069120862X
9780691208626
069120862X
4.16
263
May 23, 2023
May 23, 2023
it was amazing
This is probably the best single-volume history of Chilean economic policy from Allende onwards out there. A half-century after Pinochet's coup on Sep
This is probably the best single-volume history of Chilean economic policy from Allende onwards out there. A half-century after Pinochet's coup on September 11th, 1973, his ensuing horrific military dictatorship in Chile is typically only ever referenced in the US in the context of someone vaguely complaining about neoliberalism, that most all-encompassing yet indescribable of modern political typologies. I love pointless definitional debates about what that term "really" means as much as the next guy, but every once in a while it's nice to step back, put the nitpicky logomachia on hold, and reflect on what actually happened: how what had formerly been an unexceptional middle-of-the-road Latin American backwater dodged the twin threats of both a socialist meltdown and brutal authoritarianism to gradually become the richest country in the region. Edwards, who as a 19 year-old college student actually worked in Allende's price control directorate, discusses the economic policy advocated by the "Chicago Boys" of the title, the US-trained and influenced economists primarily responsible for guiding the Chilean economy during the many periods of political turmoil after the coup, surprising me with the well-documented conclusion that neoliberalism actually worked out fairly well for Chile.
I picked up this book because 2023 was the 50th anniversary of the 1973 coup, but by a mysterious coincidence I finished it the day before the much-anticipated death of all-time scumbag Henry Kissinger; surprisingly, and against what I had previously assumed, it turns out that Chile might be one of the few countries in the 20th century whose internal troubles he didn't either cause or make worse. This is important because, as Edwards frankly acknowledges in the very first paragraph, Chilean neoliberalism's chief criticism and "original sin" in the popular imagination is that it was enabled by the dictatorship after the coup. Edwards exonerates Kissinger and the US for Chile's economic difficulties in general, as supposed smoking guns like the "make the economy scream" memo didn't lead to any actual US action; and Allende's overthrow and suicide in particular. While the US might not have liked Allende, and we unquestionably did provide at least some minor support to earlier efforts to prevent his inauguration after he became the first democratically elected Marxist head of government in world history, the coup and his death seem to have been an essentially homegrown affair caused by the his Unidad Popular government's comprehensive economic ineptitude:
"[The Church Committee] concluded that the CIA was involved in an early attempt to keep Allende from becoming president (General Roberto Viaux's 1970 plot). After reviewing thousands of confidential documents and cables, however, the committee determined that there was no evidence supporting the view that the CIA was directly behind the September 11 coup d'état. Even if doubts remain on the extent of the CIA's support to Pinochet and his coconspirators, it is clear that, as Foucault and Rosenstein-Rodan, among others, have noted, Allende's economic policies were a failure."
The book's first section provides a great deal of background context for Pinochet's coup. Even though the book is primarily about post-Allende policy, to understand the Chicago Boys' policies it's important to understand where they were coming from: a collapsing economy with supply shortages, runaway inflation, capital flight, and plummeting real wages, directly caused by the transition to socialism and all of the usual pathologies that you see in the other countries which have tried the same thing. Allende was elected by a tiny plurality in 1970 but tried to govern as if he had a much larger mandate, at first pursuing some seemingly unobjectionable social welfare policies but quickly getting more ambitious and running off the rails, his Vuskovic Plan rapidly causing mass disruption and prompting multiple coup attempts (which, ironically, Pinochet actually helped to foil). Edwards got a fascinating inside view of how poorly the socialist transformation process can be run when he worked in the Allende administration as a teenager doing price controls. It's worth quoting his experience at length:
"One of the most damaging aspects of Unidad Popular's economics program was the surrealistic system of price controls. Maximum prices for over three thousand goods were determined by the Dirección de Industria y Comercio (DIRINCO; Directorate of Industry and Commerce), under the assumption that in every one of those industries there was monopolistic power and companies abused their clients.
I personally know how bad, arbitrary, and harmful the system was, because I was there. As a nineteen-year-old college student at the Universidad de Chile, I was offered the position of assistant to the director of costs and prices at DIRINCO. The unit oversaw every controlled price in the country and had the legal authority to determine whether a price increase was authorized. The position gave me unusual power, as I assigned price adjustment requests to the different accountants who worked in the office, and I kept the director's appointment book. On more than one occasion I was told to misplace a file, or to move it to the top of the pile, or to assign it to a given employee who was sympathetic to one view or another. In 1973, with inflation moving toward the 700 percent mark, prices authorized by the directorate became outdated within a week or so. New requests were immediately submitted, and the directorate promptly denied them. Any first-year student would have predicted the results of this viciously circular process: massive shortages and a thriving black market for all sorts of goods, including such essentials as sugar, rice, coffee, cooking oil, and toilet paper. But the political authorities believed that a strong hand was needed to deal with price gouging promoted by the "enemies of the revolutionary process.""
Edwards wisely doesn't waste much time on the typical bad-faith attempts to claim that this wasn't Real Socialism, or that if it was, its failure was actually all the US or capitalism's fault. He divides post-Allende economic reconstruction into 3 time periods of differing policy regimes as various sets of policymakers (not all of who were influenced by the University of Chicago) rotated in and out under Pinochet and his successor center-left and center-right democratic governments:
- 1973 - 1982: "incipient neoliberalism". Remove price controls, reduce trade barriers, pursue "shock treatment" to fight inflation, deregulate industry, re-privatize inefficient state-owned enterprises.
- 1982 - 1990: "pragmatic neoliberalism". Implement more measured market systems, attract private investment, expand the export sector.
- 1990 - today: "inclusive neoliberalism". Transition to democracy, remove harmful fixed exchange rates, encourage capital inflows, pursue as much free and open trade as possible, deepen now-mature market systems.
While the over pro-market direction is clear, there was more variety under the hood than might be assumed in all of these different policy regimes as Chile became more or less reformist, more or less nationalist, and so on. One crucial element that cannot be ignored is that throughout all of them was a profound concern for the poor: even during the confused early Pinochet years, where the economy was still nearly as bad as it was under Allende, social expenditures were increased, extensive anti-poverty programs were pursued, and public access to health and education was greatly expanded as a top priority. This inarguably left-wing focus is one of the things that make discussing neoliberalism so tortuous: not only were all of the so-called neoliberals completely unaware of the term until many years later, to a man the Chicago Boys all rejected the label and claimed that they were trying to implement a West German-style mixed social market economy. Without adopting a blunt rule like "socialism is when the government does something, and the more the government does the more socialist it is", the distinction between "virtuous socialism" and "perfidious neoliberalism" is so muddled that it's better to just focus on the actual policies themselves.
To that end, Edwards is now a well-regarded economist in his own right, and so thankfully most of the book is devoted to in-depth discussion of Chilean policymaking debates over all three neoliberal phases, with occasional cameos from luminaries like Milton Friedman, Friedrich Hayek, and Al Harberger where relevant. There are long sections on fixed vs flexible vs floating exchange rates, individual accounts vs pay-as-you-go pension reform, the right degree of privatization vs nationalization for various sensitive state owned companies (the military had strong opinions about many public services and key firms, particularly the lucrative cash cow copper giant CODELCO), and how to safely raise taxes up to normal levels in order to develop normal state capacity (Chile still only collected 21% of GDP in taxes in 2022 vs 31% for the average OECD country), with major areas like health, transportation, and education receiving brief but detailed explanations of what the policy goals were and how well they were achieved.
Importantly, the Chicago Boys themselves, who were essentially college students and young economist PhDs from the two major universities in Chile, with a few visiting Americans, seem not to have had any connection at all with Pinochet's horrific human rights abuses, let alone approval or endorsement. It might seem obvious that economic advisors aren't responsible for everything their government does (to use an American analogy, Ben Bernanke would be one of the last guys you'd try to pin George W Bush's Guantanamo Bay crimes on), but you still see people attempt some variant of a "Pinochet did something called neoliberalism, therefore calling something neoliberalism means it's Pinochet" syllogism (never mind that most neoliberalism occurred after he had stepped down) or blame Milton Friedman for the regime's actions even though basically all he did was tell them to stop overvaluing their currency, so it's nice to get the actual story. "Neoliberal" as a leftist political swear term meaning essentially "right-wing" was born from exactly this historical episode, and while I personally would not have implemented all of the specific policies that the Chicago Boys did, on the whole I came away impressed by their achievements and sympathetic to the constraints they were working under. Neoliberalism worked out pretty well for them!
And yet Chileans themselves were not happy with neoliberalism. In the 1980s Chile had roughly the same per capita GDP as Costa Rica and Ecuador at approximately $4,000 USD; 50 years later it had more than sextupled to over $25,000 USD, which was now 40% more than Costa Rica and double that of Ecuador, but discontent was such that the country experienced massive riots in 2019 that led to the election of far-left President Gabriel Boric and several rounds of constitutional reform in order to repudiate neoliberalism, the Chicago Boys, and Pinochet. Edwards discusses the grievances cited by some of the primary protest groups, which are fascinating to an American stepped in intra-left disagreements: while Chileans appreciated the enormous reduction in poverty and creation of general prosperity that neoliberalism had delivered, they were concerned about perceived inequality, as well as more specific issues like student loan debt, toll roads, free trade agreements, and other policies that, though they were enacted by successive left-wing governments, were deemed to have the unacceptable mark of neoliberalism upon them.
Inequality is hard to define and even harder to measure accurately, so Edwards puzzles through why Chileans were so focused on it given that statistics like the Gini coefficient and various OECD indexes gave contemporary Chile relatively good marks on inequality, especially relative to its peers. True, the Chicago Boys had consistently disdained the idea of reducing income inequality for its own sake, but that was done in order to focus on reducing poverty, which they had unquestionably succeeded at to a spectacular degree, propelling the poorest Chileans to a standard of living ever higher than the equivalent deciles in the rest of Latin America. Edwards explores a number of possible hypotheses for this disconnect, including that Chileans were also concerned about less quantifiable concepts like social inequality (referring to "quality of life, social interactions, access to basic services, the nature of interpersonal relations, and the degree of fairness (perceived and real) of the political and economic systems"), which a veteran observer of Occupy Wall Street will find illuminating.
As far as the other grievances are concerned, Edwards points out how curious it was that constitutional reform was demanded as a means to address them, since not only was there was no constitutional barrer whatsoever to, for example, reforming the college funding system or changing how roads were financed to eliminate tolls, but the 1990 Pinochet constitution, though originally adopted under a dictatorship, had been regularly amended over the years without issue. The primary spark for the protests is commonly held to be the October 2019 decision to hike metro fares by 30 pesos ($.04 USD); in a post gilets jaunes/Arab Spring world, we are no longer so surprised that seemingly mundane events can trigger vast cascades of public outrage, but demanding a new constitution in order to save a nickel on a bus pass (or adjust tariff rates, tweak pension funding, etc) seems a bit excessive. It seemed that way to Chileans too, as the eventual anti-neoliberal reform proposal ended up so overburdened by leftist wishlist items (e.g. granting constitutional rights to nature itself) that it was overwhelmingly rejected as this book went to press in September 2022, and in May 2023 a right-wing constitutional convention was elected to write a more conservative draft, which itself was also voted down in December 2023 as of the writing of this review. However much Chileans disliked what they called neoliberalism, they evidently disliked the alternatives even more.
By the way: what is neoliberalism; more relevantly, what did Chileans think it was? Edwards defines it in the Introduction as "a set of beliefs and policy recommendations that emphasize the use of market mechanisms to solve most of society's problems and needs, including the provision and allocation of social services such as education, old-age pensions, health, support for the arts, and public transportation", or more briefly, "neoliberalism is the marketization of almost everything". He supports this with an appendix discussing the Colloque Lippmann and the Mont Pelerin Society, as well as Michel Foucault's approving lectures on neoliberalism and his admiration for Gary Becker, one of the archetypal Chicago economists, including his accusation that the proper blame for the Chilean coup lay on the Marxist ineptitude which had made it necessary. Each country has its own unique spin on even the most seemingly general ideologies, and as mentioned, the primary issue for most Chileans seemed to be a lack of attention to inequality:
"Certainly the fact that neoliberals believe that the market provides the most efficient way of delivering social services does not mean that they ignore social conditions or the plight of the poor... What is true, however, is that for neoliberals the main goal of social policies is reducing (eliminating) poverty through targeted programs rather than reducing inequality. Income distribution - either vertical or horizontal - is not a priority."
This seems like a fair criticism of neoliberalism even if you disagree with it; some people just don't trust the outcomes of market processes (and rightly so, in some cases). The ultimate origins of people's fundamental attitudes towards how markets embody, reflect, or subvert moral values are beyond the scope of this book review (for a good overview of this debate, see Jason Brennan and Peter Jaworski's excellent Markets Without Limits), but as Edwards ably shows, the Chilean experience demonstrates that at least one type of neoliberalism was responsible for a sustained and successful program of eliminating deep poverty, and while marketizing various aspects of society doesn't guarantee success, center-left politicians can safely ignore leftists and right-wingers who attempt to conjure the specter of Pinochet as an excuse to avoid thinking deeply about the lessons to be drawn from what was and is a flawed but quietly triumphant ideology.
Further reading on Chile and related economic subjects:
- A more detailed analysis on the alleged US "invisible blockade", concluding that Chile did just fine destroying its economy on its own, thank you. https://pseudoerasmus.com/2015/05/21/...
- Chile is also often brought up as an example of the "Washington Consensus", which has done much better than its detractors often claim, though of course no single policy is guaranteed to succeed. https://www.sciencedirect.com/science...
- Much more detail on Milton Friedman's two visits to Chile and the fairly mundane economic advice he gave. https://www.cambridge.org/core/journa...
- In light of the Chilean debate on inequality, Auten and Splinter's brand new article "Income Inequality in the United States" shows less income and wealth inequality than is commonly asserted using more accurate calculations. https://www.journals.uchicago.edu/doi... ...more
I picked up this book because 2023 was the 50th anniversary of the 1973 coup, but by a mysterious coincidence I finished it the day before the much-anticipated death of all-time scumbag Henry Kissinger; surprisingly, and against what I had previously assumed, it turns out that Chile might be one of the few countries in the 20th century whose internal troubles he didn't either cause or make worse. This is important because, as Edwards frankly acknowledges in the very first paragraph, Chilean neoliberalism's chief criticism and "original sin" in the popular imagination is that it was enabled by the dictatorship after the coup. Edwards exonerates Kissinger and the US for Chile's economic difficulties in general, as supposed smoking guns like the "make the economy scream" memo didn't lead to any actual US action; and Allende's overthrow and suicide in particular. While the US might not have liked Allende, and we unquestionably did provide at least some minor support to earlier efforts to prevent his inauguration after he became the first democratically elected Marxist head of government in world history, the coup and his death seem to have been an essentially homegrown affair caused by the his Unidad Popular government's comprehensive economic ineptitude:
"[The Church Committee] concluded that the CIA was involved in an early attempt to keep Allende from becoming president (General Roberto Viaux's 1970 plot). After reviewing thousands of confidential documents and cables, however, the committee determined that there was no evidence supporting the view that the CIA was directly behind the September 11 coup d'état. Even if doubts remain on the extent of the CIA's support to Pinochet and his coconspirators, it is clear that, as Foucault and Rosenstein-Rodan, among others, have noted, Allende's economic policies were a failure."
The book's first section provides a great deal of background context for Pinochet's coup. Even though the book is primarily about post-Allende policy, to understand the Chicago Boys' policies it's important to understand where they were coming from: a collapsing economy with supply shortages, runaway inflation, capital flight, and plummeting real wages, directly caused by the transition to socialism and all of the usual pathologies that you see in the other countries which have tried the same thing. Allende was elected by a tiny plurality in 1970 but tried to govern as if he had a much larger mandate, at first pursuing some seemingly unobjectionable social welfare policies but quickly getting more ambitious and running off the rails, his Vuskovic Plan rapidly causing mass disruption and prompting multiple coup attempts (which, ironically, Pinochet actually helped to foil). Edwards got a fascinating inside view of how poorly the socialist transformation process can be run when he worked in the Allende administration as a teenager doing price controls. It's worth quoting his experience at length:
"One of the most damaging aspects of Unidad Popular's economics program was the surrealistic system of price controls. Maximum prices for over three thousand goods were determined by the Dirección de Industria y Comercio (DIRINCO; Directorate of Industry and Commerce), under the assumption that in every one of those industries there was monopolistic power and companies abused their clients.
I personally know how bad, arbitrary, and harmful the system was, because I was there. As a nineteen-year-old college student at the Universidad de Chile, I was offered the position of assistant to the director of costs and prices at DIRINCO. The unit oversaw every controlled price in the country and had the legal authority to determine whether a price increase was authorized. The position gave me unusual power, as I assigned price adjustment requests to the different accountants who worked in the office, and I kept the director's appointment book. On more than one occasion I was told to misplace a file, or to move it to the top of the pile, or to assign it to a given employee who was sympathetic to one view or another. In 1973, with inflation moving toward the 700 percent mark, prices authorized by the directorate became outdated within a week or so. New requests were immediately submitted, and the directorate promptly denied them. Any first-year student would have predicted the results of this viciously circular process: massive shortages and a thriving black market for all sorts of goods, including such essentials as sugar, rice, coffee, cooking oil, and toilet paper. But the political authorities believed that a strong hand was needed to deal with price gouging promoted by the "enemies of the revolutionary process.""
Edwards wisely doesn't waste much time on the typical bad-faith attempts to claim that this wasn't Real Socialism, or that if it was, its failure was actually all the US or capitalism's fault. He divides post-Allende economic reconstruction into 3 time periods of differing policy regimes as various sets of policymakers (not all of who were influenced by the University of Chicago) rotated in and out under Pinochet and his successor center-left and center-right democratic governments:
- 1973 - 1982: "incipient neoliberalism". Remove price controls, reduce trade barriers, pursue "shock treatment" to fight inflation, deregulate industry, re-privatize inefficient state-owned enterprises.
- 1982 - 1990: "pragmatic neoliberalism". Implement more measured market systems, attract private investment, expand the export sector.
- 1990 - today: "inclusive neoliberalism". Transition to democracy, remove harmful fixed exchange rates, encourage capital inflows, pursue as much free and open trade as possible, deepen now-mature market systems.
While the over pro-market direction is clear, there was more variety under the hood than might be assumed in all of these different policy regimes as Chile became more or less reformist, more or less nationalist, and so on. One crucial element that cannot be ignored is that throughout all of them was a profound concern for the poor: even during the confused early Pinochet years, where the economy was still nearly as bad as it was under Allende, social expenditures were increased, extensive anti-poverty programs were pursued, and public access to health and education was greatly expanded as a top priority. This inarguably left-wing focus is one of the things that make discussing neoliberalism so tortuous: not only were all of the so-called neoliberals completely unaware of the term until many years later, to a man the Chicago Boys all rejected the label and claimed that they were trying to implement a West German-style mixed social market economy. Without adopting a blunt rule like "socialism is when the government does something, and the more the government does the more socialist it is", the distinction between "virtuous socialism" and "perfidious neoliberalism" is so muddled that it's better to just focus on the actual policies themselves.
To that end, Edwards is now a well-regarded economist in his own right, and so thankfully most of the book is devoted to in-depth discussion of Chilean policymaking debates over all three neoliberal phases, with occasional cameos from luminaries like Milton Friedman, Friedrich Hayek, and Al Harberger where relevant. There are long sections on fixed vs flexible vs floating exchange rates, individual accounts vs pay-as-you-go pension reform, the right degree of privatization vs nationalization for various sensitive state owned companies (the military had strong opinions about many public services and key firms, particularly the lucrative cash cow copper giant CODELCO), and how to safely raise taxes up to normal levels in order to develop normal state capacity (Chile still only collected 21% of GDP in taxes in 2022 vs 31% for the average OECD country), with major areas like health, transportation, and education receiving brief but detailed explanations of what the policy goals were and how well they were achieved.
Importantly, the Chicago Boys themselves, who were essentially college students and young economist PhDs from the two major universities in Chile, with a few visiting Americans, seem not to have had any connection at all with Pinochet's horrific human rights abuses, let alone approval or endorsement. It might seem obvious that economic advisors aren't responsible for everything their government does (to use an American analogy, Ben Bernanke would be one of the last guys you'd try to pin George W Bush's Guantanamo Bay crimes on), but you still see people attempt some variant of a "Pinochet did something called neoliberalism, therefore calling something neoliberalism means it's Pinochet" syllogism (never mind that most neoliberalism occurred after he had stepped down) or blame Milton Friedman for the regime's actions even though basically all he did was tell them to stop overvaluing their currency, so it's nice to get the actual story. "Neoliberal" as a leftist political swear term meaning essentially "right-wing" was born from exactly this historical episode, and while I personally would not have implemented all of the specific policies that the Chicago Boys did, on the whole I came away impressed by their achievements and sympathetic to the constraints they were working under. Neoliberalism worked out pretty well for them!
And yet Chileans themselves were not happy with neoliberalism. In the 1980s Chile had roughly the same per capita GDP as Costa Rica and Ecuador at approximately $4,000 USD; 50 years later it had more than sextupled to over $25,000 USD, which was now 40% more than Costa Rica and double that of Ecuador, but discontent was such that the country experienced massive riots in 2019 that led to the election of far-left President Gabriel Boric and several rounds of constitutional reform in order to repudiate neoliberalism, the Chicago Boys, and Pinochet. Edwards discusses the grievances cited by some of the primary protest groups, which are fascinating to an American stepped in intra-left disagreements: while Chileans appreciated the enormous reduction in poverty and creation of general prosperity that neoliberalism had delivered, they were concerned about perceived inequality, as well as more specific issues like student loan debt, toll roads, free trade agreements, and other policies that, though they were enacted by successive left-wing governments, were deemed to have the unacceptable mark of neoliberalism upon them.
Inequality is hard to define and even harder to measure accurately, so Edwards puzzles through why Chileans were so focused on it given that statistics like the Gini coefficient and various OECD indexes gave contemporary Chile relatively good marks on inequality, especially relative to its peers. True, the Chicago Boys had consistently disdained the idea of reducing income inequality for its own sake, but that was done in order to focus on reducing poverty, which they had unquestionably succeeded at to a spectacular degree, propelling the poorest Chileans to a standard of living ever higher than the equivalent deciles in the rest of Latin America. Edwards explores a number of possible hypotheses for this disconnect, including that Chileans were also concerned about less quantifiable concepts like social inequality (referring to "quality of life, social interactions, access to basic services, the nature of interpersonal relations, and the degree of fairness (perceived and real) of the political and economic systems"), which a veteran observer of Occupy Wall Street will find illuminating.
As far as the other grievances are concerned, Edwards points out how curious it was that constitutional reform was demanded as a means to address them, since not only was there was no constitutional barrer whatsoever to, for example, reforming the college funding system or changing how roads were financed to eliminate tolls, but the 1990 Pinochet constitution, though originally adopted under a dictatorship, had been regularly amended over the years without issue. The primary spark for the protests is commonly held to be the October 2019 decision to hike metro fares by 30 pesos ($.04 USD); in a post gilets jaunes/Arab Spring world, we are no longer so surprised that seemingly mundane events can trigger vast cascades of public outrage, but demanding a new constitution in order to save a nickel on a bus pass (or adjust tariff rates, tweak pension funding, etc) seems a bit excessive. It seemed that way to Chileans too, as the eventual anti-neoliberal reform proposal ended up so overburdened by leftist wishlist items (e.g. granting constitutional rights to nature itself) that it was overwhelmingly rejected as this book went to press in September 2022, and in May 2023 a right-wing constitutional convention was elected to write a more conservative draft, which itself was also voted down in December 2023 as of the writing of this review. However much Chileans disliked what they called neoliberalism, they evidently disliked the alternatives even more.
By the way: what is neoliberalism; more relevantly, what did Chileans think it was? Edwards defines it in the Introduction as "a set of beliefs and policy recommendations that emphasize the use of market mechanisms to solve most of society's problems and needs, including the provision and allocation of social services such as education, old-age pensions, health, support for the arts, and public transportation", or more briefly, "neoliberalism is the marketization of almost everything". He supports this with an appendix discussing the Colloque Lippmann and the Mont Pelerin Society, as well as Michel Foucault's approving lectures on neoliberalism and his admiration for Gary Becker, one of the archetypal Chicago economists, including his accusation that the proper blame for the Chilean coup lay on the Marxist ineptitude which had made it necessary. Each country has its own unique spin on even the most seemingly general ideologies, and as mentioned, the primary issue for most Chileans seemed to be a lack of attention to inequality:
"Certainly the fact that neoliberals believe that the market provides the most efficient way of delivering social services does not mean that they ignore social conditions or the plight of the poor... What is true, however, is that for neoliberals the main goal of social policies is reducing (eliminating) poverty through targeted programs rather than reducing inequality. Income distribution - either vertical or horizontal - is not a priority."
This seems like a fair criticism of neoliberalism even if you disagree with it; some people just don't trust the outcomes of market processes (and rightly so, in some cases). The ultimate origins of people's fundamental attitudes towards how markets embody, reflect, or subvert moral values are beyond the scope of this book review (for a good overview of this debate, see Jason Brennan and Peter Jaworski's excellent Markets Without Limits), but as Edwards ably shows, the Chilean experience demonstrates that at least one type of neoliberalism was responsible for a sustained and successful program of eliminating deep poverty, and while marketizing various aspects of society doesn't guarantee success, center-left politicians can safely ignore leftists and right-wingers who attempt to conjure the specter of Pinochet as an excuse to avoid thinking deeply about the lessons to be drawn from what was and is a flawed but quietly triumphant ideology.
Further reading on Chile and related economic subjects:
- A more detailed analysis on the alleged US "invisible blockade", concluding that Chile did just fine destroying its economy on its own, thank you. https://pseudoerasmus.com/2015/05/21/...
- Chile is also often brought up as an example of the "Washington Consensus", which has done much better than its detractors often claim, though of course no single policy is guaranteed to succeed. https://www.sciencedirect.com/science...
- Much more detail on Milton Friedman's two visits to Chile and the fairly mundane economic advice he gave. https://www.cambridge.org/core/journa...
- In light of the Chilean debate on inequality, Auten and Splinter's brand new article "Income Inequality in the United States" shows less income and wealth inequality than is commonly asserted using more accurate calculations. https://www.journals.uchicago.edu/doi... ...more
Notes are private!
7
1
not set
Nov 2023
Dec 31, 2023
Hardcover
1984879421
9781984879424
1984879421
3.76
5,652
Feb 14, 2023
Feb 14, 2023
really liked it
I've never seen HBO's Succession, but the show's patriarch (Brian Cox's character) was in large part based on Sumner Redstone, the recently deceased,
I've never seen HBO's Succession, but the show's patriarch (Brian Cox's character) was in large part based on Sumner Redstone, the recently deceased, extremely colorful owner of Viacom/CBS/Paramount. Stewart has long been one of my favorite business writers thanks to Den of Thieves and especially Disneywar, so this was a must-read for me. He and his fellow NYT journalist Abrams, who helped break the Harvey Weinstein story, present an enthralling account of a rapidly decaying Redstone caught in an incredibly lurid sex/money/power maelstrom as his friends, family, and "female companions" tried to seize their share of his estate in his final years of life, along with the interrelated downfall of Les Moonves, the serial sexual assaulter head of CBS. You can see why this book is already being optioned for its own Succession-type series (it's even already divided into seasons and episodes instead of sections and chapters), but it's all the more worth reading because of the massive effects these events had on the broader entertainment industry.
