Making Money: Like Alchemy but Less Messy

I have to say as having read the previous 30 or so discworld books with there being no mention of the real economics or banking industry of the discworld in general and the history of the monetary system in Ankh –Morpork in particular, I was excited that Terry finally took a shot at the issue.

A few broad things: if you’re not into economics as much as I am, I think the book will hold up as a storyline in itself.  This is the second books that I am aware of that has starred Moist Von Lipwig.  I am still not sure as where he stands as a Pratchett character.  He has some interesting traits, but doesn’t seem fully formed.  

Small thing that is interesting to me: I like that Pratchett comes out against hard money, where the city is what gives currency value, not gold that was dug up in one place and the reburied in a vault (see pages  143-4 for a fun exchange on the nature of a currency’s value) 

Key quote: ‘Hubert’s an economist. That’s like an alchemist but less messy.’

If you have not read any of Pratchett’s books, this is as good a place to start as any.  I suppose the beginning may be better, but it is not wholly necessary.  I started in medias res and everything ended up just fine. 

O'Sullivan's Microeconomics. I guess it's ok.

I guess, after looking at the thing, there isn’t much to give credit to not to denigrate this thing.

Most people, if given the choice, will go after a bigger name for their micro book.  Others may not.   They may assume that their author is not easily google-able and they may have ultimate authority. 

The problem with this book, I assume, is the problem with most basic econ books.  The people coming here have no choice about which micro book to buy.  If you’re looking at this one, it is passable.

There are problems, but there are problems with the discipline.  The book assumes that you haven’t taken any calculus.  The mathematical basis of the text is algebra.  Sadly, to really understand what is going on in even the most basic form, you need at least calculus one.  Your advisor didn’t tell you that.  

No calculus means that supply and demand are not part of a dynamic system, but are just a thing that balances.  It is alienating, but it is also illuminating if you don’t need the context and just want to go home over the holidays explaining deadweight loss to your family.  You should still buy them gifts, because otherwise you look mean. 

A couple of notes: the last chapter is about trade and comparative advantage,  it grows to macro and leaves the micro behind.  As part of a combined course it works.  Finally, on page 157 there is a horrible derivation of opportunity cost.  It is a very important part of the course, and it should be told better as a story.  It isn’t here.

Hopeful Science, Doubtful Economics: Reading Zhavoronkov's "The Ageless Generation"

The Author of this work, Alex Zhavoronkov  is highly optimistic about the eventual success of biological technology in vastly increasing human lifespans.  He is also pessimistic about the state of the economy.  These two threads come together in this book,  “The Ageless Generation”.  In it, he argues that the government should simultaneously ramp up research and development in these areas  ( for example, we should make a much more concerted effort to cure cancer) while also rolling back the welfare state that covers seniors (social security and Medicare in the US).

I don’t want to go through a point-by-point rebuttal, mainly because the premise is so interesting.  So many people look to the future as either a utopia or a dystopia, but unless the political ideal of the futurist in question covers economics specifically, the projections feel like they assume the everyday economy as continuing to exist as is.  I think that this book falls into that trap.  How is it that we live in a world where we may cure death, but we haven’t cured work?  I like my job, but I’m not so scared of my own mortality that I want to keep doing it for another couple of decades to comfortably live into my 120s.  I think that is a major blind spot here, not considering the nature of work excepting computer-mediated knowledge work.  Add to that the idea that people not exiting jobs disrupts the current schema where people retire out and get promoted up and graduates enter the labor market – curing death will lock young people into either entry-level  jobs or unemployment for a very long time.  

The second issue that got me was that he is very focused on both of his fixes.  The singularity that we will reach is a biological one, where the life expectancy increases faster than the calendar year as prophesized by Aubrey De Grey (Both referenced in the book and a writer of a blurb). As far as I remember, there is no mention of a technological singularity more associated with the work of Ray Kurzweil which could be a rival or a symbiotic vision of the future.  The other focus is on rolling back “entitlements” which would be hard because people have paid into those programs and people have real expectations for when they can leave the labor force.  I don’t know why extending the working life is important here.  If you solve for death, you can maybe reimagine a world where there is more art, and more leisure time (I know Marx and Keynes were able to imagine it).  There are other places in the budget where savings can be had. 

