have some aspirations to be a general survey of what the country is or to cover much of the history of the country.   So your favorite book on the French Revolution is not eligible, for instance…

He explicitly skips South America. I can’t blame him, as I’ve never found a book that fully captures (the interrelationship between) the five things that make Argentina Argentina:

1. The fight between Buenos Aires and the Interior for fiscal resources. This was the main cause behind the civil wars of the XIXth century, and the eventual solution — the creation of a federal state that could check the power of Buenos Aires, and where the provinces of the interior would be politically over-represented — continues to be a defining feature of the country’s political economy to this day.

2. The division between “unitarios” and “federales,” which also began in the XIXth century. Although this cleavage was ostensibly about how to organize the country territorially, we should not forget that “politics is not about policy:” the actual division was about the relative status of different social groups. Specifically, he federales fell in the “Trumpian” side of the spectrum, praising the common, unsophisticated man “from here” as opposed to the high-brow cosmopolitanism promoted by the unitarios. Again, this division did not end in the XIXth century; Argentina’s political history during the XXth and beyond — and most notably the phenomenon Peronism — simply cannot be understood without making reference to this opposition.

3. The great immigration. Between the end of the XIXth and the beginning of the XXth century, Argentina embarked in a great social experiment that sought to transform the country by importing huge numbers of European immigrants. During this period, Argentina was the country that most immigrants received as proportion of its population, being second only to the US in the absolute number of immigrants it received. The assimilation of such immigrants was mostly successful, but also had profound consequences in terms of demographics, language, culture, cuisine and surnames (where do you think mine comes from?), as well as the way Argentineans perceive themselves: as a middle-class country of immigrants in which hard work allows you to get ahead in life.

4. Nationalism. One of the unintended consequences of the great immigration was the (government-sponsored) construction of a new national identity, defined in terms of territory rather than blood, race, or national history. This is the origin of Argentines’ sickly relationship with national boundaries, most patently seen in relation to the Malvinas/Falklands issue.

5. Pretorian politics. Between 1930 and 1983, Argentina was governed by no less than five different military regimes (in 1930, 1943, 1958, 1966 and 1976, respectively). The last of them (1976-1983) was especially murderous, as the military  systematically “disappeared” thousands of guerrilla members, political activists, union leaders and Left-wing sympathizers in a vain attempt to engineer a new political system. It is impossible to make sense of the political, social and cultural attitudes that have predominated in the country since 1983 without understanding this past.

Unfortunately, no book comes even close to capturing all these factors simultaneously. That said, the ones that best approach this ideal are the following:

1. Juan José Sebreli, Crítica de las Ideas Políticas Argentinas [A Criticism of Political Ideas in Argentina]. As far as I’ve seen, it’s only available in Spanish, however.

2. Larry Sawers, The Other Argentina. The Interior and National Development. As far as I know, it hasn’t been translated; please tell me I’m wrong.

3. Nicolas Shumway, The Invention of Argentina. There is also a Spanish edition.

PS. If you’re going for some XIXth-century work, don’t get swayed by the beguiling prose of Sarmientos’s Facundo; it’s too dominated by mood affiliation. Juan Bautista Alberdi’s Bases y Puntos de Partida para la Organización Política de la República Argentina [Bases and Starting Points for the Political Organization of the Argentine Republic] is a far better choice.

*The Islamic Enlightenment* | A critical review

De Bellaigue, Christopher. (2017) The Islamic Enlightenment: The Struggle Between Faith and Reason 1798 to Modern Times. Liveright Publishing Corporation (Norton & Company) New York, London.

In 1798, in view of the Pyramids, a French expeditionary force defeated the strange caste of slave-soldiers, the Mamlukes, who had been ruling Egypt for several centuries. The Mamlukes charged the French infantry squares on horseback, ending their charge with the throwing of javelins. The Mamlukes were thus eliminated from history. The French lost 29 soldiers. In the conventional narrative, the battle woke up the whole Muslim world from its long and haughty slumber. The defeat, the pro-active reforms of Napoleon’s short-lived occupancy, and the direct influence of the French scholars he had brought with him lit the wick of the candle of reform or, possibly, of enlightenment throughout the Islamic world.

De Bellaigue picks up this conventional narrative and follows it to the beginning of the 20th century with a dazzling richness of details. This is an imperfect yet welcome thick book on a subject seldom well covered.

This book has, first, the merit of existing. Many people of culture, well-read people with an interest in Islam – Islam the sociological phenomenon, rather than the religion – know little of the travails of its attempted modernization. Moreover, under current conditions of political correctness the very subject smells a little of sulfur: What if we looked at Muslim societies more closely and we found in them some sort of intrinsic inferiority? I mean by this, an inferiority that could not easily be blamed on the interference of Western, Christian or formerly Christian, capitalist societies. Of course, such a finding could only be subjective but still, many would not like it, and not only Muslims.