Starting from a pair of movie theaters owned by his father, Redstone, who coined the term "multiplex", gradually built up an immense media/entertainment empire under his National Amusements, Inc. holding company, culminating in a successful 1993 bid for Paramount (originally Gulf+Western) over his hated rivals Barry Diller and John Malone, which he tucked into his portfolio alongside Viacom (purchased in 1987) and CBS (2000). Having acquired great wealth, naturally he became surrounded by people professing great concern for his welfare: his daughter Shari, his paramours Sydney Holland and Manuela Herzer, and his underlings Les Moonves and Phillippe Dauman. There was a lot at stake for them:
His personal fortune, which was still in the billions despite his lavishing tens of millions of dollars on the women he was keeping.
His shares in National Amusements, which granted majority voting control over both Viacom and CBS.
His love and respect, which was a surprisingly powerful draw to his close circle even as his health and acuity declined markedly.
Like with any good book about the entertainment industry, there are a number of fun cameos in here, as well as many interesting looks behind the scenes at how critical business decisions are actually made. In 2021 I read Ben Fritz's similarly great book The Big Picture, which was about the turmoil at Sony Pictures in recent years, and it really put into perspective how many of what seem to the unaware consumer like completely baffling business moves are really being driven by corporate turmoil at higher levels. Even very large companies can quickly get into trouble if key executives take a dislike to each other, and many of the market struggles of Viacom and CBS were reflective of the power struggles going on in the boardroom, the biggest point of contention being that the Redstone family didn't care if Viacom and CBS were 1 company or 2 since they controlled them both, even though it made a huge difference to their CEOs (Moonves in particular), as well as their boards, shareholders, employees, and consumers.
This occluded drama means that many of the weirder decisions at the more neglected outposts of the Redstone empire, like the creative drift and eventual stagnation of Dreamworks in the 00s and 10s, can be traced back to the fact that the octogenarian Sumner Redstone was too busy piling up mistresses left and right to mind the store, leaving his underlings to quarrel with each other and expand their own fiefdoms at the expense of the broader vision. Another good example is the way that CBS All Access limped along until it was abruptly replaced by Paramount+ and Pluto TV; this was as much driven by court politics as by any inherent technological or strategic differences between the platforms, as once Shari had ousted Moonves and combined the companies under the more pliable Bob Bakish, she was free to slap a new coat of paint on Moonves's streaming initiatives and make some progress in the online content wars (as an aside, I hope Stewart or someone else will someday write the equivalent book about the HBO/AT&T/Warner Brothers/Discovery/Max saga).
Naturally the sex is one of the main draws of the book, both in the somewhat sad but relatively salacious Sumner Redstone plotline and in the much grimmer Moonves plotline. Towards the end of Redstone's life he became increasingly obsessed with his self-image as a ladies man, which led him to essentially force hot younger women to date him, with the definition of "date" ranging from simply appearing with him at increasingly rare public events, to providing him emotional support (basically soothing his ego and telling him everyone else was out to get him), to engaging in sexual activities with him or procuring him some unfortunate girl who would. Sydney Holland (introduced to him by Millionaire Matchmaker host Patti Stanger) and Manuela Herzer were his 2 primary mistresses, with Malia Andelin and Heather Naylor as lesser satellite girlfriends. The harem dynamics that Holland and Herzer (dubbed "S & M") engage in over the course of the book are fascinating; they sweet-talked him into an ever-escalating series of gifts and allowances, eventually ending up with about $150 million of Redstone's money after being essentially paid to go away. You somehow feel almost bad for the doddering, decaying Sumner as his procuresses do their best to bleed him dry, but by the end it's hard to feel much sympathy for anyone involved.
Meanwhile, Les Moonves, who had ascended to the heights of power as CEO of CBS, was finally facing a reckoning for his history of sexual assault at the worst possible time for him: just as he was instigating a board revolt against Shari for trying to recombine Viacom and CBS, which would naturally diminish both the board's and his own power. I'm not a fan of the reductive, vaguely dismissive phrase "he got MeToo'd", even less with a hashtag, since it's often used as a way to bracket off the actual behavior; a better way to put it is that Moonves was one of the most prominent figures associated with the movement to hold powerful people accountable for their actions, which in this case amounted to repeated incidents of sexual assault against a full dozen actresses and other women over several decades. Stewart and Abrams provide plenty of documentation of his trail of victims, including his bizarre crusade against Janet Jackson over the Super Bowl XXXVIII halftime show incident; it's sobering to remember that beyond the actual assault, he had the Weinstein-like tendency to ruin the careers of women he just didn't like on what seems like unbelievably hypocritical pretexts.
What's galling is that Moonves's downfall was another instance of "it's the coverup, not the crime". It's entirely possible that the board would have been perfectly willing to look past some 30 years old "indiscretions", even additional incidents beyond the few that were known, until it emerged that rather than all these incidents having occurred in the distant past, he'd actually recently reached out to one victim's agent to try to buy her silence due to a Ronan Farrow New Yorker article about Moonves by finding her a minor bit part. Even worse, he lied about how he had arranged for this bit part, trying to cover up texts between him and the agent. Once the texts were revealed and his paper-thin excuses were exposed (he at one point tried to claim that the text messages were faked by passing off his son's iPad as his own), it was all over. What's even more irritating is that Moonves was literally hours away from being home free with a $70 million golden parachute (and potentially $120 million if he played his cards right) until Vanity Fair saw the New Yorker piece and jumped in with yet another victim's story they'd been hesitant to pursue. And even worse: he even tried for years afterwards to get that money, like the little boy in the famous definition of "chutzpah" who killed his parents and then begged the court for mercy on the grounds that he was an orphan.
WSJ reporter Keach Hagey wrote a book in 2018 which I haven't read titled The King of Content that focuses more on the business maneuvers Redstone engaged in to build his empire; his rise rather than his decline. Stewart and Abrams present an impeccably-sourced, dramatically-paced account of the final days of a wealthy, deteriorating tycoon who was almost more influential in his senility than in his youth, the downfall of an executive who might have gotten away with ruining many more lives than he did if not for inhuman levels of arrogance, and an absorbing look at an industry built on enabling while also simultaneously ignoring and exploiting the worst of human behavior. The value of books like Unscripted is that you get a rare peek behind the screen into the almost incomprehensibly sordid lives of the players who make the entertainment products you watch happen. Sex, power, and money - you can see how the adaptations practically write themselves. ...more
Starting from a pair of movie theaters owned by his father, Redstone, who coined the term "multiplex", gradually built up an immense media/entertainment empire under his National Amusements, Inc. holding company, culminating in a successful 1993 bid for Paramount (originally Gulf+Western) over his hated rivals Barry Diller and John Malone, which he tucked into his portfolio alongside Viacom (purchased in 1987) and CBS (2000). Having acquired great wealth, naturally he became surrounded by people professing great concern for his welfare: his daughter Shari, his paramours Sydney Holland and Manuela Herzer, and his underlings Les Moonves and Phillippe Dauman. There was a lot at stake for them:
His personal fortune, which was still in the billions despite his lavishing tens of millions of dollars on the women he was keeping.
His shares in National Amusements, which granted majority voting control over both Viacom and CBS.
His love and respect, which was a surprisingly powerful draw to his close circle even as his health and acuity declined markedly.
Like with any good book about the entertainment industry, there are a number of fun cameos in here, as well as many interesting looks behind the scenes at how critical business decisions are actually made. In 2021 I read Ben Fritz's similarly great book The Big Picture, which was about the turmoil at Sony Pictures in recent years, and it really put into perspective how many of what seem to the unaware consumer like completely baffling business moves are really being driven by corporate turmoil at higher levels. Even very large companies can quickly get into trouble if key executives take a dislike to each other, and many of the market struggles of Viacom and CBS were reflective of the power struggles going on in the boardroom, the biggest point of contention being that the Redstone family didn't care if Viacom and CBS were 1 company or 2 since they controlled them both, even though it made a huge difference to their CEOs (Moonves in particular), as well as their boards, shareholders, employees, and consumers.
This occluded drama means that many of the weirder decisions at the more neglected outposts of the Redstone empire, like the creative drift and eventual stagnation of Dreamworks in the 00s and 10s, can be traced back to the fact that the octogenarian Sumner Redstone was too busy piling up mistresses left and right to mind the store, leaving his underlings to quarrel with each other and expand their own fiefdoms at the expense of the broader vision. Another good example is the way that CBS All Access limped along until it was abruptly replaced by Paramount+ and Pluto TV; this was as much driven by court politics as by any inherent technological or strategic differences between the platforms, as once Shari had ousted Moonves and combined the companies under the more pliable Bob Bakish, she was free to slap a new coat of paint on Moonves's streaming initiatives and make some progress in the online content wars (as an aside, I hope Stewart or someone else will someday write the equivalent book about the HBO/AT&T/Warner Brothers/Discovery/Max saga).
Naturally the sex is one of the main draws of the book, both in the somewhat sad but relatively salacious Sumner Redstone plotline and in the much grimmer Moonves plotline. Towards the end of Redstone's life he became increasingly obsessed with his self-image as a ladies man, which led him to essentially force hot younger women to date him, with the definition of "date" ranging from simply appearing with him at increasingly rare public events, to providing him emotional support (basically soothing his ego and telling him everyone else was out to get him), to engaging in sexual activities with him or procuring him some unfortunate girl who would. Sydney Holland (introduced to him by Millionaire Matchmaker host Patti Stanger) and Manuela Herzer were his 2 primary mistresses, with Malia Andelin and Heather Naylor as lesser satellite girlfriends. The harem dynamics that Holland and Herzer (dubbed "S & M") engage in over the course of the book are fascinating; they sweet-talked him into an ever-escalating series of gifts and allowances, eventually ending up with about $150 million of Redstone's money after being essentially paid to go away. You somehow feel almost bad for the doddering, decaying Sumner as his procuresses do their best to bleed him dry, but by the end it's hard to feel much sympathy for anyone involved.
Meanwhile, Les Moonves, who had ascended to the heights of power as CEO of CBS, was finally facing a reckoning for his history of sexual assault at the worst possible time for him: just as he was instigating a board revolt against Shari for trying to recombine Viacom and CBS, which would naturally diminish both the board's and his own power. I'm not a fan of the reductive, vaguely dismissive phrase "he got MeToo'd", even less with a hashtag, since it's often used as a way to bracket off the actual behavior; a better way to put it is that Moonves was one of the most prominent figures associated with the movement to hold powerful people accountable for their actions, which in this case amounted to repeated incidents of sexual assault against a full dozen actresses and other women over several decades. Stewart and Abrams provide plenty of documentation of his trail of victims, including his bizarre crusade against Janet Jackson over the Super Bowl XXXVIII halftime show incident; it's sobering to remember that beyond the actual assault, he had the Weinstein-like tendency to ruin the careers of women he just didn't like on what seems like unbelievably hypocritical pretexts.
What's galling is that Moonves's downfall was another instance of "it's the coverup, not the crime". It's entirely possible that the board would have been perfectly willing to look past some 30 years old "indiscretions", even additional incidents beyond the few that were known, until it emerged that rather than all these incidents having occurred in the distant past, he'd actually recently reached out to one victim's agent to try to buy her silence due to a Ronan Farrow New Yorker article about Moonves by finding her a minor bit part. Even worse, he lied about how he had arranged for this bit part, trying to cover up texts between him and the agent. Once the texts were revealed and his paper-thin excuses were exposed (he at one point tried to claim that the text messages were faked by passing off his son's iPad as his own), it was all over. What's even more irritating is that Moonves was literally hours away from being home free with a $70 million golden parachute (and potentially $120 million if he played his cards right) until Vanity Fair saw the New Yorker piece and jumped in with yet another victim's story they'd been hesitant to pursue. And even worse: he even tried for years afterwards to get that money, like the little boy in the famous definition of "chutzpah" who killed his parents and then begged the court for mercy on the grounds that he was an orphan.
WSJ reporter Keach Hagey wrote a book in 2018 which I haven't read titled The King of Content that focuses more on the business maneuvers Redstone engaged in to build his empire; his rise rather than his decline. Stewart and Abrams present an impeccably-sourced, dramatically-paced account of the final days of a wealthy, deteriorating tycoon who was almost more influential in his senility than in his youth, the downfall of an executive who might have gotten away with ruining many more lives than he did if not for inhuman levels of arrogance, and an absorbing look at an industry built on enabling while also simultaneously ignoring and exploiting the worst of human behavior. The value of books like Unscripted is that you get a rare peek behind the screen into the almost incomprehensibly sordid lives of the players who make the entertainment products you watch happen. Sex, power, and money - you can see how the adaptations practically write themselves. ...more
Notes are private!
1
not set
Aug 2023
Dec 31, 2023
Hardcover
0802160417
9780802160416
0802160417
3.51
1,343
2023
Jan 24, 2023
liked it
An intriguing light novel about sleepless nights and the thought of John Maynard Keynes, two very different subjects you don’t often see linked togeth
An intriguing light novel about sleepless nights and the thought of John Maynard Keynes, two very different subjects you don’t often see linked together. Abby is a feminist economist suffering a bout of insomnia while staying in a hotel. She has just been denied tenure, but she’s still scheduled to give a talk the next day regarding John Maynard Keynes’ famous 1930 work Economic Possibilities For Our Grandchildren (which in my opinion is one of the greatest essays ever written). She starts tossing and turning, and her nerves over the speech combined with her disappointment over the tenure denial is all set to give her a major late-night life crisis, but the spirit of Keynes himself appears in her thoughts to guide her through her speech anxiety as well as the emotional fallout of many other important events in her life.
The book isn’t quite stream-of-consciousness (thank god), but it does a great job of depicting the torrent of involuntary mental free-associations that will be all-too-familiar to anyone who’s had a poorly-timed 3am journey through every regret they’ve ever had, mixed with a surprisingly substantive exploration of Keynes’s legendary piece about what people might do with real wealth and abundance for the first time in human history. One might say that Abby’s inability to commit to any task mirrors our own inability to stick on the smooth path of progress that Keynes was so evocative of, but Riker is not so crass as to make his moral so obvious. The surreal ending, where Keynes himself somehow begins to give Abby’s speech for her, might not be to everyone’s taste, but then again the whole rest of the novel has been basically operating on dream logic - has she actually been asleep the whole time? ...more
The book isn’t quite stream-of-consciousness (thank god), but it does a great job of depicting the torrent of involuntary mental free-associations that will be all-too-familiar to anyone who’s had a poorly-timed 3am journey through every regret they’ve ever had, mixed with a surprisingly substantive exploration of Keynes’s legendary piece about what people might do with real wealth and abundance for the first time in human history. One might say that Abby’s inability to commit to any task mirrors our own inability to stick on the smooth path of progress that Keynes was so evocative of, but Riker is not so crass as to make his moral so obvious. The surreal ending, where Keynes himself somehow begins to give Abby’s speech for her, might not be to everyone’s taste, but then again the whole rest of the novel has been basically operating on dream logic - has she actually been asleep the whole time? ...more
Notes are private!
1
not set
Mar 2023
Jul 31, 2023
Paperback
4.28
40,171
1989
Oct 13, 2009
it was amazing
I knew Barbarians at the Gate would be good, but it surpassed my expectations. It’s probably the single most widely-praised business book of all time,
I knew Barbarians at the Gate would be good, but it surpassed my expectations. It’s probably the single most widely-praised business book of all time, along with maybe John Brooks’ Business Adventures, and it deserves every bit of its acclaim. A good business book will present a business story or problem, explain why it mattered to the people involved, and most of all, connect it to something the broader world at large would care about, especially all-too-human feelings like greed and hubris. It’s much more difficult than it seems to adequately convey the relationship between an abstract financial maneuver and the human motives underneath, particularly when it involves complex financial chicanery of the sort that takes a phalanx of lawyers and accountants to sort out, so it is nothing short of a miracle that Burroughs and Helyar’s chronicle of the 1988 leveraged buyout of RJR Nabisco for $25 billion, the largest in history (that’s $64 billion in 2023 dollars)is not merely readable but thrilling. Even if you aren’t interested in the world of 80s finance, reading this will give you invaluable insight into the modern business landscape, for example Elon Musk’s increasingly frantic behavior these days after his own LBO of Twitter.
Leveraged buyouts are conceptually fairly straightforward - one company/entity buys a controlling share in another with the use of debt (leverage) that will be paid off by the target company - and they happen on a small scale all the time. An example might be when the aging founder of a family-owned business wants to retire and sell it to his son-in-law, who doesn’t have the cash to buy the majority stake on hand, but could purchase it with a small amount of debt that would then be repaid by the business’ ongoing cash flow. The founder and his son–in-law go to the bank, which examines the business’ books and decides that it’s safe for the firm to take on that much debt, especially since the new owner not only has a long history with the company but will now have a powerful motivation to help it continue to grow in the future. All of the players involved have strong incentives to make the transaction work in everyone’s best interests, the famous Modigliani-Miller theorem that debt finance is as good to a company as equity finance (ceteris paribus) might hold on this small scale, and so these LBOs are too boring and uncontroversial to attract much attention.
The Wall Street version, on the other hand, can get very dicey, particularly for a publicly traded company. The friendliness of the negotiations, the exact amount of debt and what the terms will be, how much of their own actual money the buyers will put up, what the new ownership structure will look like, and what the target company might have to do after the purchase in order to pay off the new debt, are no longer so simple at all. If the buyout offer is too low, existing shareholders might feel cheated and reject the deal outright, potentially harming the company’s prospects and calling the soundness of the leadership into question, but if the offer is too high, the company might struggle under the resulting debt burden and have to make unnecessarily painful choices. Furthermore, once the sale goes through the new owners might simply strip their new acquisition for parts and sell it off once they recoup their investment (plus a healthy profit for themselves, of course!), leaving the company worse off than before. So what is theoretically a mundane, morally neutral transaction can take on nearly apocalyptic overtones to the target of an LBO once you start talking billions.
The LBO of RJR Nabisco was not quite the apocalypse, but it might have felt like it at the time. The company was created in 1985 by an amalgamation of RJ Reynolds (founded in 1875) and Nabisco (1898), which was itself formed by the 1981 amalgamation of Nabisco and Standard Brands (1929). F. Ross Johnson, the CEO of Standard Brands, then Nabisco, then RJR Nabisco, worked his way up from a middle-class life in Manitoba to the heights of corporate America by using all the typical tactics you associate with an 80s chief executive, most of all being less concerned with the employees or the company’s core businesses than with taking (and keeping) power, making lots of money, playing the M&A slot machine game, and enjoying the perks that come with being a tobacco magnate. Almost immediately after he wrested control of RJR Nabisco he uprooted the company HQ from Winston-Salem to Atlanta, assembled a gigantic fleet of private jets (the “RJR Air Force”), spent a surprisingly large percentage of his time either playing golf or hobnobbing with golf-adjacent celebrities, and generally not trying overly hard to be liked by the people around him, who did not appreciate his cavalier attitude towards all these beloved legacy brands that had been around for upwards of a century or more.
Johnson had risen incredibly quickly through the ranks by acting like a parody of the ruthless, hard-charging, unconstrained CEO. However, running a corporate empire, a stable environment of caution and pragmatism where a wrong move can be fatal, is very different than assembling that corporate empire via moments of audacity and boldness where rewards usually outweigh risks, which can mean trouble if the CEO doesn’t adapt. The company was enduring a period of doldrums on the stock market thanks to ill-advised ventures like the previous CEO Tylee Wilson’s unsuccessful experiments with Premier smokeless cigarettes (sadly vape technology was not around then, so it’s another case of right idea, wrong time), and the boredom-prone Johnson very quickly set about trying to make himself even richer by soliciting takeover bids for the company. Since RJR Nabisco was a massive mega-conglomerate with plenty of meat on the bones, beloved consumer brands like Del Monte, or even Nabisco itself, became merely bargaining chips to be traded away in order to finance the takeover while the tobacco part of the company was steadily printing money, a stable revenue stream that would be very attractive to potential buyers.
Even though a buyout of this magnitude was beyond the capability of most investment firms to realistically finance, the immense potential profits at stake made several long-shot firms decide to throw their hat into the ring with increasingly convoluted bids, so once Johnson starts soliciting takeover bids, the hundreds of pages of corporate intrigue absolutely fly by in a whirlwind of steadily ratcheting tension and ever-more intricate (but still intelligible) financing schemes. This deal was so lucrative that essentially everyone who was anyone on Wall Street was involved at some point, so if you have read other finance books of the era like Den of Thieves, Liar’s Poker, Octopus, When Genius Failed, etc, you will see a lot of familiar faces show up to bid for what could be hundreds of millions of dollars in commissions. As the bidding gradually rises from $75/share to $90 and beyond, the authors, who were both veteran Wall Street Journal reports, make sure to explain everyone’s thinking on key bargaining chips like debt to equity ratios, the use of junk bonds, interest rate resets on securities, opaque tax shenanigans - at one point, one bidder’s offer includes a scheme to defer $3.5 billion in corporate taxes, enough to increase the federal deficit by 2 percent all by itself! - and, most importantly, control of the board of directors.
You will be heartened to learn that megadeals like this one get very confusing to even seasoned Wall Street guys, who are basically just playing Indian poker with bundles of bank loans, and amused by their tactics; at one point KKR is reduced to juvenile skullduggery like “urinal patrols”, where they wait for board members to go to the bathroom during marathon negotiation sessions and then send in a underlying to chat up the the hapless director in hopes of getting valuable intel or swaying their thinking. Wall Street high finance was and is a small world, with plenty of bad blood and inside drama between players who have long histories together, and Burroughs and Helyar show every twist and turn as they wage total war over what to an outsider would seem like impossibly trivial issues. My favorite fight was the one over which firm name would be listed first in the buyout announcement, which is worth a lengthy quote:
“When more than one bank agrees to underwrite a bond offering, a lead bank must be chosen to run the books. The key records of bond sales reside physically at that bank, which generally calls the shots and parcels out bonds over the course of the offering. The lead bank is so noted by placing its name first — on the left side — of the subsequent tombstone advertisements that pack The Wall Street Journal and other financial publications. Being "on the left" of the tombstone thus has powerful symbolic significance in the bond world.
Before Kravis's entry, Strauss and Cohen had agreed that Salomon and Shearson would corun the books. Shearson would be on the left, Salomon on the right. The books would rest physically at Shearson. That arrangement didn't bother Salomon, Strauss explained, because Salomon's power in the bond world so overshadowed Shearson's that everyone would know who had really run the deal.
The same structure, however, would send an entirely different message with Drexel on the left. While Salomon could tower over Shearson from a position on the right, the same wouldn't be true of a bond-trading power such as Drexel. "With Drexel on the left," Strauss said, "we would have been perceived as an afterthought."
In the end, then, perception was the issue. Perception about who was running a set of bond offerings that, to Johnson or any other acquirer, was a detail. For despite its status as a full partner in Johnson's deal, despite all the high talk about merchant banking, Salomon's principal mission wasn't owning Oreos. It was selling bonds. And it was willing to sacrifice Johnson's interests — indeed, his entire deal — to avoid the perception that it was taking a backseat to its hated rival, Drexel. Through all the machismo, through all the greed, through all the discussion of shareholder values, it all came down to this: John Gutfreund and Tom Strauss were prepared to scrap the largest takeover of all time because their firm's name would go on the right side, not the left side, of a tombstone advertisement buried among the stock tables at the back of The Wall Street Journal and The New York Times.”
The masters of the universe!
It makes you wonder how the company could possibly have been conducting business normally while every C-level exec was spending seemingly every waking minute arguing about this stuff while plotting how to grab themselves a piece of the pie and the very existence of large swaths of the company were in question. Eventually the board decides to stop the madness and accepts KKR’s offer of $109/share over Johnson’s own offer of $112, for a then-mind blowing total of $25 billion ($64 billion in 2023 dollars). This was for two reasons, one purely pragmatic: it contained a safer underlying mix of cash and securities; the other personal: it would let them fire Johnson, who had by then thoroughly worn out his welcome at RJR Nabisco. Though Johnson doesn’t come off as evil, per se (it’s hard to see a tobacco company as a victim relative to even a greedy CEO like him), you get a real sense of satisfaction from watching him fly too close to the sun and get deposed. Don’t feel too bad for him, though: his $53 million golden parachute gave him a pretty soft landing. Even though it also doesn’t feel good that a private equity firm won, it is a valuable lesson that there is often no such thing as a good guy or bad guy in these deals - it’s just business.
Burroughs & Helyar somewhat sadly state in the Afterword to my 20th anniversary edition that they caught lightning in a bottle here and never released anything else on this level. That is a real shame, as Barbarians at the Gate is so good that it stands on its own as a masterpiece of not merely financial journalism, but financial literature. It might be forever unknowable precisely what urges prompted Elon Musk to sink tens of billions of his own money into an LBO of Twitter, but after having read this book, it will be a lot clearer to you just how many titanically important financial decisions rest on mysterious foundations in the depths of the human mind. ...more
Leveraged buyouts are conceptually fairly straightforward - one company/entity buys a controlling share in another with the use of debt (leverage) that will be paid off by the target company - and they happen on a small scale all the time. An example might be when the aging founder of a family-owned business wants to retire and sell it to his son-in-law, who doesn’t have the cash to buy the majority stake on hand, but could purchase it with a small amount of debt that would then be repaid by the business’ ongoing cash flow. The founder and his son–in-law go to the bank, which examines the business’ books and decides that it’s safe for the firm to take on that much debt, especially since the new owner not only has a long history with the company but will now have a powerful motivation to help it continue to grow in the future. All of the players involved have strong incentives to make the transaction work in everyone’s best interests, the famous Modigliani-Miller theorem that debt finance is as good to a company as equity finance (ceteris paribus) might hold on this small scale, and so these LBOs are too boring and uncontroversial to attract much attention.
The Wall Street version, on the other hand, can get very dicey, particularly for a publicly traded company. The friendliness of the negotiations, the exact amount of debt and what the terms will be, how much of their own actual money the buyers will put up, what the new ownership structure will look like, and what the target company might have to do after the purchase in order to pay off the new debt, are no longer so simple at all. If the buyout offer is too low, existing shareholders might feel cheated and reject the deal outright, potentially harming the company’s prospects and calling the soundness of the leadership into question, but if the offer is too high, the company might struggle under the resulting debt burden and have to make unnecessarily painful choices. Furthermore, once the sale goes through the new owners might simply strip their new acquisition for parts and sell it off once they recoup their investment (plus a healthy profit for themselves, of course!), leaving the company worse off than before. So what is theoretically a mundane, morally neutral transaction can take on nearly apocalyptic overtones to the target of an LBO once you start talking billions.
The LBO of RJR Nabisco was not quite the apocalypse, but it might have felt like it at the time. The company was created in 1985 by an amalgamation of RJ Reynolds (founded in 1875) and Nabisco (1898), which was itself formed by the 1981 amalgamation of Nabisco and Standard Brands (1929). F. Ross Johnson, the CEO of Standard Brands, then Nabisco, then RJR Nabisco, worked his way up from a middle-class life in Manitoba to the heights of corporate America by using all the typical tactics you associate with an 80s chief executive, most of all being less concerned with the employees or the company’s core businesses than with taking (and keeping) power, making lots of money, playing the M&A slot machine game, and enjoying the perks that come with being a tobacco magnate. Almost immediately after he wrested control of RJR Nabisco he uprooted the company HQ from Winston-Salem to Atlanta, assembled a gigantic fleet of private jets (the “RJR Air Force”), spent a surprisingly large percentage of his time either playing golf or hobnobbing with golf-adjacent celebrities, and generally not trying overly hard to be liked by the people around him, who did not appreciate his cavalier attitude towards all these beloved legacy brands that had been around for upwards of a century or more.
