From Smart People to Sarajevo

1.  From the November 27-28 Wall Street Journal:
Economic Smarts
Economists are more likely than average citizens to view trading with other nations as a win-win scenario, to prize the efficiency of markets and to see recessions as cyclical downturns rather than systemic collapses. Some research has found that the more education people have, the closer they move to this economist's-eye view of the world. A new study suggests that, even more than education, intelligence itself leads citizens to "think like economists."
The researchers wanted to tease out the independent effects of intelligence and education. They made use of the National Opinion Research Center's massive General Social Survey, which includes demographic data, queries about economic attitudes and (for half the respondents) a short vocabulary quiz, which the authors treat as a workable (if not ideal) test of intelligence.
The authors found that intelligence supplanted education as the primary predictor of whether one took an economist's typical point of view. Education moved into second place, followed by party identification (Republican) and recent growth in income. The correlation between the views of intelligent people and professional economists offers "another reason to accept the 'economists are right, the public is wrong' interpretation" of differences in opinion, these economists argue.
"Intelligence Makes People Think like Economists: Evidence from the General Social Survey," Bryan Caplan and Stephen C. Miller, Intelligence (November-December)"

That must be the most insightful and brilliant bit of research ever done.  Well, OK, maybe the Principia was better.

2. In the last week, I celebrated a birthday, Thanksgiving, and the arrival of our Christmas Tree.  The Raiders were also crushed for two weeks in a row.  It is left as an exercise of the Reader to determine whether this is a net increase or decrease in happiness.

3. We traditionally get our tree on the first Saturday in December, which the Clever Reader will note was not in the last week.  Lily, however, vetoed our the Traditional Date of the Christmas Tree Arrival.  It seems that Lily would rather attend the Formal Dance for her High School (said dance is named for reasons I do not fully understand a Cotillion.  Nothing occurring at said event will resemble a Cotillion in the least, so why the name?  Why not just call it "Gathering of a bunch of Awkward Teenagers"?), which for reasons that elude me was scheduled for the first Saturday in December.  December!  Really, now.  Didn't it occur to anyone that maybe December is already full of social engagements?  And so, my daughter whom I love has decided that Tradition is less important than a misnamed social gathering of the same people she already sees five days a week.  And moreover, she had to buy a new dress to attend said event.  Apparently Lily has not read enough Thoreau: "I say, beware of all enterprises that require new clothes, and not rather a new wearer of clothes."

4. In unrelated news (or if there is a relation, then it is better left unarticulated), a book review:  The Death of Ivan Ilyich and Other Stories, by Tolstoy, translated by Pevear and Volokhonsky.  We read a few of these stories for my tutorial, and I finished the book mostly because I like finishing books.  Tolstoy has a reputation as a great short story writer to go along with his reputation for writing two of the best long novels ever written.  The stories here are good, no doubt about it.  But, I am still left with my fundamental dissatisfaction with short stories.  I cannot figure out why short store always leave me a bit flat.  I can recognize their brilliance; I see the point; but even still.  And it isn't shortness that leaves me unsettled--I can really appreciate an excellent play and I enjoy poetry.  Short stories are, when I think about it, my least favorite literary form.  Why should that be?  I honestly have no idea.

But, if you like short stories (and you should), then this isn't a bad volume at all.  They probably aren't great when you want an emotional lift unless you are the sort of person who gets an emotional high from seeing other people in misery before dying.  Lots of dying here.  Lots of bleakness.  Russian are a very depressing lot.  It must have something to do with the weather.  Or maybe it is because their national beverage has no flavor.

5. And speaking of Russians and Christmas:  I recommend to you the Trans-Siberian Orchestra.

Time Thief

Last weekend I was looking for a nice quick read to while away some hours in the evenings.  I grabbed my copy of the Library of America volume, Crime Stories: American Noir of the 1930s and 40s.  Next up in the book was Edward Anderson's Thieves Like Us.  I finally forced myself to finish the story on Wednesday night.  Obviously, it wasn't a good book to pass the time on a Friday or Saturday night.  Indeed, it was terribly disappointing.  The LOA volume has 6 novels in it--the idea that this was one of the best six Noir novels published in the 20 years covered by the volume is a bit hard to accept.  So, how did this novel get selected?  I wondered, so I looked it up on Wikipedia--a great source for figuring out things like "Why would anyone like this book?"  The Wikipedia entry is a placeholder--in other words, nobody in Wikipedia World has even wanted to bother writing a plot summary.  So herewith is the plot summary:  A guy gets out of prison, gets together with a couple of other criminals and  robs a few banks.  He also hooks up with a girl.  Everyone dies in the end.  But, the book isn't as interesting as the summary.