Second, and mostly unintentionally, possibly inadvertently, the book casts a light, an indirect light to be sure, on Islamist (fundamentalist) terrorism. It’s simple: Enlightened individuals of any religious background are not likely to be also fanatics willing to massacre perfect strangers. Incidentally, I examine this issue myself in a fairly parochial vein, in an essay in the libertarian publication Liberty Unbound: “Religious Bric-à-Brac and Tolerance of Violent Jihad” (January 2015). With his broader perspective, with his depth of knowledge, De Bellaigue could have done a much better job of this than I could ever do. Unfortunately he ignored the subject almost entirely. It wasn’t his topic, some will say. It was not his period of history. Maybe.

Continue reading

The Dictator’s Handbook

I recently pointed you towards a book that has turned out to be a compelling and interesting read.

At the end of the day, it’s a straightforward application of public choice theory and evolutionary thinking to questions of power. Easy to understand theory is bundled with data and anecdotes* to elucidate the incentives facing dictators, democrats, executives, and public administrators. The differences between them are not discrete: they all face the same basic problem of compelling others’ behavior while facing some threat of replacement.

Nobody rules alone, so staying in power means keeping the right people happy and/or afraid. All leaders are constrained by their underlings. These underlings are necessary to get anything done, but they’re also potential rivals. For Bueno de Mesquita and Smith the crucial facts of a political order are a) how big a coalition (how many underlings) the ruler is beholden too and b) how replaceable the members of that coalition are.

The difference between liberal and illiberal orders boil down to differences in those two parameters. In democracies with a larger coalition and less replaceable coalition members, rulers behave better.

 

I got a Calculus of Consent flavor from Dictator’s Handbook. At the end of the day, collective decision making will reflect some version of “the will of the people… who matter.” But when we ask about the number of people who matter, we run into C of C thinking. Calling for bigger coalitions is another way of calling for an approach to an effective unanimity rule (at least at the constitutional stage).

In C of C the question of the optimal voting rule (majority vs. super majority vs. unanimity) boils down to a tradeoff between the costs of organizing and the costs of externalities imposed by the ruling coalition. On the graph below (from C of C) we’re comparing organization costs (J) against externality costs (I) (the net costs of the winning coalition’s inefficient policies). The idea is that a unanimity rule would prevent tyranny of the majority (i.e. I is downward sloping), but that doesn’t mean unanimity is the optimal voting rule.

Figure 18.  Click to open in new window.

But instead of asking “what’s efficient” let’s think think about what we can afford out of society’s production, then ask who makes what decisions. In a loose sense, we can think of a horizontal line on the graph above representing our level of wealth. If we** aren’t wealthy enough to organize, then the elites rule and maximize rent extraction. We can’t get far up J, so whichever coalition is able to rule imposes external costs at a high level on I.

But I‘s height is a function of rent extraction. Rulers face the classic conundrum of whether to take a smaller piece of a larger pie.

The book confirms what we already know: when one group can make decisions about what other groups can or must do, expect a negative sum game. But by throwing in evolutionary thinking it shed light on why we see neither an inexorable march of progress nor universal tyranny and misery.

As you travel back in time, people (on average) tend to look more ignorant, cruel, and superstitious. The “default state” of humanity is poverty and ignorance. The key to understanding economics is realizing that we’ve bootstrapped ourselves out of that position and we aren’t done yet.

The Dictator’s Handbook helped me realize that I’d been forgetting that the “default state” of political power is rule by force. The liberalization we’ve seen over the last 500 years has been just the first part of a bootstrapping process.

Understanding the starting point makes it clear that more inclusive systems use ideas, institutions, capital, and technology to abstract upward to more complex levels. Something like martial honor scales up the exercise of power from the tribe (who can The Chief beat up) to the fiefdom (now the Chief has sub-chiefs). Ideology and identity can tie fiefdoms into nation-states (now we’ve got a king and nobility). Wealth plus new ideologies create more inclusive and democratic political orders (now we’ve got a president and political parties). But each stage is built on the foundation set before. We stand on the shoulders of giants, but those giants were propped up by the non-giants around them.

Our world was built by backwards savages. The good news is that we can use the flimsier parts of the social structure we inherited as scaffolding for something better (while maintaining the really good stuff). What exactly this means is the tricky question. Which rules, traditions, organizations, and processes are worth keeping? How do we maintain those? How/when do we replace the rest? And what does “we” even mean?

Changing the world involves uncertainty. There are complex interrelations between every part of reality. And the knowledge society needs is scattered through many different minds. To make society better, we need buy-in from our neighbors (nobody rules alone). And we need to realize that the force we exert will be countered by an equal and opposite force some plural, imperfectly identifiable, maybe-but-probably-not equal, and only-mostly-opposite forces. There are complex and constantly shifting balances between different coalitions vying for power and the non-coalitions that might suddenly spring into action if conditions are right. Understanding the forces at play helps us see the constraints to political change.

And there’s good news: it is possible to create a ruling coalition that is more inclusive. The conditions have to be right. But at least some of those conditions are malleable. If we can sell people on the right ideas, we can push the world in the right direction. But we have to work at it, because there are plenty of people pitching ideas that will concentrate power and create illiberal outcomes.


*I read the audiobook, so I’m basically unable to vouch for the data analysis. Everything they said matched the arguments they were making, but without seeing it laid out on the page I couldn’t tell you whether what they left out was reasonable.

**Whatever that means…