Johnson had risen incredibly quickly through the ranks by acting like a parody of the ruthless, hard-charging, unconstrained CEO. However, running a corporate empire, a stable environment of caution and pragmatism where a wrong move can be fatal, is very different than assembling that corporate empire via moments of audacity and boldness where rewards usually outweigh risks, which can mean trouble if the CEO doesn’t adapt. The company was enduring a period of doldrums on the stock market thanks to ill-advised ventures like the previous CEO Tylee Wilson’s unsuccessful experiments with Premier smokeless cigarettes (sadly vape technology was not around then, so it’s another case of right idea, wrong time), and the boredom-prone Johnson very quickly set about trying to make himself even richer by soliciting takeover bids for the company. Since RJR Nabisco was a massive mega-conglomerate with plenty of meat on the bones, beloved consumer brands like Del Monte, or even Nabisco itself, became merely bargaining chips to be traded away in order to finance the takeover while the tobacco part of the company was steadily printing money, a stable revenue stream that would be very attractive to potential buyers.
Even though a buyout of this magnitude was beyond the capability of most investment firms to realistically finance, the immense potential profits at stake made several long-shot firms decide to throw their hat into the ring with increasingly convoluted bids, so once Johnson starts soliciting takeover bids, the hundreds of pages of corporate intrigue absolutely fly by in a whirlwind of steadily ratcheting tension and ever-more intricate (but still intelligible) financing schemes. This deal was so lucrative that essentially everyone who was anyone on Wall Street was involved at some point, so if you have read other finance books of the era like Den of Thieves, Liar’s Poker, Octopus, When Genius Failed, etc, you will see a lot of familiar faces show up to bid for what could be hundreds of millions of dollars in commissions. As the bidding gradually rises from $75/share to $90 and beyond, the authors, who were both veteran Wall Street Journal reports, make sure to explain everyone’s thinking on key bargaining chips like debt to equity ratios, the use of junk bonds, interest rate resets on securities, opaque tax shenanigans - at one point, one bidder’s offer includes a scheme to defer $3.5 billion in corporate taxes, enough to increase the federal deficit by 2 percent all by itself! - and, most importantly, control of the board of directors.
You will be heartened to learn that megadeals like this one get very confusing to even seasoned Wall Street guys, who are basically just playing Indian poker with bundles of bank loans, and amused by their tactics; at one point KKR is reduced to juvenile skullduggery like “urinal patrols”, where they wait for board members to go to the bathroom during marathon negotiation sessions and then send in a underlying to chat up the the hapless director in hopes of getting valuable intel or swaying their thinking. Wall Street high finance was and is a small world, with plenty of bad blood and inside drama between players who have long histories together, and Burroughs and Helyar show every twist and turn as they wage total war over what to an outsider would seem like impossibly trivial issues. My favorite fight was the one over which firm name would be listed first in the buyout announcement, which is worth a lengthy quote:
“When more than one bank agrees to underwrite a bond offering, a lead bank must be chosen to run the books. The key records of bond sales reside physically at that bank, which generally calls the shots and parcels out bonds over the course of the offering. The lead bank is so noted by placing its name first — on the left side — of the subsequent tombstone advertisements that pack The Wall Street Journal and other financial publications. Being "on the left" of the tombstone thus has powerful symbolic significance in the bond world.
Before Kravis's entry, Strauss and Cohen had agreed that Salomon and Shearson would corun the books. Shearson would be on the left, Salomon on the right. The books would rest physically at Shearson. That arrangement didn't bother Salomon, Strauss explained, because Salomon's power in the bond world so overshadowed Shearson's that everyone would know who had really run the deal.
The same structure, however, would send an entirely different message with Drexel on the left. While Salomon could tower over Shearson from a position on the right, the same wouldn't be true of a bond-trading power such as Drexel. "With Drexel on the left," Strauss said, "we would have been perceived as an afterthought."
In the end, then, perception was the issue. Perception about who was running a set of bond offerings that, to Johnson or any other acquirer, was a detail. For despite its status as a full partner in Johnson's deal, despite all the high talk about merchant banking, Salomon's principal mission wasn't owning Oreos. It was selling bonds. And it was willing to sacrifice Johnson's interests — indeed, his entire deal — to avoid the perception that it was taking a backseat to its hated rival, Drexel. Through all the machismo, through all the greed, through all the discussion of shareholder values, it all came down to this: John Gutfreund and Tom Strauss were prepared to scrap the largest takeover of all time because their firm's name would go on the right side, not the left side, of a tombstone advertisement buried among the stock tables at the back of The Wall Street Journal and The New York Times.”
The masters of the universe!
It makes you wonder how the company could possibly have been conducting business normally while every C-level exec was spending seemingly every waking minute arguing about this stuff while plotting how to grab themselves a piece of the pie and the very existence of large swaths of the company were in question. Eventually the board decides to stop the madness and accepts KKR’s offer of $109/share over Johnson’s own offer of $112, for a then-mind blowing total of $25 billion ($64 billion in 2023 dollars). This was for two reasons, one purely pragmatic: it contained a safer underlying mix of cash and securities; the other personal: it would let them fire Johnson, who had by then thoroughly worn out his welcome at RJR Nabisco. Though Johnson doesn’t come off as evil, per se (it’s hard to see a tobacco company as a victim relative to even a greedy CEO like him), you get a real sense of satisfaction from watching him fly too close to the sun and get deposed. Don’t feel too bad for him, though: his $53 million golden parachute gave him a pretty soft landing. Even though it also doesn’t feel good that a private equity firm won, it is a valuable lesson that there is often no such thing as a good guy or bad guy in these deals - it’s just business.
Burroughs & Helyar somewhat sadly state in the Afterword to my 20th anniversary edition that they caught lightning in a bottle here and never released anything else on this level. That is a real shame, as Barbarians at the Gate is so good that it stands on its own as a masterpiece of not merely financial journalism, but financial literature. It might be forever unknowable precisely what urges prompted Elon Musk to sink tens of billions of his own money into an LBO of Twitter, but after having read this book, it will be a lot clearer to you just how many titanically important financial decisions rest on mysterious foundations in the depths of the human mind. ...more
Notes are private!
1
not set
Feb 2023
Jul 31, 2023
Kindle Edition
0815739281
9780815739289
0815739281
3.94
380
2022
Feb 22, 2022
it was amazing
Even though I am a homeowner, and thus in theory safely insulated from the vicissitudes of America’s housing affordability crisis, I don’t think it’s
Even though I am a homeowner, and thus in theory safely insulated from the vicissitudes of America’s housing affordability crisis, I don’t think it’s possible for anyone to ignore how expensive housing has become. I am a firm believer in what economists Sam Bowman and Ben Southwood once aptly termed “The Housing Theory of Everything” - I think that there is no better way of tackling many of the US’s current social issues like crime, homelessness, climate change, inequality, cultural stagnation, and more at a single stroke than by returning our broken housing market to the prices of the 90s - it’s all downstream of how high the rent is. If you had to recommend only one book to someone unfamiliar with the issue that summed up the whole debate over the housing crisis, from causes to mechanics to potential solutions, this would probably be it, because even though housing is an incredibly complex and contentious subject, Schuetz ably lays out the historical background, explains the terms of the debate, explores the various analytical frames often encountered, discusses possible solutions, and evaluates them in an even-handed yet rigorous way.
Based on watching what’s happened in my hometown of Austin, I have become a solidly committed YIMBY/neoliberal who believes that the primary solution to what is clearly a deliberate decades-long engineering of a housing supply shortage in all cities at all income levels is to liberalize our broken single-family exclusionary zoning system by allowing us to simply build more housing. Unleash the cranes and bulldozers and don’t stop until everyone has a place they can afford to live, is my view, although I’m not opposed to including social housing or targeted rent subsidies/cost controls as part of the solution. However, I think even more market-skeptical or change-averse folks would find a lot of value in her analysis; even her chapter titles have a pleasant, common-sensical apothegmatic punch to them that should be unobjectionable across most of the normal ideological spectrum:
- Housing Sits at the Intersection of Several Complex Systems
- Build More Homes Where People Want to Live
- Stop Building Homes In the Wrong Places
- Give Poor People Money
- Homeownership Should Be Only One Component of Wealth
- High-Quality Community Infrastructure Is Expensive, But It Benefits Everyone
- Overcome the Limits of Localism
- Build Better Political Coalitions Around Better Policies
All excellent points, although of course actually solving the crisis is much easier said than done. Politics being what they are, even small steps forward encounter massive resistance from incumbents and rent-seekers, and even minor victories can take a long time; as I write this in July 2023 Austin just took the first step in the right direction since the collapse of our attempt to rewrite our zoning code a few years back by voting to allow more missing middle housing and stop requiring extra parking everywhere. It won’t fix everything, but it’s progress. A better world is possible! This book is not the last word on housing, but following her prescriptions to unravel the mess we’ve gotten ourselves in one step at a time would be an excellent starting point. ...more
Based on watching what’s happened in my hometown of Austin, I have become a solidly committed YIMBY/neoliberal who believes that the primary solution to what is clearly a deliberate decades-long engineering of a housing supply shortage in all cities at all income levels is to liberalize our broken single-family exclusionary zoning system by allowing us to simply build more housing. Unleash the cranes and bulldozers and don’t stop until everyone has a place they can afford to live, is my view, although I’m not opposed to including social housing or targeted rent subsidies/cost controls as part of the solution. However, I think even more market-skeptical or change-averse folks would find a lot of value in her analysis; even her chapter titles have a pleasant, common-sensical apothegmatic punch to them that should be unobjectionable across most of the normal ideological spectrum:
- Housing Sits at the Intersection of Several Complex Systems
- Build More Homes Where People Want to Live
- Stop Building Homes In the Wrong Places
- Give Poor People Money
- Homeownership Should Be Only One Component of Wealth
- High-Quality Community Infrastructure Is Expensive, But It Benefits Everyone
- Overcome the Limits of Localism
- Build Better Political Coalitions Around Better Policies
All excellent points, although of course actually solving the crisis is much easier said than done. Politics being what they are, even small steps forward encounter massive resistance from incumbents and rent-seekers, and even minor victories can take a long time; as I write this in July 2023 Austin just took the first step in the right direction since the collapse of our attempt to rewrite our zoning code a few years back by voting to allow more missing middle housing and stop requiring extra parking everywhere. It won’t fix everything, but it’s progress. A better world is possible! This book is not the last word on housing, but following her prescriptions to unravel the mess we’ve gotten ourselves in one step at a time would be an excellent starting point. ...more
Notes are private!
1
not set
Feb 2023
Jul 31, 2023
Paperback
0465019595
9780465019595
0465019595
3.95
1,949
Sep 06, 2022
Sep 06, 2022
it was amazing
I’m sure you’ve seen those charts of historical world GDP per capita: almost perfectly flat for 99% of human history since the dawn of time, rising gr
I’m sure you’ve seen those charts of historical world GDP per capita: almost perfectly flat for 99% of human history since the dawn of time, rising gradually only in the 19th century, and finally turning nearly vertical by the present day. That line represents humanity’s gradual escape from the grinding poverty of our prehistoric past into a world of, if not plenty, at least some, and if not for everyone, at least more and more, and explaining its shape - not just how but why it went from flat to exponential, changing the story of our species from questions of bare subsistence and survival to wealth and abundance - is one of the central questions of both economic history as well as any progressive politics of the future. Now, to fully describe the economic history of the entire planet over even a single year is an impossible task, let alone the “long 20th century” of 1870 to 2010, but if any mortal could even dream of such an Olympian feat, it’s DeLong. This stretch of time, from 1870 - when globalization, the industrial research lab, and the modern corporation appeared - to 2010 - the trough of the Great Recession - is populated with many disputatious characters and diverging trends, but DeLong sees the overarching narrative as a conflict between Friedrich Hayek’s market capitalism and Karl Polanyi’s social justice, refereed by John Maynard Keynes’s mixed economy, reaching an apex in the postwar mixed economies and shambling to a nadir after the Great Financial Crisis. And yet even that nadir represents a fantastic triumph of human achievement, vast numbers of people lifted out of poverty and even into luxury, and we can be confident that the story’s not over yet, even if we never reach the promised land. I’ve been reading DeLong’s econ blog for nearly 20 years, enjoying all the preview snippets of this magnum opus he would from time to time, and it was well worth the wait.
...more
Notes are private!
1
not set
Dec 2022
Jan 03, 2023
Hardcover
1948836122
9781948836128
1948836122
3.96
661
unknown
Aug 20, 2019
really liked it
As an Austinite, I am subjected to a continuous daily barrage of Elon Musk news, and ordinarily that would make me want to pay attention to literally
As an Austinite, I am subjected to a continuous daily barrage of Elon Musk news, and ordinarily that would make me want to pay attention to literally anything else, but as the saying goes, “you may not be interested in Elon Musk, but he is interested in you”. I finished this book in late 2022, just as Musk's bid to buy Twitter was entering an especially interminable phase of legal shenanigans, and his baffling actions during the Twitter acquisition perfectly complement the journalism here. After reading this history of Tesla, which is essentially an EV emissions credit-selling company that has a side business of selling cars at a loss, I am now not surprised one bit at any of the baffling maneuvers he’s undertaken to avoid what is pretty clearly a case of buyer’s remorse over an ill-advised impulse; it is fascinating how consistently he has behaved over the past decade and change.
Niedermeyer’s book was published in 2019, but while 3 years is practically decades in terms of grandiose Musk overpromises, his basic pattern has remained the same from Tesla to Twitter:
Make a ridiculous promise with an impossible deadline
Hold a showy demo with a barely functional duct-taped demonstration model
Bask in the rapturous press attention and take as many pre-sales as possible
Book that revenue and use it to solicit desperately needed funding from banks to actually make the product
Years later, begin shipping small quantities of the half-functional product, but no one cares because you’ve already moved on to the next thing
There is more than a small element of deception and chicanery involved in this hype cycle, but that’s often how things work in the tech sector, where charismatic founders are still far more influential than they are in more established and mature industries like cars. Speaking of which, one of the main points Niedermeyer makes repeatedly is that the “move fast and break things” startup mentality that is common in Musk’s Silicon Valley habitat is in many ways fundamentally opposed to the best practices of the auto industry, where enormous amounts of time, effort, and care are invested in creating the most stable and predictable production processes so that carmakers can produce tens or hundreds of thousands of the same model without worrying that they’ll spend a fortune in recalls, lawsuits, and repairs the way that Tesla has.
While not a grand business history book in the way that, say, James Stewart’s Disneywar is, this is a great piece of business journalism (Niedermeyer writes for car blogs and you can tell by his keen attention to specific claims and sourcing) that should be required reading for anyone tempted to proclaim what game-changing genius Musk is. ...more
Niedermeyer’s book was published in 2019, but while 3 years is practically decades in terms of grandiose Musk overpromises, his basic pattern has remained the same from Tesla to Twitter:
Make a ridiculous promise with an impossible deadline
Hold a showy demo with a barely functional duct-taped demonstration model
Bask in the rapturous press attention and take as many pre-sales as possible
Book that revenue and use it to solicit desperately needed funding from banks to actually make the product
Years later, begin shipping small quantities of the half-functional product, but no one cares because you’ve already moved on to the next thing
There is more than a small element of deception and chicanery involved in this hype cycle, but that’s often how things work in the tech sector, where charismatic founders are still far more influential than they are in more established and mature industries like cars. Speaking of which, one of the main points Niedermeyer makes repeatedly is that the “move fast and break things” startup mentality that is common in Musk’s Silicon Valley habitat is in many ways fundamentally opposed to the best practices of the auto industry, where enormous amounts of time, effort, and care are invested in creating the most stable and predictable production processes so that carmakers can produce tens or hundreds of thousands of the same model without worrying that they’ll spend a fortune in recalls, lawsuits, and repairs the way that Tesla has.
While not a grand business history book in the way that, say, James Stewart’s Disneywar is, this is a great piece of business journalism (Niedermeyer writes for car blogs and you can tell by his keen attention to specific claims and sourcing) that should be required reading for anyone tempted to proclaim what game-changing genius Musk is. ...more
Notes are private!
1
not set
Sep 2022
Jan 03, 2023
Hardcover
080909536X
9780809095360
080909536X
3.84
58
Jan 06, 2009
Jan 06, 2009
it was amazing
Anyone who has passed high school US History is beyond tired of the “What caused the Civil War?” question, but “What political and economic factors ma
Anyone who has passed high school US History is beyond tired of the “What caused the Civil War?” question, but “What political and economic factors made the Civil War inevitable?” is still a worthy topic of interest. If you have read Eric Foner's Free Soil, Free Labor, Free Men chronicling the formation of the Republican Party then you’ll be familiar with the political background, while James McPherson's Battle Cry of Freedom devotes a good number of its pages to the social context; this book presents the economic side of the story, analyzing how changing patterns of production, transportation, and trade in the disparate regions of the country gradually polarized the formerly ideologically incoherent national Whig and Democratic parties into implacable opponents, making some sort of conflict unavoidable as the North and Midwest boomed while the South stagnated. While not an economic determinist in the mold of Charles & Mary Beard, Egnal presents reams of data showing how the explosive growth of the Midwest (particularly areas adjacent to the Great Lakes) contrasted with declining soil fertility in the South, permanently upsetting the delicate regional balance of power and established coalitions in Congress. Peter Turchin’s Ages of Discord had a fascinating section trying to apply Structural Demographic Theory to explain why the Civil War had to happen in the 1860s specifically and not the 1850s or 1870s; Egnal agrees that the Southern plantation owner class who controlled the region’s politics were presented with the grim but inescapable choice of either forcing the issue with the North in the waning moments of their strength, or meekly accepting terminal decline relative to the rest of the country. The implicit lesson that those who run a slave economy often become slaves to that economy themselves in turn is well-taken.
PS: it’s not cited here, but Mario Chacón & Jeffrey L. Jensen's 2019 paper "The Political and Economic Geography of Southern Secession" is a great supplement to this book. ...more
PS: it’s not cited here, but Mario Chacón & Jeffrey L. Jensen's 2019 paper "The Political and Economic Geography of Southern Secession" is a great supplement to this book. ...more
Notes are private!
1
not set
Aug 2022
Jan 03, 2023
Hardcover
unknown
4.11
18
Jan 01, 2012
Jul 2012
really liked it
Radio is not quite the dominant driver of taste it once was, and the fact that this book was written in 2012 before streaming became ubiquitous dates
Radio is not quite the dominant driver of taste it once was, and the fact that this book was written in 2012 before streaming became ubiquitous dates its analysis somewhat, but the dynamics of how songs become popular and spread through the culture is interesting no matter the medium or the decade. Rossman, a sociology professor at UCLA, dives deeply into the structure of the music industry, the role of key players like promoters and DJs, and actual mathematical analysis of song popularity to investigate questions of how prominent payola might still be, the role of format-specific charts in determining programming, or what effects modern conglomerated ownership has in terms of what gets played vs actual organic popular demand. It’s fun to see charts showing the airplay trends of “Umbrella”-era Rihanna or “My Humps”-era Black-Eyed Peas, but there are also fascinating historical sections, such as the one on how the Dixie Chicks boycott worked in practice, or on how reggaeton went from being a Puerto Rican genre to pan-Latin American, followed by immense popularity in the United States across all demographics. This is a good followup to the music-related sections of Duncan Watts' Everything You Know Is Obvious.
...more
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1
not set
Jul 2022
Jan 03, 2023
ebook
1541617606
9781541617605
1541617606
4.16
2,148
2020
Nov 10, 2020
it was amazing
Postrel’s 2013 book Glamour was a fascinating look at the rhetoric of desire, and this new book is similarly interesting. Textiles are by now so commo
Postrel’s 2013 book Glamour was a fascinating look at the rhetoric of desire, and this new book is similarly interesting. Textiles are by now so commoditized in rich countries as to be almost beneath notice except in unusual circumstances, but for the majority of human history they were extremely expensive and time-consuming to produce. Elizabeth Barber’s book Women’s Work: The First 20,000 Years was a great look at the historical mode of fabric production, and this is an able sequel of sorts, using explorations of how various societies have tried to solve the problem of keeping their members fully clothed as a base and layering other aspects of the clothing experience on top: how do trading patterns affect clothing, how has the question of fashion vs utility worked over time, how did scientific discoveries in fabrics and dyes affected clothing styles, to what extent did cotton production determine geopolitics, where will technological advances take clothing next, and all sorts of other questions. I have a family history in the garment business and have been to textile mills in other countries, so I was hoping for a little more discussion of labor issues (in addition to the gender aspect that Barber covered so well in her book, when I visited Bangladesh in 2019, the classic question of if risky low-wage export jobs are better than no jobs was front-page news every day), but this book both covers a lot of interesting ground itself and is an excellent jumping-off point for many other lines of reading too, which is the mark of a great work.
...more
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1
not set
Aug 2022
Jul 15, 2020
Hardcover
0691168652
9780691168654
0691168652
3.77
1,149
May 26, 2020
May 26, 2020
really liked it
Everyone loves being around beautiful women, but what is it like to actually be the sort of beautiful woman who gets to party in some of the nicest an
Everyone loves being around beautiful women, but what is it like to actually be the sort of beautiful woman who gets to party in some of the nicest and most expensive places on the planet for free, whose mere presence at a party could be worth serious money for someone else if the vibe you provide could make a party extra-special? Where is the line between beauty as an aspect of and for yourself, and beauty as a commodity to be traded and negotiated over by other people? Is a piece of designated party eye candy basically a prostitute, even if you’re not compensated in money or sex but partying itself? This performance of beauty is of course very interesting to everyone, and this is a sort of embedded ethnography on being beautiful by Ashley Mears, a model turned sociology professor at Boston University who was hot enough to pass herself off as one of the young party girls who are ubiquitous at the exclusive high-end Vegas/LA/NYC/Miami scenes we all dream of being regulars at. While ironically she doesn’t get nearly as far into the psychology of her fellow party girls as they undergo the surprisingly demanding lifestyle of party-hopping as she does into the hustlers and promoters who book them and the international high-rolling bottle service “whale” customers who are paying for it all, she uncovers some fascinating details of a stratum of life as strange as it is glamorous.
...more
Notes are private!
1
not set
Jun 2022
Mar 09, 2020
Hardcover
0415737346
9780415737340
0415737346
4.11
99
Aug 31, 2015
Aug 31, 2015
really liked it
I had an extremely polarized reaction to this book. Its central question - how exactly does money relate to morality? - is incredibly important, and i
I had an extremely polarized reaction to this book. Its central question - how exactly does money relate to morality? - is incredibly important, and its answer - if you may do something for free, then you may do it for money - is elucidated in a clear, convincing manner I've never seen anywhere else. I can't say that I fully agree with all of Brennan and Jaworski's arguments, but the main idea itself, that it's not immoral to buy or sell something for money unless it's also immoral to get or give it away for free, is worthy of a long ponder. Indeed, even though this book is clearly written from a libertarian perspective, you often encounter its central argument coming from "the left" in a surprising number of areas, even from those who don't subscribe to the infamous label "neoliberal", so it probably isn't all wrong. The notion that commodification introduces ethical problems is nearly universal, but lots of things are or were universal without being correct, and I think the logic here is strong enough that it's worthy of being promoted to the default view, in a John Stuart Mill sense, where the burden of proof should generally be on the side of market opposition and that we shouldn't restrict markets unless they can be shown to cause harm. However, the authors fail to convince in several specific areas where they don't engage with empirical evidence, such as when they try to argue that it should be legal to buy and sell votes, and their disengagement with many obvious real-world counter-examples means that even though I find the basic idea extremely compelling, much of the book falls into "nice in theory but maybe not in practice" territory.
One of the best running gags in Philip K Dick's Ubik, one of my favorite science fiction novels, is how awful a completely commodified future could be. Point of sale transactions are everywhere, and there's a great scene where the main character has to pay the door in his apartment to pass through it; without enough change to pay the door, he grabs a knife to start unscrewing it while the door threatens to sue him. Ever since I read it I agreed with the unspoken anti-capitalist logic: some things can be monetized out of great necessity, but by default market transactions are alienating and impersonal, and to pass through a door without paying is the very nexus of free and freedom. Yet after reading this book, I think there's a different lesson to be had: it's not that paying for doors is somehow wrong (after all, it costs money to make a door, thousands if not tens of thousands of people pay for door installation without a second thought every single day, and essentially all of us have paid for doors directly or indirectly via rent or mortgage payments), it's just that the micropayments model is inappropriate for doors for exactly the same reasons that Clay Shirky explained made it inappropriate for websites way back in 2000: transaction costs make many small payments far more inconvenient than a single simple door purchase. That's not the same thing as saying that doors shouldn't cost money, still less that buying and selling doors is immoral, and the authors expand on this basic idea and run with it for 200 pages. They outline 7 dimensions of market manner, and argue that many objections to markets are really objections to particular combinations of market manners, when other combinations would be perfectly fine. Those 7 dimensions are:
1. Participants (buyer, seller, middleman, broker, etc.)
2. Means of exchange (money, barter, local currency, bitcoins, gift cards, etc.)
3. Price (high, low, moderate, etc.)
4. Proportion / Distribution (how much each party gets)
5. Mode of exchange (auction, lottery, bazaar, co-op, etc.)
6. Mode of payment (salary, scholarship, tip, charitable contribution, etc.)
7. Motive of exchange (for-profit, public benefit, cost-recovery, non-profit, charitable, etc.)
A socialist would immediately respond that even the mundane door market you find at Home Depot is still inherently immoral for the same reason that all markets are immoral: the exploitation and alienation of worker labor is wrong, full stop. I'm not a socialist and I disagree with that analysis, so a more interesting debate to have in my opinion is how the decision to buy or sell something affects our understanding of its "inherent" worth, given the failure of alternative models like the labor theory of value (as they astutely point out, "Marx thought that the value of the product was determined by the value of the labor that went into the product. On the contrary, it’s closer to the truth that the value of the labor that goes into the product is determined by the value of the product").
Libertarianism is hardly a less controversial framework than socialism for analyzing value, of course, but one benefit of neoclassical economics, or whatever you want to call the logic behind capitalism, is that it gives us perhaps the closest thing to a true utilitarian methodology we've yet discovered to compare the worth of things to different people, and the more you go looking for examples of seemingly "purely moral" situations where markets have not only not corrupted morality but improved people's lives the more you find. Karl Polanyi's fascinating The Great Transformation argued that markets have social contexts, and that even though the gradual introduction of markets irrevocably transformed the communal peasant societies of Europe into the liberal capitalist societies we see today, that there is no such thing as true laissez faire because you cannot truly separate a marketplace from the people in it, who act to protect themselves from its negative aspects. But are the downsides of markets inherent to markets as a whole, or only particular marketplaces where the 7 dimensions have been combined inappropriately? The Ubik door scene shows that it's possible to make door shopping into a completely normal and mundane part of life rather than a nightmarish dystopia, but there are plenty of other examples of where creating markets in things that were previously off-limits is not only normal but good.