Queen Elizabeth 2

I recently finished Thomas Sowell's The Housing Boom and Bust (revised edition), which I had assigned to my intermediate macroeconomics class.  It is a decent overview of the housing portion of the recent financial crisis.  It doesn't aim to be a comprehensive overview of the whole crisis, but does a pretty good job asking why housing prices rose so much and then fell, and why this caused some problems in financial markets.  To give some idea of the flavor of the book, Sowell documents that during the boom, housing prices rose faster in areas with extensive restrictions on land use--with less land available on which to build houses in a given area, housing prices rose faster.  This is important, in Sowell's telling, because it implies that it was not simply the Greenspan Bubble causing a rise in housing prices, but other government failures combined with the Greenspan bubble.  Not surprisingly, then, Fannie Mae and Freddie Mac come in for quite a bit of abuse in the book.  The chief virtue of the book is that if one knew nothing about all this, it is written in a manner that explains part of the problem very well.  The chief disadvantage of the book is that if one knows quite a bit about the financial ciris, the book seems horribly incomplete.

And, I may as well take the opportunity to answer a question I get asked a lot these days.  What is QE2 and is it a good idea?  QE2 or Quantitative Easing 2 is simply the recent Fed decision to expand the money supply.  Rapidly increasing the amount of money is commonly known as an "easy money" policy, and thus the Fed is being Easy in providing a higher Quantity of money.  The only thing unusual about this is that they are not using the standard method of deciding how much more money to provide.  In normal times, the Fed would announce an easier money supply by announcing a lower target for the federal funds rate (the rate banks charge each other on overnight loans).  Once the target was lowered, the Fed would simply  increase the monetary base until that particular interest rate fell to the desired level.  However, right now the federal funds rate is near zero, so they can't announce the policy that way.  So, they announced that they will buy longer term assets and provide a certain amount of funds to the market.  They did this before; so this is the second time they have announced such a policy, hence the 2 in QE2.  Plus, it sounds a lot hipper and cooler to talk about QE2 than it does to say things like increase the monetary base.

What will be the effect of the policy.  Bernanke thinks that QE2 will provide enough new money to the market that interest rates will fall a bit and then firms will invest more and consumers will borrow more and the increase in investment and consumption will help kick economic growth into a higher gear.  There is an obvious concern that the long term effect of this policy will be higher inflation, but Bernanke is convinced the Fed can get the money back out of the economy in time to prevent inflation.  Critics of the policy come in two forms: 1) the mild critics think hat the policy won't actually do much good, that there is limited ability to lower the interest rates (they are already low), so the stimulative effect of the policy will be tiny;  2) the stronger critics agree that the policy won't do much good, but moreover, the Fed is unlikely to get the money back out of the economy in time to avoid generating high inflation.

There is really no way to forecast what will happen with respect to inflation--it is purely a matter of predicting whether the Fed will have the willingness and knowledge to act in time.  So, the big determination in whether one is a mild or strong critic is simply determining whether you think Ben Bernanke will have enough knowledge and will to pull off shrinking the money supply before inflation becomes unavoidable.  (I don't think anyone questions his motives here.)  You can put me down as a strong critic.  I really don't see the Fed stomping on the breaks in time to stop inflation from coming at the risk of generating another recession.  It can be done in theory, but I will be surprised if it works out well in practice.  I really hope I am surprised.

Collecting Butterflies

Nabokov's Speak, Memory is a curious book.  It is, in a sense, an autobiography, and I really am not a big fan of autobiographies.  It is also, in a sense, a collection of short stories originally published in magazines about the author's life, and I have mixed feelings about short stories in magazines, especially autobiographical ones.  The book has no plot whatsoever.  The author does not discuss anything that is of particular interest--Nabokov is famous because he is a great novelist, but nothing in this book discusses the writing of novels or anyhting close to that. 

