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| Mar 10, 2008
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really liked it
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More than any other book I’ve read in this series, this one felt, well, very short. Perhaps this book should have focused on just one or the other of
More than any other book I’ve read in this series, this one felt, well, very short. Perhaps this book should have focused on just one or the other of these topics, but I was left feeling as though it simply trailed off, leaving the subject hanging in mid-air. To be fair, considering the range of programs included in the New Deal, and the many personalities involved in it, jamming even a representative fraction of that into a book of 100 pages is probably impossible. But perhaps I’m more frustrated with the topic itself. After reading several books about this time period, I am still unclear as to several things: Did the 1929 crash really cause the Great Depression? And if not, what did? Why did the depression last so long? Did the New Deal merely mollify suffering, or did it actually help to end the depression, or (as some argue) did it prolong it? Curiously, though Hoover is typically the villain of the story, and FDR the hero, the reality seems to be far more complicated. Some authors praise Hoover for his (relative to the standards of the time) vigorous response to the disaster, while others portray him as indifferent to the suffering of everyday Americans, and a minority think that he had basically the right approach, but wasn’t given enough time. FDR, by contrast, while sometimes portrayed as an early Kenysian who wanted to spend his way out of the depression, was actually quite reluctant to use deficit spending, and arguably had no coherent ideology—just a willingness to experiment. My impressions, after investigating this far, is that the country was at a breaking point—politically and psychologically, at least—by 1932, and FDR’s whirlwind of laws and programs passed in his first 100 days broke the death spiral of faltering confidence. It allowed people to trust their banks and gave them hope that the government would fix the problem, a sense of security which itself went a long way in stopping the economic freefall. Yet as innovative and energetic as this response was, the government simply did not spend enough—in other words, did not take on enough debt—to really stimulate the economy. It was only when the federal deficit ballooned during the Second World War, when spending eclipsed the cost of the New Deal programs, that the country definitively emerged from the Great Depression. This is not to say that the New Deal wasn’t admirable. Yet it’s lasting significance, I think, is not as a program for economic recovery, but for embodying what was, at the time, a new idea: a government willing to work vigorously on the side of ordinary people. It was not only an unprecedented expansion of the power of the federal government—in itself, not necessarily a good thing—but it was often done for the benefit of the least fortunate. The New Deal is also significant, as Rauchway says, for pioneering a model of strong government action that was compatible with democracy, individual rights, and a free market—a striking success when compared with contemporary European countries. Perhaps it is fair to say that the New Deal was a brilliant set of solutions, but only a middling one for the problem of economic depression. ...more |
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After reading the Warren Commission Report, I decided that I ought to go ahead and finish the other congressional report sitting around my ancestral h
After reading the Warren Commission Report, I decided that I ought to go ahead and finish the other congressional report sitting around my ancestral home. You may not be surprised to hear that the two books have little in common. The Warren Commission Report is a true-crime thriller, while the FCIC report consists of dense analysis. Simply mastering the jargon of Wall Street (which I certainly did not) is hard enough. Using said jargon to tweeze apart a historical crisis proved to be mostly beyond my piddling capabilities. To give you an idea of the prose, here is a fairly typical example: Synthetic CDOs were complex paper transactions involving credit default swaps. Unlike the traditional CDO, synthetic CDOs contained no actual tranches of mortgage-backed securities, or even tranches of other CDOs. Instead, they simply referenced these mortgaged securities and were thus bets on whether borrowers would pay their mortgages. To be fair, the authors take care to explain every term as it is introduced, and try to flesh out their abstract analysis with concrete examples. And I think the authors did their best to write clearly about a dizzyingly complex topic. But it is still tough going for the financially illiterate. Still, the basic story seems fairly clear. Spurred by a real-estate boom, in which the price of housing climbed ever-higher, lenders started relaxing mortgage requirements. This allowed many people to buy houses who normally wouldn’t have been able to. Meanwhile, banks pooled this debt into complex financial packages, which were foolishly deemed safe investments by ratings agencies. Leveraging allowed many huge financial institutions to acquire billions of dollars of this debt with little money down. But when the housing bubble burst, the entire house of cards built on top of it crumpled. To further explain, I other a rather fanciful analogy. Imagine a casino where all gamblers are playing using money borrowed for pennies on the dollar from the casino itself. Meanwhile, secondary markets arise, wherein sophisticated gamblers bet on which card or slot machine player will come out ahead, and they are betting using money borrowed from the very same players. Then a tertiary market arises, betting on the betters. And so on. All this is premised on the idea that the gamblers will always outplay the casino. But when reality reasserts itself, and the house wins, and the money has to be paid back to the casino—the slot machine player asking for the money he lent to the secondary gambler, who in turn asks the tertiary gambler, etc.—the entire ecosystem falls apart as everyone finds themselves in debt to everyone else, which means the casino can’t make a profit and goes bankrupt.* This is a very imprecise comparison. But it does capture, I think, the spirit of reckless investment—based on the idea of endless growth—which pervaded the institutions described by the commissioners. And I think it also gives a taste of how risky investments were spread around the system, to go bad in one massive avalanche. The commissioners describe (in much more precise terms) how this situation arose, and then give a blow-by-blow account of how the crisis played out, and how the government attempted to stop the bleeding. Curiously, this report comes with two dissenting statements. It appears that the era of severe partisanship had already begun, and the Republican-appointed commissioners could not bring themselves to agree with the conclusions of their Democratic colleagues. Admittedly, the first dissenting statement, by Hennessey, Holtz-Eakin, and Thomas make the interesting point that the report examined the American scene too exclusively, while a recession was suffered by many countries around the world. This is relevant since both mortgage and finance laws can differ significantly, while the commission often cites inadequate regulation. Nevertheless, for my taste the dissenters are rather too eager to overlook the (for me) obvious abuses of the masters of finance, preferring to see the crash as something unavoidable. (The other dissenting statement, by Wallison, makes the implausible claim that government policies promoting homeownership provoked the crisis.) Personally, if a trader on wall street—or even his entire firm—makes a bad investment and goes bankrupt, it would not disturb my sleep. But when the casino mentality causes normal folks to lose their homes and jobs, it is more difficult to stomach. I would like to believe it is possible to create a more rational and equitable economy, though I recognize this is a very old dream, and is likely to remain a dream for some time. _______________________ * I am dismayed to discover that this exact analogy was used in The Big Short, the movie, to explain the financial crisis. I am not original. ...more |
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| 1504011384
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| 4.06
| 951
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| May 26, 2015
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really liked it
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It seems odd for an author’s wheelhouse to be summarizing the preceding decade, but that is what Frederick Lewis Allen did with both the 1920s and the
It seems odd for an author’s wheelhouse to be summarizing the preceding decade, but that is what Frederick Lewis Allen did with both the 1920s and the 1930s. (Presumably he had another source of income while waiting for the decade to end.) I imagine him being rather wry and detached in life, for how else could he have read the news so diligently and so dispassionately? The vast majority of nonfiction books from a given year will seem irremediably dated 50 years later; and even the most cultured usually bear the marks of their epoch. Allen, however, managed to write about his own time as if it were already long gone. It is a remarkable talent. True, this volume might not hold up as well as his book on the 1920s. But that is mostly because the 1920s were simply more fun, while the economic catastrophe of the 1930s has attracted so much analysis that Allen’s book could hardly have been the definitive version. Even so, unlike the weightier tomes written in years gone by about the Dust Bowl and the Great Depression, this one is enlivened by the sense of close proximity, and the uncertainty about how the crisis was going to end. ...more |
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| 1541736184
| 9781541736184
| 1541736184
| 4.04
| 8,777
| Jun 09, 2020
| Jun 09, 2020
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liked it
| Deficits can be used for good or evil. Robert Skidelsky, in his enormous biography of Keynes, remarks that economics today occupies the same positi Deficits can be used for good or evil. Robert Skidelsky, in his enormous biography of Keynes, remarks that economics today occupies the same position as theology did in the Middle Ages—as a complex a priori logic that can be used to reach any number of contradictory conclusions. The more I read in the subject, the more I agree with him. To be taken seriously in politics means being able to use this logic. And yet, despite the seemingly scientific nature of this language, we seem hardly better able to pinpoint the nature of economic reality than the scholastics were able to count the angels. I am exaggerating, of course. But I am a little distressed to find that, according to Stephanie Kelton, most economists and politicians—who already disagree with one another—are still fundamentally wrong about money, taxes, fiscal policy, and government debt. Here is another perspective to add to the mix: Modern Monetary Theory, or MMT. Kelton begins the book by taking a page right out of David Graeber’s history of debt. Money was not invented, as so often supposed, to solve the problems of a barter economy. Instead, money and taxes go hand in hand. The argument goes like this: If you introduce a currency into a fully functioning credit economy (where people just keep track of what is owed to one another), then there is little reason why people would adopt it. But if you institute a tax payable only in this currency, and threaten punishment for non-payment, then suddenly everyone must find a way to acquire the new currency, and this means doing some work for the state. In other words, governments introduced taxes, not to collect money (which it was producing anyway) but to compel work. And Kelton argues that this is still true today: that governments do not depend on taxes. She uses the example of a scorekeeper in a board game. The scorekeeper adds and subtracts points for other players, but they are never in need of points for themselves. Points are simply willed into existence whenever needed. Kelton argues that the US government (and other governments with what she calls “monetary sovereignty”) is in essentially the same position with regard to the US dollar. Since we use a fiat currency, any number of dollars can be willed into existence. Thus, the government does not depend on tax revenue, any more than a scorekeeper must subtract points from other players in order to stay afloat. In short, we do not have to worry about the deficit, since government debt is nothing like the debt you or I may owe. Does that mean that the government can just spend infinite money? No, Kelton says: though the deficit is not a problem, inflation may be. Too much government spending may lead to too many dollars chasing too few resources, which can cause prices to rise. Does that mean that taxes are unnecessary? Also no, according to Kelton, since, apart from compelling work, taxes perform at least two important functions. First, they remove money from circulating, thus decreasing inflationary pressure; and second, they reduce inequality, which leads to a healthier society. Yet if the government cannot spend infinitely, and if we still do need to tax, then what are we doing wrong? To answer that, Kelton next turns her attention to unemployment. Kelton notes that unemployment is built into our economy, largely via the policies of the Federal Reserve. The Fed aims for an arbitrary level of unemployment (say, 3%) which it considers the “natural” rate. Going below this natural rate would, it is feared, cause inflation to kick in, since demand would outpace supply. But this “natural” rate is little more than a guess, Kelton argues. Even when unemployment has been very low in recent years, inflation has remained low. Indeed, in this argument Kelton seems to have been prescient, since just in August the Fed decided to change its policy of lifting interest rates once employment hits a certain level, thus paving the way for more sustained employment growth. But Kelton has a fairly dim view of the prospects