One of Brennan and Jaworski's go-to examples is life insurance, particularly for children. In a world where life insurance doesn't exist, putting a price on the life of a child by means of paying a monthly premium to a company that will cut you a big check if the child dies sounds incredibly immoral and outrageous, if not like a perverse incentive for infanticide. However, in a world where life insurance is normal, it's opting out of life insurance that seems, at best, like a personal idiosyncrasy, whereas insuring your child is the adult and responsible thing to do. Furthermore, proposals to make the payouts of the gigantic life insurance system called Social Security stronger, and to bring more people into the gigantic health insurance system called Medicare, are not only perfectly orthodox left-wing ideas, they're supported even by socialists! So it's tough to argue that putting a price on human life is wrong in all contexts (note that paying for Medicare via payroll taxes instead of monthly premiums does not change the logic here), and it's easy to show that pricing human life can actually make us more careful and aware of each other. Remember that the idea is that markets don't introduce immorality where there was none before, so while it's still possible to have callous individuals and even murderers in a universally insured population, if they would have committed their murders anyway then it's hard to argue that insurance made them do it. And while murders for insurance money do of course happen, I think most people correctly see that scenario as an extremely rare perversion of an otherwise well-functioning system, and would hardly welcome the abolition of life insurance to "solve" that problem.
In that spirit, the authors group moral objections to commodification into 7 types, with the seventh having three forms:
1. Exploitation: Markets in some good or service - such as organ sales - might encourage the strong to exploit (to take unjust advantage of) the vulnerable.
2. Misallocation: Markets in certain goods and services - such as Ivy League admissions - might cause those goods to be allocated unjustly.
3. Rights Violations: Markets in some good - such as slaves - might violate people's rights.
4. Paternalism: Markets in some good or service - such as crystal meth or cigarettes - might cause people to make self-destructive choices.
5. Harm to Others: Markets in some good or service - such as pit bulls or handguns - might lead to greater violence.
6. Corruption: Participating in certain markets - such as buying luxury goods for oneself or Disney Princesses for one's daughters - will tend to cause us to develop defective preferences or character traits.
7. Semiotics: Independently of objections 1-6, to allow a market in some good or service X is a form of communication that expresses the wrong attitude toward X or expresses an attitude that is incompatible with the intrinsic dignity of X, or would show disrespect or irreverence for some practice, custom, belief, or relationship with which X is associated. Three form of this:
- The Mere Commodity Objection: Claims that buying and selling certain goods or services shows that one regards them as having merely instrumental value.
- The Wrong Signal Objection: Claims that buying and selling certain goods and services communicates, independently of one's attitudes, disrespect for the objects in question.
- The Wrong Currency Objection: Claims that inserting markets and money into certain kinds of relationships communicates estrangement and distance, and is objectionably impersonal.
In many cases, it seems like the fundamental objection is not the exchange of money, but the thing itself, and the most classic example of the intersection of money and morality where the typically "left" position is to support commodification is prostitution. Again, a perfectly consistent socialist position is that sex work, like all work, is fundamentally exploitative, but in practice, support for the legalization of exchanging money for sex is hardly a right-wing or exclusively libertarian idea in America today, and there are many impeccably leftist organizations attempting to alter prostitution regulations to protect workers or to organize them into unions to increase their bargaining power (i.e. to increase their wages, among other things). It's hard to see how legalizing prostitution harms sex workers relative to the status quo, and likewise, if a government were to suddenly criminalize a previously legal prostitution market, I don't think we would see that as helping or empowering them either.
Any use of those 7 moral objections about worker safety, consumer protection, power imbalances, or even sexual morality against a market for sex work has to grapple with the fact that most of them apply equally to the current absence of a market for sex work. The argument of "if you may do it for free, you may do it for money" is that there is no moral dividing line between a consensual one-night stand and a consensual visit to a prostitute, and that the addition of money doesn't in and of itself turn something that was okay into something that's not okay or vice versa. That seems correct to me, and it tracks with a similar argument about money in sports: at one point Olympic athletes were lauded as the same kind of "noble amateurs" that NCAA athletes are today; now no one blinks at Olympic athletes being firmly embedded in commerce, and it seems inevitable that college athletes will someday be paid as well, since it's the lack of payments to players which is the exploitation there. Brennan and Jaworski have many similar examples.
I don't want to sound unabashedly positive about the book, because I'm not. They insist correctly that empirical evidence should be the standard, but evidence is mighty scanty in the book itself, and their attempts to sum up vast fields of research in just a few "some studies say" paragraphs in order to argue for more markets are often spectacularly unconvincing. There's a bit on how paying for college admissions is just fine that feels particularly ill-timed in light of the "Operation Varsity Blues" admissions scandal, and at various points they weigh in on such weighty topics as whether markets necessarily "solve" racism or sexism, or whether school choice/vouchers have reduced costs without sacrificing quality, or whether it's a good idea to introduce tiered pricing for adopted babies based on their race and market demand, etc, in a manner that's anything but empirical. Does private industry or the government build better roads? A smart person could think of all sorts of philosophical rationales for one or the other, or even a combination of the two, but the fact that there is not a single obvious answer in the real world should make you skeptical of claims to be able to produce definitive public policy guidelines based on pure logic alone. These digressions are especially frustrating because strictly speaking they have nothing to do with the book's core thesis whatsoever. A government department building a road via tax revenue is in practice not much different than a private contractor building a road via bonds backed by expected future toll revenue, and though I agree that things like congestion pricing, which is a market for space on the highway during rush hour, would be helpful, it's not like you don't have underpaid women/minorities, failing charter schools, or discriminatory restaurants in the real world.
The nadir of their style of argumentation is in chapter 19, which is about vote-selling. Specifically, Brennan and Jaworski hope to show that, using the same "if you may do it for free, then you may do it for money" theorem which has served them so well so far, since it's totally fine for us to attempt to persuade each other to vote a particular way using words, that it is therefore perfectly kosher to take the next step and simply allow paying people to change their vote or stay home. Politicians already compete for votes in a market-like manner, voters in safe states already sometimes "trade" votes with voters in swing states, and spending money on campaigns is already often enough to make the difference in close elections, so let's just go ahead and legalize the outright purchase of votes. A lot of the heavy lifting in this chapter is done offscreen, by way of references to The Ethics of Voting, another of Brennan's books (he thinks that since most people are fairly uninformed, they shouldn't vote), and since it's boring to dive too deeply into artificial theories of voting on Justified True Beliefs wherein I the rational actor attempt to translate my ethical convictions into policy outcomes via the ballot box based on mechanistic cost-benefit incentives, I'll refrain.
Instead I'll just say that their thought experiment involving Ignorant Ignacio, Careless Carla, and Lackadaisical Loren to "prove" that buying votes is fine given the existence of stupid or lazy voters is wholly unsatisfying, and the complete absence of engagement with literally any political science literature is so brazen as to be almost comical, and in fact when I read this chapter I was in danger of throwing out the whole book in a rage despite agreeing with so much of it. I don't care if you think Citizens United was a good or bad decision, or if you think George Soros is better or worse than the Koch brothers, or how much public choice literature you have or haven't read, or if you do or don't generally trust politicians - anyone can set up a trolley problem where the moneyed elite being able to buy elections is good, actually, but reading about literally any corruption or election fraud scandal in history should be reason enough to pause when someone says that abandoning the democratic franchise in favor of giving powerful interests even more power will work out just great, trust me. Imagine using and trusting this system for even something as trivial as American Idol winners and it's laughable. Not even the Libertarian Party would choose to run its party primaries in this manner, allowing anyone with enough money (gold bars?) to simply purchase the nomination. It's like they read libertarian pundit PJ O'Rourke's quip that "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators", and thought "yes, more of this".
Now, Brennan and Jaworski are perfectly aware of reactions like mine, and the final section of the book is devoted to why I'm wrong to have strong negative emotional reactions to insane proposals to legalize vote-fixing. Once again, in the most abstract terms their analysis makes perfect sense: time and again in history, people have said that markets are bad, and yet after markets were introduced, they turned out to be just fine and indeed irreplaceable. Douglas Irwin's excellent book Against the Tide recounts how weak arguments against the concept of free trade have been unkillable for thousands of years no matter how many times they're refuted, and Brennan and Jaworski are going for the same sort of thing here with respect to introducing markets in general. Disgust is a strong but unreliable guide to morality, and organ sales are a good example of how deadly emotion-based thinking can be - we laud an individual who donates a kidney to help out a stranger, but a real market in kidneys and other organs would be vastly more efficient, and we shouldn't let urban legends or sci-fi dystopias scare us out of saving many lives via market mechanisms in the same way as we shouldn't eliminate insurance systems because of lurid but extremely rare tabloid murders. So they are correct, in a sense, that my occasionally incredulous reactions fit into a general reactionary pattern, and that since I and many other liberals happily donate money to political campaigns to get our desired outcomes achieved via electoral success, it could theoretically be cheaper for us all to just cut out the campaign middlemen and simply pay our fellow citizens directly to vote our way.
Well, maybe. I feel bad concluding that "the authors are correct in a general sense yet incorrect in specific examples for reasons that I won't explain", so I will instead say that they include enough great examples of how markets not only don't corrupt virtues but enhance them to earn them a place in my mental toolbox regardless of the CITATIONS NEEDED sections, particularly with their taxonomies of market dimensions and moral objections to markets. They're absolutely right that we shouldn't think that store-bought flowers for a loved one are worse than garden-grown flowers, or that pet owners who have bought their pets from a store love them any less than owners who were given their pets by friends, or that managing demand by charging higher prices is less moral than creating giant queues (the BBQ joint Franklin in my city of Austin is infamous for forcing people to waste their time in 4-hour lines because Aaron Franklin refuses to either raise his brisket prices or expand his capacity beyond his personal control). In fact, one of the examples that they used in their own book, where they sold various levels of acknowledgements in a tiered pricing model, was disarmingly funny enough that it also seemed profound: if the concept of meaningful, heartfelt acknowledgements isn't ruined for everyone by a few authors deciding to auction off inclusion instead of following the typical spouse/children/parents pattern, what else could safely accommodate this model? Quite a lot, it seems, because one of the major advantages of capitalism is that it can transform zero-sum conflicts into positive-sum transactions. Just perhaps not quite as many transactions as they claim. ...more
One of the best running gags in Philip K Dick's Ubik, one of my favorite science fiction novels, is how awful a completely commodified future could be. Point of sale transactions are everywhere, and there's a great scene where the main character has to pay the door in his apartment to pass through it; without enough change to pay the door, he grabs a knife to start unscrewing it while the door threatens to sue him. Ever since I read it I agreed with the unspoken anti-capitalist logic: some things can be monetized out of great necessity, but by default market transactions are alienating and impersonal, and to pass through a door without paying is the very nexus of free and freedom. Yet after reading this book, I think there's a different lesson to be had: it's not that paying for doors is somehow wrong (after all, it costs money to make a door, thousands if not tens of thousands of people pay for door installation without a second thought every single day, and essentially all of us have paid for doors directly or indirectly via rent or mortgage payments), it's just that the micropayments model is inappropriate for doors for exactly the same reasons that Clay Shirky explained made it inappropriate for websites way back in 2000: transaction costs make many small payments far more inconvenient than a single simple door purchase. That's not the same thing as saying that doors shouldn't cost money, still less that buying and selling doors is immoral, and the authors expand on this basic idea and run with it for 200 pages. They outline 7 dimensions of market manner, and argue that many objections to markets are really objections to particular combinations of market manners, when other combinations would be perfectly fine. Those 7 dimensions are:
1. Participants (buyer, seller, middleman, broker, etc.)
2. Means of exchange (money, barter, local currency, bitcoins, gift cards, etc.)
3. Price (high, low, moderate, etc.)
4. Proportion / Distribution (how much each party gets)
5. Mode of exchange (auction, lottery, bazaar, co-op, etc.)
6. Mode of payment (salary, scholarship, tip, charitable contribution, etc.)
7. Motive of exchange (for-profit, public benefit, cost-recovery, non-profit, charitable, etc.)
A socialist would immediately respond that even the mundane door market you find at Home Depot is still inherently immoral for the same reason that all markets are immoral: the exploitation and alienation of worker labor is wrong, full stop. I'm not a socialist and I disagree with that analysis, so a more interesting debate to have in my opinion is how the decision to buy or sell something affects our understanding of its "inherent" worth, given the failure of alternative models like the labor theory of value (as they astutely point out, "Marx thought that the value of the product was determined by the value of the labor that went into the product. On the contrary, it’s closer to the truth that the value of the labor that goes into the product is determined by the value of the product").
Libertarianism is hardly a less controversial framework than socialism for analyzing value, of course, but one benefit of neoclassical economics, or whatever you want to call the logic behind capitalism, is that it gives us perhaps the closest thing to a true utilitarian methodology we've yet discovered to compare the worth of things to different people, and the more you go looking for examples of seemingly "purely moral" situations where markets have not only not corrupted morality but improved people's lives the more you find. Karl Polanyi's fascinating The Great Transformation argued that markets have social contexts, and that even though the gradual introduction of markets irrevocably transformed the communal peasant societies of Europe into the liberal capitalist societies we see today, that there is no such thing as true laissez faire because you cannot truly separate a marketplace from the people in it, who act to protect themselves from its negative aspects. But are the downsides of markets inherent to markets as a whole, or only particular marketplaces where the 7 dimensions have been combined inappropriately? The Ubik door scene shows that it's possible to make door shopping into a completely normal and mundane part of life rather than a nightmarish dystopia, but there are plenty of other examples of where creating markets in things that were previously off-limits is not only normal but good.
One of Brennan and Jaworski's go-to examples is life insurance, particularly for children. In a world where life insurance doesn't exist, putting a price on the life of a child by means of paying a monthly premium to a company that will cut you a big check if the child dies sounds incredibly immoral and outrageous, if not like a perverse incentive for infanticide. However, in a world where life insurance is normal, it's opting out of life insurance that seems, at best, like a personal idiosyncrasy, whereas insuring your child is the adult and responsible thing to do. Furthermore, proposals to make the payouts of the gigantic life insurance system called Social Security stronger, and to bring more people into the gigantic health insurance system called Medicare, are not only perfectly orthodox left-wing ideas, they're supported even by socialists! So it's tough to argue that putting a price on human life is wrong in all contexts (note that paying for Medicare via payroll taxes instead of monthly premiums does not change the logic here), and it's easy to show that pricing human life can actually make us more careful and aware of each other. Remember that the idea is that markets don't introduce immorality where there was none before, so while it's still possible to have callous individuals and even murderers in a universally insured population, if they would have committed their murders anyway then it's hard to argue that insurance made them do it. And while murders for insurance money do of course happen, I think most people correctly see that scenario as an extremely rare perversion of an otherwise well-functioning system, and would hardly welcome the abolition of life insurance to "solve" that problem.
In that spirit, the authors group moral objections to commodification into 7 types, with the seventh having three forms:
1. Exploitation: Markets in some good or service - such as organ sales - might encourage the strong to exploit (to take unjust advantage of) the vulnerable.
2. Misallocation: Markets in certain goods and services - such as Ivy League admissions - might cause those goods to be allocated unjustly.
3. Rights Violations: Markets in some good - such as slaves - might violate people's rights.
4. Paternalism: Markets in some good or service - such as crystal meth or cigarettes - might cause people to make self-destructive choices.
5. Harm to Others: Markets in some good or service - such as pit bulls or handguns - might lead to greater violence.
6. Corruption: Participating in certain markets - such as buying luxury goods for oneself or Disney Princesses for one's daughters - will tend to cause us to develop defective preferences or character traits.
7. Semiotics: Independently of objections 1-6, to allow a market in some good or service X is a form of communication that expresses the wrong attitude toward X or expresses an attitude that is incompatible with the intrinsic dignity of X, or would show disrespect or irreverence for some practice, custom, belief, or relationship with which X is associated. Three form of this:
- The Mere Commodity Objection: Claims that buying and selling certain goods or services shows that one regards them as having merely instrumental value.
- The Wrong Signal Objection: Claims that buying and selling certain goods and services communicates, independently of one's attitudes, disrespect for the objects in question.
- The Wrong Currency Objection: Claims that inserting markets and money into certain kinds of relationships communicates estrangement and distance, and is objectionably impersonal.
In many cases, it seems like the fundamental objection is not the exchange of money, but the thing itself, and the most classic example of the intersection of money and morality where the typically "left" position is to support commodification is prostitution. Again, a perfectly consistent socialist position is that sex work, like all work, is fundamentally exploitative, but in practice, support for the legalization of exchanging money for sex is hardly a right-wing or exclusively libertarian idea in America today, and there are many impeccably leftist organizations attempting to alter prostitution regulations to protect workers or to organize them into unions to increase their bargaining power (i.e. to increase their wages, among other things). It's hard to see how legalizing prostitution harms sex workers relative to the status quo, and likewise, if a government were to suddenly criminalize a previously legal prostitution market, I don't think we would see that as helping or empowering them either.
Any use of those 7 moral objections about worker safety, consumer protection, power imbalances, or even sexual morality against a market for sex work has to grapple with the fact that most of them apply equally to the current absence of a market for sex work. The argument of "if you may do it for free, you may do it for money" is that there is no moral dividing line between a consensual one-night stand and a consensual visit to a prostitute, and that the addition of money doesn't in and of itself turn something that was okay into something that's not okay or vice versa. That seems correct to me, and it tracks with a similar argument about money in sports: at one point Olympic athletes were lauded as the same kind of "noble amateurs" that NCAA athletes are today; now no one blinks at Olympic athletes being firmly embedded in commerce, and it seems inevitable that college athletes will someday be paid as well, since it's the lack of payments to players which is the exploitation there. Brennan and Jaworski have many similar examples.
I don't want to sound unabashedly positive about the book, because I'm not. They insist correctly that empirical evidence should be the standard, but evidence is mighty scanty in the book itself, and their attempts to sum up vast fields of research in just a few "some studies say" paragraphs in order to argue for more markets are often spectacularly unconvincing. There's a bit on how paying for college admissions is just fine that feels particularly ill-timed in light of the "Operation Varsity Blues" admissions scandal, and at various points they weigh in on such weighty topics as whether markets necessarily "solve" racism or sexism, or whether school choice/vouchers have reduced costs without sacrificing quality, or whether it's a good idea to introduce tiered pricing for adopted babies based on their race and market demand, etc, in a manner that's anything but empirical. Does private industry or the government build better roads? A smart person could think of all sorts of philosophical rationales for one or the other, or even a combination of the two, but the fact that there is not a single obvious answer in the real world should make you skeptical of claims to be able to produce definitive public policy guidelines based on pure logic alone. These digressions are especially frustrating because strictly speaking they have nothing to do with the book's core thesis whatsoever. A government department building a road via tax revenue is in practice not much different than a private contractor building a road via bonds backed by expected future toll revenue, and though I agree that things like congestion pricing, which is a market for space on the highway during rush hour, would be helpful, it's not like you don't have underpaid women/minorities, failing charter schools, or discriminatory restaurants in the real world.
The nadir of their style of argumentation is in chapter 19, which is about vote-selling. Specifically, Brennan and Jaworski hope to show that, using the same "if you may do it for free, then you may do it for money" theorem which has served them so well so far, since it's totally fine for us to attempt to persuade each other to vote a particular way using words, that it is therefore perfectly kosher to take the next step and simply allow paying people to change their vote or stay home. Politicians already compete for votes in a market-like manner, voters in safe states already sometimes "trade" votes with voters in swing states, and spending money on campaigns is already often enough to make the difference in close elections, so let's just go ahead and legalize the outright purchase of votes. A lot of the heavy lifting in this chapter is done offscreen, by way of references to The Ethics of Voting, another of Brennan's books (he thinks that since most people are fairly uninformed, they shouldn't vote), and since it's boring to dive too deeply into artificial theories of voting on Justified True Beliefs wherein I the rational actor attempt to translate my ethical convictions into policy outcomes via the ballot box based on mechanistic cost-benefit incentives, I'll refrain.
Instead I'll just say that their thought experiment involving Ignorant Ignacio, Careless Carla, and Lackadaisical Loren to "prove" that buying votes is fine given the existence of stupid or lazy voters is wholly unsatisfying, and the complete absence of engagement with literally any political science literature is so brazen as to be almost comical, and in fact when I read this chapter I was in danger of throwing out the whole book in a rage despite agreeing with so much of it. I don't care if you think Citizens United was a good or bad decision, or if you think George Soros is better or worse than the Koch brothers, or how much public choice literature you have or haven't read, or if you do or don't generally trust politicians - anyone can set up a trolley problem where the moneyed elite being able to buy elections is good, actually, but reading about literally any corruption or election fraud scandal in history should be reason enough to pause when someone says that abandoning the democratic franchise in favor of giving powerful interests even more power will work out just great, trust me. Imagine using and trusting this system for even something as trivial as American Idol winners and it's laughable. Not even the Libertarian Party would choose to run its party primaries in this manner, allowing anyone with enough money (gold bars?) to simply purchase the nomination. It's like they read libertarian pundit PJ O'Rourke's quip that "When buying and selling are controlled by legislation, the first things to be bought and sold are legislators", and thought "yes, more of this".
Now, Brennan and Jaworski are perfectly aware of reactions like mine, and the final section of the book is devoted to why I'm wrong to have strong negative emotional reactions to insane proposals to legalize vote-fixing. Once again, in the most abstract terms their analysis makes perfect sense: time and again in history, people have said that markets are bad, and yet after markets were introduced, they turned out to be just fine and indeed irreplaceable. Douglas Irwin's excellent book Against the Tide recounts how weak arguments against the concept of free trade have been unkillable for thousands of years no matter how many times they're refuted, and Brennan and Jaworski are going for the same sort of thing here with respect to introducing markets in general. Disgust is a strong but unreliable guide to morality, and organ sales are a good example of how deadly emotion-based thinking can be - we laud an individual who donates a kidney to help out a stranger, but a real market in kidneys and other organs would be vastly more efficient, and we shouldn't let urban legends or sci-fi dystopias scare us out of saving many lives via market mechanisms in the same way as we shouldn't eliminate insurance systems because of lurid but extremely rare tabloid murders. So they are correct, in a sense, that my occasionally incredulous reactions fit into a general reactionary pattern, and that since I and many other liberals happily donate money to political campaigns to get our desired outcomes achieved via electoral success, it could theoretically be cheaper for us all to just cut out the campaign middlemen and simply pay our fellow citizens directly to vote our way.
Well, maybe. I feel bad concluding that "the authors are correct in a general sense yet incorrect in specific examples for reasons that I won't explain", so I will instead say that they include enough great examples of how markets not only don't corrupt virtues but enhance them to earn them a place in my mental toolbox regardless of the CITATIONS NEEDED sections, particularly with their taxonomies of market dimensions and moral objections to markets. They're absolutely right that we shouldn't think that store-bought flowers for a loved one are worse than garden-grown flowers, or that pet owners who have bought their pets from a store love them any less than owners who were given their pets by friends, or that managing demand by charging higher prices is less moral than creating giant queues (the BBQ joint Franklin in my city of Austin is infamous for forcing people to waste their time in 4-hour lines because Aaron Franklin refuses to either raise his brisket prices or expand his capacity beyond his personal control). In fact, one of the examples that they used in their own book, where they sold various levels of acknowledgements in a tiered pricing model, was disarmingly funny enough that it also seemed profound: if the concept of meaningful, heartfelt acknowledgements isn't ruined for everyone by a few authors deciding to auction off inclusion instead of following the typical spouse/children/parents pattern, what else could safely accommodate this model? Quite a lot, it seems, because one of the major advantages of capitalism is that it can transform zero-sum conflicts into positive-sum transactions. Just perhaps not quite as many transactions as they claim. ...more
Notes are private!
1
not set
May 2019
Feb 15, 2019
Hardcover
unknown
3.82
208
Apr 27, 2018
unknown
really liked it
Great use of the serialized novel concept, even though I didn't read it until the whole thing had already been finished. Written as both a memoir and
Great use of the serialized novel concept, even though I didn't read it until the whole thing had already been finished. Written as both a memoir and a Seven Habits of Highly Effective Drug Dealers by "Huey Carmichael" (yes, as in "P. Newton" and "Stokely"), an anonymous friend of Taibbi's, this literary treatment/extension of Biggie's famous "Ten Crack Commandments" offers the aspiring young criminal an interesting real-life account of the heady days of marijuana growing and distribution in the Wild West pre-legalization pre-corporate era, as well as, more relevantly, a bunch of practical advice on how not to get busted should you wish to continue running drugs outside the confines of the law. As he says, most drug dealers learn their jobs from movies, so it's neat to see a more detailed and practical set of guidelines than you can get from, say, watching New Jack City over and over again. While in literary terms it's not written with the gripping intensity of a classic like Clockers, the steady rotation of characters throughout the narrative, most notably his on-again/off-again girlfriend Courtney, gives the slow accumulations and rapid dissipations of his various drug empires a poignancy that a more clinical instruction manual would lack. Taibbi's forays into the criminal justice system in his previous books The Divide and I Can't Breathe were phenomenal, and this detour into the life of someone who neatly avoided that system is worth a pass as well.
Carmichael grew up "between two worlds", as they say, shuffling between upper class and working class communities in New Jersey in his youth. His leap to dealing was prompted by his discovery that he was good at it. Throughout the book he's clear-eyed about his place in America, particularly when he had a (fortunately) brief experience with prison. "I believe in money. So does America. Beyond that we don't have a relationship.... America and I, we were two ships that passed in the night. The mindless experience of prison was the only thing we ever shared." Since marijuana is on a seemingly inevitable march towards full legalization, one wonder how well these insights will translate to other drugs and future times. Would a non-fictional Scarface still offer useful lessons for someone running ecstasy? But on that subject, Carmichael made a great point about what the likely effects of legalization will be on the existing drug industry, particularly black people who don't have the access to capital it takes to get big: "People think racism in America is in a word or an image. It isn't. It's in money. The history of our country is that as soon as Black people find a way to build up anything, rich people find a way to take it. Doesn't matter if it's rock n' roll, rap, or subprime real estate. They buy it up and bust it from the inside. This country was founded on capitalism, and Black people were the first commodity sold on Wall Street. Now we'll be the first to be stripped of a business that we built, and in exchange some of us will get housing in Wall Street-backed private prisons."
Bleak stuff, and he's probably right. His complete list of rules, for the curious:
- Always have a job.
- Never let business partners know where you stay.
- Never trade minutes for years.
- Align incentives with potential antagonists.
- Minimize your risk.
- In every deal, at least double your money.
- Never write down anything you wouldn't want printed on the cover of the New York Times.
- Keep your face off the Internet.
- Deal with as few people as possible.
- No guns, but keep shooters.
- Always stay behind the white guy.
- Don't fuck with nobody else's girl, not even an enemy's.
- Always store in a place with a doorman.
- Always leave a dummy stash.
- Always get a pay lawyer. And get the best one there is.
- Always under-promise and over-deliver.
- Always keep your money neat.
- Patronize casinos.
- Trust the postal services.
- Try to work with people you know.
- If you can't afford a hotel room, I'm not doing business with you.
- No business at night.
- Be the last person in any group that walks into any space.
- When dealing with new people, Keep the purse small.
- A loss isn't a loss. It's a lesson.
- Always carry an Allen wrench.
- Embrace racial stereotypes.
- Every time you enter a state, change out your cars. Drive rentals but make sure you've got in-state plates as often as possible.
- Keep your business and your family separated.
- Dress like an off-duty Applebee's waiter.
- Always have a lawyer on retainer.
- Always pay the plug - unless you can't.
- Don't get attached.
- Treat your cash like kids, don't let it stay inside all day and get soft.
- I watch sixty seconds tick off on my watch before I say anything I might regret.
- Plan for the worst.
- If you talk long enough to hear yourself giving a speech, you're probably fucking something up.
- When you do any work, no matter how menial, always find out exactly how much you're worth. Because someone will always try to pay you less.
- In any big operation, don't weigh your foot soldiers down with too many different orders. Work hard to focus on a few simple goals.
- Always be willing to spend money for goodwill.
- Get your money and get out.
- Never count the next man's money.