I just worry that the book may be overselling the idea that we can even achieve what he’s saying can be met biologically.  He marvels at the increase in life expectancy in the 20^th century, but were those achievements just the low-hanging fruit of life-extension?  I’m not sure about that, but I worry about nature fighting back.   One thing I kept thinking about was the evolution of anti-bacterial-resistant  bugs.  There aren’t many new penicillins in the pipeline, and we have to keep at it just to keep where we are (and that’s just one example of what can happen to the organism, and ignoring any systemic issues).  We have also to struggle with people taking for granted now simple things like vaccines.  People have been worrying about their safety, even though it is hard to prove absence: anecdotes beat statistical evidence and probabilities.  I suppose if you could cure cancer, you’d have a pretty high-take up, but it is harder to sell prevention as opposed to intervention.

I am sure that Zhavoronkov has heard many of these criticisms before.  This book is more for a popular audience, so it is more of an introduction.  I hope he is right on the science.  That’s where I feel his domain lays.  The economics need more work, and I think he is largely incorrect mainly because of a lack of imagination.  If the science works, the cultural change will refigure economics and art and the nature of work.  I’m interested in seeing what’s next.

I received a copy of this book in exchange for review.

The Marshmallow Index.

If I have to read one more shorthand description of the famous "Marshmallow Study" in a social science book, I'm going to explode.

You know why?

They always miss something.

Marshmallows are delicious.

For real though, I hate how it has become a proxy for so much lazy analysis.  I've long considered creating a "marshmallow index" that shows how far into the book the study is cited.  The sooner, and the more reliant whatever the argument is on the necessity of looking at the study, the higher the number.  The higher the number, the more worthless the book.

This is all preliminary.

Short and Lacks Focus: Cass Sunstein's "Simpler"

I don’t know what I really expected when I picked this book up.  I liked “Nudge” and I am a fan of most of the Behavioral Economics books that have been put out to popularize the subject in the recent past.  Since Sunstein recently served a time in the Obama administration, I was hoping for something like “Nudge: Practical Applications”.

 That’s not exactly what it is, but it starts striving towards that near the end.  The problem is that the book feels like it lacks focus.  The first part is more like a memoir of the time Sunstein was moving into the position and the difficulties with the office in particular and with the current congress in particular.  Once he starts to describe the inner workings, it gets more interesting, but it ends too soon.  What I really learned is that it must have been Thaler who gave “Nudge” its zing.  Simplier isn’t really a bad book, but it will soon be forgotten. 

Get this to the President: Reading Baker and Bernstein's "Getting Back to Full Employment"

We are at the level of employment we have only because people have made the decision that this level is acceptable. 

Bernstein and Baker lay out different answers in this book.

If you have a capitalist society, you are not yoked necessarily to the idea that the current version of capitalism is the one that is necessary, right, and the only way possible.  You can have capitalism with a human face where workers are not fighting for crumbs.

The point of this book is that the current upwardly distributing system is the logical conclusion to policy decisions that were made already.  Different, more equitable policy decisions can be made.  These include raiding the minimum wage, targeting a lower "Natural" unemployment level, and going for weak dollar policies to help boosts exports relative to imports.

This is a short book, basically a long white paper, but it is an important book.  I suppose that is why they are distributing it at cost.  I read it in an evening over the long weekend, and I nodded my head to their words.  It needs to be in the hands of policy makers, as soon as possible.

A couple of notes.  The only thing that troubles me is the idea of weakening the currency (70).  It is not an issue that it should be done, but that others can make moves to offset your moves because currency's values are relative to each other.  That and you don't want to be labeled a currency manipulator on President Romney's first day in office.  The second thing that gets me is that there is a cover design implying an attack on a certain company that isn't followed through fully in the text.  I kept waiting for it, and it never came.  I have to admit to liking take-downs of the beast from Bensonville.

On "Scarcity" by Mullainathan and Shafir

Here’s the bottom line.  Not having enough is bad. It is not just the absence of material goods, but also the price is paid in cognition.  If you are worried about want, part of your mind is taken up by that need.  You are quantifiably less intelligent, and you make poorer decisions because your mind has no slack.

If possible, you can make yourself more efficient by planning for this scarcity in mental attention.  The authors use for an example of a busy hospital.  They were always off schedule and ended up paying more in overtime because they were so busy.  An outside consultant fixed that problem by setting aside one operating room for emergency surgeries.  Even though that room could be empty at times, having that slack helped the hospital operate more efficiently.  Your everyday life works the same way.  From what I see, the problem is now how to get to there from here.