of using monetary policy to govern the economy. Instead, she thinks that unemployment should be directly eliminated using a Federal Jobs Guarantee. This is the main policy proposal of the book, and Kelton spends a good deal of time selling it. The advantages are compelling. Most obviously, unemployment is bad for people and communities, so it would be highly desirable to get rid of it. And a jobs guarantee would give workers more bargaining power, since the wage floor would rise (the jobs would pay a living wage) and the threat of losing work and health insurance would be eliminated. Still, I admit that I was not convinced. For one, even according to MMT’s own premises, the huge increase in aggregate demand—caused by increased federal spending, eliminating unemployment, and increasing wages across the board—could cause inflation. Kelton does not really address this potential pitfall. On a more practical level, I also have trouble imagining the logistics. Kelton describes a program that can employ anyone, anywhere, in socially meaningful jobs. But there is not necessarily the right amount of meaningful work in any given location, nor do the unemployed necessarily have the skills necessary to do this work (and re-training has its limits). I think that a substantial amount of make-work is inevitable in such a scheme. Furthermore, I can hardly contemplate the enormous bureaucracy that would be needed to administer such a program. It seems there would be just as many people making jobs as people needing jobs made for them. The job guarantee’s major policy rival, universal basic income (UBI), has none of these practical challenges (though of course it could cause inflation, too), since it is merely paid via the IRS. Admittedly, jobs do provide social and psychological benefits that an income does not. But Kelton does not discuss UBI at all, which I thought disappointing. At this point, the reader may be forgiven for wondering what is so new about MMT. After all, Paul Krugman—an orthodox Keynesian economist critical of MMT—has been writing for years about the mistake of thinking of the federal budget like a household budget, and the desirability of federal deficits in times of recession. The difference, so far as I understand it, brings us into dangerously wonky territory. Krugman avers that when we near full employment, a large deficit may require higher interest rates in order to avoid inflation. Kelton counters that our assumptions that low interest rates boost spending, and higher interest rates constrict spending, are actually incorrect. In other words, Krugman thinks that monetary policy can partly compensate for fiscal policy, while Kelton thinks that monetary policy is not particularly useful. I have little to add to this, other than to remark that I can never understand why these disputes—like theology—always take the form of high theoretical debates from first principles. It strikes me that the impact of monetary policy is an empirical question that could be answered with a careful look at the historical record. But what do I know? Well, I have done my best to elucidate this sacred mystery, but I ought to evaluate the book. Like many readers, I found the writing in this book extremely grating. The tone was somewhere between a salesperson and a televangelist—promising instant enlightenment and easy solutions—which immediately put me on edge. In fairness, when Kelton is not selling MMT but explaining it, the book can be quite fascinating. But Kelton’s insistence on treating MMT as blindingly true, and its enemies as either blinkered traditionalists or deceptive politicians, was not charming or effective. And the amount of repetition could even be condescending. By the time I reached the end, I really could not stand to hear another iteration of the central tenets of MMT. I got it the first couple times. Whatever the flaws of the book, and whether or not MMT is an accurate picture of how the economy works, it at least makes you think about how the deficit is treated in public discourse. Anyone who reads the news cannot help but notice that the swelling deficit is only invoked when we have to pay for, say, healthcare or infrastructure; but, somehow, when tax cuts to the wealthy or defense spending are on the table, nobody seems to worry. Even if the deficit presents more of a problem than Kelton believes, it is obvious that, if anything is worth going into debt for, it is programs that benefit the public, rather than bombs or yachts. I hope that followers of Keynes, MMT, Thomas Aquinas, and William of Ockham can at least agree with that. ...more |
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| Nov 12, 2019
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really liked it
| Economics is too important to be left to economists. After listening to a series of lectures on introductory economics, I was struck by the degree Economics is too important to be left to economists. After listening to a series of lectures on introductory economics, I was struck by the degree to which the basic logic of supply and demand was used to make sweeping pronouncements about human behavior and economic policy. The lecturer, starting from the premise that supply and demand is inexorable, would rule out certain policies as working against the market, while promoting those he considered ‘market-friendly.’ But rarely did he stop to actually examine a case study to see how these theories played out, leaving me with the impression of a wholly a priori logic. The central thrust of this book is that a priori logic cannot be trusted. The economy is complex and unpredictable, so the best way to understand it is through historical case studies and randomized control trials. The authors find that, when we examine the economy in such a way, many of our intuitions about how the it works or will respond to certain policies are wrong. Indeed, though this could hardly be called a revolutionary book—its tone is engaging but mostly academic—the two authors, Banerjee and Duflo, reach quite heterodox conclusions. One basic economic argument used against permissive immigration policies is that the increased supply of cheap labor will inevitably drive down wages, thus hurting native workers. The logic is simple but it does not hold up under the evidence. In case study after case study, immigration is shown to be either economically neutral or beneficial to native workers. Indeed, ironically—and contrary to what Trump and his ilk may say—low-skill immigrants are better for native workers than highly skilled ones, because they often take jobs that native workers do not want—jobs requiring little communication and much labor. Native workers may even benefit by being promoted to managerial roles. A multilingual immigrant doctor actually competes more directly with native workers than a monolingual immigrant fruit picker. Perhaps you can see that the above supply and demand argument against immigration is simplistic, since immigrants, apart from increasing the labor supply, also increase demand for goods. Indeed, most professional economists are decidedly in favor of migration. Workers have much to gain from moving to where their skills will be most highly rewarded; and businesses would gain from having good workers. But here the economists’ logic is shown to have its own flaw. Real workers are actually quite averse to migration. Banerjee and Duflo show that, even when a better job may just require move from the country to the city, most will simply not go. There is a large amount of inertia built into real people’s lives—the pull of family, friends, and familiarity—which works against even obviously beneficial moves. This is not the only way that the real economy is (in economic parlance) ‘sticky.’ Though economists imagine a world of workers ready to move and re-train, of companies willing to fire and hire, banks that drop bad investments and jump on promising new ones, firms willing to relocate to new countries with cheaper labor, new businesses popping up and inefficient ones disappearing—in a word, a dynamic world governed by shifting supply and demand—the real world is consistently stickier than this logic suggests. This seems particularly true in the developing world—the authors’ main area of study—where they found that efficient and inefficient businesses coexisted, where bad-selling product lines were retained, where banks merely rubber stamped loan applications from existing clients, and where people do not migrate for work, or even take the work that is available locally. Inhabitants of planet earth will likely not be surprised by all this. But the upshot, the authors argue, is that free trade does not deliver all that it promises. Now, the logic of free trade is simple and compelling, grounded in the law of Comparative Advantage put forward by David Ricardo. Simply put, this law states that we all will benefit from trade, since we can all specialize in what we are comparatively better at doing. But the logic has not exactly played out as hoped. Though touted as a way of propelling developing nations out of poverty, in practice free trade policies have a mixed record. The authors use the example of India, which transitioned from a highly-regulated economy with high tariffs to a free market with low tariffs in the 1990s. The result of this transition was hardly the economic wonder that some economists could have predicted. In many places, wages actually went down rather than up, and in subsequent years much of the economic growth has simply gone to the country’s rich. This is not to say that the results of economic liberalization were all bad, only that it was hardly the panacea that free-market advocates promised. The consequences for rich nations, like the United States, have also been mixed. While most economic transitions involve winners and losers, the shock of free trade has benefited those who were already ‘winning,’ and hurt those who were already ‘losing.’ In other words, while the big cities full of college-educated workers have grown richer, the arrival of cheap goods—mostly from China—has ravaged many blue-collar communities. Admittedly, the theory of Comparative Advantage does predict that free trade will temporarily hurt some workers who are forced to compete with cheaper goods from abroad. But the belief in economic adaptability (not to mention the political will to help assuage the problem) was overly optimistic. Even when jobs disappear, workers do not move. Many simply go on disability and leave the workforce entirely. In short, workers are sticky. Not only that, but the United States has been very bad at redistributing the gains of free trade in the form of worker retraining and extended unemployment. No wonder that many in the country are skeptical of the benefits. However, the authors are careful to note that the solution to this problem is not to impose new tariffs on China. This will only create further economic harm in other sectors (like agriculture) without remedying the harm already done. What is needed, the authors argue, are generous government programs to either re-train displaced workers, or to subsidize industries that are being driven out of business. This leads us to the longest and most theoretical chapter in this book, that on growth. The argument is fairly dry but the conclusion the authors reach is striking: we do not know what makes economies grow. The greatest years of economic growth were between the end of WWII and the 1970s. This was also a time dominated by Keynesian economics, which led many to give Keynes the credit for this economic miracle. But the magic wore off with the coming of stagflation, which the Keynesian seemed powerless to stave off. This crisis brought the managed economy into discredit, and ushered in the neoliberal revolution, where deregulation, lower taxation, and free trade were seen as the best tools to rejuvenate the economy. Unfortunately, that did not work, either, and growth has never picked up to pre 1970s levels. Instead, what has grown since the neoliberal turn has been inequality. Rather than stimulate the economy into mad activity, these policies have merely directed what modest economic growth there has been to the much-maligned top 1%. And their political influence has grown right along with their fortunes, which only reinforces the government’s tendency to embrace these sorts of ‘business-friendly’ policies. As usual, the economic logic used to argue in favor of these policies—that lower taxes on the rich will spur greater activity—is supported by a priori logic rather than actual evidence. But the evidence does not bear it out. People work just as hard whether they are being taxed at 30% or 70%, or not at all, as demonstrated by a series of tax holidays in Switzerland. The notion that high salaries reflect employee value (which supply and demand would predict) is also not supported, as demonstrated by the remarkably high wages paid to those who manage stock portfolios, which consistently underperform against index funds—meaning that the wages are essentially a rent for holding onto money. (And since the high salaries in finance influence salary negotiations in other industries, this increases salaries across the board.) A strange picture emerges from all this, a picture of an economic policy—at least in the United States—that is entirely divorced from reality. We wring our hands about immigration at a time when immigration is not going up, and even though immigrants pose no credible economic or cultural threat. We argue about tariffs but not about how to actually help those hurt by free trade policies. We cut taxes and deregulate businesses in the name of growth that never appears. Meanwhile, automation is likely to make many of these problems that much worse, and we persist in putting off any action related to the looming climate crisis. The current pandemic—and concomitant economic crisis—has only put this magical thinking into high relief. Perhaps the best thing to call it is free-market fundamentalism: the belief that the economy, acting on its own, will sort out all of our problems—from poverty to pandemic—without any government aid. Strangely, it is a faith held most ardently by those who see the least evidence for it: people who have been hit by the economic dislocation of free trade. Indeed, at just the time when inequality is rising, we have embraced a kind of social Darwinism that treats the economic pecking order as a perfect reflection of personal merit. This mentality, resting upon the assumption of an imagined economic mobility (which is even lower in the US than in the European Union), justifies both extreme poverty and extreme wealth, since both are ‘deserved.’ To the extent that anyone is held responsible for the situations, it is either outsiders like immigrants or minorities, or the government—not the wealthy. As Manny has suggested, the situation is rather reminiscent of the USSR in its final years. In both cases we have an economic philosophy based on a priori logic rather than evidence, and believed on the same grounds. As this philosophy fails to deliver, the country’s elites still do not publicly renounce it, but instead only increase their displays of fervor. Rather, entirely irrelevant factors—immigrants, minorities, nefarious citizens—are used to explain the lack of prosperity. Meanwhile, the rich line their already deep pockets while spouting the old egalitarian slogans. The result is a society gripped by nihilism, wherein the old ideals become barely-disguised lies by corrupt and incompetent leaders, and anger and hopelessness descend upon a country that senses it is going in the wrong direction but does not understand why. This may seem rather hyperbolic. But when you consider how bad things have gotten in the United States in the short time since the publication of this book, when it was already quite bad, then perhaps you can see the justification. If our economic logic is often misguided, and our policies either useless or worse, what do the authors suggest? Here is where I thought that the book was mostly lacking. Banerjee and Duflo are extremely heterodox when criticizing conventional economics, but are not nearly so bold in proposing solutions. Their general point, however, is that we ought to shift our focus away from trying to grow the economy—since we do not know how to do that anyway—and towards most justly distributing the resources we have now. High tax rates on the rich will help curb inequality without reducing effective incentives. Coordinated efforts between countries can help to reduce tax dodging, and enforcing anti-trust legislation will help curb corporate power. The authors have a fairly nuanced view of basic income. They think that basic income schemes work well in developing countries, where the poorest are mostly working a variety of temporary or seasonal jobs. But they do not think UBI would work in developed countries, because people have come to rely on jobs not only for income but for structure and even meaning in their lives. In studies, people who stop working do not tend to increase time socializing, or volunteering, or on hobbies; instead, most people end up just watching a lot of television—which does not increase happiness or well-being. This is why the authors prefer significantly stronger unemployment support—helping workers to retrain and relocate. This seemed somewhat timid to me. But perhaps it is misguided to seek bold, sweeping solutions from authors who insist on hewing to trial, experiment, and evidence. Hard-headed economists, the authors do not promise miracles. Yet if you are looking for a probing and insightful look at many of our current economic woes—now only exacerbated by the coronavirus recession—then this book is quite an excellent place to start. The most pressing point is that our economical problems have political solutions. As usual, the only thing we need is the political will to start acting. ...more |
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| 3.92
| 5,833
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| Apr 28, 1997
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really liked it
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Having read the official report on the 2008 financial crisis, I figured that I ought to learn something more about the greatest of all financial crise
Having read the official report on the 2008 financial crisis, I figured that I ought to learn something more about the greatest of all financial crises. This is an excellent place to start. Galbraith is quite a wonderful writer. His prose is witty, sardonic, and crisp—and he manages to wring a good deal of wry fun at the expense of the financial geniuses of the age: Despite a flattering supposition to the contrary, people come readily to terms with power. There is little reason to think that the power of the great bankers, while they were assumed to have it, was much resented. But as the ghosts of numerous tyrants, from Julius Caesar to Benito Mussolini will testify, people are very hard on those who, having had power, lose it or are destroyed. Then anger at past arrogance is joined with contempt for present weakness. For an economist, his explanation of the crisis is astonishingly straightforward. It was, in short, a comedy of all-too-human errors. Greed, cowardice, or pure stupidity blinded far too many as a speculative bubble was ceaselessly inflated, until it grew so large that its bursting sank the entire market. Regulators did not step in as investors came up with ever-more imaginative ways to make bigger and riskier bets, while gurus proclaimed the doctrine of infinitely expanding wealth. This book is pleasing, then, not for any special insights, but from Galbraith’s shrewd narration of how a generation of financiers sowed the wind, and reaped the whirlwind. Yet the book ends on an oddly deflating note. If the Great Crash of 1929 was just an extreme example of a speculative bubble formed through reckless investing, then why did it lead to ten years of the worst economic depression that the modern world had ever seen? After all, there have been many economic crashes, but nothing comparable to the Great Depression. This is all the more puzzling when one considers that only a small minority of the population were invested in the stock market. It was not as the situation was in, say, 2008, when a great many people had mortgages or retirement accounts tied to the market. On the contrary, the America of 1929 was still largely rural and agricultural. If anything, it would seem as though the 2008 crash should have led to a worse economic recession than the 1929 one. Galbraith offers many possible hypotheses for this. For one, since income inequality was far greater than it was when he wrote the book in 1955, it follows that it would indeed cause a large reduction in spending if the rich took a big hit. What is more, at least during Hoover’s presidency, the government did exactly the wrong things in order to remedy the situation—raising taxes and cutting spending. Galbraith also notes the widespread corruption of the 1920s economy, in which many businesses were fraudulent or otherwise mismanaged. The Smoot-Hawley tariff exacerbated an already bad balance of trade, provoked by the First World I and the Treaty of Versailles And of course there was no deposit insurance for banks, allowing runs which led many banks to close. However, all of these theories remind me of a remark by Bertrand Russell, that the multiplication of arguments can have the paradoxical result of weakening your point. If a colleague invited you to a birthday party, it would not strengthen your case to say that you have to give your mom a ride to the doctor’s office, and that you also have a migraine. Indeed, as I’m sure Galbraith would admit, the plethora of causes and theories is an indication that we still don’t fully understand why the Great Crash of 1929 resulted in the Great Depression. ...more |
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really liked it
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Except for the agricultural revolution, the industrial revolution is arguably the most transformative period in history—a time of unprecedented econom
Except for the agricultural revolution, the industrial revolution is arguably the most transformative period in history—a time of unprecedented economic and technological growth, which reshaped virtually every aspect of our lives. Strangely, however, far more time in school is usually devoted to the American and French Revolutions than the industrial one. Hoping to remedy this gap in my own education, I reached for this course. For a company with a business model that relies on different university professors to deliver dozens of lectures on diverse topics, the Great Courses does a great job in quality control. Virtually all of their lecturers are high quality, and Allitt is no exception. He has a warm, jolly voice with a sort of lilt that makes him easy to listen to. More importantly, he is knowledgeable, articulate, and intelligent. So this course is pleasant. I have more criticisms for Allitt’s choice of subject-matter. The early lectures, on the beginnings of industrialization, I thought were very well done. Allitt examines many different industries, explaining some of the new technologies and techniques that helped to usher in industrialization—ship-building, canals, coal-mining, textile manufacture, railroads. This, to me, what the meat of the course, where Allitt best accomplished his goal. But other sections fell flat for me. First, I was unsatisfied with Allitt’s explanation for why industrialization first emerged in England, and also why it emerged when it did. Curiously, the technology to create some of the earliest labor-saving machines did not rely on new scientific theories, new tools, or new materials, but were assembled by tinkerers using trial-and-error. It remains something of a mystery—to me at least—why it took so long for, say, the Spinning Jenny to be invented. Allitt is fairly good when it comes to the cultural reactions to industrialization, such as in art, politics, labor, economics, or society in general. But once Allitt moves past the early years of industrialization, I thought that the course quality declines. This is because he attempts to cover far too much in far too little space—the world wars, the rise of Asian economies, the information revolution, environmental issues. What is more, in these later lectures Allitt often substitutes superficial ‘great men’ narratives of industries for more detailed discussions of the technologies involved. While the life of, say, Andrew Carnegie is colorful, I would much rather learn about how steel is made and how it came to be used. I would most dissatisfied with Allitt’s treatment of environmental issues. He is fairly dismissive of environmental concerns, citing numerous cases in which new technologies or regulations solved environmental problems, such as air pollution. He seems to think that environmental problems will inevitably be solved through technological innovation, and is confident that the same will be true for global climate change (if it is, indeed, anthropological in origin!). Allitt is similarly sanguine on the subject of labor, seeing the harsh working conditions as something that will inevitably be solved through further economic development. In this, I would say he is in line with the Great Courses’ conservative tendency. But if you would like to learn about the first century of the industrial revolution, I would say that this course is an excellent and accessible resource. ...more |
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| 9,514
| May 22, 2018
| Apr 03, 2018
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really liked it
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I admit that I hardly paid attention to Andrew Yang during the primaries. I knew that he was for Universal Basic Income (UBI), but little else; and it
I admit that I hardly paid attention to Andrew Yang during the primaries. I knew that he was for Universal Basic Income (UBI), but little else; and it did not seem to matter, given his pole numbers. But during the economic fallout caused by the coronavirus lockdowns, UBI is starting to look all the more reasonable (especially after I received a direct deposit from the federal government!). So I decided that it was time to take a second look. This book could easily have been mushy pap—a boilerplate campaign book only published for publicity. Yang could have gone on and on about his good work in Venture for America, all the inspiring young people he met, all the businesses he helped grow, and all of the wonderful places he visited across America. He could have talked about his own story from first generation American to entrepreneur and politician. Some of that is in here, of course; but not nearly as much as one might expect. Instead, Yang has written a serious work on the problems facing America. Yang covers a remarkable amount of ground in this short book—video game addiction, the importance of malls in communities, the rising cost of universities—but his primary message is fairly simple: Automation is going to eliminate many millions of jobs, and we need to transform the economy accordingly. As someone with many friends in Silicon Valley, Yang speaks convincing on the subject of automation. An obvious example is self-driving cars. Once the technology becomes reliable enough, virtually all driving jobs are threatened. Considering the numbers of people whose work involves transporting either passengers or cargo, this alone can be dramatic. What would happen to all the taxi, bus, and truck drivers of the world? But according to Yang, self-driving cars would only be the beginning. While automation may call to mind robotic arms laboring in factories, white collar jobs are also liable to being automated. Chances are, if you work in an office, at least some of your work is rote and repetitive; and that means a computer could potentially do it, and do it far better than you can. While most of us are far removed from the world of artificial intelligence, those in the community routinely seem alarmed by the prospect of increasingly powerful A.I. Every year a new program accomplishes another “impossible” task, such as mastering the Chinese game Go. Yang even mentions computer-written symphonies and computer-generated artwork! (I was happy to note, however, that Yang did not seem to think teachers could be automated away.) This will result in still more intense economic stratification. Many parts of America have already hollowed out as a result of recent economic trends. Most of the country’s factories have closed, destroying some of the most well-compensated blue-collar jobs. The rise of online retail—only accelerated by the coronavirus crisis—threatens to permanently