- Never touch your savings.
- Never run from the front. ...more
Carmichael grew up "between two worlds", as they say, shuffling between upper class and working class communities in New Jersey in his youth. His leap to dealing was prompted by his discovery that he was good at it. Throughout the book he's clear-eyed about his place in America, particularly when he had a (fortunately) brief experience with prison. "I believe in money. So does America. Beyond that we don't have a relationship.... America and I, we were two ships that passed in the night. The mindless experience of prison was the only thing we ever shared." Since marijuana is on a seemingly inevitable march towards full legalization, one wonder how well these insights will translate to other drugs and future times. Would a non-fictional Scarface still offer useful lessons for someone running ecstasy? But on that subject, Carmichael made a great point about what the likely effects of legalization will be on the existing drug industry, particularly black people who don't have the access to capital it takes to get big: "People think racism in America is in a word or an image. It isn't. It's in money. The history of our country is that as soon as Black people find a way to build up anything, rich people find a way to take it. Doesn't matter if it's rock n' roll, rap, or subprime real estate. They buy it up and bust it from the inside. This country was founded on capitalism, and Black people were the first commodity sold on Wall Street. Now we'll be the first to be stripped of a business that we built, and in exchange some of us will get housing in Wall Street-backed private prisons."
Bleak stuff, and he's probably right. His complete list of rules, for the curious:
- Always have a job.
- Never let business partners know where you stay.
- Never trade minutes for years.
- Align incentives with potential antagonists.
- Minimize your risk.
- In every deal, at least double your money.
- Never write down anything you wouldn't want printed on the cover of the New York Times.
- Keep your face off the Internet.
- Deal with as few people as possible.
- No guns, but keep shooters.
- Always stay behind the white guy.
- Don't fuck with nobody else's girl, not even an enemy's.
- Always store in a place with a doorman.
- Always leave a dummy stash.
- Always get a pay lawyer. And get the best one there is.
- Always under-promise and over-deliver.
- Always keep your money neat.
- Patronize casinos.
- Trust the postal services.
- Try to work with people you know.
- If you can't afford a hotel room, I'm not doing business with you.
- No business at night.
- Be the last person in any group that walks into any space.
- When dealing with new people, Keep the purse small.
- A loss isn't a loss. It's a lesson.
- Always carry an Allen wrench.
- Embrace racial stereotypes.
- Every time you enter a state, change out your cars. Drive rentals but make sure you've got in-state plates as often as possible.
- Keep your business and your family separated.
- Dress like an off-duty Applebee's waiter.
- Always have a lawyer on retainer.
- Always pay the plug - unless you can't.
- Don't get attached.
- Treat your cash like kids, don't let it stay inside all day and get soft.
- I watch sixty seconds tick off on my watch before I say anything I might regret.
- Plan for the worst.
- If you talk long enough to hear yourself giving a speech, you're probably fucking something up.
- When you do any work, no matter how menial, always find out exactly how much you're worth. Because someone will always try to pay you less.
- In any big operation, don't weigh your foot soldiers down with too many different orders. Work hard to focus on a few simple goals.
- Always be willing to spend money for goodwill.
- Get your money and get out.
- Never count the next man's money.
- Never touch your savings.
- Never run from the front. ...more
Notes are private!
1
not set
Jan 2019
Jan 28, 2019
0813589401
9780813589404
B01LYTFII9
3.94
16
Jan 01, 2005
May 18, 2005
really liked it
"Cultural appropriation" is a hot topic these days, a great example of how frustrating debate in the 21st century can be. An emotionally-charged subje
"Cultural appropriation" is a hot topic these days, a great example of how frustrating debate in the 21st century can be. An emotionally-charged subject with unclear boundaries and varying definitions that has deep implications for capital-letter topics like Authenticity, Identity, Ownership, and Power is an ideal engine for producing negative-sum arguments that leave everyone more angry and less enlightened than they were before. For my own edification I thought it would be helpful to read something about cultural appropriation that fit the concept into a more analytical framework. Scafidi's central ideas - group cultural property as an analogue of individual intellectual property, and cultural appropriation as an analogue of copyright infringement - are a much more useful way of thinking about the latest controversies over food, fashions, music, and so on than what you usually read. In addition to providing lots of interesting examples of cultural exchange, both good and bad, and across many types of cultures, Scafidi offers proposals to both protect sensitive aspects of culture as well as promote cultural innovation, which is an exceptionally difficult balance to strike even within a single culture. Like with many things in life, familiar concepts like respect, openness, and dignity are perhaps more important tools for this debate than any particular abstract theory of property rights, but I wish everyone who's tempted to write or read yet another clickbait article about cultural appropriation in the era of ubiquitous memes, remixes, and adaptations would read this immediately.
Cultural appropriation has never had a clear definition. This is perhaps unavoidable, given the incredible sociological complexities of cultural identity, but it would be really useful to have a straightforward way to distinguish the undisputedly unfair cases of Western countries refusing to return plundered Egyptian artifacts from the vastly more numerous but far less harmful and even amusing instances of infamously lame suburban white kids using black slang they heard on a hip hop album to seem cool to their friends, if only for the sake of our collective blood pressure. Is it worth caring about appropriation at all, or is not caring just a sign of privilege, itself an extremely controversial subject? What if cultural appropriation is actually good and necessary for both individual and cultural growth, and complaints are merely illegitimate demands for power? What if it all depends on filling in every single one of the blanks every time Person A uses Element B from Culture C to make Artwork D which appeals to Group E? Even if cultural appropriation is real, and bad, does anyone win if art is not created?
Scafidi's main contribution to this debate, for me, was in starting from the comparatively clear perspective of property rights. "Why can a country-music writer demand royalties from performers she has never met, while an Appalachian folk musician cannot?" We have had legal regimes, in one form or another, that have handled instances of one person ripping another off for hundreds of years. Concepts like real property, personal property, and intellectual property (the clearest precedent for a notion of cultural property) have long traditions in every legal system around, and we generally know where we stand when it comes to purposeful individual creations. There are of course shades of complexity - a standup comedian who copies a joke hasn't committed a crime but can expect career repercussions due to informal norms about craftsmanship - but a news story about one musician accusing another of plagiarism rarely rises to the level of major public debate unless, paradoxically, the alleged offender has stolen something that no one person owns. Steal an individual riff or melody and you'll simply end up in court; steal a broader musical idiom or genre and you'll end up in an ocean of vitriol (my personal favorite example was when Iggy Azalea was accused of "vocal blackface", a hilarious phrase no matter your opinion of her music).
Protections for purposeful individual creations are fairly well-understood, but as Scafidi shows, the often-accidental, usually-anonymous creations of a culture come with all kinds of amorphous obligations and encumbrances that can in fact reverse the logic we normally use for deciding what's okay and what's not. Think about overly restrictive copyright law, which is rightly seen as a tool of control by large corporations that unfairly discourages innovation and nets them money by keeping things out of the public domain long after they should have been released. How many jokes about the absurd copyright status of "Happy Birthday" have been made before the song was finally, mercifully, freed to the world? It's at the boundaries of cultures where this gets more fraught: a white American doing another take on the Cinderella folktale is legally fine as long as they don't use Disney-specific imagery, and in moral terms, perhaps they're even heroic as an individual creator proudly defying a greedy megacorporation. But, if that same person were to do a similar take on Ye Xian, the Chinese equivalent of Cinderella, that would strike many people (of many cultures) as different in some vague but important way.
This is where one major weakness of most debates on cultural appropriation becomes unignorable: most examples you read about are too parochial and America-centric to be very useful for thinking about the broader logic of cultural exchange. As Scafidi puts it: "Assimilation to American life has traditionally involved the loss of non-Anglo cultural characteristics in order to conform to a mainstream norm, which is perceived as the absence of ethnic culture. White, Anglo-Saxon, Protestant, educated, healthy, straight males from reasonably affluent Mid-Atlantic or Midwestern backgrounds allegedly have "no" accents, eat "normal" food, wear "regular" clothes, play "popular" music, engage in the "usual" pastimes, share "common" opinions, and have "ordinary" tastes." There are countless articles that implicitly or explicitly use this framework to treat white Americans as all-powerful active appropriators and other groups or cultures as passive appropriatees, watching helplessly as their hard-won cultural products like music/food/slang/mannerisms are absorbed and retransmitted without any acknowledgement of the source, let alone remuneration. It's tough to argue with those pieces because they're often true, and they happen all the time. Scafidi's introduces the idea of the "identity tax" that members of a non-WASP group have to pay to be accepted in America (think gabagool and Mafia imagery for Italians, sombreros and tequila for Mexicans, etc). However, outright cultural theft - in that important legal sense of one person taking something that belongs to another person away from them - is such a minuscule proportion of all cultural exchange that reducing the billions of interactions between different people that occur every day all over the planet to the moral equivalence of an actual crime is neither accurate nor useful.
To return to the Cinderella/Ye Xian example, organizations like the World Intellectual Property Organization have had great difficulty implementing protocols like the "National Laws on the Protection of Expressions of Folklore Against Illicit Exploitation and Other Prejudicial Actions" because everything is difficult to measure. How much harm is inflicted by a white American using another country's folktale as creative inspiration? Who is harmed, current Chinese people, or the nameless Chinese storytellers of the past who collectively developed Ye Xian one detail and plot twist at a time? If the harm is current, are Chinese people in China and Chinese-Americans harmed equally, or in some other proportion? What would restitution look like, and how would it be distributed? What if the white American used some elements from Cinderella, some from Ye Xian, and also some from Tấm Cám, the Vietnamese equivalent? What if it was a religious text and not a folktale, or if it was contemporary food, or music, or dress? What if this person were half-Chinese themselves, or Chinese-American, or black American? And so on.
Breaking the issue down in such a calculated fashion might seem flip, but given the attention that Disney movies and their like play in the broader culture, examples like that neatly illustrate the potentially unbounded complexity of the concept of cultural appropriation, and why so many people decide that the easiest, safest, and fairest way to handle these complicated questions is to avoid them entirely by declaring that cultural appropriation doesn't really exist, and that everything not adequately covered under the existing copyright regime is fair game for everyone. Problem solved! This is one reason why cultural appropriation debates get stuck so quickly: if you think that any aspect of any culture belongs to everyone, then arguments to restrict its use of some cultural element, or even require acknowledgement that it's being used, can feel like lawyering on someone else's behalf, with no remedy readily available or even possible. Especially because a "culture" can be basically anything, in sociological terms, and it's often difficult for someone to know when they're treading on sensitive ground. Of course, this does not apply to people knowingly mocking another culture, but it's precisely because there aren't clear boundaries between what's public and what's private - or what "private" even means - that discussion becomes so fraught.
Scafidi's proposal to make all this easier is to recognize cultural property as a new type of intellectual property. Three things are needed to make this work:
- The idea of individual ownership should be extended to groups (cultures), who would then have group ownership of cultural products, though with more fair use exceptions than is traditionally allowed. "Intellectual property at common law is a protected category of intangible ideas embodied and reproduced in tangible form, while cultural products are the frequently unprotected expressions of shared values or experiences that are created and reproduced by a source community in either tangible or intangible form."
- Time limits on protections should be altered, perhaps extended to the life of the source community, or made renewable periodically. "In order to preserve the flow
of creations and inventions into the public domain, especially in light of the longevity of source communities, the exclusiveness of ownership should be established in rough inverse proportion to the duration of protection, taking into account the relative cultural significance of particular artifacts or rituals."
- Since many of the most cherished aspects of culture are not tangible, the requirement for cultural products to have a tangible form should be removed. "While individual or defined groups of authors and inventors generally anticipate embodiment or reduction of their work to tangible form prior to its legal recognition, cultural groups may have longstanding preferences and practices regarding intangibility and orality."
Furthermore, once those definitions are established, the protections given to cultural products should be broken into four categories, with distinctions between commodified and noncommodified, and public and private, depending on what sort of cultural product is under discussion:
- Noncommodified + private (example: Native American ceremonial dances): Enhanced trade secret-style protection
- Noncommodified + public (example: open source software): Copyright/patent-style protection
- Commodified + private (example: objects used in religious practice, like menorahs/rosaries): Copyright/patent-style protection
- Commodified + public (example: most cultural food/dress/music): Registered mark-style "Authenticity mark" protection
All of this should immediately prompt many questions and arguments, but I think at the abstract level of a proposed solution, it's a fairly sensible extension of a system which has worked, more or less, for a long time. It makes the dilemma for those who would restrict cultural appropriation explicit: it's possible to set up a system to punish unauthorized cultural exchange, but at the cost of bringing all of this into the Western legal system, with the attendant explosion in legal activity and costs, not to mention vast numbers of new gatekeepers and authorities and the almost-certain reduction in useful cultural exchange to come. It's not quite as simple as setting up a big dial to turn the level of cultural exchange from "high" to "low", but it's obvious that the more layers of lawyers you add to something, the more difficult it will then be. Scafidi cites Ronald Coase's theorem, a staple of law school classes, that given a neutral system to bargain in without excessive transaction costs, individuals will generally reach the most productive and Pareto-efficient equilibrium of property regardless of initial distribution. We don't live in that neat frictionless theoretical world, but would we actually prefer to live in a world where it would be possible to sue someone for inventing a fusion cuisine, or a musician would owe royalties to an entire nation for their folk songs, or take an actor to court if they played someone of the wrong sexual orientation/ethnicity/background? You could prevent Scarlett Johansson from starring in Ghost In the Shell, but Lin-Manuel's Hamilton might not even be written. Black hip hop artists could benefit at the expense of Eminem, but norteño musicians might depend on the whims of polka enthusiasts. An "inauthentic" hot chicken joint could be trapped in the same legal thicket as a humble Korean taco vendor. And so on.
Scafidi herself is scrupulous throughout the book in her choices of examples to illustrate how cultural appropriation can harm vulnerable groups, but she also discusses how some level of cultural exchange, even if intended as appropriation, is essential for tolerance and indeed progress at all. The "melting pot" cliché, as tiresome as it is, endures because it captures both the notion of separateness and incorporation, and while it's very easy to dismiss the calls from someone at the top of the pyramid to members of more vulnerable groups to surrender ownership of the very aspects of their culture that define their identity, at some point, as much as it rankles, loosening the grips of exclusivity helps everyone in much the same manner that putting the "Happy Birthday" song in the public domain helps everyone. And while there will always be those who misuse cultural exchange to highlight divisions, it's vastly more common to see people using what's in front of them to create something new. Besides, let's keep in mind that it's hardly a given that the current power structure will last forever, and it's entirely possible in 200 years that we'll have a completely different cultural hierarchy where white Americans are not on top; any proposed new system of rules for cultural exchange should account for this to avoid burdening future artists, musicians, and creators with the hangups of the past. I don't support Scafidi's proposals - to put it crudely, you have to accept that when the concept of pizza is given out to the world, someone is going to put pineapple on top of it - but others might, and she should be commended for so clearly laying out the options in front of us. ...more
Cultural appropriation has never had a clear definition. This is perhaps unavoidable, given the incredible sociological complexities of cultural identity, but it would be really useful to have a straightforward way to distinguish the undisputedly unfair cases of Western countries refusing to return plundered Egyptian artifacts from the vastly more numerous but far less harmful and even amusing instances of infamously lame suburban white kids using black slang they heard on a hip hop album to seem cool to their friends, if only for the sake of our collective blood pressure. Is it worth caring about appropriation at all, or is not caring just a sign of privilege, itself an extremely controversial subject? What if cultural appropriation is actually good and necessary for both individual and cultural growth, and complaints are merely illegitimate demands for power? What if it all depends on filling in every single one of the blanks every time Person A uses Element B from Culture C to make Artwork D which appeals to Group E? Even if cultural appropriation is real, and bad, does anyone win if art is not created?
Scafidi's main contribution to this debate, for me, was in starting from the comparatively clear perspective of property rights. "Why can a country-music writer demand royalties from performers she has never met, while an Appalachian folk musician cannot?" We have had legal regimes, in one form or another, that have handled instances of one person ripping another off for hundreds of years. Concepts like real property, personal property, and intellectual property (the clearest precedent for a notion of cultural property) have long traditions in every legal system around, and we generally know where we stand when it comes to purposeful individual creations. There are of course shades of complexity - a standup comedian who copies a joke hasn't committed a crime but can expect career repercussions due to informal norms about craftsmanship - but a news story about one musician accusing another of plagiarism rarely rises to the level of major public debate unless, paradoxically, the alleged offender has stolen something that no one person owns. Steal an individual riff or melody and you'll simply end up in court; steal a broader musical idiom or genre and you'll end up in an ocean of vitriol (my personal favorite example was when Iggy Azalea was accused of "vocal blackface", a hilarious phrase no matter your opinion of her music).
Protections for purposeful individual creations are fairly well-understood, but as Scafidi shows, the often-accidental, usually-anonymous creations of a culture come with all kinds of amorphous obligations and encumbrances that can in fact reverse the logic we normally use for deciding what's okay and what's not. Think about overly restrictive copyright law, which is rightly seen as a tool of control by large corporations that unfairly discourages innovation and nets them money by keeping things out of the public domain long after they should have been released. How many jokes about the absurd copyright status of "Happy Birthday" have been made before the song was finally, mercifully, freed to the world? It's at the boundaries of cultures where this gets more fraught: a white American doing another take on the Cinderella folktale is legally fine as long as they don't use Disney-specific imagery, and in moral terms, perhaps they're even heroic as an individual creator proudly defying a greedy megacorporation. But, if that same person were to do a similar take on Ye Xian, the Chinese equivalent of Cinderella, that would strike many people (of many cultures) as different in some vague but important way.
This is where one major weakness of most debates on cultural appropriation becomes unignorable: most examples you read about are too parochial and America-centric to be very useful for thinking about the broader logic of cultural exchange. As Scafidi puts it: "Assimilation to American life has traditionally involved the loss of non-Anglo cultural characteristics in order to conform to a mainstream norm, which is perceived as the absence of ethnic culture. White, Anglo-Saxon, Protestant, educated, healthy, straight males from reasonably affluent Mid-Atlantic or Midwestern backgrounds allegedly have "no" accents, eat "normal" food, wear "regular" clothes, play "popular" music, engage in the "usual" pastimes, share "common" opinions, and have "ordinary" tastes." There are countless articles that implicitly or explicitly use this framework to treat white Americans as all-powerful active appropriators and other groups or cultures as passive appropriatees, watching helplessly as their hard-won cultural products like music/food/slang/mannerisms are absorbed and retransmitted without any acknowledgement of the source, let alone remuneration. It's tough to argue with those pieces because they're often true, and they happen all the time. Scafidi's introduces the idea of the "identity tax" that members of a non-WASP group have to pay to be accepted in America (think gabagool and Mafia imagery for Italians, sombreros and tequila for Mexicans, etc). However, outright cultural theft - in that important legal sense of one person taking something that belongs to another person away from them - is such a minuscule proportion of all cultural exchange that reducing the billions of interactions between different people that occur every day all over the planet to the moral equivalence of an actual crime is neither accurate nor useful.
To return to the Cinderella/Ye Xian example, organizations like the World Intellectual Property Organization have had great difficulty implementing protocols like the "National Laws on the Protection of Expressions of Folklore Against Illicit Exploitation and Other Prejudicial Actions" because everything is difficult to measure. How much harm is inflicted by a white American using another country's folktale as creative inspiration? Who is harmed, current Chinese people, or the nameless Chinese storytellers of the past who collectively developed Ye Xian one detail and plot twist at a time? If the harm is current, are Chinese people in China and Chinese-Americans harmed equally, or in some other proportion? What would restitution look like, and how would it be distributed? What if the white American used some elements from Cinderella, some from Ye Xian, and also some from Tấm Cám, the Vietnamese equivalent? What if it was a religious text and not a folktale, or if it was contemporary food, or music, or dress? What if this person were half-Chinese themselves, or Chinese-American, or black American? And so on.
Breaking the issue down in such a calculated fashion might seem flip, but given the attention that Disney movies and their like play in the broader culture, examples like that neatly illustrate the potentially unbounded complexity of the concept of cultural appropriation, and why so many people decide that the easiest, safest, and fairest way to handle these complicated questions is to avoid them entirely by declaring that cultural appropriation doesn't really exist, and that everything not adequately covered under the existing copyright regime is fair game for everyone. Problem solved! This is one reason why cultural appropriation debates get stuck so quickly: if you think that any aspect of any culture belongs to everyone, then arguments to restrict its use of some cultural element, or even require acknowledgement that it's being used, can feel like lawyering on someone else's behalf, with no remedy readily available or even possible. Especially because a "culture" can be basically anything, in sociological terms, and it's often difficult for someone to know when they're treading on sensitive ground. Of course, this does not apply to people knowingly mocking another culture, but it's precisely because there aren't clear boundaries between what's public and what's private - or what "private" even means - that discussion becomes so fraught.
Scafidi's proposal to make all this easier is to recognize cultural property as a new type of intellectual property. Three things are needed to make this work:
- The idea of individual ownership should be extended to groups (cultures), who would then have group ownership of cultural products, though with more fair use exceptions than is traditionally allowed. "Intellectual property at common law is a protected category of intangible ideas embodied and reproduced in tangible form, while cultural products are the frequently unprotected expressions of shared values or experiences that are created and reproduced by a source community in either tangible or intangible form."
- Time limits on protections should be altered, perhaps extended to the life of the source community, or made renewable periodically. "In order to preserve the flow
of creations and inventions into the public domain, especially in light of the longevity of source communities, the exclusiveness of ownership should be established in rough inverse proportion to the duration of protection, taking into account the relative cultural significance of particular artifacts or rituals."
- Since many of the most cherished aspects of culture are not tangible, the requirement for cultural products to have a tangible form should be removed. "While individual or defined groups of authors and inventors generally anticipate embodiment or reduction of their work to tangible form prior to its legal recognition, cultural groups may have longstanding preferences and practices regarding intangibility and orality."
Furthermore, once those definitions are established, the protections given to cultural products should be broken into four categories, with distinctions between commodified and noncommodified, and public and private, depending on what sort of cultural product is under discussion:
- Noncommodified + private (example: Native American ceremonial dances): Enhanced trade secret-style protection
- Noncommodified + public (example: open source software): Copyright/patent-style protection
- Commodified + private (example: objects used in religious practice, like menorahs/rosaries): Copyright/patent-style protection
- Commodified + public (example: most cultural food/dress/music): Registered mark-style "Authenticity mark" protection
All of this should immediately prompt many questions and arguments, but I think at the abstract level of a proposed solution, it's a fairly sensible extension of a system which has worked, more or less, for a long time. It makes the dilemma for those who would restrict cultural appropriation explicit: it's possible to set up a system to punish unauthorized cultural exchange, but at the cost of bringing all of this into the Western legal system, with the attendant explosion in legal activity and costs, not to mention vast numbers of new gatekeepers and authorities and the almost-certain reduction in useful cultural exchange to come. It's not quite as simple as setting up a big dial to turn the level of cultural exchange from "high" to "low", but it's obvious that the more layers of lawyers you add to something, the more difficult it will then be. Scafidi cites Ronald Coase's theorem, a staple of law school classes, that given a neutral system to bargain in without excessive transaction costs, individuals will generally reach the most productive and Pareto-efficient equilibrium of property regardless of initial distribution. We don't live in that neat frictionless theoretical world, but would we actually prefer to live in a world where it would be possible to sue someone for inventing a fusion cuisine, or a musician would owe royalties to an entire nation for their folk songs, or take an actor to court if they played someone of the wrong sexual orientation/ethnicity/background? You could prevent Scarlett Johansson from starring in Ghost In the Shell, but Lin-Manuel's Hamilton might not even be written. Black hip hop artists could benefit at the expense of Eminem, but norteño musicians might depend on the whims of polka enthusiasts. An "inauthentic" hot chicken joint could be trapped in the same legal thicket as a humble Korean taco vendor. And so on.
Scafidi herself is scrupulous throughout the book in her choices of examples to illustrate how cultural appropriation can harm vulnerable groups, but she also discusses how some level of cultural exchange, even if intended as appropriation, is essential for tolerance and indeed progress at all. The "melting pot" cliché, as tiresome as it is, endures because it captures both the notion of separateness and incorporation, and while it's very easy to dismiss the calls from someone at the top of the pyramid to members of more vulnerable groups to surrender ownership of the very aspects of their culture that define their identity, at some point, as much as it rankles, loosening the grips of exclusivity helps everyone in much the same manner that putting the "Happy Birthday" song in the public domain helps everyone. And while there will always be those who misuse cultural exchange to highlight divisions, it's vastly more common to see people using what's in front of them to create something new. Besides, let's keep in mind that it's hardly a given that the current power structure will last forever, and it's entirely possible in 200 years that we'll have a completely different cultural hierarchy where white Americans are not on top; any proposed new system of rules for cultural exchange should account for this to avoid burdening future artists, musicians, and creators with the hangups of the past. I don't support Scafidi's proposals - to put it crudely, you have to accept that when the concept of pizza is given out to the world, someone is going to put pineapple on top of it - but others might, and she should be commended for so clearly laying out the options in front of us. ...more
Notes are private!
1
not set
Jan 2019
Jan 19, 2019
Kindle Edition
0393059960
9780393059960
0393059960
3.92
309
2006
May 01, 2006
really liked it
Paul Romer shared half of the 2018 Economics Nobel for his work on endogenous growth theory, so I figured I'd pick up this 2006 look at his work to le
Paul Romer shared half of the 2018 Economics Nobel for his work on endogenous growth theory, so I figured I'd pick up this 2006 look at his work to learn a bit more about what that was and why it matters (his co-Nobelist William Nordhaus' work on environmental economics is also given an all-too-brief mention). Popular works dedicated to technical theoretical economics of that sort aren't exactly common, so I was pleasantly surprised by what a good job David Warsh did of clearly explaining Romer's role in showing how Adam Smith's metaphor of the Pin Factory in The Wealth of Nations contained a fundamental tension between forces that increase concentration of economic activity, like increasing returns and falling costs, and forces that decrease it, like knowledge spillovers and competition, and how an improvement in mathematical modeling of traditional economic narratives both resolved that conceptual tension as well as advanced economics as a field, giving us a better explanation for how economic growth happens, especially in a "knowledge economy". There's some inside baseball in terms of how the economics profession is structured, so there are sections that can be skimmed if you're not interested in the conference circuit, the politics of academia, the structure of professional economics organizations, or the market for textbooks, but if you have an interest in the history of economic thought at the high level then this is a great explainer, and it provides a lot of excellent secondary reading if you then want to go back and read the debates firsthand themselves. It's always good to be reminded that discovery is an ongoing project, on important questions, between real people, still happening right now.
Paul Krugman, whose work on trade and economic geography comes up frequently in this book, once wrote a really interesting and directly relevant essay in 1996 that somehow wasn't cited here. Titled "Ricardo's Difficult Idea", its main subject is the idea of comparative advantage, and why such a simple economic concept is so hard for most people to internalize and then apply. He grounds that difficulty in the observation that there are two very different ways of thinking about the world: literary/narrative and mathematical/model-based, which don't always agree (this is perhaps for deep-seated cognitive-evolutionary reasons). When most people, even many professional economists, think about economic issues the default is to view issues in terms of simple zero-sum stories. For example, if Chinese companies are outcompeting American companies, then by imposing trade tariffs on China, American companies will be stronger, and hence America as a whole will be richer. Simple! This story has sounded very plausible for essentially all of human history, but explaining exactly why tariffs do not have the intended effects, and exactly how all sides become poorer from trade wars, requires an essentially mathematical understanding of economic logic that just does not come naturally to most people. Mathematical models by necessity make many simplifications of reality, but you can show how tariff revenue will almost certainly be smaller than costs to consumers in a simple diagram with just a few lines on paper, whereas forgoing the math means reverting to lengthy and complex expositions of concepts like deadweight loss, import/export price ratios, and currency exchange rates that sound plainly wrong to the uninitiated: what do you mean that making foreign products more expensive won't make us any richer?
