I Finally Read Piketty's Capital!

This is one of those books I was looking forward to reading so much that I went and ordered it early, even though it was pretty pricey - come on university presses, get your discounts on Amazon. The thing is that it created so much buzz between the big conference of the Economists in January and when it was finally released in translation in the spring, so many people had written on and about the book that actually reading the book and taking in the argument for myself seemed pretty superfluous at the time, you know. It is a big book and if people are going to tell you that the rate of return is greater than the rate of growth on a long time scale in less than 700 pages I was ready to listen. My physical copy has it’s bookmark firmly on page 113, right in front of the beginning of chapter three. (I have Robert Gordon’s new book on my pile, afraid it will reach the same point).

But I then had an extra credit on my audible account, so I thought I would listen to it. I’m convinced by Piketty’s argument. I worry that the information he has is not full enough to jump to huge conclusions. He treats the big wars of the 20th century as one-off things. I’d bet that they are not the last big wars that civilization will see, and those are pretty good at destroying wealth in the form of real estate and equities (minus defense, I’d wager). And the data-sets, as impressive as they are are limited to only four countries for the longest sets, and to just France for the longest set. So let’s go with a global wealth tax. Just tell me how to implement it.

The other thing is that though I was an English major, I read mostly the 20th century, so the Austen references go over my head (not to say the Balzac ones, an author to me known only for what his name rhymes with in English). It seems to be a novel way to track price movements and what not since inflation nowadays makes mush of the idea of stable prices (all one needs is 500 pounds and room of one’s own to do the math on that on).

Utopias to Utopia: David Frayne's "The Refusal of Work: The Theory and Practice of Resistance to Work"

This is an interesting text since I haven’t thought much myself about the systemic disalienation of your labor as a point of protest. The first chapters of Frayne’s book introduces me to several thinkers I have never heard of, and takes ideas from those who are more familiar, back to old grandfather Karl. But for me the Marxian framework is more about refiguring the ownership of the labor output than direct nonwork. Frayne goes back to Keynes to show that there was a leisure trade-off that was once thought inevitable that was instead traded for more consumption.

The theoretical beginning is interesting, but the book really gained steam when the author talks to people who have removed themselves from the labor force for some kind of idleness or aggressive loafing. I’m being too facile here, since each person he talks to has their own unique perspective on what they wanted to gain through work and what they want and are enjoying through not work. The idea of these individual utopias is nice, but when I was reading I couldn’t help but think that this removal will always be a niche thing since capitalism is touching even those who try to remove themselves from the economic system.

This concern is taken up in the last chapters, where Frayne takes the call from the individual and tries to make it part of a larger program where we can still meet our material needs but also think of our leisure time as ours and not the time we have when we (like I am right now) just plugging away because it is when you are not at work - this definition of free time is dependent on what you are free from. It’s not just time. I’m skeptical, since work is so definitional of who we are. Kids are defined by their parents work, students are defined by what they’re studying towards, and then you become something by having a title and a business card and you can finally define who you are by how you make your money. I had a bit of this myself. I was unemployed for two years and uncertain of what the next thing that was going to happen to me. I then worked myself so that I was chosen to be on the show Jeopardy!. How do they introduce you there? Your name, what you do, and then where you’re from. I was called an “Educator” though I haven’t been in front of a classroom in the five years since.

Overall, the book was enjoyable and made me want to read more in the subject. It did have its deficiencies though. First was that the citations to the texts were done in-text, like a student’s paper. This was distracting since it didn’t usually offer the text in introduction, so if I wanted to track down the text, I’d have to go to the index anyways. But it also had the year of the cited work, not the year of the original publication. This meant that the citation was something like “(Marx, 1959)”. And I know my buddy Karl wasn’t active in that year so it was distracting. This was a lesser issue in the middle chapters. The other concern is that the interviews were just a handful of anecdotes, and not hard comparable data, so the conclusions from a dozen interviews may not be applicable on a broader, more international basis.

On "Invisible Influence" by Jonah Berger

I end up reading a lot of these kinds of books that are basically repackaged original research (much of it done by other researchers) that is then taken and put a structure around it. The structure allows the author (sometimes a scientist, sometimes a journalist) to tell a story. Hopefully the research helps the story; hopefully the story is interesting and supported by the research.

I would not have picked this up off the shelf if it were not for the cover design, a clever cover that from one angle shows the title and from the other says “Everyone’s reading it”. That was the most novel thing about the book, since because I have read a lot of these books, the grass is not growing for me on this particular path. If you haven’t read a lot of popular behavioral science books, this one is fairly well done and you would not disservice yourself if you were to read it as an introduction to the field. I do have to note there was one thing that Berger talks about which shined a different light on the world  - he walks the reader through why counterfeiting is good for consumer product manufacturers. That starts around page 138.