destroy much more employment. Of course, when some jobs are eliminated, other types of jobs come into being. But we cannot rely on this process to correct the imbalance—first, because automation destroys more jobs than it creates (think of the one trouble-shooter for every five self-checkout registers), and second, because the new jobs usually require different skills, and exist in different parts of the country. There are many proposed solutions in this book, but Yang’s signature idea is UBI. This would be a monthly payment of $1,000, or $12,000 a year, to every citizen over the age of 18; and it would be given a very patriotic name: the Freedom Dividend. Yang proposes to pay for this with a Value Added Tax (VAT) of 10%. (I was actually unaware of the difference between a VAT and a sales tax before reading this book, which is that a VAT must be paid at every step in the production process. This has the added advantage of taxing automated industries, since robots do not pay an income tax.) But the hefty price tag of UBI would also be partially compensated by the reduction or elimination of other government welfare programs. And, of course, if you put more money into the hands of consumers, most of them will spend rather than save it, and this will in turn increase tax revenue. One obvious objection to UBI is that, by giving money indiscriminately, we will inevitably be giving it to people who do not need it. The most apposite reply to this objection, for me, is that subjecting government assistance to means-testing creates a host of problems. For one, there is a great deal of cumbersome bureaucracy involved in determining whether a particular person ‘deserves’ aide—bureaucracy that would be rendered entirely redundant by UBI, since the checks can be sent out through the IRS. Indeed, this cumbersome bureaucracy only creates added waste, since many NGOs exist simply to help people navigate the complex government paperwork. Of every, say, $100 spent on welfare, what portion of that goes to those in need, and what portion to the paychecks of bureaucrats laboring to determine who gets the money and how they can spend it? Indiscriminate giving would also eliminate the pesky problem of disincentivizing work. At the moment, Republicans and Democrats are in a dispute over this very issue, as Republicans are arguing that the extra $600 of unemployment money (as part of the coronavirus aid package) will encourage people not to work. While some on the left disagree, personally I think this is a rather strong objection—not to giving people money, but to making the money conditional on not having a job. The same issue is present in many other sorts of government aid, such as disability payments, which cease as soon as the recipient becomes employed. If the money were unconditional, however, then people would have no disincentive to work; on the contrary, they would be able to substantially improve their economic situation by working, perhaps even making enough to start saving and investing. UBI, then, has potential appeal for both those on the left and on the right. Those on the left may like it because it is a way of redistributing wealth, while those on the right may like it since it is a way of shrinking the government. The latter statement might seem more far-fetched, but I do think that a solid, conservative case could be made for UBI. After all, Milton Friedman was quite an avid supporter of the concept, for a multitude of reasons: it shrinks government, it reduces government paternalism, it promotes both work and consumption, and it would avoid dividing people into different categories. This last point merits some comment. Presently, a great deal of anti-welfare rhetoric is concerned with parasitism—the idea that lazy people are simply ‘on the dole,’ dragging down the rest of society. It is the perfect recipe for shame and resentment, since inevitably it divides up society into groups of givers and takers; and even the best government bureaucracy in the world could not hope to distribute money in the fairest way possible. Inevitably, some people who ‘deserve’ aid will not get it; and others who do not ‘deserve’ it will—since no definition of ‘deserving’ will be perfect, and in any case there is no way of perfectly measuring how much somebody ‘deserves.’ UBI works against this psychology in a powerful way, by being entirely indiscriminate. Though the rich would be paying more in taxes than they receive back, they too would receive their monthly payment, and I think this fact alone would help create an added sense of social solidarity. UBI would be something shared by everyone, everywhere, rather than something that marks you out as being poor and dependent, a mark of stigma and shame. This strikes me as quite a positive thing in the age of dramatic political polarization. Another aspect of UBI that I find deeply appealing is that it will give people the freedom to pursue less well-remunerated, but more socially beneficial, work. As Yang points out, many of the most humanly important jobs—being a parent, an artist, or even an online book reviewer—are quite poorly compensated, if they are compensated at all. An economist might argue that this is justified, since the free market determines the value of work based on supply-and-demand. But I think that this logic will become less appealing as robots start to out-compete humans. Indeed, perhaps automation will erode our faith in the wisdom of markets and meritocracy, since it will be difficult to believe that a delivery drone is more deserving than a delivery driver, even if it gets more work done. There are, of course, many objections to UBI, one being that it will encourage widespread free-loading. But the evidence for this is quite weak. As Yang demonstrates, in the many UBI trials that have been conducted, work reduction was quite low, mostly taking place among new mothers. And as I mentioned above, our current welfare system arguably encourages free-loading far more effectively than UBI would, since UBI does not disincentive work. In any case, I think all of us—especially new mothers!—could do with a modest reduction in work hours, given the fact that study after study shows that long hours do not benefit productivity. Instead of having humans emulate work machines, then, it would be far better to automate as much work as possible—since machines never sleep, never eat, and never get sick—and focus on the remaining work which really does require a human touch. Yang addresses many other objections to UBI, and most of his arguments are convincing. I do have one nagging question, however, and it is this: If the purchasing power of the general population is increased across the board, will prices of food and housing correspondingly increase? Though I am economically naïve, it strikes me that this is bound to happen, at least somewhat; and this may partially offset the gains of UBI. But perhaps I am mistaken. Another question is whether automation will go as far as Yang predicts. I found most of his forecasts—particularly about self-driving vehicles—quite compelling. But it does seem possible that the affects will be less sweeping than Yang supposes. For example, I cannot imagine couples turning to an A.I. marriage counselor with the voice of Morgan Freeman, as Yang somewhat fancifully imagines. In any case, while Yang’s twin themes of automation and UBI are his central message, his book has far more to offer. I particularly appreciated his portrayal of the economic plight facing many parts of America, and the increasingly stark divide between those with and without a college degree. For example, I often find myself forgetting that the majority of American adults do not have degrees, if only because almost all of my friends and family have one. Considering how many jobs—including low-skilled jobs—require a degree, this is a major economic disadvantage nowadays. The fact that I can forget about this economic disadvantage is a measure of the degree to which different parts of the country are insulated from one another. And the university system is not helping to even the playing field. After all, most of the people who do obtain degrees are already from comparatively better-off families. The university system also does not add to economic diversification, since students are pursuing an increasingly narrow range of majors; and after college, most graduates move to one of a handful of large cities. The result is an increasingly stark economic divide between Americans with college degrees living in large cities, working in a shrinking number of industries, and those living in more rural areas, or hallowed out cities, without degrees. It is an inimical process. Yang also deserves credit for his mental flexibility. Besides UBI, this book contains a range of proposals, all of them quite new to me. Considering the degree to which political debate is dominated by decades-old proposals, I found this extremely refreshing. Admittedly, I do think that Yang’s Silicon Valley message failed to resonate with the voting public for a reason. While he has much to say about the future of America’s economy, he is less convincing on problems besetting many Americans now, most notably health care. Yang does favor a version of universal coverage, and he has some very intriguing things to say about how technology can change the role of the doctor, but I think it is fair to say that this was a minor part of his book. Yet if this book fails as political marketing, it succeeds in being both a thoughtful meditation on the problems facing the average American, and a set of bold proposals to address these problems. While so many politicians come across as blindly ideological, stupidly partisan, or simply as creatures of the political system, Yang is intelligent, imaginative, and unconventional. I hope that this is not the last we hear from him. ...more |
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| 0691192170
| 9780691192178
| 0691192170
| 4.31
| 508
| May 14, 2019
| May 14, 2019
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really liked it
| Mantras about the virtues of markets are no substitute for serious ethical convictions. There are a great many things for Americans to feel embarra Mantras about the virtues of markets are no substitute for serious ethical convictions. There are a great many things for Americans to feel embarrassed about. Depending on your politics, you may bemoan the rise of identity politics and the snowflake culture predominating on college campuses; or perhaps you rage against racist policing or our lax gun laws. But I think that, as Americans, we can all come together and feel a deep and lasting shame over our health care system—specifically, how we finance it. According to Reinhardt, our system is so bad that it is routinely invoked in international conferences as a kind of boogey man, an example of what to avoid. And after reading this book, it is easy to see why. I did not suspect that our system was quite so bad until I left the country. But, in retrospect, the evidence was quite apparent. Virtually all of my friends have expressed anxiety about their health care at some point—high premiums, high deductibles, or simply no health insurance at all. I have seen family members spend weeks negotiating with insurance companies for payment of their medicines (and even after the insurance chips in, the cost is still breathtaking). Meanwhile, in my five years here, I have yet to hear a single Spaniard express anxiety over how they will pay for a medicine or a medical procedure. Here, as in most of Europe, this type of anxiety is quite uncommon. The U.S. system fails on many different fronts. Most simply, there is coverage. Millions of Americans have no coverage, and millions more have inadequate coverage (such as many of my friends, whose deductibles are so high that they may as well not have insurance). Second is cost. Both medical procedures and medicines are significantly more expensive in the United States. For example, the drug Xarelto (for blood clots) costs $101 in Spain, $292 in the U.S. The average cost of an appendectomy is $2,003 in Spain, $15,930 in America. A third failure— closely related to cost—is waste. Our byzantine payment system requires doctors and hospitals to spend great amounts of time and money communicating with insurance companies, which of course costs money, which of course gets transferred to the consumer. But most fundamental failure is a failure of ethics. Or perhaps it is better to say a lack of ethical vision. As Reinhardt explains, while much of the debate on health care in America concerns itself with technicalities—risk pools, risk exposure, whether premiums should be actuarially fair or community-rated, etc.—this debate conceals the fact that we have yet to come to a consensus on the moral foundations of health care. Most of the world’s developed nations have established their systems on the presumption that health care is a social good. In the United States, on the other hand, we are sort of muddled, at times treating health care as if it is a commodity, and yet unwilling to face up to the implications of that choice—such as letting poor people die without treatment. Aside from the ethical issues involved, health care has many features that make it unlike a typical commodity, and thus poorly governed by supply-and-demand. If I want to buy a car, for example, typically I am not in a great rush to do so. I can shop around, test-drive cars, compare prices across companies and locations, and read reviews. I can even decide that I do not want to buy a car after all, and instead buy a train pass. All of this contributes to control the price of cars, and incentivizes car companies to give us the best value for our money. None of this is the case in our health care system. The demand is non-negotiable and, very often, time-sensitive. Furthermore, most patients lack the knowledge needed to evaluate what procedures or tests are justified or not, so oftentimes we cannot even be fully aware of our own ‘demand.’ Besides that, we have no ability to compare prices or to compare treatment efficacy. And even if we are careful to go to a hospital in our insurance network, there may be doctors ‘out of network’ working there, leading to the ugly phenomenon of surprise medical bills. Added together, it is as if the car salesman blindfolded me, put a gun to my head, told me I had to choose a car in five minutes, while he was the only source of information about what car I needed (and medical bills can be quite as expensive as cars!). This is the position of the American “consumer” of healthcare. My own brief experience with emergency medical care highlights the situation. The only time that I have ever been taken to an emergency room, I was unconscious. I woke up after being transported by the ambulance. Luckily, I was quickly discharged, and I also had insurance. But even though my insurance covered the hospital bill, it did not cover the ambulance, which I had to pay out of pocket. Again, I was lucky, since I was able to afford it. Many cannot, however, and have the experience of waking up from an accident, an injury, or an operation in debt. How can you be an intelligent consumer when you are unconscious? (Consider that 40% of Americans cannot afford a one-time $400 emergency payment; and my ambulance cost over twice that much.) The helplessness of the consumer creates a perverse incentive in our system. There is little downward pressure on prices. Instead, what results is a kind of arms race between health care providers and insurers. Insurers are incentivized to put up as many barriers as possible to paying out, which requires doctors and hospitals to invest ever-more resources into their billing departments, which of course only increases the cost to the patient. In many hospitals, there are more billing clerks than hospital beds; and when you realize that these billing clerks have their own counterparts in the insurance companies, you can get some idea of the enormous bloat created by our financing system. I think there is a particular irony to this situation, since our American insistence on market values has created a labyrinthine network of incomprehensible rules, endless paperwork, and legions of bureaucrats—the very thing that capitalist principles were supposed to eliminate. Indeed, ironies abound in our system. For example, we endlessly discuss the affordability of government programs, while the tax incentives for employment-based insurance (which costs the federal and state governments an annual $300 billion in foregone revenues) is never mentioned. What is more, while the insurance mandates of Obamacare were roundly criticized as forcing the healthy to subsidize the unhealthy, as Reinhardt points out, the exact same thing occurs in insurance-based healthcare. And as a final irony: It is fair to ask why, if socialized medicine is so bad, Americans for almost a century now have preserved precisely that construct for their military Veterans, and, indeed, why the latter are so defensive and protective of that socialized medicine system. After reading this review, you may be excused for thinking that this book is a fiery manifesto about the evils of the system. Far from it. Uwe Reinhardt was a prominent economist and much of this book consists of tables and graphs. The writing is, if anything, on the dry side, and the tone is one of intellectual criticism rather than passionate outrage. Yet, strangely, this is why I found the book so effective. It is one thing for an arm-swinging socialist to condemn the evils of the system, but quite another for a calm economist to go through the data, point by point, and explain how it all works and how it compares with other countries’ performance. You may also be excused for thinking that, given all this, Reinhardt would be an advocate for a single-payer system in the United States. After all, he was one of the architects of Taiwan’s single-payer system, which costs about 6% of the country’s GDP. (For comparison, America’s system costs us 17% of GDP!) But Reinhardt thinks that such a system would not work on American soil. For one, the libertarian streak in our culture runs too deep for such a system to be broadly acceptable. More importantly, however, Reinhardt thinks that our campaign finance system is so corrupt that the health care lobby would be able to exert a heavy influence on the government, thus canceling the benefit. He instead advocates for an ‘all-payer’ system. The idea is to consolidate the market power of consumers by having standard prices set either by the government, or by associations of care providers and insurers. This would, at the very least, avoid the wild price variability that can be found in even a single city in the United States. It also helps to bring costs down, as demonstrated in Maryland, which has had an all-payer system for quite a while. Japan’s system is also established on this principle, and spends far less money per capita on its health care system, despite having a significantly older population than the United States. In normal times, I was not exactly optimistic about the prospect of reforming out broken health care system. But in the wake of this pandemic, it does seem as if major reforms might not only be possible, but inevitable. Employment-based insurance makes little sense if people lose their jobs during a major health crisis, as has already happened to many millions of Americans. And high unemployment may persist for some time. What is more, a major health crisis, resulting in many thousands of additional hospital stays, will put pressure on private insurance firms and lead to a significant rise in insurance premiums. Basically, higher-risk patients create higher cost, and a pandemic puts far more people into the high-risk category. The greater strain on an already teetering system may be the proverbial straw on the camel’s back. We shall see. ...more |
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May 22, 2020
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May 18, 2020
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| 9781594201820
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| 4.03
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| 4.08
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| Jul 08, 2013
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really liked it
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Capitalism is one of those words that is thrown about so often that it seems to lose all meaning. It is given credit for all the good in society, and
Capitalism is one of those words that is thrown about so often that it seems to lose all meaning. It is given credit for all the good in society, and blamed for all the bad. Meanwhile, nobody seems to agree on what it is, exactly, or how it works, or how it is supposed to work. Even the experts seem to have quite radically different takes on the matter. This is what makes an intellectual history of capitalism so valuable: it can help to give context and substance to arguments that, all too often, lack both. Muller is an admirable guide for this historical tour. He is eloquent and intelligent, and more importantly he is broad and flexible. In this series he must summarize and engage with ideas from economics, sociology, and cultural criticism, across a long historical range and the complete ideological spectrum. It is difficult to do justice both to the ideas of Adam Smith and Herbert Marcuse; and Muller does this and more. It is a valuable work of scholarly popularization. Any survey course requires selection, of course; and any selection is open to accusations of bias. I think it is fair to say that Muller’s selection shows his interest in the conservative tradition. Thus we get lectures on Edmund Burke, Justus Möser, Matthew Arnold, and lots of Friedrich Hayek and Joseph Schumpeter. Prominent leftist thinkers, such as Althusser or Gramsci, are not even mentioned. And even fundamental economic thinkers—Ricardo and Malthus, most notably—are largely passed over, while John Maynard Keynes is not examined in much detail. Muller is clearly most interested in perspectives on capitalism from the right. This bias notwithstanding, these lectures do offer the listener much to contemplate. What is most striking, perhaps, is that reservations about, and criticisms of, capitalism have come from every point on the political spectrum. While Marx was vilifying capitalism for degrading work and alienating people from their labor, conservatives were bemoaning the breakdown of traditional hierarchies and values, and even those at the center were uttering warnings about how political pressures could compromise the proper functioning of the market. Muller is particularly interested in the thinkers who examined the ways that capitalism can affect the individuals in society, whether it is Max Weber with his Protestant Ethic, Marcuse with his one-dimensional man, or Daniel Bell with his worries of the cultural contradictions of capitalism. Clearly, whatever capitalism is, it shapes every aspect of our lives. But does it make us richer or poorer? More or less free? Wiser or more foolish? The thinkers in these lectures present compelling arguments for all of the above alternatives. For my part, I think that there are no tempting alternatives for a free market system when it comes to producing wealth. And yet, there are very few among us—conservatives, moderates, and leftists alike—who would wish to live in a world governed by an unregulated free market. Where people disagree is mostly on how to harness the market, not on whether to have one at all. And of course the answer to this question will depend on your own biases. ...more |
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Mar 10, 2020
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| 9781598031287
| 1598031287
| unknown
| 4.14
| 527
| 1994
| Jan 01, 2005
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really liked it
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Economics is one subject that causes me perpetual unease. Everybody cares about the economy, of course, and everybody argues about how it should be st
Economics is one subject that causes me perpetual unease. Everybody cares about the economy, of course, and everybody argues about how it should be structured and managed. Imposing terminology is thrown around, graphs and statistics are wheeled out, and yet the situation always seems quite unclear to me. So I was pleased when Timothy Taylor framed his lectures, not as the gospel truth of economics, but as an introduction to the language of economics. Learning this language is essential if you would like to take part in this endless societal argument. Considering the restraints of time and of format, I think that Taylor deserves praise for these lectures. In 18 hours, he manages to cover all of the major topics of micro- and macro-economics—supply and demand, price curves, government regulation, fiscal policy, etc.—in an accessible but not overly simplistic style. Further, Taylor is an engaging speaker whose enthusiasm for a potentially dreary subject helps to alleviate the dryness. Someone has got to get excited about interest rates, I suppose. A major shortcoming of these lectures is that they were recorded in 2005, just before the enormous financial crash. Surely, a new edition is called for. Considering how much time has passed, however, I think that these lectures have held up remarkably well. For the most part, the major disagreements and issues in economics do not seem to have changed very much. Everything is here—healthcare costs, financial crashes, trade wars, deficits—which is probably not a reason to celebrate. If Taylor can be criticized, I think it should be for inserting too many of his own views into these lectures. Some degree of editorializing is inevitable in any academic course, I think. But Taylor is quite an opinionated guide, and never hesitates to advocate for his pet policies. Admittedly this did make the lectures more interesting; but it also undermined Taylor’s insistence that economics is merely a way of thinking rather than a specific doctrine. To the contrary, these lectures contain very specific presumptions about and prescriptions for a successful society (hint: it is all about a free market). Speaking more generally, it is frustrating for me the degree to which the social sciences inhabit parallel worlds. Not only do anthropology, psychology, and economics study different sorts of phenomena, but they make very different assumptions about human behavior—which often contradict one another. I was acutely aware of this while listening to these lectures, since I was concurrently reading psychologist Daniel Kahneman’s Thinking, Fast and Slow, which argues that the rational agent model of economic actors is fundamentally flawed. Meanwhile, my brother is reading anthropologist David Graebner’s book about the many different (not capitalist) forms that economic activity has taken throughout time and across space. Compared to psychology and anthropology, economics can seem worrisomely abstract to me—too content to rest its conclusions on untested assumptions and a priori principles. In these lectures, for example, I would have appreciated more case studies of historical examples in lieu of theoretical explanations. This would have illustrated the concepts’ usefulness far more effectively, I think. But I am drifting off topic. As a painless introduction to economics, these lectures do an admirable job. It is a fascinating discipline with much to teach us. I am glad to have a break for now, though. A dismal science indeed. ...more |
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Feb 06, 2020
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| 9781933633862
| 1933633867
| 4.21
| 23,535
| Jul 12, 2011
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really liked it