Adam Smith faced precisely this difficulty in The Wealth of Nations, which is why it's so long and tedious to read today. Back then, the logic of specialization and division of labor had never really been laid out before, so Smith had to answer all the what-ifs and how-abouts at great length, just to be able to say that a pin factory can make more pins if each of the workers has specific steps of the pin-making process to perform. We can sum up in just a few neat equations what took him chapters to laboriously explicate, and another advantage of math is that it's easier to see when an idea has unexamined implications or hidden assumptions that lead to further problems. In the case of the pins, what sounds like a neat story about how a pin factory sees increasing returns from specialization, thereby creating economic growth, becomes more complicated when you consider multiple pin factories. Here the infamous invisible hand, acting as it does to increase competition and therefore decrease returns, should encourage competing pin factories to jump into the market until the total economic profit in the pin industry nears zero (or else you could increase economic growth forever by building endless pin factories, video game-style). But any theory of increasing returns should logically grant the first pin factory an insurmountable advantage until they come to monopolize the pin market, so how is it that most markets we see, while individual companies might come and go, are not in fact dominated by monopolies? One force rewards the most efficient pin maker, the other rewards their competitors, and it took until the advent of mathematical modeling for economists to get a real handle on how specific markets could work in any sort of equilibrium even as the total economy grew.
Ironically that's where Warsh's storytelling comes in so handy, as the progression of economics from a narrative discipline to a mathematical discipline is itself better-presented as a narrative. I'm sure there are people who would prefer that concepts like the effect that the size of the market has on specialization (why big cities have so many more and different high-skill and high-paying jobs than small towns) be directly conveyed to the reader in terms of the equations alone, but Warsh devotes a chapter to a single presentation in 1985, Robert Lucas' "On the Mechanics of Economic Development", with a quote showing what that would look like:
"Suppose there are N workers in total, with skill levels h ranging from 0 to infinity. Let there be N(h) workers with skill level h, so that N = N(h)dh. Suppose a worker with skill h devotes a fraction u(h) of his non-leisure time to current production, and the remaining 1–u(h) to human capital accumulation. Then the effective workforce in production - the analogue to N(t) in equation (2) - is the sum Ne = the indefinite integral of u(h)N(h)hdh of the skill-weighted manhours devoted to current production. Thus if output is a function of total capital K and effective labor Ne is F(K,Ne), the hourly wage of a worker at skill h is Fn(K,Ne)h and his total earnings are Fn(K,Ne)hu(h)."
It's perfectly readable if you have a math or econ background, but since economics is about human actions, the human context is important too. So while you do get some discussion of non-convexities and hyperplanes and other mathematical objects of interest, Warsh presents the slow accretion of various ideas into endogenous growth theory via the stories of the economists themselves trying to fit all the pieces of the puzzle together. It might seem faintly condescending to praise economists for being able to turn statements like "knowledge is important for economic growth", "when one person has an idea it doesn't take away from anyone else", or "you can sell more things when there are more people" into equations, like so many toddlers stacking brightly colored blocks into towers, but again: economics is full of deeply counterintuitive ideas, and things that make sense at one level often need to be refined or modified at another level. Building a model that captures enough about the real world to be insightful, yet simple enough to be tractable, is really hard, especially when you're also trying to explain why lasting growth occurs in some places but not others, and the reduction of such a broad concept as "innovation" into a system of equations necessarily involves a short-term loss of subtlety in exchange for longer-term power and insight. It's one thing to theorize that cities grow based on industrial concentration, intense competition, or economic diversity, it's another to use real data and formal models as Ed Glaeser did, to see which theories actually hold up.
This is where Paul Romer's two papers come in: 1986's "Increasing Returns and Long Run Growth", and 1990's "Endogenous Technological Change". "Increasing Returns" integrates knowledge into a model of economic growth, focusing on the positive externalities of new ideas, the increasing returns to the production of goods, and the decreasing returns to scientific research. Whereas previous models had lacked a way to account for creativity, implicitly assuming that innovation happens "outside" the economy, Romer was able to show how firms innovate, how those innovations can leave a market in equilibrium while society overall experiences growth, and how strategic interventions by the government can move markets from low equilibria to higher ones through the strategic strategic diffusion of knowledge (for example, via anti-trust actions against monopolies, public funding for research, or liberalizing adjustments to copyright laws). "Endogenous Technological Change" relates knowledge to growth slightly differently, crediting knowledge accumulation for capital accumulation and productivity growth, formalizing how market forces encourage technological change (though with the important caveat that much "pure research" is insulated from direct market forces, as at universities), and better defining the non-rivalrous and incompletely excludable nature of how innovations can be shared at zero marginal cost. These are important clarifications, because as societies accumulate more knowledge and human capital, forces which apply less or differently to traditional physical capital, like network effects, public goods, indivisibilities, and property rights, become much more important. Public policy becomes vital to ensuring that the simple ingredients of capital, labor, human capital, and the level of technological progress are combined in a way that allows for competitive markets and stable growth.
A vivid example of this comes from Romer's own career, when he provided expert testimony during the infamous Microsoft monopoly trials of the 1990s. The history of the internet is a case study in knowledge spillovers, increasing returns, and literal network effects, and Microsoft's attempts to maintain its dominance in crucial junctures of the industry, modeled as "monopolistic competition", demonstrate the incentives produced by particular attitudes towards intellectual property rights in a world of free reproduction of software. These philosophical differences between the proprietary model and open source model were famously pondered over in essays like "The Cathedral and The Bazaar" and "In the Beginning Was the Command Line", but from a practical perspective, the court system was attempting to decide whether a judicious intervention into the market would diffuse this non-rival knowledge and hence improve economic growth, or whether Microsoft's strategy of using its trade secrets and large scale to dominate the market were all in the game and hence just another example of a successful firm. The decision to break up the company was never implemented, but amusingly enough, in 2005 Microsoft reorganized itself into functional divisions that closely resembled the antitrust experts and the judge's recommendation of how to break up the company AT&T-style.
Much of the book is devoted to Paul Romer's life story, which is interesting if you pay attention to the econ blogosphere or have some familiarity with the field since many prominent names appear at key junctures. His work on the pricing of so-called "club goods" like ski-lift tickets or Disneyland passes, where he accidentally retread the same ground as James Buchanan, is a funny demonstration of how difficult it can be for knowledge to stick within a profession. His attempts to break into the textbook market, and his founding of a company specializing in online test administration, show how rare it is for academic economists to have practical business experience, how that affects their research, and how there might still be room for innovation in the ancient world of teaching. William Nordhaus, who shared the other half of the 2018 Economics Nobel, gets a brief discussion of his 1993 paper "Do Real Income and Real Wage Measures Capture Reality? The History of Lighting Suggests Not", which is a fascinating attempt to track the true price of light throughout human history. Based on his estimates, the shifts in energy sources from wood to coal to oil and so on from prehistory to the present has brought the price of light, measured in the number of labor-hours required to produce an hour of light, from 40 man-hours per lumen-hour in 2000 BC to .0001 man-hours per lumen-hour in 2000 AD, which represents a hundreds of thousands-fold drop in costs. This works as both a great critique of attempts to measure price inflation and a practical, objective measure of technological progress at the same time. I wish there had been more discussion of Nordhaus' research in environmental economics, but a single book can only cover so many things, and as the book itself shows, a loss of specialization would mean a loss in total consumer satisfaction. Warsh produced an excellent account of how knowledge is actually accumulated. ...more
Paul Krugman, whose work on trade and economic geography comes up frequently in this book, once wrote a really interesting and directly relevant essay in 1996 that somehow wasn't cited here. Titled "Ricardo's Difficult Idea", its main subject is the idea of comparative advantage, and why such a simple economic concept is so hard for most people to internalize and then apply. He grounds that difficulty in the observation that there are two very different ways of thinking about the world: literary/narrative and mathematical/model-based, which don't always agree (this is perhaps for deep-seated cognitive-evolutionary reasons). When most people, even many professional economists, think about economic issues the default is to view issues in terms of simple zero-sum stories. For example, if Chinese companies are outcompeting American companies, then by imposing trade tariffs on China, American companies will be stronger, and hence America as a whole will be richer. Simple! This story has sounded very plausible for essentially all of human history, but explaining exactly why tariffs do not have the intended effects, and exactly how all sides become poorer from trade wars, requires an essentially mathematical understanding of economic logic that just does not come naturally to most people. Mathematical models by necessity make many simplifications of reality, but you can show how tariff revenue will almost certainly be smaller than costs to consumers in a simple diagram with just a few lines on paper, whereas forgoing the math means reverting to lengthy and complex expositions of concepts like deadweight loss, import/export price ratios, and currency exchange rates that sound plainly wrong to the uninitiated: what do you mean that making foreign products more expensive won't make us any richer?
Adam Smith faced precisely this difficulty in The Wealth of Nations, which is why it's so long and tedious to read today. Back then, the logic of specialization and division of labor had never really been laid out before, so Smith had to answer all the what-ifs and how-abouts at great length, just to be able to say that a pin factory can make more pins if each of the workers has specific steps of the pin-making process to perform. We can sum up in just a few neat equations what took him chapters to laboriously explicate, and another advantage of math is that it's easier to see when an idea has unexamined implications or hidden assumptions that lead to further problems. In the case of the pins, what sounds like a neat story about how a pin factory sees increasing returns from specialization, thereby creating economic growth, becomes more complicated when you consider multiple pin factories. Here the infamous invisible hand, acting as it does to increase competition and therefore decrease returns, should encourage competing pin factories to jump into the market until the total economic profit in the pin industry nears zero (or else you could increase economic growth forever by building endless pin factories, video game-style). But any theory of increasing returns should logically grant the first pin factory an insurmountable advantage until they come to monopolize the pin market, so how is it that most markets we see, while individual companies might come and go, are not in fact dominated by monopolies? One force rewards the most efficient pin maker, the other rewards their competitors, and it took until the advent of mathematical modeling for economists to get a real handle on how specific markets could work in any sort of equilibrium even as the total economy grew.
Ironically that's where Warsh's storytelling comes in so handy, as the progression of economics from a narrative discipline to a mathematical discipline is itself better-presented as a narrative. I'm sure there are people who would prefer that concepts like the effect that the size of the market has on specialization (why big cities have so many more and different high-skill and high-paying jobs than small towns) be directly conveyed to the reader in terms of the equations alone, but Warsh devotes a chapter to a single presentation in 1985, Robert Lucas' "On the Mechanics of Economic Development", with a quote showing what that would look like:
"Suppose there are N workers in total, with skill levels h ranging from 0 to infinity. Let there be N(h) workers with skill level h, so that N = N(h)dh. Suppose a worker with skill h devotes a fraction u(h) of his non-leisure time to current production, and the remaining 1–u(h) to human capital accumulation. Then the effective workforce in production - the analogue to N(t) in equation (2) - is the sum Ne = the indefinite integral of u(h)N(h)hdh of the skill-weighted manhours devoted to current production. Thus if output is a function of total capital K and effective labor Ne is F(K,Ne), the hourly wage of a worker at skill h is Fn(K,Ne)h and his total earnings are Fn(K,Ne)hu(h)."
It's perfectly readable if you have a math or econ background, but since economics is about human actions, the human context is important too. So while you do get some discussion of non-convexities and hyperplanes and other mathematical objects of interest, Warsh presents the slow accretion of various ideas into endogenous growth theory via the stories of the economists themselves trying to fit all the pieces of the puzzle together. It might seem faintly condescending to praise economists for being able to turn statements like "knowledge is important for economic growth", "when one person has an idea it doesn't take away from anyone else", or "you can sell more things when there are more people" into equations, like so many toddlers stacking brightly colored blocks into towers, but again: economics is full of deeply counterintuitive ideas, and things that make sense at one level often need to be refined or modified at another level. Building a model that captures enough about the real world to be insightful, yet simple enough to be tractable, is really hard, especially when you're also trying to explain why lasting growth occurs in some places but not others, and the reduction of such a broad concept as "innovation" into a system of equations necessarily involves a short-term loss of subtlety in exchange for longer-term power and insight. It's one thing to theorize that cities grow based on industrial concentration, intense competition, or economic diversity, it's another to use real data and formal models as Ed Glaeser did, to see which theories actually hold up.
This is where Paul Romer's two papers come in: 1986's "Increasing Returns and Long Run Growth", and 1990's "Endogenous Technological Change". "Increasing Returns" integrates knowledge into a model of economic growth, focusing on the positive externalities of new ideas, the increasing returns to the production of goods, and the decreasing returns to scientific research. Whereas previous models had lacked a way to account for creativity, implicitly assuming that innovation happens "outside" the economy, Romer was able to show how firms innovate, how those innovations can leave a market in equilibrium while society overall experiences growth, and how strategic interventions by the government can move markets from low equilibria to higher ones through the strategic strategic diffusion of knowledge (for example, via anti-trust actions against monopolies, public funding for research, or liberalizing adjustments to copyright laws). "Endogenous Technological Change" relates knowledge to growth slightly differently, crediting knowledge accumulation for capital accumulation and productivity growth, formalizing how market forces encourage technological change (though with the important caveat that much "pure research" is insulated from direct market forces, as at universities), and better defining the non-rivalrous and incompletely excludable nature of how innovations can be shared at zero marginal cost. These are important clarifications, because as societies accumulate more knowledge and human capital, forces which apply less or differently to traditional physical capital, like network effects, public goods, indivisibilities, and property rights, become much more important. Public policy becomes vital to ensuring that the simple ingredients of capital, labor, human capital, and the level of technological progress are combined in a way that allows for competitive markets and stable growth.
A vivid example of this comes from Romer's own career, when he provided expert testimony during the infamous Microsoft monopoly trials of the 1990s. The history of the internet is a case study in knowledge spillovers, increasing returns, and literal network effects, and Microsoft's attempts to maintain its dominance in crucial junctures of the industry, modeled as "monopolistic competition", demonstrate the incentives produced by particular attitudes towards intellectual property rights in a world of free reproduction of software. These philosophical differences between the proprietary model and open source model were famously pondered over in essays like "The Cathedral and The Bazaar" and "In the Beginning Was the Command Line", but from a practical perspective, the court system was attempting to decide whether a judicious intervention into the market would diffuse this non-rival knowledge and hence improve economic growth, or whether Microsoft's strategy of using its trade secrets and large scale to dominate the market were all in the game and hence just another example of a successful firm. The decision to break up the company was never implemented, but amusingly enough, in 2005 Microsoft reorganized itself into functional divisions that closely resembled the antitrust experts and the judge's recommendation of how to break up the company AT&T-style.
Much of the book is devoted to Paul Romer's life story, which is interesting if you pay attention to the econ blogosphere or have some familiarity with the field since many prominent names appear at key junctures. His work on the pricing of so-called "club goods" like ski-lift tickets or Disneyland passes, where he accidentally retread the same ground as James Buchanan, is a funny demonstration of how difficult it can be for knowledge to stick within a profession. His attempts to break into the textbook market, and his founding of a company specializing in online test administration, show how rare it is for academic economists to have practical business experience, how that affects their research, and how there might still be room for innovation in the ancient world of teaching. William Nordhaus, who shared the other half of the 2018 Economics Nobel, gets a brief discussion of his 1993 paper "Do Real Income and Real Wage Measures Capture Reality? The History of Lighting Suggests Not", which is a fascinating attempt to track the true price of light throughout human history. Based on his estimates, the shifts in energy sources from wood to coal to oil and so on from prehistory to the present has brought the price of light, measured in the number of labor-hours required to produce an hour of light, from 40 man-hours per lumen-hour in 2000 BC to .0001 man-hours per lumen-hour in 2000 AD, which represents a hundreds of thousands-fold drop in costs. This works as both a great critique of attempts to measure price inflation and a practical, objective measure of technological progress at the same time. I wish there had been more discussion of Nordhaus' research in environmental economics, but a single book can only cover so many things, and as the book itself shows, a loss of specialization would mean a loss in total consumer satisfaction. Warsh produced an excellent account of how knowledge is actually accumulated. ...more
Notes are private!
1
not set
Dec 2018
Dec 14, 2018
Hardcover
0753545772
9780753545775
0753545772
3.85
2,922
Jul 10, 2018
Jul 12, 2018
really liked it
The concept of a Universal Basic Income has been around in various forms for quite a while, but it's become more politically relevant recently for sev
The concept of a Universal Basic Income has been around in various forms for quite a while, but it's become more politically relevant recently for several reasons: rapid technological change combined with international supply chains, growing global wealth yet widening inequality, and the sense that not only do we now have the social structure to truly end poverty forever, but that the best tool is also the simplest. There are many examples in miniature of what a UBI could look like; Lowrey covers both historical and recent programs in places like India, Kenya, and Alaska to explore what has worked to reduce poverty, and what has not. For example, delivering unconditional cash grants via India's Aadhaar program (a vast biometric digital identity scheme tied to pensions, banking, census, and various welfare functions) has had many of the intended poverty reduction benefits, but at the cost of great disruption to established patterns of life; requiring that individuals receive their benefits themselves reduces fraud, but sometimes the system crashes, or someone can't send their relative to pick up the money and has to take off work, or they can't make the side deals they used to. That kind of James Scott's Seeing Like a State central control vs local knowledge stuff would be critical in any kind of implementation, both between countries (would a UBI dramatically increase illegal immigration from countries without them?) and within them (would poor people just waste a non-means tested UBI or otherwise stop entering the labor market?), so even beyond the philosophical question of "should we?", the "how exactly?" question remains.
Science fiction has dealt with these questions for a long time, so in addition to the extensive analysis of real pilot programs, Lowrey touches on what, if anything we can learn from those explorations in terms of program design. The founding text for modern sci-fi worlds of plenty is probably Keynes' famous 1930 essay "Economic Possibilities For Our Grandchildren", where he accurately predicted that by 2030 we'd be between 4 and 8 times as rich as in 1930 but inaccurately predicted that we'd all therefore choose to work much less. Star Trek is the most famous fictional example of a society that has solved the "economic problem" and allowed people to work for fun rather than out of necessity, but the questions of how one would actually acquire wine from Picard's family vineyard or gumbo from Sisko's restaurant were usually left offscreen (Manu Saadia's pleasingly nerdy Trekonomics is cited at length). For a different take I wish she had also discussed Neal Stephenson's The Diamond Age, in which free replicators simply increase inequality, a fantastically wealthy overclass taking full advantage of technological cornucopia while the proles squander their dole in a manner familiar to Dickens. I think the question of whether free money corrodes the work ethic is an empirical question, and as Lowrey shows, while of course some people in Alaska do spend their free money on luxuries, the idea that most or even many people would waste precious funds is more fantastical than Star Trek, where everyone is an amateur archaeologist or chef or what have you.
There are even some conservatives, like Charles Murray, who advocate a UBI as a replacement for the existing welfare state precisely because it maximizes personal choice in that way, and is not susceptible to the familiar incentive-warping problems of means-tested programs: if a program like Medcaid is only available to those with an income less than $X, the strong incentive not to make more than $X can end up entrenching poverty rather than reducing it, to say nothing of how complex overlapping benefits programs are. However, the seemingly more dystopian concept of a federal jobs guarantee seems to be competing for mindshare as the preferred solution for poverty, particularly among liberals. I haven't seen a jobs guarantee show up in fiction to a great degree, but as Nick Taylor's superb history American Made shows, in the real world America still depends to a surprising degree on the infrastructure built during the Great Depression by the Works Progress Administration, the first real experiment with guaranteed jobs. The two concepts need not be opposed - I don't see why people couldn't choose to supplement their UBI by also accepting a government job - but it is striking that a UBI seems much more popular among intellectuals than a jobs guarantee, given the historical record of each. Perhaps the worry is that guaranteed jobs could become mandatory jobs, combining the worst aspects of the medieval corvée with Soviet subbotniks. A UBI seems much more difficult to run poorly than a jobs guarantee, but the work requirements that conservative states are trying to inflict upon their Medicaid recipients should indicate that a government that's determined to harass its poorest or most vulnerable citizens will find a way.
Keynes was a big champion of capitalism as the best tool to raise living standards, and ultimately the idea of ending poverty is an economic question as much as a moral one. It may be that truly ending it involves a sort of struggle against diminishing returns: a typical capitalist economy working well enough for most people (80%?), with guaranteed jobs picking up the majority of the slack (15%?), and a UBI covering those few who for whatever reason can't handle employment in either the private or public sectors. The last mile of anything is always the most difficult, but since a UBI covers everyone, it's less susceptible to the "programs for poor people are poor programs" issues that that currently plague America's haphazard, rickety, and often racist welfare state. The single most difficult aspect of a UBI is the funding structure, and here Lowrey predictably is less able to give useful guidance, since these are bitter political and practical questions. Alaska's scheme is funded from oil, but not only is every state not Alaska, but even Alaska might find its wells running dry someday. As FDR said of his own attempt to fund a UBI for the elderly: "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program." We don't have as much fiscal space as FDR did back in the welfare state's infant days, so either coming up with new taxes, such as on financial transactions or wealth, or finding acceptable ways to increase existing taxes, will prove the most challenging part of all. But, as Lowrey shows, there's no real mystery to ending poverty - just give people money. ...more
Science fiction has dealt with these questions for a long time, so in addition to the extensive analysis of real pilot programs, Lowrey touches on what, if anything we can learn from those explorations in terms of program design. The founding text for modern sci-fi worlds of plenty is probably Keynes' famous 1930 essay "Economic Possibilities For Our Grandchildren", where he accurately predicted that by 2030 we'd be between 4 and 8 times as rich as in 1930 but inaccurately predicted that we'd all therefore choose to work much less. Star Trek is the most famous fictional example of a society that has solved the "economic problem" and allowed people to work for fun rather than out of necessity, but the questions of how one would actually acquire wine from Picard's family vineyard or gumbo from Sisko's restaurant were usually left offscreen (Manu Saadia's pleasingly nerdy Trekonomics is cited at length). For a different take I wish she had also discussed Neal Stephenson's The Diamond Age, in which free replicators simply increase inequality, a fantastically wealthy overclass taking full advantage of technological cornucopia while the proles squander their dole in a manner familiar to Dickens. I think the question of whether free money corrodes the work ethic is an empirical question, and as Lowrey shows, while of course some people in Alaska do spend their free money on luxuries, the idea that most or even many people would waste precious funds is more fantastical than Star Trek, where everyone is an amateur archaeologist or chef or what have you.
There are even some conservatives, like Charles Murray, who advocate a UBI as a replacement for the existing welfare state precisely because it maximizes personal choice in that way, and is not susceptible to the familiar incentive-warping problems of means-tested programs: if a program like Medcaid is only available to those with an income less than $X, the strong incentive not to make more than $X can end up entrenching poverty rather than reducing it, to say nothing of how complex overlapping benefits programs are. However, the seemingly more dystopian concept of a federal jobs guarantee seems to be competing for mindshare as the preferred solution for poverty, particularly among liberals. I haven't seen a jobs guarantee show up in fiction to a great degree, but as Nick Taylor's superb history American Made shows, in the real world America still depends to a surprising degree on the infrastructure built during the Great Depression by the Works Progress Administration, the first real experiment with guaranteed jobs. The two concepts need not be opposed - I don't see why people couldn't choose to supplement their UBI by also accepting a government job - but it is striking that a UBI seems much more popular among intellectuals than a jobs guarantee, given the historical record of each. Perhaps the worry is that guaranteed jobs could become mandatory jobs, combining the worst aspects of the medieval corvée with Soviet subbotniks. A UBI seems much more difficult to run poorly than a jobs guarantee, but the work requirements that conservative states are trying to inflict upon their Medicaid recipients should indicate that a government that's determined to harass its poorest or most vulnerable citizens will find a way.
Keynes was a big champion of capitalism as the best tool to raise living standards, and ultimately the idea of ending poverty is an economic question as much as a moral one. It may be that truly ending it involves a sort of struggle against diminishing returns: a typical capitalist economy working well enough for most people (80%?), with guaranteed jobs picking up the majority of the slack (15%?), and a UBI covering those few who for whatever reason can't handle employment in either the private or public sectors. The last mile of anything is always the most difficult, but since a UBI covers everyone, it's less susceptible to the "programs for poor people are poor programs" issues that that currently plague America's haphazard, rickety, and often racist welfare state. The single most difficult aspect of a UBI is the funding structure, and here Lowrey predictably is less able to give useful guidance, since these are bitter political and practical questions. Alaska's scheme is funded from oil, but not only is every state not Alaska, but even Alaska might find its wells running dry someday. As FDR said of his own attempt to fund a UBI for the elderly: "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program." We don't have as much fiscal space as FDR did back in the welfare state's infant days, so either coming up with new taxes, such as on financial transactions or wealth, or finding acceptable ways to increase existing taxes, will prove the most challenging part of all. But, as Lowrey shows, there's no real mystery to ending poverty - just give people money. ...more
Notes are private!
1
not set
Sep 2018
Jul 02, 2018
Paperback
1473637465
9781473637467
1473637465
4.36
189,792
Apr 03, 2018
Apr 03, 2018
it was amazing
When Bill Gates read this book, he liked it so much that he not only gushed copiously about it on his blog, he also offered to cover the cost of the e
When Bill Gates read this book, he liked it so much that he not only gushed copiously about it on his blog, he also offered to cover the cost of the ebook for every college graduate in the United States. Dang! In fairness to him, Factfulness is basically a Gates-seeking missile - it's a slim, efficient volume focused on exactly the issues of global poverty and economic development that he's spent the last few decades thinking about, and it's not only packed with interesting data but also accompanied with a neatly itemized mental checklist for identifying and countering some major cognitive biases that affect the interpretation of that data. Its author, who created the excellent data visualization site Gapminder, sadly passed away before the book's release, but his children/cofounders cleaned up his manuscript and published it in the belief that its framework was too important to abandon. I agree - while individually each of these cognitive biases are familiar, rarely do you see them so neatly categorized, or so clearly applied to such important issues. Best of all, its positive conclusions are hopeful without being too airy, and its message of data-supported optimism is needed immensely in a world that seems tailor-made to dishearten us.
Even people who "don't pay attention to the news" pay attention to the news, they just tend do it badly, and they are not alone: all of us have an incomplete view of the world, almost by definition. It's true enough that there's enough news about war, poverty, deprivation, disease, and unhappiness in the world to depress just about anyone, yet being depressed about the world is exactly what this book is warning against. All of us have cognitive biases that affect how we process information, particularly about faraway strangers living lives that don't have much to do with us directly, and that's not helped by the media's well-known "if it bleeds, it leads" tendency, which we unfortunately encourage. Life truly is not as bad around the world as it seems, but in order to appreciate the dramatic progress the world has made in recent years, you not only have to filter out a big percentage of the shouting, you also have to unlearn some cognitive biases. Context is key, but that's exactly what we don't often get from the news, and so we have to supply it on our own.
Rosling uses many examples from his home country of Sweden to that effect, showing that many of our beliefs about foreign countries should look different with a bit of context. For example, no one should feel good when reading about a high rate of child mortality in developing nations, but learning that that statistic is actually lower than the equivalent number for most Western nations in the early part of the 20th century not only lowers your blood pressure, it makes you appreciate the tremendous work of governments, companies, NGOs, and the people themselves. It also helps you think more clearly about what's still to be done, since without context, foreign problems can seem utterly intractable. We often forget that while civilization doesn't always progress evenly in each part of the world, it usually does progress, and though it's very easy to simply toss news items into the Good or Bad bucket, especially in a rich Western country consumed with its own issues, life is getting better for more people at a faster rate than at any point in human history.