Pragmatism Wins: Cohen and DeLong's "Concrete Economics"

Brad DeLong easily has the most interesting mind in modern economics. Before this book, I was unfamiliar with his co-author. But when I saw that DeLong was writing a book, no matter what the subject, I was ready to pounce on it. Thankfully the people at the Harvard Business School Press gave me and advance review copy, and then I was inconsiderate enough to not read review it in any form until now.

What Concrete Economics calls for is an economic plan on pragmatism. The realization is that both parties may have strayed too far into an ideology that doesn’t work (neoliberalism in the vein of Thatcher and Reagan and continued to this day) in the light of the crisis that was almost ten years ago now. What we need, according to the authors, is to look at the administration of Hamilton’s Treasury Department on doing what is needed to help the country grow and prosper. It reminds me of the dictum attributed to FDR in the Depression – Try something, and if that doesn’t work, try something else.

The prescription is timely, since growing inequality and stagnating wages at the middle of the distribution have given rise to the voices of populism and xenophobia.  These current developments are scary to people who have tried to make the economic system work for everyone, and though I am to the left of the authors politically, I would much prefer a politics and economics of pragmatism much more than one based on fear of the other. Thankfully and hopefully, DeLong is a creature on the edge of the establishment, so maybe his voice will be heard in the next administration. (As long as the vox populi doesn’t make some sort of fatal mistake.)

Chernow's Hamilton: Very Little Singing and Dancing

Reading Chernow’s biography of Washington several years ago, it was clear that the author had a special warm place in his heart for Hamilton. The biography shows Chernow’s affection for his subject in a greater detail, as he goes from Hamilton’s life on the islands to his death on the New Jersey shore. It even covers a bit of the afterlife with his killer and his family.

Though Chernow obviously has admiration and affection for the man, he is still able to show the flaws in Hamilton’s character, from the fact he had an affair and was essentially blackmailed to his falling out with the Federalists in charge of the party (and the country until the assention of Jefferson). If you are interested in learning about the founding of the country and the ideas behind it, this is a very strong secondary text to explore in your own education. 

A side note – there is little, if any, rapping in the text. That was all made up in the mind of the writer of the smash Broadway musical taking this book as its source material.

How Do You Like Kuznets?: On Milanovic's "Global Inequality"

I have a completely irrelevant critique on Milanovic’s new book.

I’ll get to it, but first I have to praise him. I read the book based on his blog, which Thoma links to often enough that when I saw that he was talking about a new book to be released, I knew O had to buy it. He’s smart and credentialed and has the resume, but most importantly, he is an engaging writer. It was when I went to preorder this one that I saw that he had an previous book, so I went and got that one to give me more background. And let me tell you, that other book is a super fun read if you like short vignettes about economics that build towards a larger point  - there he was looking at three sorts of inequalities: 1) between countries; 2) between people in countries; and 3) between people globally. 

Here he does the same thing, and I thinks that since its post Piketty he thought he had to take some of the fun out of it and be more empirical or rigorous or something.

Therefore, here’s the non-substantive critique: It was not as fun to read as his earlier book. Which is a horrible thing to say since here I should be looking at his ideas and assessing how he presents the Kuznets Wave he theories and the wealth inequality charts. And that’s there and good and if this were the first book, I read by him I just might be more engaged but it was not and I am apparently not Milanovic’s ideal reader. I read too much in economic history when the economist were telling stories and not having all these clever graphs and charts.  

Indexing is Common Sese: On Boogle's Little Book

I have read the most recent version of Malkiel’s “A Random Walk Down Mainstreet,” and it made me thankful for those people who actually go out and try to make a return for themselves on the market. It provides a service that current leftist critiques of finance capitalism forget – they provide liquidity and aid price discovery. Now, that is just a small part of what they do, and the bulk of their profits are actual rents, and half of the people will end up losers whatever system they try – because there are some patterns in the market, but I am a believer that the market will stay irrational longer than I can stay liquid. I guess at heart I am pretty conservative about what I do with my money because people like Malkiel and Bogle speak to me so much.

"The Little Book of Common Sense Investing" is like a cover version of Malkiel’s classic, coming in with a shorter page count and being less of a sales document – though where the recent “Random Walk” made me curious about Wealthfront and reading this made me go to the Vanguard website, I still am paying more in fees than I should to the company-administered 403(b) even in their so-called Index Fund.  This is a pretty well-written book, but it does have a bit of an odd structure,  with short chapters closed by asides referencing the current point made with an outside source instead of integrating it in the main chapter. Overall, though, it is a strong case for indexing your funds and taking advantage of the work the active traders do. When you are buying the market, you are giving up the chance of some great stock or sector that goes parabolic, but it also prevents you from thinking you are clever and taking a short position in that same sector just before it goes parabolic. Buy and hold and buy again seems to be the best way to ensure that the money you do invest will be there when you need it at the end of your life. I’m not trying to get rich by any means, but I’m also not looking to degrade the quality of my life at the end.