| For a very long time, the intellectual consensus has been that we can no longer ask Great Questions. Increasingly, it’s looking like we have no oth For a very long time, the intellectual consensus has been that we can no longer ask Great Questions. Increasingly, it’s looking like we have no other choice. Three years ago, I went on vacation in the north of Spain, to the city of A Coruña. There, perched on the jagged rocks below the Roman lighthouse, I read Oswald Spengler’s Decline of the West. The crashing sound of ocean waves just seemed an appropriate accompaniment to Spengler’s grandiose attempt to analyze all of human history. At it happened, I ended up reading David Graeber’s Debt in the exact same circumstances. And perhaps this coincidence highlighted the odd similarities between Graeber’s book and Spengler’s. On the surface, the two men are quite radically opposed: Spengler is mystical, conservative, and mainly preoccupied with ‘high culture,’ while Graeber is conversational, leftist, and usually focused on more humdrum human affairs. But both The Decline of the West and Debt are sweeping scholarly exercises which attempt to completely alter our view of history. As a consequence, the books have similar merits—a large perspective, unusual connections, an original angle—while suffering from the same basic weakness: the attempt to strap history into a Procrustean bed. But I am getting ahead of myself, as I should explain what this book is about. Graeber set out to write about debt, partly as a response to the 2008 financial crash, but also to respond to a certain moral confusion he noticed in the general culture. This is the notion that one always ought to ‘pay one’s debts.’ Most of us, I suspect, would agree that this is the right and proper thing to do. But there are many cases in which debt can be morally questionable. Consider a man who had an unexpected heart attack and was taken to a hospital out of his insurance network, or a young student who took out college loans but then had to drop out because her father had a heart attack, or a family who had agreed to a predatory mortgage for a house that the bank knew they could not afford, or a poor country forced to adopt austerity policies by the IMF in order to pay their debts to richer countries—in any of these cases, is it moral to pay one’s debts? As Graeber points out, standard economic theory does not hold that all debts must be repaid. Rather, both the lender and the debtor enter into an arrangement with a certain amount of risk. The loan is, in a sense, an investment like buying stock, and may or may not yield money according to the fortunes of the debtor. But this is not how we typically treat debt. Bolstered by our moral sense that debts should be paid, we accept a moral lopsidedness in the relationship, giving lenders quite extraordinary powers (garnishing wages, confiscating property) to extract money from debtors. Yet Graeber is not an economist, and does not want to restore a balance to the arrangement. Rather, he is disturbed by the very concept of debt. For what sets debt apart from an obligation is that it can be precisely quantified. This means debts require a system of money. This leads Graeber to examine the origins of money, which for me was easily the strongest section of the book. Most economist textbooks explain money by pointing out that money solves the problem of a double coincidence of wants. That is, if I have some extra boots, and I would like to trade them for some beer, it is quite possible the brewer already has all the boots he needs. But if I can sell the boots for money, and the brewer accepts cash payments, then we are in business. The problem with this story is that there is no historical evidence that such a thing happened. Indeed, this hypothetical situation is rather bizarre—essentially taking a world very much like our own, and then removing the money. Instead, it appears from the historical record that credit systems developed before actual money. These could be formal or quite informal. As an example of the latter, imagine you are living in a small village. One day, you see your neighbor wearing a nice pair of boots, and you ask if he has any extras. He does, and offers them to you as a gift. Next month, you make a big brew of beer and then give him a jug of it, offering it as a gift. The key is that, using such a credit system, you effectively get around the double coincidence of wants, since there is a very good chance that you will eventually have something your neighbor wants, and vice versa. This is just one informal example of how such a credit system could work with ‘virtual money.’ Graeber, being an anthropologist, is full of fun examples of exchange practices from around the world, all of which fly in the face of our idealized notions of purely economic transactions. After quite effectively demolishing what Graeber calls the ‘myth of barter,’ he embarks on a grand tour of history. And here is where the book fell off the rails for me. Now, this is not to say I did not enjoy the ride: Graeber is an engaging writer and is full of fascinating factoids and radical notions. But I was constantly bugged by the sensation that either I was misunderstanding Graeber, or that he was not proving what he thought he was proving. To give you a smattering of Graeber’s points, he argues that the use of coinage influenced ancient Greek philosophers’ concepts of matter, that religions emphasizing selfless charity arose in reactions to markets emphasizing selfish acquisition, that our notions of property derive through Roman law from slavery, that money was actually introduced by kings who used it to debt-finance wars, and that the Spanish conquistadores were driven to commit such atrocities because they were in debt. As you can see, that is an awful lot of material to cover; and this is just a sample. Each of these arguments is, in my opinion, quite interesting (if not always convincing). But, again, I was always unsure as to the larger point that Graeber was trying to make. On the one hand, Graeber seemed to be saying that money and debt are inextricably bound up in an ugly history of violence; but on the other, Graeber demonstrates that debt financing is a remarkably old and persistent practice, and is partly responsible for what we (pretentiously) call ‘civilization.’ At the end of the book, Graeber states that his purpose was to give his readers a wider taste of what is possible, so that we can reimagine our society. However, one of Graeber’s main insights is that history is cyclical: alternating from periods of hard money (like precious metals) and virtual money (like IOUs and fiat currency)—though both of these systems involve debt. If anything, then, this book left me with the impression that debt is an inescapable part of life. Allow me, if you please, to mention one of my pet peeves here. Graeber is a big fan of etymologies. This book is peppered with words and their unexpected origins, which Graeber often uses as evidence in his arguments. In my opinion, this is a very lazy and unconvincing way of arguing. Do not misunderstand me: I like a good etymology as much as anyone. But the fact that a word once meant one thing and now means another does not, in my opinion, prove that these two concepts are somehow secretly connected. I would have much preferred more detailed examinations of historical evidence; but Graeber actually goes out of his way in the afterward to criticize historians for being overly empirical. This is not a message I can get behind. But enough of that. I am sorry to be writing even a moderately critical review in the wake of Graeber’s tragic passing. For all of this book’s (perceived) faults, I am very glad to have read it. Like Spengler, Graeber had a mind full of fire, and was always letting off sparks in every direction. He was, in advertising parlance, an idea man; and this book is full of bold new ways of seeing our past and present. And even if Graeber’s grand theories about society and history do not, ultimately, pan out, one can say of Graeber what Walter Pater said of aesthetic theorists: Many attempts have been made by writers on art and poetry to define beauty in the abstract, and express it in the most general terms, to find a universal formula for it. The value of these attempts has most often been in the suggestive and penetrating things said by the way....more |
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| Oct 25, 2011
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it was amazing
| Nothing in life is as important as you think it is when you are thinking about it. I think this book is mistitled. For years, I assumed that it was Nothing in life is as important as you think it is when you are thinking about it. I think this book is mistitled. For years, I assumed that it was some kind of self-help book about when to trust your gut and when to trust your head, and thus I put off reading it. But Thinking, Fast and Slow is nothing of the sort. As I finally discovered when the book was gifted to me (the ecstatic blurbs in the front pages were the first clue), this book is the summary of Daniel Kahneman’s study of cognitive errors. The book should probably be called: Thinking, Just Not Very Well. Granted, my initial impression had a grain of truth. Kahneman’s main focus is on what we sometimes call our gut. This is the “fast thinking” of the title, otherwise known as our intuition. Unlike many books on the market, which describe the wonders of human intuition and judgment, Kahneman’s primary focus was on how our intuition can systematically fail to draw correct conclusions. So you might say that this is a book about all of the reasons you should distrust your gut. Every researcher of the mind seems to divide it up into different hypothetical entities. For Freud it was the conscious and unconscious, while for Kahneman there are simply System 1 and System 2. The former is responsible for fast thinking—intuition, gut feelings—and the second is responsible for slow thinking—deliberative thought, using your head. System 2, while admirably thorough and logical, is also effortful and sluggish. Trying any unfamiliar mental task (such as mental arithmetic) can convince you of this. Thus, we must rely on our fast-acting System 1 for most of any given day. System 1 generates answers to questions without any experience of conscious deliberation. Most often these answers are reasonable, such as when answering the question “What you like a hamburger?” (Answer: yes). But, as Kahneman demonstrates, there are many situations in which the answer that springs suddenly to mind is demonstrably false. This would not be a problem if our conscious System 2 detected these falsehoods. Yet our default position is to simply go with our intuition unless we have a strong reason to believe our intuition is misleading. Unfortunately, the brain has no warning system to tell you that your gut feeling is apt to be unreliable. You can call these sorts of situations “cognitive illusions.” A common theme in these cognitive illusions is a failure of our intuition to deal with statistical information. We are good at thinking in terms of causes and comparisons, but situations involving chance throw us off. As an example, imagine a man who is shy, quiet, and orderly. Is he more likely to be a librarian or a farmer? Now consider the answer that springs to mind (librarian, I assume): how was it generated? Your mind compared the description to the stereotype of a librarian, and made the judgment. But this judgment did not take into account the fact that there are many times more farmers than male librarians. Another example of this failure of intuition is the mind’s tendency to generate causal stories to explain random statistical noise. A famous example of this is the “hot hand” in basketball: interpreting a streak of successful shots as due to the player being especially focused, rather than simply as a result a luck. (Although subsequent research has shown that there was something to the idea, after all. So maybe we should not lament too much about our intuitions!) Another well-known example is the tendency for traders to attribute their success or failure in the stock market to skill, while Kahneman demonstrated that the rankings of a group of traders from year to year had no correlation at all. The basic point is that we are generally hesitant to attribute something to chance, and instead invent causal stories that “explain” the variation. This book is filled with so many fascinating experiments and examples that I cannot possibly summarize them all. Suffice to say that the results are convincing, not only because of the weight of evidence, but mainly because Kahneman is usually able to demonstrate the principle at work on the reader. Our intuitive reactions are remarkably similar, apparently, and I found that I normally reacted to his questions in the way that he predicted. If you are apt to believe that you are a rational person (as I am) it can be quite depressing. After establishing the groundwork, Kahneman sets his sights on the neighboring discipline of economics. Conventional economic theory presupposes rational actors who are able to weigh risks and to act in accordance with their desires. But, as Kahneman found, this does hold with actual people. Not only do real humans act irrationally, but real humans deviate from the expected predictions of the rational agent model systematically. This means that we humans are (to borrow a phrase from another book in this vein) predictably irrational. Our folly is consistent. One major finding is that people are loss-averse. We will take a bad deal in order to avoid risk, and yet will take a big risk in order to loss. This behavior seems to be motivated by an intense fear of regret, and it is the cause of a certain amount of conservatism, not only in economics, but in life. If an action turns out badly, we tend to regret it more of it was an exceptional rather than a routine act (picking up a hitchhiker rather than driving to work, for example), and so people shy away from abnormal options that carry uncertainty. Yet, logically speaking, there is no reason to regret a special action more than a customary one, just as there is no reason to weigh losses so much more heavily than gains. Of course, there is good evolutionary logic for these tendencies. In a dangerous environment, losing a gamble could mean losing your life, so it is best to stay to the tried-and-true. But in an economic context, this strategy is not usually optimal. The last section of the book was the most interesting of all, at least from a philosophical perspective. Kahneman investigates how our memories systematically misrepresent our experiences, which can cause a huge divergence between experienced happiness and remembered joy. Basically, when it comes to memory, intensity matters more than duration, and the peaks and ends of experiences matter more than their averages. The same applies with pain: We may remember one experience as less painful than another just because the pain was mild when it ended. And yet, in terms of measured pain per minute, the first experience may actually have included more experiential suffering. As a result of this, our evaluations of life satisfaction can often have very little to do with our real, experiential well being. This presents us with something of a paradox, since