If you're like me, whenever you read a statement like "life is getting better!" you almost automatically leap to provide counterexamples of world tragedies, but, cleverly, this book provides its own tools to prove its thesis! Normally books that try to prove themselves are to be taken extremely skeptically ("of course the Bible/Koran/Torah is true, it says so itself!"), but I really don't think it's possible to argue against any of its 10 Rules of Thumb, especially when applied to the data herein, because even if you might decide that one or another of them isn't applicable, they are inarguably useful. Rosling presents a list of 10 instincts that we all have, and recommends some strategies for whenever we notice them in ourselves reacting to the daily parade of horribles:
1. The gap instinct - Factfulness is recognizing when a story talks about a gap, and remembering that this paints a picture of two separate groups, with a gap in between. The reality is often not polarized at all. Usually the majority is right there in the middle, where the gap is supposed to be.
2. The negativity instinct - Factfulness is recognizing when we get negative news, and remembering that information about bad events is much more likely to reach us. When things are getting better we often don't hear about them. This gives us a systematically too-negative impression of the world around us, which is very stressful.
3. The straight line instinct - Factfulness is recognizing the assumption that a line will just continue straight, and remembering that such lines are rare in reality.
4. The fear instinct - Factfulness is recognizing when frightening things get our attention, and remembering that these are not necessarily the most risky. Our natural fears of violence, captivity, and contamination make us systematically overestimate these risks.
5. The size instinct - Factfulness is recognizing when a lonely number seems impressive (small or large), and remembering that you could get the opposite impression if it were compared with or divided by some other relevant number.
6. The generalization instinct - Factfulness is recognizing when a category is being used in an explanation, and remembering that categories can be misleading. We can't stop generalization and we shouldn't even try. What we should try to do is to avoid generalizing incorrectly.
7. The destiny instinct - Factfulness is recognizing that many things (including people, countries, religions, and cultures) appear to be constant just because the change is happening slowly, and remembering that even small, slow changes gradually add up to big changes.
8. The single perspective instinct - Factfulness is recognizing that a single perspective can limit your imagination, and remembering that it is better to look at problems from many angles to get a more accurate understanding and find practical solutions.
9. The blame instinct - Factfulness is recognizing when a scapegoat is being used and remembering that blaming an individual often steals the focus from other possible explanations and blocks our ability to prevent similar problems in the future.
10. The urgency instinct - Factfulness is recognizing when a decision feels urgent and remembering that it rarely is.
Note that unlike many "Rules for X" lists out there, these are not ideological prescriptions masquerading as objectivity. It seems like it's usually conservatives urging delay or inaction on any given issue (which in fact is one of the primary definitions of "conservative"), but none of these heuristics support, for example, reducing or ceasing efforts to lower child mortality; in fact all of these strategies could just as well be used on the claim that child mortality is nothing to worry about. This means that it's also totally fair to use these tools to argue we should be more concerned about something than we already are. So yes: any tools that help us reckon the magnitude of our problems, fairly weigh evidence, and accurately determine solutions are welcome in our struggles with wars, diseases, famines, poverty, and climate change. This book did not invent any of its strategies, but I have never personally seen them gathered together in once place like this, so in spite of its slim size it makes an extremely convenient handbook. Perhaps Gates was not wrong to consider it as necessary for college students as any official textbook. ...more
Even people who "don't pay attention to the news" pay attention to the news, they just tend do it badly, and they are not alone: all of us have an incomplete view of the world, almost by definition. It's true enough that there's enough news about war, poverty, deprivation, disease, and unhappiness in the world to depress just about anyone, yet being depressed about the world is exactly what this book is warning against. All of us have cognitive biases that affect how we process information, particularly about faraway strangers living lives that don't have much to do with us directly, and that's not helped by the media's well-known "if it bleeds, it leads" tendency, which we unfortunately encourage. Life truly is not as bad around the world as it seems, but in order to appreciate the dramatic progress the world has made in recent years, you not only have to filter out a big percentage of the shouting, you also have to unlearn some cognitive biases. Context is key, but that's exactly what we don't often get from the news, and so we have to supply it on our own.
Rosling uses many examples from his home country of Sweden to that effect, showing that many of our beliefs about foreign countries should look different with a bit of context. For example, no one should feel good when reading about a high rate of child mortality in developing nations, but learning that that statistic is actually lower than the equivalent number for most Western nations in the early part of the 20th century not only lowers your blood pressure, it makes you appreciate the tremendous work of governments, companies, NGOs, and the people themselves. It also helps you think more clearly about what's still to be done, since without context, foreign problems can seem utterly intractable. We often forget that while civilization doesn't always progress evenly in each part of the world, it usually does progress, and though it's very easy to simply toss news items into the Good or Bad bucket, especially in a rich Western country consumed with its own issues, life is getting better for more people at a faster rate than at any point in human history.
If you're like me, whenever you read a statement like "life is getting better!" you almost automatically leap to provide counterexamples of world tragedies, but, cleverly, this book provides its own tools to prove its thesis! Normally books that try to prove themselves are to be taken extremely skeptically ("of course the Bible/Koran/Torah is true, it says so itself!"), but I really don't think it's possible to argue against any of its 10 Rules of Thumb, especially when applied to the data herein, because even if you might decide that one or another of them isn't applicable, they are inarguably useful. Rosling presents a list of 10 instincts that we all have, and recommends some strategies for whenever we notice them in ourselves reacting to the daily parade of horribles:
1. The gap instinct - Factfulness is recognizing when a story talks about a gap, and remembering that this paints a picture of two separate groups, with a gap in between. The reality is often not polarized at all. Usually the majority is right there in the middle, where the gap is supposed to be.
2. The negativity instinct - Factfulness is recognizing when we get negative news, and remembering that information about bad events is much more likely to reach us. When things are getting better we often don't hear about them. This gives us a systematically too-negative impression of the world around us, which is very stressful.
3. The straight line instinct - Factfulness is recognizing the assumption that a line will just continue straight, and remembering that such lines are rare in reality.
4. The fear instinct - Factfulness is recognizing when frightening things get our attention, and remembering that these are not necessarily the most risky. Our natural fears of violence, captivity, and contamination make us systematically overestimate these risks.
5. The size instinct - Factfulness is recognizing when a lonely number seems impressive (small or large), and remembering that you could get the opposite impression if it were compared with or divided by some other relevant number.
6. The generalization instinct - Factfulness is recognizing when a category is being used in an explanation, and remembering that categories can be misleading. We can't stop generalization and we shouldn't even try. What we should try to do is to avoid generalizing incorrectly.
7. The destiny instinct - Factfulness is recognizing that many things (including people, countries, religions, and cultures) appear to be constant just because the change is happening slowly, and remembering that even small, slow changes gradually add up to big changes.
8. The single perspective instinct - Factfulness is recognizing that a single perspective can limit your imagination, and remembering that it is better to look at problems from many angles to get a more accurate understanding and find practical solutions.
9. The blame instinct - Factfulness is recognizing when a scapegoat is being used and remembering that blaming an individual often steals the focus from other possible explanations and blocks our ability to prevent similar problems in the future.
10. The urgency instinct - Factfulness is recognizing when a decision feels urgent and remembering that it rarely is.
Note that unlike many "Rules for X" lists out there, these are not ideological prescriptions masquerading as objectivity. It seems like it's usually conservatives urging delay or inaction on any given issue (which in fact is one of the primary definitions of "conservative"), but none of these heuristics support, for example, reducing or ceasing efforts to lower child mortality; in fact all of these strategies could just as well be used on the claim that child mortality is nothing to worry about. This means that it's also totally fair to use these tools to argue we should be more concerned about something than we already are. So yes: any tools that help us reckon the magnitude of our problems, fairly weigh evidence, and accurately determine solutions are welcome in our struggles with wars, diseases, famines, poverty, and climate change. This book did not invent any of its strategies, but I have never personally seen them gathered together in once place like this, so in spite of its slim size it makes an extremely convenient handbook. Perhaps Gates was not wrong to consider it as necessary for college students as any official textbook. ...more
Notes are private!
1
not set
Jul 2018
Jun 05, 2018
Hardcover
0062390856
9780062390851
0062390856
3.91
41,135
May 09, 2017
May 09, 2017
it was amazing
Big Data has become the kind of cliché you normally associate with Dilbert cartoons (the insights! the disruption! the leveraged synergies! - just add
Big Data has become the kind of cliché you normally associate with Dilbert cartoons (the insights! the disruption! the leveraged synergies! - just add Big Data!), so it's nice to see someone drag the buzzword out of its reputational bog, clean it up for an audience, and show off its practical uses. While marketing departments and academics have always hungered for data to draw inferences from, the simultaneous rise of large data sets, cheap processing power, advanced statistical techniques, and readily available consumer data has created a seemingly endless new frontier in analyzing previously opaque human behavior. Survey data is notoriously unreliable: for example, the average number of self-reported sexual partners is famously higher for straight men than for straight women even though mathematically they must be equal (since everyone must go home with someone, this is charmingly known as the "high school prom theorem"). But since data can be collected in other ways that are harder to fake, like search history, browsing behavior, click rates, or app usage, an intelligent researcher can cut through the noise to shed new light on these problems. He comes up with all kinds of insights, from the discovery that lesbian porn is surprisingly popular with straight women, to the recommendation that wives should spend more time wondering if their husbands are alcoholic and less if they're gay, to the depressing conclusion that child abuse is going increasingly unreported. Under no circumstances should mindless number-crunching take the place of rational thought, but Big Data used properly is a valuable new tool to learn about ourselves, so this book comes off like a humbler yet more useful Freakonomics.
...more
Notes are private!
1
not set
Nov 2017
Jun 28, 2017
Hardcover
0670020621
9780670020621
0670020621
3.85
1,335
2009
May 14, 2009
it was amazing
This book hooked me from its name alone: not only is the pun on its subtitle of Sex, Evolution, and Consumer Behavior exactly my sense of humor, those
This book hooked me from its name alone: not only is the pun on its subtitle of Sex, Evolution, and Consumer Behavior exactly my sense of humor, those subjects are right up my alley. Miller's thesis is that much of modern conspicuous consumption is a waste, and not just in the environmental sense. In his view, much of what we buy as signaling and trait display devices are also a waste in evolutionary terms, because human beings are already extremely good at figuring out who they want to have sex with, and most purchases don't actually add much value to the whole mating determination process. Proving that takes him through evolutionary psychology, the economics of consumption, product marketing and consumer behavior, signaling theory, the relationship between technological progress and human nature, the quantification of personality types, how shared qualities like musical taste relate to sexual attraction, and the politics of conservation. He's really funny and well-read, with a keen eye for how our endless quests to spread our genes manifest themselves in our product purchases, with plenty of references not only to recent scientific research, but also to relevant pop culture like The Sims.
Miller opens the book by asking the modern reader to pretend that they're explaining the logic of consumer capitalism to a Cro-Magnon, playing on the absurdity of the work-buy-consume paradigm of the modern industrialized nations by having the Cro-Magnons ask what exactly all the goods and services our lives revolve around are useful for in evolutionary terms, like maximizing mammoth hunts, aiding berry foraging, acquiring more mates, and so on. To no one's surprise, they're not much use directly, but this is not just a recapitulation of Naomi Klein's thesis in No Logo that brands have hijacked our lives. So many pages have been written about consumer capitalism that a reasonable person might be forgiven for their lack of enthusiasm at yet another political screed, since the takes write themselves: either consumer capitalism is a rot, a sickness, a spiritual disease; or we live in the best of all possible mall worlds and the haters who don't like it are just jealous losers. Likewise with evolutionary psychology, surely one of the world's most misunderstood disciplines: either it's the key to explaining just about every nuance of human behavior, or else it's a tendentious mishmash of backwards reasoning and just-so stories. Yet who would disagree with this amusing summary?:
"Animal bodies and behaviors evolve largely as advertisements for their genes. Male humans evolved potent new sales tactics - verbal courtship, rhythmic music, gentle foreplay, prolonged copulation - for seducing skeptical female customers into accepting free trials of their fastest-moving consumer goods (sperm). Female humans evolved potent new tactics of relationship marketing to build long-term loyalty among their highest-value male customers, and to promote continued male investment in their new subsidiaries (children)."
However, as an evolutionary psychologist, his aim is to cut through relativistic and unscientific descriptions of our shopping trips. As he says, "Consumerist capitalism, as humans practice it in any particular culture, is not a natural or inevitable outcome of human evolution, given a certain level of technological sophistication. An evolutionary-psychology analysis of consumerism is accordingly not a way of giving science's seal of approval to consumerism, nor is it a way of morally justifying consumerism as the highest possible stage of biocultural progress." This is important, because even though much consumption closely resembles narcissism ("Narcissists tend to alternate between public status seeking and private pleasure seeking"), and he has a really funny chart attempting to quantify narcissism by calculating the cost per pound of items ranging from tap water ($0.0000633/lb) to a Victoria's Secret bra ($240/lb) to a porn DVD ($1,510/lb) to a human egg ($4.5 trillion/lb), just saying "people buy things to show themselves off" needs a bit more explanation. I was really cheered by seeing that I'm not the only one who has trouble appreciating what the people around me have spent so much time and effort on:
"Seriously, can you remember anything specific worn by your spouse or best friend the day before yesterday? Can you remember what kind of watch your boss wears? The brand of your nearest neighbor's dining room table? The face of the last person you saw driving a Ferrari? Probably not, unless you have the obsessive consumer fetishism of American Psycho's protagonist.... The net result could be called the fundamental consumerist delusion - that other people care more about the artificial products you display through consumerist spending than about the natural traits you display through normal conversation, cooperation, and cuddling."
He posits three different models of consumption, with the first two being mostly-accurate caricatures of the way many people look at capitalism:
- Wrong Conservative Model: human nature + free markets = consumerist capitalism (the hardcore libertarian model that includes Friedrich Hayek, Milton Friedman, and modern Republicans)
- Wrong Radical Model: the blank slate + oppressive institutions + invidious ideologies = consumerist capitalism (the "blank slate" model criticized by Steven Pinker that includes Stephen Jay Gould, Steven Rose, and Richard Lewontin)
- Sensible Model: human instincts for trying unconsciously to display certain desirable personal traits + current social norms for displaying those mental traits through certain kinds of credentials, jobs, goods, and services + current technological abilities and constraints + certain social institutions and ideologies + historical accident and cultural inertia = early twenty-first-century consumerist capitalism
The "Sensible Model" that he champions has a lot of moving parts, and he discusses how his model compares to other, more well-known models that have been used to explain how humans go about satisfying their desires. One of the big ones is Maslow's hierarchy, which he has issues with to the extent that it "mixes innate drives (breathing, eating, seeking status, acquiring knowledge) and learned concerns (seeking financial security, self-esteem, and increased intelligence). It does not 'cut nature at the joints' in terms of the key selection pressures that shaped human behavior: survival and reproduction." I've had similar thoughts before; the basic insight that some human needs are more fundamental than others is hard to argue with, but for any theory to attain at least the veneer of science, the devil is in the details. Miller's framework makes a lot more sense, or at least it's more clearly grounded in the behaviors which seem more fundamental. When it comes to our desires as consumers, it usually all comes back to sex appeal:
"The most desirable traits are not wealth, status, and taste - these are just vague pseudo-traits that are achieved and displayed in widely different ways across different cultures, and ones that do not show very high stability within individual lives, or very high heritability across generations. They exist at the wrong level of description to be scientifically useful in connecting consumer psychology to evolutionary psychology. Rather, the most desirable traits are universal, stable, heritable traits closely related to biological fitness - traits like physical attractiveness, physical health, mental health, intelligence, and personality."
Physical attractiveness is easy for people to assess, no matter the particulars of cultural standards, but much of the middle part of the book is devoted to the more difficult task of explaining how we unconsciously demonstrate aspects of our personalities and seek like-minded others through our purchases, in a more consumerist version of Erving Goffman's The Presentation of Self In Everyday Life. He models this with the Central Six, abbreviated GOCASE: general intelligence plus the Big Five of openness, conscientiousness, agreeableness, stability, and extroversion. I've always been fascinated by personality tests, from the semi-respectable like MMPI or Myers-Briggs to the absurd like astrology. Much like with Maslow's hierarchy, nearly all of them seem like they're capturing something "true-ish" about ourselves, but the fact that there are dozens, maybe hundreds of incompatible measures out there makes Clickhole's parodies like "Are You an Introvert, an Extrovert, or a Sea Monster?" or "Which Blade of Grass Are You?" probably the best ones out there. However, the GOCASE framework explains a great deal across many domains, and most importantly, is stable and consistent enough to be the gold standard for psychologists trying to measure real aspects of our personalities. It's the distinct permutations of those six factors which make up the variety of people that we see in the world.
And it's often highly specific combinations that we're seeking in our partners, even if we couldn't consciously articulate what, exactly. Some people like high agreeableness (if you see your partner as a refuge from the world), some like low agreeableness (if you want someone who will challenge you), some like it in between. Some people aren't too picky (especially if you score poorly on the G factor), while others demand such exotic configurations of the Central Six that it takes them a while to find a partner. Anyone who's read Matt Ridley's The Red Queen or merely done some dating knows that the endless sexual arms race of signaling/counter-signaling/fake-signaling involves a frustrating amount of discerning signal from noise, even in matters of taste: "Personal taste should not just attract like-minded individuals; it should also repulse differently minded ones. To be effective, it must be a high-risk, high-gain form of taste signaling, rather than a meek nod to the least common denominator." Or, in another interesting passage where he compares attempts to maintain the glamour of diamonds in the face of alternatives like zirconia:
"Advances in gem production raise the possibility that in biological evolution, too, traits that began as fake alternatives to certain signals of quality may have evolved to be more useful and even more desirable than the original traits ever were. For example, verbal humor may have originated as a way for subordinate youths to imitate and mock older, more physically dominant sexual rivals - until eventually, humor became even more attractive than dominance, just as Moissanite achieved higher brilliance and fire than diamonds."
Some signals are unquestionably better than others, at least for most people. For example, one of the best ways to make a connection with someone you're attracted to is to discuss your shared aesthetic tastes, especially music. How is it that having a similar music phase in middle school or a shared guilty pleasure make you want to have offspring with someone? A big part of it is the subconscious recognition of which personality traits that the bands embody - everyone knows that a punk is different from a pop fan, a metalhead from a classical aficionado, a folkie from a country lover, and so on - but few are willing to say outright that your playlists are your personality type, or are able to explain why exactly finding some with the same reaction to the same artist means so much to them. Miller runs with that idea, for example arguing that a minor taste for the avant-garde is a good indicator of openness, but that too much might be a warning sign: "An individual with a longstanding appreciation of Lynch's Blue Velvet (1986) is therefore a safer bet than one with a newly acquired enthusiasm for Inland Empire (2006)." (Remember that the book was published in 2008; insert your favorite cutting edge "safe weird" vs "weird weird" examples here).
Less controversial is the idea that your taste in something like pets can show off something about you, as someone with a big active breed of dog is more likely to have the high conscientiousness required to keep up with the necessary feeding, walking, and exercising than someone with a tiny toy dog, with the obvious implications for potential willingness to expend time and energy on children. And as attributes like conscientiousness becomes ever more important in the modern world, ways of displaying and measuring it will be more important in turn: "School, work, and credit - three pillars of consumer capitalism - are also, not coincidentally, the most reliable and conspicuous indicators of conscientiousness. All other consumer purchasing depends on these three pillars, so they are fundamental to conspicuous consumption." Seen in that light, the fact that much of what we buy and consume serves to signal to potential mates that we're the type of person that they'd really like to have sex with makes perfect sense.
However, much of what we buy seems to offer limited value for our money. Some of the funniest parts of the book are where Miller skewers how our attempts to flaunt ourselves go awry. For example, how much benefit do guys trying to impress babes really get out of status objects like sports cars?
"Even if male Corvette drivers do manage to attract a little extra female attention, the math doesn't work out very well for them. Suppose a male driver enjoys an average of one extra short-term mating per year attributable to his choice of car. The Chevrolet Corvette Z06 ($70,000) has a $50,000 price premium over the comparable-size Chevrolet Malibu sedan ($20,000), and both cars are designed to become obsolete in about five years. Rational car-buyers could then calculate that the Corvette’s price premium of $50,000 yields an expected five extra sexual encounters during its five-year product life, or $10,000 per encounter. By contrast, a typical encounter with a professional sex worker costs about $200, or fifty times less. Instead of paying the Corvette's price premium, which might yield one encounter per year, the driver could just buy the Malibu and, with the cash he saved, have one encounter per week. The prospective male Corvette-buyer must accordingly either be wildly overoptimistic about the car's attractiveness to women, or be very bad at math, or strongly prefer sexual encounters with amateurs rather than professionals."
We're also bad at math when it comes to our health, in a way that reminds me of the cartoonish catering towards our basest desires in the movie Idiocracy:
"For example, Costco sells M&M candies in sixty-four-ounce bags for about $8. I like M&Ms, so that seems like a great impulse purchase if I think I deserve a treat. However, at 142 calories per ounce, that bag contains about 9,000 calories of milk chocolate, which, knowing myself, I would eventually eat. An intensive aerobics class burns only 500 calories an hour, so it would take eighteen hours of aerobic lessons, at $10 per hour, to counteract the fat gain. So, rationally, I should be willing to pay about $180 to the Costco cashier - or my wife, or anyone - to restrain me from buying the $8 bag of M&M's."
Are there acid tests for personality traits?
"For example, it may be hard to judge a daughter's boyfriend's agreeableness (kindness, warmth, generosity) if we meet him in a quiet, air-conditioned steak house. Much better to invite him over for a midsummer extended-family barbecue at which he is in encouraged to drink several beers, and then assaulted chaotically on all sides by children, dogs, footballs, and stinging insects. If, under these more difficult, disinhibited, and diagnostic conditions, he becomes irritable to the point of throwing the footballs at the dogs and squirting mustard at the children, we know his agreeableness level is rather low (and that he might have a short temper with our daughter's future babies). Conversely, if he remains calm, cheerful, and helpful as the sweat rolls down his beer-flushed, mosquito-stung, dog-licked face, we know his agreeableness level is rather high. The cultural evolution of such occasions for accurate personality assessment may explain why major social rituals (dates, job interviews, parties, banquets, holidays, weddings, honeymoons) entail such long durations, high stress levels, and disinhibiting drugs such as alcohol. These conditions bring out both the best and the worst in us."
And what do pickup lines sound like when stripped down to their bare essentials?
"If I say on a second date that 'the sugar maples in Harvard Yard were so beautiful every fall term,' I am basically saying 'my SAT scores were sufficiently high (roughly 720 out of 800) that I could get admitted, so my IQ is above 135, and I had sufficient conscientiousness, emotional stability, and intellectual openness to pass my classes. Plus, I can recognize a tree.' The information content is the same, but while the former sounds poetic, the latter sounds boorish."
I could go on and on. Miller's conclusion is that to stop such senseless waste, we not only have to recognize it for what it is, but also agree collectively to take concrete political action. Some suggestions are radical enough to be right out of science fiction, like the "trait tattoos" that would encode your Central Six measurements visibly, thus completely removing the need for most conspicuous consumption since at a glance you would be able to see who's compatible with you: "Mass social transparency sounds frightening and embarrassing, but it is what humans have been striving for ever since the prehistoric development of gossip, reputation, 'face', and status symbols. It would allow at least some rational people, some of the time, to choose their friends, mates, co-workers, and neighbors more quickly and accurately." The Gattaca-type incentives for people to fake their tattoos are obvious, yet the idea is worth some thought. More politically respectable, at least in some regards, is the idea of more consumption taxes. The politics of this are extremely tricky - the FairTax as currently proposed is primarily supported by libertarians opposed to income taxes, the bullet tax he proposes to solve the negative externalities of gun crimes would be absolutely opposed by conservatives, while it's mainly liberals who seem to support soda taxes to combat obesity - yet the logic behind the idea of taxing the hell out of grotesque status symbols like megayachts seems mostly unimpeachable. There are five main reasons he presents for consumption taxes, none of them illogical or unsupported by empirical evidence:
First, people would reduce, reuse, and recycle more;
Second, the consumption tax would also create incentives for people to buy longer-lasting goods that have a higher resale value in the secondary market;
Third, the consumption tax would encourage people to buy products that consume less energy and matter to operate;
Fourth, the consumption tax would promote social capital and neighborly camaraderie;
Finally, the consumption tax would increase savings, investment, and charity
As a popular social science work, this one earns its place among the top tier by being carefully argued, well-sourced, provocative, and well-written. Evolutionary psychology is still in its infancy as a discipline, yet Miller's explanation of how it relates to consumer capitalism is both intuitively true as well as widely applicable. I can't believe I found an author with something actually new to say about the endless "do opposites really attract, or do birds of a feather really flock together?" debate. ...more
Miller opens the book by asking the modern reader to pretend that they're explaining the logic of consumer capitalism to a Cro-Magnon, playing on the absurdity of the work-buy-consume paradigm of the modern industrialized nations by having the Cro-Magnons ask what exactly all the goods and services our lives revolve around are useful for in evolutionary terms, like maximizing mammoth hunts, aiding berry foraging, acquiring more mates, and so on. To no one's surprise, they're not much use directly, but this is not just a recapitulation of Naomi Klein's thesis in No Logo that brands have hijacked our lives. So many pages have been written about consumer capitalism that a reasonable person might be forgiven for their lack of enthusiasm at yet another political screed, since the takes write themselves: either consumer capitalism is a rot, a sickness, a spiritual disease; or we live in the best of all possible mall worlds and the haters who don't like it are just jealous losers. Likewise with evolutionary psychology, surely one of the world's most misunderstood disciplines: either it's the key to explaining just about every nuance of human behavior, or else it's a tendentious mishmash of backwards reasoning and just-so stories. Yet who would disagree with this amusing summary?:
"Animal bodies and behaviors evolve largely as advertisements for their genes. Male humans evolved potent new sales tactics - verbal courtship, rhythmic music, gentle foreplay, prolonged copulation - for seducing skeptical female customers into accepting free trials of their fastest-moving consumer goods (sperm). Female humans evolved potent new tactics of relationship marketing to build long-term loyalty among their highest-value male customers, and to promote continued male investment in their new subsidiaries (children)."
However, as an evolutionary psychologist, his aim is to cut through relativistic and unscientific descriptions of our shopping trips. As he says, "Consumerist capitalism, as humans practice it in any particular culture, is not a natural or inevitable outcome of human evolution, given a certain level of technological sophistication. An evolutionary-psychology analysis of consumerism is accordingly not a way of giving science's seal of approval to consumerism, nor is it a way of morally justifying consumerism as the highest possible stage of biocultural progress." This is important, because even though much consumption closely resembles narcissism ("Narcissists tend to alternate between public status seeking and private pleasure seeking"), and he has a really funny chart attempting to quantify narcissism by calculating the cost per pound of items ranging from tap water ($0.0000633/lb) to a Victoria's Secret bra ($240/lb) to a porn DVD ($1,510/lb) to a human egg ($4.5 trillion/lb), just saying "people buy things to show themselves off" needs a bit more explanation. I was really cheered by seeing that I'm not the only one who has trouble appreciating what the people around me have spent so much time and effort on:
"Seriously, can you remember anything specific worn by your spouse or best friend the day before yesterday? Can you remember what kind of watch your boss wears? The brand of your nearest neighbor's dining room table? The face of the last person you saw driving a Ferrari? Probably not, unless you have the obsessive consumer fetishism of American Psycho's protagonist.... The net result could be called the fundamental consumerist delusion - that other people care more about the artificial products you display through consumerist spending than about the natural traits you display through normal conversation, cooperation, and cuddling."
He posits three different models of consumption, with the first two being mostly-accurate caricatures of the way many people look at capitalism:
- Wrong Conservative Model: human nature + free markets = consumerist capitalism (the hardcore libertarian model that includes Friedrich Hayek, Milton Friedman, and modern Republicans)
- Wrong Radical Model: the blank slate + oppressive institutions + invidious ideologies = consumerist capitalism (the "blank slate" model criticized by Steven Pinker that includes Stephen Jay Gould, Steven Rose, and Richard Lewontin)
- Sensible Model: human instincts for trying unconsciously to display certain desirable personal traits + current social norms for displaying those mental traits through certain kinds of credentials, jobs, goods, and services + current technological abilities and constraints + certain social institutions and ideologies + historical accident and cultural inertia = early twenty-first-century consumerist capitalism
The "Sensible Model" that he champions has a lot of moving parts, and he discusses how his model compares to other, more well-known models that have been used to explain how humans go about satisfying their desires. One of the big ones is Maslow's hierarchy, which he has issues with to the extent that it "mixes innate drives (breathing, eating, seeking status, acquiring knowledge) and learned concerns (seeking financial security, self-esteem, and increased intelligence). It does not 'cut nature at the joints' in terms of the key selection pressures that shaped human behavior: survival and reproduction." I've had similar thoughts before; the basic insight that some human needs are more fundamental than others is hard to argue with, but for any theory to attain at least the veneer of science, the devil is in the details. Miller's framework makes a lot more sense, or at least it's more clearly grounded in the behaviors which seem more fundamental. When it comes to our desires as consumers, it usually all comes back to sex appeal:
"The most desirable traits are not wealth, status, and taste - these are just vague pseudo-traits that are achieved and displayed in widely different ways across different cultures, and ones that do not show very high stability within individual lives, or very high heritability across generations. They exist at the wrong level of description to be scientifically useful in connecting consumer psychology to evolutionary psychology. Rather, the most desirable traits are universal, stable, heritable traits closely related to biological fitness - traits like physical attractiveness, physical health, mental health, intelligence, and personality."
Physical attractiveness is easy for people to assess, no matter the particulars of cultural standards, but much of the middle part of the book is devoted to the more difficult task of explaining how we unconsciously demonstrate aspects of our personalities and seek like-minded others through our purchases, in a more consumerist version of Erving Goffman's The Presentation of Self In Everyday Life. He models this with the Central Six, abbreviated GOCASE: general intelligence plus the Big Five of openness, conscientiousness, agreeableness, stability, and extroversion. I've always been fascinated by personality tests, from the semi-respectable like MMPI or Myers-Briggs to the absurd like astrology. Much like with Maslow's hierarchy, nearly all of them seem like they're capturing something "true-ish" about ourselves, but the fact that there are dozens, maybe hundreds of incompatible measures out there makes Clickhole's parodies like "Are You an Introvert, an Extrovert, or a Sea Monster?" or "Which Blade of Grass Are You?" probably the best ones out there. However, the GOCASE framework explains a great deal across many domains, and most importantly, is stable and consistent enough to be the gold standard for psychologists trying to measure real aspects of our personalities. It's the distinct permutations of those six factors which make up the variety of people that we see in the world.
And it's often highly specific combinations that we're seeking in our partners, even if we couldn't consciously articulate what, exactly. Some people like high agreeableness (if you see your partner as a refuge from the world), some like low agreeableness (if you want someone who will challenge you), some like it in between. Some people aren't too picky (especially if you score poorly on the G factor), while others demand such exotic configurations of the Central Six that it takes them a while to find a partner. Anyone who's read Matt Ridley's The Red Queen or merely done some dating knows that the endless sexual arms race of signaling/counter-signaling/fake-signaling involves a frustrating amount of discerning signal from noise, even in matters of taste: "Personal taste should not just attract like-minded individuals; it should also repulse differently minded ones. To be effective, it must be a high-risk, high-gain form of taste signaling, rather than a meek nod to the least common denominator." Or, in another interesting passage where he compares attempts to maintain the glamour of diamonds in the face of alternatives like zirconia:
"Advances in gem production raise the possibility that in biological evolution, too, traits that began as fake alternatives to certain signals of quality may have evolved to be more useful and even more desirable than the original traits ever were. For example, verbal humor may have originated as a way for subordinate youths to imitate and mock older, more physically dominant sexual rivals - until eventually, humor became even more attractive than dominance, just as Moissanite achieved higher brilliance and fire than diamonds."
Some signals are unquestionably better than others, at least for most people. For example, one of the best ways to make a connection with someone you're attracted to is to discuss your shared aesthetic tastes, especially music. How is it that having a similar music phase in middle school or a shared guilty pleasure make you want to have offspring with someone? A big part of it is the subconscious recognition of which personality traits that the bands embody - everyone knows that a punk is different from a pop fan, a metalhead from a classical aficionado, a folkie from a country lover, and so on - but few are willing to say outright that your playlists are your personality type, or are able to explain why exactly finding some with the same reaction to the same artist means so much to them. Miller runs with that idea, for example arguing that a minor taste for the avant-garde is a good indicator of openness, but that too much might be a warning sign: "An individual with a longstanding appreciation of Lynch's Blue Velvet (1986) is therefore a safer bet than one with a newly acquired enthusiasm for Inland Empire (2006)." (Remember that the book was published in 2008; insert your favorite cutting edge "safe weird" vs "weird weird" examples here).
Less controversial is the idea that your taste in something like pets can show off something about you, as someone with a big active breed of dog is more likely to have the high conscientiousness required to keep up with the necessary feeding, walking, and exercising than someone with a tiny toy dog, with the obvious implications for potential willingness to expend time and energy on children. And as attributes like conscientiousness becomes ever more important in the modern world, ways of displaying and measuring it will be more important in turn: "School, work, and credit - three pillars of consumer capitalism - are also, not coincidentally, the most reliable and conspicuous indicators of conscientiousness. All other consumer purchasing depends on these three pillars, so they are fundamental to conspicuous consumption." Seen in that light, the fact that much of what we buy and consume serves to signal to potential mates that we're the type of person that they'd really like to have sex with makes perfect sense.
However, much of what we buy seems to offer limited value for our money. Some of the funniest parts of the book are where Miller skewers how our attempts to flaunt ourselves go awry. For example, how much benefit do guys trying to impress babes really get out of status objects like sports cars?
"Even if male Corvette drivers do manage to attract a little extra female attention, the math doesn't work out very well for them. Suppose a male driver enjoys an average of one extra short-term mating per year attributable to his choice of car. The Chevrolet Corvette Z06 ($70,000) has a $50,000 price premium over the comparable-size Chevrolet Malibu sedan ($20,000), and both cars are designed to become obsolete in about five years. Rational car-buyers could then calculate that the Corvette’s price premium of $50,000 yields an expected five extra sexual encounters during its five-year product life, or $10,000 per encounter. By contrast, a typical encounter with a professional sex worker costs about $200, or fifty times less. Instead of paying the Corvette's price premium, which might yield one encounter per year, the driver could just buy the Malibu and, with the cash he saved, have one encounter per week. The prospective male Corvette-buyer must accordingly either be wildly overoptimistic about the car's attractiveness to women, or be very bad at math, or strongly prefer sexual encounters with amateurs rather than professionals."
We're also bad at math when it comes to our health, in a way that reminds me of the cartoonish catering towards our basest desires in the movie Idiocracy:
"For example, Costco sells M&M candies in sixty-four-ounce bags for about $8. I like M&Ms, so that seems like a great impulse purchase if I think I deserve a treat. However, at 142 calories per ounce, that bag contains about 9,000 calories of milk chocolate, which, knowing myself, I would eventually eat. An intensive aerobics class burns only 500 calories an hour, so it would take eighteen hours of aerobic lessons, at $10 per hour, to counteract the fat gain. So, rationally, I should be willing to pay about $180 to the Costco cashier - or my wife, or anyone - to restrain me from buying the $8 bag of M&M's."
Are there acid tests for personality traits?
"For example, it may be hard to judge a daughter's boyfriend's agreeableness (kindness, warmth, generosity) if we meet him in a quiet, air-conditioned steak house. Much better to invite him over for a midsummer extended-family barbecue at which he is in encouraged to drink several beers, and then assaulted chaotically on all sides by children, dogs, footballs, and stinging insects. If, under these more difficult, disinhibited, and diagnostic conditions, he becomes irritable to the point of throwing the footballs at the dogs and squirting mustard at the children, we know his agreeableness level is rather low (and that he might have a short temper with our daughter's future babies). Conversely, if he remains calm, cheerful, and helpful as the sweat rolls down his beer-flushed, mosquito-stung, dog-licked face, we know his agreeableness level is rather high. The cultural evolution of such occasions for accurate personality assessment may explain why major social rituals (dates, job interviews, parties, banquets, holidays, weddings, honeymoons) entail such long durations, high stress levels, and disinhibiting drugs such as alcohol. These conditions bring out both the best and the worst in us."
And what do pickup lines sound like when stripped down to their bare essentials?
"If I say on a second date that 'the sugar maples in Harvard Yard were so beautiful every fall term,' I am basically saying 'my SAT scores were sufficiently high (roughly 720 out of 800) that I could get admitted, so my IQ is above 135, and I had sufficient conscientiousness, emotional stability, and intellectual openness to pass my classes. Plus, I can recognize a tree.' The information content is the same, but while the former sounds poetic, the latter sounds boorish."
I could go on and on. Miller's conclusion is that to stop such senseless waste, we not only have to recognize it for what it is, but also agree collectively to take concrete political action. Some suggestions are radical enough to be right out of science fiction, like the "trait tattoos" that would encode your Central Six measurements visibly, thus completely removing the need for most conspicuous consumption since at a glance you would be able to see who's compatible with you: "Mass social transparency sounds frightening and embarrassing, but it is what humans have been striving for ever since the prehistoric development of gossip, reputation, 'face', and status symbols. It would allow at least some rational people, some of the time, to choose their friends, mates, co-workers, and neighbors more quickly and accurately." The Gattaca-type incentives for people to fake their tattoos are obvious, yet the idea is worth some thought. More politically respectable, at least in some regards, is the idea of more consumption taxes. The politics of this are extremely tricky - the FairTax as currently proposed is primarily supported by libertarians opposed to income taxes, the bullet tax he proposes to solve the negative externalities of gun crimes would be absolutely opposed by conservatives, while it's mainly liberals who seem to support soda taxes to combat obesity - yet the logic behind the idea of taxing the hell out of grotesque status symbols like megayachts seems mostly unimpeachable. There are five main reasons he presents for consumption taxes, none of them illogical or unsupported by empirical evidence:
First, people would reduce, reuse, and recycle more;
Second, the consumption tax would also create incentives for people to buy longer-lasting goods that have a higher resale value in the secondary market;
Third, the consumption tax would encourage people to buy products that consume less energy and matter to operate;
Fourth, the consumption tax would promote social capital and neighborly camaraderie;
Finally, the consumption tax would increase savings, investment, and charity
As a popular social science work, this one earns its place among the top tier by being carefully argued, well-sourced, provocative, and well-written. Evolutionary psychology is still in its infancy as a discipline, yet Miller's explanation of how it relates to consumer capitalism is both intuitively true as well as widely applicable. I can't believe I found an author with something actually new to say about the endless "do opposites really attract, or do birds of a feather really flock together?" debate. ...more
Notes are private!
1
not set
Nov 2016
May 25, 2016
Hardcover
1594205493
9781594205491
1594205493
3.81
1,322
Sep 22, 2015
Oct 20, 2015
really liked it
Many people have strong opinions about the Federal Reserve, despite not having a clear idea of what it is, what it does, how it's structured, or who's
Many people have strong opinions about the Federal Reserve, despite not having a clear idea of what it is, what it does, how it's structured, or who's in charge. However, even if that describes you, don't feel so bad, because ignorance has been practically a second father to the Fed since the beginning. America's allergy to central banking has endured from the founding, through multiple painful financial crises and recessions, and even through to the relatively peaceful and prosperous present. As Lowenstein ably demonstrates through his description of the Federal Reserve Act's drafting, debate, and passage, the Federal Reserve's complex structure and arcane operations are less a product of smoke-filled rooms than the unavoidably complicated nature of high finance, as well as the often-terrible political compromises necessary to shepherd such a controversial piece of legislation through the drama of the Progressive Era. Since the "End the Fed" movement is still with us, as it most likely will be for some time, it's worth reading on why the Fed exists, what problems its creators were trying to solve, and how it ended up quite the way it did.
Nowadays, central banks are a given in the international financial landscape - less a feature than the foundation. Yet despite the best efforts of Alexander Hamilton and many other government officials during the early years, the US did not get a truly permanent central bank until just before World War I. Despite otherwise rapid economic growth, in comparison to European nations the US had an unusually fragile monetary system that was vulnerable to frequent panics and recessions. Individual banks issued their own notes, which made taking out loans and redeeming debts across state lines difficult. Rural banks in particular had asset flows that tracked the harvests, which could leave their reserves critically low if too many farmers needed to withdraw at once. Local banks had to rely on public perception of their stability and trustworthiness, which meant often that they went bust very suddenly, completely wiping out deposits. Many banks had deep ties to corruption-intense industries like railroads that were subject to intense, unstable bursts of speculation. And, since nothing travels faster than bad news, nationwide financial contagions could spread in a flash but take years to recover from. Yet public mistrust of centralized government, which was even shared by Presidents such as Andrew Jackson, meant that America more or less muddled through recession after recession, relying on the private sector to clean up its own messes.
The low point was the Panic of 1907, a particularly harsh but certainly not the only bank crisis/recession around the turn of the 20th century. Borne of a misbegotten attempt to corner the market on copper, the collapse of the instigator's firm led to a wave of bank closures. In normal conditions in a fractional reserve system, it isn't an issue when banks owe each other large sums of money, since only a small percentage of deposits will ever be withdrawn at a time. But when credit becomes scarce, each bank tries to call in its debts from all the others, and with a sufficiently leveraged system where the total amount of loans outstanding can be greater than the total amount of reserves, everyone goes bankrupt. In most European countries at the time, the central bank would step in and, in the words of Economist editor Walter Bagehot, "lend freely, at a penalty rate, against good collateral", but in the US, Wall Street was forced to rely on the person of JP Morgan to coordinate relief as the banking crisis became particularly pronounced. Thanks to his personal reputation and his powers of persuasion, Morgan was able to calm the markets and arrange for some measure of stability, but it was clear that this state of affairs couldn't continue. The United States needed a central bank, and so Senator Nelson Aldrich and banker Paul Warburg began their efforts to design one.
For conspiracy theorists, this is where the story really begins. There are plenty of books out there with titles like "The Creature From Jekyll Island" that imply that the creation of the Federal Reserve was some kind of sinister plot foisted on an unwary public to debauch the currency/tighten the grip of Wall Street/empower a tyrannical federal government/extend the tentacles of international banks/destroy freedom/etc. However, as Lowenstein shows, the eventual passage of the Federal Reserve Act in 1913 was only one step, though the crucial one, in the long struggle to give the United States a modern banking system with the powers of crisis-prevention that we now take for granted. Many of the peculiarities of the Federal Reserve that intrigue people - its quasi-public/private structure, its dispersion into regional banks, its insulation from direct public accountability, its somewhat circuitous control over the money supply, the fact that dollar bills say "Federal Reserve Note" instead of "U.S. Government note" - are less the product of deliberate conspiracies than the many rounds of bitter negotiations and painful compromises it took to get a bill through Congress during an unusually turbulent period in American governance.
The Progressive Era's expansion on the powers of the federal government is under-appreciated today, maybe because the similar expansions in the Civil War/Reconstruction and the New Deal are easier to explain to high schoolers. It's easy to see why the federal government would assume new responsibilities when during a civil war or economic calamity, less easy when the catalyst is monetary and administrative structural reform. However, you can't understand the Federal Reserve without understanding something about where its progenitors were coming from. Senators like Nelson Aldrich (patrician Rhode Islander, a pawn of Big Sugar), Carter Glass (conservative Virginian, of later Glass-Steagall fame), and Latham Owen (populist Oklahoman) had their own motives for pursuing reform, but in trying to draft a passable bill, each had to face some tough political questions:
- Ordinary people might not like a government bank because it's the government, unless they're farmers, who will love it, but banks will hate it because it's competition - what should its powers be?
- Conservatives want Federal Reserve directors appointed by bankers, but Progressives want them appointed by the President - what's the best way to balance independence with accountability?
- Many people hate the idea of a single central bank, but splitting it into several regional banks (as many as 20 in some drafts) could be dangerous in a crisis, and that still leaves no direct involvement by states themselves - how should it be structured?
- Notes issued by the federal government directly and backed by "full faith and credit" would involve the least corporate control, but notes issued by the Federal Reserve and backed by member banks reserves would quiet inflation worries - what legal status should money issued by this bank have?
- The original plan was outlined by Senator Aldrich, a backer of the hated tariff and a notorious tool of the sugar trust in his home state, as well as Paul Warburg, a foreign banker - can the people trust anything about it?
- And what would the creation of a central bank imply about other important issues of the day, such as the gold standard vs free coinage of silver, or about high tariffs?
Unfortunately, all of these touchy questions were debated in an unusually turbulent political environment. The election of 1912 featured a three-way race between incumbent Republican William Howard Taft, Democrat Woodrow Wilson, and Progressive Theodore Roosevelt, whose friendship with Taft was ended by Roosevelt's disappointment at his conservativism. The election exposed the limitations of the two-party system to accommodate all of the different disputes at play: the ideological battle of conservatism vs populism vs progressivism, the economic struggle of bankers vs farmers vs merchants, and the regional arguments of Northeast vs South vs West. And in many ways, the victorious Democrats might have been the last party you'd expect to lead a successful banking reform initiative, not only because their base of support in the South was hostile, but also because notorious anti-banker and perennial candidate William Jennings Bryan became Secretary of State in the Wilson administration. Yet Wilson, whose background as a Princeton professor included political science and public administration, was convinced that America needed a legitimate central bank.
While the later part of the book can seem tedious unless you're interested in the minutiae of historical lobbying efforts, Lowenstein highlights Wilson's direct involvement as a major factor in getting the bill passed. It's a fascinating counter-example to many other instances of successful reform, such as Barack Obama's more hands-off approach to the Affordable Care Act, but is more in line with other historical examples such as LBJ and the Great Society legislation. While some of Wilson's other initiatives such as the League of Nations failed despite him ruining his health over it, his shepherding of the bill in this instance made the difference. The legislative horse-trading also makes you appreciate the fine line between pandering to special interests and speaking up for forgotten voices - there's no logical reason for the Fed's 12 branches as opposed to 11 or 13, but sometimes you have to buy some votes, and the true alternative to a flawed bill isn't a better bill, but no bill at all. The Federal Reserve's mandate would be enlarged and expanded by successive bills, but the foundation was finally set.
The Federal Reserve has not always done a great job, as even its staunchest supporters would recognize. Whether you buy Milton Friedman's theory in A Monetary History of the United States that the severity of Great Depression was the Fed's fault or not, it's indisputable that its twin missions of price stability and full employment have been heavy burdens, and its responsibilities have only increased over time. Many people would like to get rid of it entirely, and technology has produced possible alternatives like bitcoins that seem worthy of exploration. Certainly there's a debate to be had over the proper method of ensuring accountability for individuals who wield such dangerous power. However, you can dislike how something is run without wanting to blow it up entirely, and contemporary accounts like Neil Irwin's The Alchemists suggest that for all its flaws, the Fed is about the best institution you could expect, given its history, its mission, and the political and social constraints that it operates under. Seeing the messy story of its origin, recounted by Lowenstein with his typical skill and diligence, reminds us that the American political system is designed to produce compromise, not perfection. Ultimately we get the Federal Reserve we deserve. ...more
Nowadays, central banks are a given in the international financial landscape - less a feature than the foundation. Yet despite the best efforts of Alexander Hamilton and many other government officials during the early years, the US did not get a truly permanent central bank until just before World War I. Despite otherwise rapid economic growth, in comparison to European nations the US had an unusually fragile monetary system that was vulnerable to frequent panics and recessions. Individual banks issued their own notes, which made taking out loans and redeeming debts across state lines difficult. Rural banks in particular had asset flows that tracked the harvests, which could leave their reserves critically low if too many farmers needed to withdraw at once. Local banks had to rely on public perception of their stability and trustworthiness, which meant often that they went bust very suddenly, completely wiping out deposits. Many banks had deep ties to corruption-intense industries like railroads that were subject to intense, unstable bursts of speculation. And, since nothing travels faster than bad news, nationwide financial contagions could spread in a flash but take years to recover from. Yet public mistrust of centralized government, which was even shared by Presidents such as Andrew Jackson, meant that America more or less muddled through recession after recession, relying on the private sector to clean up its own messes.
The low point was the Panic of 1907, a particularly harsh but certainly not the only bank crisis/recession around the turn of the 20th century. Borne of a misbegotten attempt to corner the market on copper, the collapse of the instigator's firm led to a wave of bank closures. In normal conditions in a fractional reserve system, it isn't an issue when banks owe each other large sums of money, since only a small percentage of deposits will ever be withdrawn at a time. But when credit becomes scarce, each bank tries to call in its debts from all the others, and with a sufficiently leveraged system where the total amount of loans outstanding can be greater than the total amount of reserves, everyone goes bankrupt. In most European countries at the time, the central bank would step in and, in the words of Economist editor Walter Bagehot, "lend freely, at a penalty rate, against good collateral", but in the US, Wall Street was forced to rely on the person of JP Morgan to coordinate relief as the banking crisis became particularly pronounced. Thanks to his personal reputation and his powers of persuasion, Morgan was able to calm the markets and arrange for some measure of stability, but it was clear that this state of affairs couldn't continue. The United States needed a central bank, and so Senator Nelson Aldrich and banker Paul Warburg began their efforts to design one.
For conspiracy theorists, this is where the story really begins. There are plenty of books out there with titles like "The Creature From Jekyll Island" that imply that the creation of the Federal Reserve was some kind of sinister plot foisted on an unwary public to debauch the currency/tighten the grip of Wall Street/empower a tyrannical federal government/extend the tentacles of international banks/destroy freedom/etc. However, as Lowenstein shows, the eventual passage of the Federal Reserve Act in 1913 was only one step, though the crucial one, in the long struggle to give the United States a modern banking system with the powers of crisis-prevention that we now take for granted. Many of the peculiarities of the Federal Reserve that intrigue people - its quasi-public/private structure, its dispersion into regional banks, its insulation from direct public accountability, its somewhat circuitous control over the money supply, the fact that dollar bills say "Federal Reserve Note" instead of "U.S. Government note" - are less the product of deliberate conspiracies than the many rounds of bitter negotiations and painful compromises it took to get a bill through Congress during an unusually turbulent period in American governance.
The Progressive Era's expansion on the powers of the federal government is under-appreciated today, maybe because the similar expansions in the Civil War/Reconstruction and the New Deal are easier to explain to high schoolers. It's easy to see why the federal government would assume new responsibilities when during a civil war or economic calamity, less easy when the catalyst is monetary and administrative structural reform. However, you can't understand the Federal Reserve without understanding something about where its progenitors were coming from. Senators like Nelson Aldrich (patrician Rhode Islander, a pawn of Big Sugar), Carter Glass (conservative Virginian, of later Glass-Steagall fame), and Latham Owen (populist Oklahoman) had their own motives for pursuing reform, but in trying to draft a passable bill, each had to face some tough political questions:
- Ordinary people might not like a government bank because it's the government, unless they're farmers, who will love it, but banks will hate it because it's competition - what should its powers be?
- Conservatives want Federal Reserve directors appointed by bankers, but Progressives want them appointed by the President - what's the best way to balance independence with accountability?
- Many people hate the idea of a single central bank, but splitting it into several regional banks (as many as 20 in some drafts) could be dangerous in a crisis, and that still leaves no direct involvement by states themselves - how should it be structured?
- Notes issued by the federal government directly and backed by "full faith and credit" would involve the least corporate control, but notes issued by the Federal Reserve and backed by member banks reserves would quiet inflation worries - what legal status should money issued by this bank have?
- The original plan was outlined by Senator Aldrich, a backer of the hated tariff and a notorious tool of the sugar trust in his home state, as well as Paul Warburg, a foreign banker - can the people trust anything about it?
- And what would the creation of a central bank imply about other important issues of the day, such as the gold standard vs free coinage of silver, or about high tariffs?
Unfortunately, all of these touchy questions were debated in an unusually turbulent political environment. The election of 1912 featured a three-way race between incumbent Republican William Howard Taft, Democrat Woodrow Wilson, and Progressive Theodore Roosevelt, whose friendship with Taft was ended by Roosevelt's disappointment at his conservativism. The election exposed the limitations of the two-party system to accommodate all of the different disputes at play: the ideological battle of conservatism vs populism vs progressivism, the economic struggle of bankers vs farmers vs merchants, and the regional arguments of Northeast vs South vs West. And in many ways, the victorious Democrats might have been the last party you'd expect to lead a successful banking reform initiative, not only because their base of support in the South was hostile, but also because notorious anti-banker and perennial candidate William Jennings Bryan became Secretary of State in the Wilson administration. Yet Wilson, whose background as a Princeton professor included political science and public administration, was convinced that America needed a legitimate central bank.
While the later part of the book can seem tedious unless you're interested in the minutiae of historical lobbying efforts, Lowenstein highlights Wilson's direct involvement as a major factor in getting the bill passed. It's a fascinating counter-example to many other instances of successful reform, such as Barack Obama's more hands-off approach to the Affordable Care Act, but is more in line with other historical examples such as LBJ and the Great Society legislation. While some of Wilson's other initiatives such as the League of Nations failed despite him ruining his health over it, his shepherding of the bill in this instance made the difference. The legislative horse-trading also makes you appreciate the fine line between pandering to special interests and speaking up for forgotten voices - there's no logical reason for the Fed's 12 branches as opposed to 11 or 13, but sometimes you have to buy some votes, and the true alternative to a flawed bill isn't a better bill, but no bill at all. The Federal Reserve's mandate would be enlarged and expanded by successive bills, but the foundation was finally set.
The Federal Reserve has not always done a great job, as even its staunchest supporters would recognize. Whether you buy Milton Friedman's theory in A Monetary History of the United States that the severity of Great Depression was the Fed's fault or not, it's indisputable that its twin missions of price stability and full employment have been heavy burdens, and its responsibilities have only increased over time. Many people would like to get rid of it entirely, and technology has produced possible alternatives like bitcoins that seem worthy of exploration. Certainly there's a debate to be had over the proper method of ensuring accountability for individuals who wield such dangerous power. However, you can dislike how something is run without wanting to blow it up entirely, and contemporary accounts like Neil Irwin's The Alchemists suggest that for all its flaws, the Fed is about the best institution you could expect, given its history, its mission, and the political and social constraints that it operates under. Seeing the messy story of its origin, recounted by Lowenstein with his typical skill and diligence, reminds us that the American political system is designed to produce compromise, not perfection. Ultimately we get the Federal Reserve we deserve. ...more
Notes are private!
1
not set
Sep 2016
Oct 05, 2015
Hardcover
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