we often do things, not for how much joy they will bring us in the moment, but for the nice memory they will create. Think about this: How much money would you spend on a vacation if you knew that every trace of the experience would be wiped out as soon as the vacation ended, including photos and even your memories? The answer for most people is not much, if anything at all. This is why so many people (myself included) frantically take photos on their vacations: the vacation is oriented toward a future remembering-self. But perhaps it is just as well that humans were made this way. If I made my decisions based on what was most pleasant to do in the moment, I doubt I would have made my way through Kant. This is just a short summary of the book, which certainly does not do justice to the richness of Kahneman’s many insights, examples, and arguments. What can I possibly add? Well, I think I should begin with my few criticisms. Now, it is always possible to criticize the details of psychological experiments—they are artificial, they mainly use college students, etc. But considering the logistical restraints of doing research, I thought that Kahneman’s experiments were all quite expertly done, with the relevant variables controlled and additional work performed to check for competing explanations. So I cannot fault this. What bothered me, rather, was that Kahneman was profuse in diagnosing cognitive errors, but somewhat reticent when it came to the practical ramifications of these conclusions, or to strategies to mitigate these errors. He does offer some consequences and suggestions, but these are few and far between. Of course, doing this is not his job, so perhaps it is unfair to expect anything of the kind from Kahneman. Still, if anyone is equipped to help us deal with our mental quagmires, he is the man. This is a slight criticism. A more serious shortcoming was that his model of the mind fails to account for a ubiquitous experience: boredom. According to Kahneman’s rough sketch, System 1 is pleased by familiarity, and System 2 is only activated (begrudgingly, and without much relish) for unfamiliar challenges. Yet there are times when familiarity can be crushing and when novel challenges can be wonderfully refreshing. The situation must be more subtle: I would guess that we are most happy with moderately challenging tasks that take place against a familiar background. In any case, I think that Kahneman overstated our intellectual laziness. Pop psychology—if this book can be put under that category—is a genre I dip into occasionally. Though there is a lot of divergence in emphasis and terminology, the consensus is arguably more striking. Most authors seem to agree that our conscious mind is rather impotent compared to all of the subconscious control exerted by our brains. Kahneman’s work in the realm of judgments closely parallels Johathan Haidt’s work in morals: that our conscious mind mostly just passively accepts verdicts handed up from our mental netherworld. Indeed, arguably this was Freud’s fundamental message, too. Yet it is so contrary to all of our conscious experiences (as, indeed, it must be) that it still manages to be slightly disturbing. Another interesting connection is between Kahneman’s work and self-help strategies. It struck me that these cognitive errors are quite directly related to Cognitive Behavioral Therapy, which largely consists of getting patients to spot their own mental distortions (most of which are due to our mind’s weakness with statistics) and correct them. And Kahneman’s work on experiential and remembered well being has obvious relevance to the mindfulness movement—strategies for switching our attention from our remembering to our experiencing “self.” As you can see from these connections, Kahneman’s research is awfully rich. Though perhaps not as amazing as the blurbs would have you believe, I cannot help but conclude that this is a thoroughly excellent book. Kahneman gathers many different strands of research together into a satisfying whole. Who would have thought that a book about all the ways that I am foolish would make me feel so wise? ...more |
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| 4.03
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| May 2018
| May 15, 2018
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it was amazing
| Economies around the world have, increasingly, become vast engines for producing nonsense. Reading this was cathartic. Like so many people, I, too, Economies around the world have, increasingly, become vast engines for producing nonsense. Reading this was cathartic. Like so many people, I, too, have experienced the suffering that is a useless job—a job that not only lacks any real benefit to society, but which also does not even benefit the company. (Lucky for me, I am now a teacher, which, for all its unpleasant aspects, almost never feels useless.) Even though I got a lot of reading and writing done on the job, the feeling of total futility eventually drove me half-crazy. So it felt liberating to read an entire book about this phenomenon. But let me take a step back and explain the book. In 2013 Graeber published an article in STRIKE! magazine (a fairly obscure publication) about bullshit jobs, and it immediately went viral. This book is basically an articulation, elaboration, and defense of the points in that short article. Graeber notes that Keynes predicted the rise of automation to cause a startling reduction in the work-week. Yet this has not occurred. Many economists explain this by pointing to the rise of the so-called “service” industry. But this would seem to imply that we have switched from factory-work to making lattes for one another, or giving each other massages. As Graeber shows, this is hardly the case: the number of people in such jobs has remained fairly constant. What has grown, rather, is a vast edifice of managerial and administrative work. Anyone familiar with the academic world will instantly recognize this. Universities have come to be dominated by a top-heavy administrative structure, and faculty have been forced to spend ever-increasing amounts of time on bureaucratic nonsense. The same is true in the medical field, or so I hear. Really, the story is the same everywhere: an increasingly arcane hierarchy of administrators, leading to byzantine networks of paperwork—all of it ostensibly for improving quality, and yet manifestly distracting from the real work. This kind of ritualistic box-ticking is only one of the types of bullshit jobs that Graeber investigates. Also included are flunkies (subordinates whose only role is to make superiors feel important), goons (jobs which arise from a kind of arms race, such as marketing agents or corporate lawyers), and duct tapers (who are hired to patch over an easily-fixed problem). Obviously, one could argue all day about the typology of useless jobs. One could also argue about which jobs, if any, are useless. It must be said that Graeber’s reliance on the subjective experience of his informants does introduce a worrisome element of capricious judgment. Besides this, some might say that the free market can never give rise to useless jobs, since such things would be obviously detrimental to a company’s profits. But one need only read through the many testimonies collected by Graeber to be convinced that, yes, some jobs really ought not to exist. According to surveys, around 40% of workers report that they believe their own jobs to be useless—so useless that they could vanish tomorrow without anyone minding. To pick just one of Graeber’s examples: a man works for a subcontractor of a subcontractor of a contractor for the German military, whose job is to fill out the paperwork necessary to allow somebody to move their desk from one room to another room. I do not think this is necessary. But this raises the obvious question: If so many jobs are really useless, why do they exist? One might understand this happening in the government, but this is precisely the sort of thing that the private sector should be immune from. Well, Graeber is an anthropologist, not an economist, and so his explanations are social and cultural. He cites several factors. There is a huge amount of political pressure, from the left and the right, to create more jobs. This is natural, since being out of work means being poor, or worse. More than that, we have culturally internalized the institution of “work” to the extent that our jobs are the primary source of meaning in many people’s lives, even if they ultimately are disagreeable. Indeed, Graeber believes it is just the unpleasantness of work that makes it a source of value in our culture, as it becomes a type of ennobling suffering. Graeber also notes the usefulness of useless jobs to the upper classes. For one, they keep people endlessly busy; and, what is more, well-paying, white-collar jobs—even useless ones—make their holders identify with the interests of the upper class. The economy then becomes a kind of engine for distributing favors and resources down an elaborate chain of command. Graeber coins the term “managerial feudalism” for this arrangement: the return of the medieval obsession with ranks mirrored by the modern penchant for inflated job titles. Now, my brief summary does not do justice to Graeber’s writing. Nevertheless, it is here where one wishes most for an economist to contribute to the argument. For even if there are forces countervailing the pressures of profit, the economy is still running on manifestly capitalist lines. So how could a sort of inefficient feudalism exist in this context? Another point that Graeber examines is the relative pay of people with useful and useless employment. The obvious trend is that jobs which have undeniable social value—like nurses and teachers—are paid less, while jobs that have questionable or even negative social value—such as “creative vice presidents” and corporate lobbyists—are richly rewarded. I do not think you need to be an idealist to see this situation as undesirable. Graeber explains this tendency by analyzing the culture of work (specifically, that useful employment is supposed to be its own reward, while useless employment requires incentives), but again one craves an economic explanation. (This, by the way, is one of the frustrations of social science: that the different disciplines operate with incompatibly different premises and methodologies.) For my part, my own experience, combined with the many testimonies and statistics in this book, is enough to convince me that some jobs are really bullshit—even from the limited standpoint of a company’s profit. And I think that Graeber may be correct in searching for a cultural and political, rather than a strictly “economic,” explanation. After all, we humans are not exactly renowned for our rational economies. But I do think he may have underestimated the role that corporate mergers have played in vastly reducing competition—and, thus, the pressure to eliminate useless jobs. While all of this deserves analysis and debate, I think that this book is valuable if only for raising serious questions about the institution of work itself. The more that I read about history, the more I have come to see our modern ritual of work as strange and aberrant. The idea that we would all go to work five days a week, eight hours a day, year after year—regardless of whether we are making cars or filling out forms, and regardless of how much work there is on any given day—would have struck people in nearly any other place and time as bizarre. To me, it just seems backwards to use a cookie-cutter schedule for every task (from lawyer to salesman), and then expect every member of society to adopt this basic template or risk abject poverty. Considering that the economy requires a certainly level of employment to function, and that the current social safety net could not support a large number of unemployed people anyway, perhaps it should come as no surprise that we are plagued by dummy jobs. And if you think about it, it would be an amazing coincidence if the economy—through all the structural and technological changes of the previous century—always needed between 90 to 95 percent of the working population at any given time. Graeber’s proposed solution to this problem is Universal Basic Income—providing every person with a regular paycheck, sufficient to cover the necessities of life. Personally I think that this is a wonderful idea, and one which could greatly alleviate many of our social ills. Unfortunately, in the United States, at least, UBI seems just as likely as paid maternity leave. But whatever the means, I think it is high time to change our attitude towards work. We spend enormous amounts of time doing things we do not want to do, and, what is worse, things which often do not need to be done. What fuels this is a kind of masochistic work ethic, defining our worth by our ability to do things that we do not want to do. This ethic has so pervaded our culture that, in America at least, we take it for granted that everything form health care to our self-respect should depend on our jobs. One of Graeber’s most interesting points is that the phenomenon of useless jobs may reveal that we are using a flawed conception of human nature. One would think that being paid to do little or nothing would be the height of happiness. But most people in useless jobs report profound feelings of unease and distress. Again, my own experience testifies to this. Though I had little work, and was paid decently, I often found myself miserable, even beside myself with a strange mixture of boredom and anxiety. Graeber has a long section on this, but basically it comes down to the way that useless work undermines our sense of agency in the world. There is a reason the gods punished Sisyphus that way. As Dostoyevsky said, having humans perform an unpleasant, uninteresting, and totally worthless task might be the most profound form of torture. In my own case, it gave me a very unsettling feeling of dissociation, as if I really could not control my own actions. So if we build our economy on the assumption that humans, left to themselves, will choose to get the maximum reward for the least benefit, we may be building on false premises. I think that Graeber is right, and that people generally prefer feeling like they are doing something useful. This is why I think we ought not to fear that Universal Basic Income, or a drastic reduction in working hours, would lead to a society of lazy idlers. In any case, people bored at home may do something more worthwhile than people bored at work, who mostly seem to go on social media. (Graeber notes that the rise in social media use coincides with the rise of useless employment. Certainly it was true in my case, that useless employment led naturally to spending huge amounts of time on Facebook.) This summary does not do justice to the full contents of the book. Graeber is a sharp writer and an agile thinker. Not only is he the first to really hone in on this strange aspect of the modern world, but he does so within a wide perspective. To give just a few more examples, he connects the rise of bullshit jobs with the slowdown in scientific progress and the decline in quality of Hollywood movies. Perhaps Graeber’s political identity as an anarchist helps him to avoid the basic narratives of both the left and the right, and to develop strikingly original opinions about social problems. While I am not anarchist myself, I think the institution of work deserves far more questioning and criticism. We have accepted work as the bedrock of society and the foundations of our lives’ meanings, and yet most of us do not particularly like it. If I could wax utopian for a moment, I would imagine a movement devoted to the creation of a society of leisure. I would even work for it. ...more |
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Oct 28, 2018
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| Feb 10, 2003
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really liked it
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A few years ago, I read Ron Chernow’s excellent biography of John D. Rockefeller, a man who looms large over my little corner of New York. That summer
A few years ago, I read Ron Chernow’s excellent biography of John D. Rockefeller, a man who looms large over my little corner of New York. That summer, I took walks in the Rockefeller State Park Preserve, went to Stone Barns, the Pocantico Hills Church, and Riverside Church (all Rockefeller creations), and even visited the Cloisters (a Rockefeller museum)—capping it all off with a trip to Kykuit, the house of John D. Rockefeller himself. In the gift shop of the old tycoon’s abode, this little book was on sale, written by the woman who did more than anyone else to blacken his reputation. It seemed like rubbing salt in an old wound—but I bought it, anyway. Ida Tarbell was born in oil country, and witnessed the squalor, danger, and insecurity of the industry first hand. Her father was a moderately successful oil man before Standard took over. In short, this book was not written from mere journalistic curiosity. However, even this heavily abridged version is enough to convince anyone that Tarbell was a remarkable person. At the very vanguard of investigative journalism, Tarbell demonstrated that facts and words, when wielded skillfully, could be just as powerful as money. And she was certainly skillful. In sharp, snappy prose, she patiently lays out a case against Standard Oil, arguing that it owed its rise to unfair business practices, and that its existence was nefarious to society. It is masterful journalism. However, it does make for somewhat odd reading nowadays. When a business is censured today, it is normally because of its effects on the environment or its mistreatment of workers. But whereas Tarbell knew from personal experience that the oil fields were filthy and noxious (or, in her words, “destructive of beauty”), this was many years before the environmental movement, and so this angle is mostly absent. And when the Standard’s treatment of its own workers is brought up, it is normally to point out how well-paid, well-treated, and consequently loyal they were. There is no mention of a strike or a union. Rather, Tarbell takes Rockefeller to task for unfair business practices. A big component of this foul play consisted of railroad rebates, which were basically special discounts given to Standard Oil shipments. Another strategy would be to deliberately sell oil at a loss until a competitor folded under the pressure. And with so much of the industry under their control—refineries, railroads, pipelines—Standard could easily squeeze and threaten smaller producers until they sold their companies. In short, Tarbell faults Rockefeller for trying—successfully—to create an oil monopoly. This is interesting, as it reveals, I think, some contradictions in the ways that we think about capitalism. On the one hand, competition is supposed to be the engine that drives innovation and keeps down prices. On the other hand, the goal of any ambitious entrepreneur is to put all of his rivals out of business. That is to say that capitalism requires competition to function properly, while there is a historical tendency for monopolies to form (which must then be broken up by the government). Rockefeller himself, though a businessman, was an inveterate enemy of competition, thinking it wasteful and disorganized. And he did have a point. By controlling the process from production to delivery, he was able to create a consistent product with consistent prices, which is no small thing. I am not, you understand, defending Standard Oil. I only want to point out that both competition and consolidation have potential benefits to consumers. I also think there is a tension in the way that we think about people like John D. Rockefeller or, for example, Jeff Bezos. They epitomize the economic system we collectively create, and many of our livelihoods depend, directly or indirectly, on such highly successful businesses. And yet, so many of us cannot stomach their wealth, their power, or simply their naked display of avidity. And while the unfair practices of Standard Oil or Amazon may get us riled up, there is another part of us, I think, which admires the man (and it is usually a man) willing to get ahead by any means. What I am trying to say, I suppose, is that we can revile—or profess to revile—people like Rockefeller all we like, but this is the sort of person who will end up at the top if we do not make some big changes. As this rambling review indicates, I found this book more impressive, enjoyable, and rewarding than I suspected when I bought it in the gift shop. Rockefeller’s story—and Tarbell’s telling of it—still has much to teach us. ...more |
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really liked it
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When I picked up this book, I assumed it was a biography of the two famous John Pierpont Morgans. But this is far more; indeed it is a true history of
When I picked up this book, I assumed it was a biography of the two famous John Pierpont Morgans. But this is far more; indeed it is a true history of the Morgan bank, though admittedly with heavy emphasis on the biographies of the key figures. Given that this history spans over a century and includes a huge number of players, politics, and policies, the fact that Chernow could put out such a polished book in two and a half years is a testament to his skill as a writer and researcher. The book is most colorful in its beginning and slowly fades into the dullness of contemporary reality. The Bank of Morgan began with the 19th century financier George Peabody, a sort of Dickensian miser turned philanthropist. Lacking a son, Peabody passed on his business to Junius Spencer Morgan, another personality of a bygone age, who managed to combine pious moralizing with strict business. His son, Pierpont, is by far the most captivating character in this panorama. A rabid art collector, an amateur archeologist, and an inveterate womanizer with a swollen nose and an enormous yacht, Pierpont was a central figure in the American economy of his age. His son, “Jack,” though resembling Pierpont physically, was a far more mild-mannered sort of banker. His life is mostly lacking in racy and romantic stories (except for the time he was shot by a would-be assassin). The Morgan line mostly fizzles off after Jack; but there are many other Morgan bankers to take note of. The most important was undoubtedly Thomas Lamont. Chernow tracks Lamont’s strange journey from the cosmopolitan advocate of the League of Nations to an apologist for Italian fascism and Japanese aggression. It appears wide culture and smooth manners do not immunize one from ugly politics. The wider historical arc of Chernow’s book gave me a bit of nostalgia. We begin with bankers in top hats and stiff collars, guzzling port wine and sucking on cigars. (Pierpont was a heavy drinker and smoker, and believed that exercise was unhealthy.) These bankers relied on charisma and relationships as much as they did on any technical understanding. The early House of Morgan was paternalistic towards its employees and stressed an esprit de corps—the importance of banking tradition over personal egos. This sleepy world of respectable bankers gives way, in the late twentieth century, to the high-octane world of trading, where highly trained employees work twelve-hour days trying to beat one another in an enormous casino. The activities of the bankers also change markedly in this history. While nobody would argue that Pierpont was saintly or altruistic, his main activities consisted of reorganizing industrial companies to make them more productive and effective. This is a great contrast with the bankers of the 1980s, who are mainly concentrated on speculative activities and hostile takeovers which seem to have very little to do with work of real value. Of course, my impressions of this history are colored by the fact that I know relatively little about finance and thus at times had trouble following the business side of things. Chernow, for his part, is typically vague when it comes to any technical details; his preferred style is to focus on individuals and their foibles. This was a bit frustrating, since I felt that I could have learned more had Chernow simply included more in the way of explanation. But, as it stands, this is an extremely readable and compelling history of one of America’s most important banks. Things have changed since the publication of this book. Morgan Stanley is still going strong, though J.P. Morgan mainly serves as a brand used by Chase bank, and Morgan, Grenfell & Co. does not even exist as a name anymore. Even 23 Wall Street, the iconic home to this iconic bank, now sits empty and unused, apparently owned by a shadowy billionaire who is reportedly sitting in a Chinese jail. Such is the fate of all great empires. ...more |
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Aug 25, 2020
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Aug 29, 2017
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| 0520081153
| 9780520081154
| 0520081153
| 4.45
| 559
| 1979
| Dec 23, 1992
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Oct 08, 2016
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Paperback
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| 0520081145
| 9780520081147
| 0520081145
| 4.35
| 1,663
| 1979
| Dec 23, 1992
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Oct 08, 2016
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| 3.64
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Oct 24, 2024
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Oct 24, 2024
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| 3.84
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Sep 08, 2024
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Sep 08, 2024
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| 4.06
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Oct 17, 2024
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| 4.04
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Sep 29, 2020
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Sep 29, 2020
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| 4.23
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Aug 05, 2020
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Aug 05, 2020
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| 3.92
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Sep 14, 2024
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Jul 30, 2020
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| 4.25
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Jun 19, 2020
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Jun 19, 2020
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May 29, 2020
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May 23, 2020
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really liked it
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May 22, 2020
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May 18, 2020
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May 09, 2020
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really liked it
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Mar 08, 2020
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Mar 10, 2020
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really liked it
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Feb 06, 2020
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Feb 06, 2020
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really liked it
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Sep 23, 2020
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Nov 24, 2019
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it was amazing
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Feb 03, 2020
not set
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it was amazing
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Nov 20, 2019
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Oct 28, 2018
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really liked it
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Sep 22, 2022
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Aug 16, 2018
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| 3.87
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Dec 28, 2017
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| 3.95
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really liked it
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Aug 25, 2020
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Oct 08, 2016
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Oct 08, 2016
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