Yet, I really enjoyed the book.  It is amazingly well-written, and so the prose style alone makes it worth reading.  Each chapter (and originally each magazine piece) starts off with some rumination about an event in Nabokov's life and then rambles all over the place--it reads like the way memory works--first you think of one thing which reminds you of something else, which leads to something else entirely.  So, rather than being a conventional autobiography ("I was born and then later I turned 1 and a year later turned 2 and then surprisingly one year later I had my 3rd birthday, and then..."), it wanders all over.  And it was fun to read. 

It makes one think about memory, naturally enough.  But the thing which rally made me puzzle was the chapter in which he discussed his butterfly collection.  Nabokov loved collecting butterflies.  His whole life he tracked them down to capture them. I think  I read more about butterflies in this book than I have read about them in all the other books I have read combined.  I don't really care all that much about butterflies.  There is allegedly a fantastic butterfly zoo very close to where I live, and I have never once been tempted to go see the butterflies.  Yet, I found this chapter utterly riveting.  The butterfly part wasn't that interesting, but the discussion of collecting was amazing.

You see, I don't collect anyhting.  There are things I own and things I like to get, but I just don't have the collector's impulse.  For example, I really like getting Raiders paraphernalia, but I never hunt it out, scouring through stores to find rare items.  I never buy anything just to add to my collection.  I also like books, and I buy lots of books, but again, I don't have that collector's impulse to find a rare copy of a book.  If I want a book, I look on-line and find the cheapest copy and buy it.  Yesterday, I asked the students in my tutorial (in which I assigned the book for this week--the students liked the book too, by the way) about this collecting thing.  They collect things, and they described the joy of discovery with the same reverential tones that Nabokov discusses finding a new butterfly.  I asked why they just don't buy the things for their collection online, and they scoffed at the idea--that, it seems, would destroy the whole joy of the quest. I was told in no uncertain terms, that finding a rare Harry Potter edition in the dusty corner of a used bookstore is fun; buying the same book online is boring.

My lack of collecting has bugged me for years.  Every now and then, I  think that I should start a collection of something.  But every time I decide I should do this and try to think of what to collect, I can't think of anything I would get excited about going to a giant flea market to find.  So, I am left perpetually thinking I am missing out on some pleasure that  normal people in the world enjoy.

At least that I what I thought until it suddenly hit me this morning.  I do collect something.  I collect books I have read.  It isn't the physical book collecting that makes me happy, it is the fact that I have read yet another book.  I get happy about reading a particular book even when the particular book isn't all that good.  I am always happy when I read the last page of a book.  When I think about the joy of reading a book, I realize that it sounds just like Nabokov discussing butterflies.  He wants to find another butterfly not because it is a particularly beautiful butterfly, but just because he hasn't found it yet.  That's what I feel about reading a not particularly amazing book--I am still glad to be able to put the book in my metal register of books I have read.  Suddenly I feel a lot better--I have a collection!  And just like collecting another butterfly or stamp or egg-shaped rock makes collectors of such things happy, reading another book makes me happy.  And, best of all--my collection doesn't take up space in the house.

Wisdom

On Saturday, I went with my tutorial  to see the Met's broadcast of Donizetti's Don Pasquale.  It was, not surprisingly, amazing.  There is something quite satisfying about seeing the best opera singers of the age in a beautifully done high-level production.  The opera itself is funny--I am not sure how funny it would have been with a different cast, but all four parts in this opera were played marvelously well.  The moral:  Old men should not get married.  Wise words, those.

And, as long as the topic is Wisdom, I recently finished Robert Alter's new work of translations: The Wisdom Books.  These are translations of Job, Proverbs and Ecclesiastes.  The Job translation is fantastic; it made Job, which has before now always struck me as a tiresome book, come alive.  The poetry in it is incredible--I had never noticed that before.  The translation of Ecclesiastes is also extremely good.  Proverbs?  Well, Proverbs is a rather tedious book to read straight through--it is like reading one of those quote a day books in one sitting--the mind numbs pretty rapidly.  Alter's introductions to each of the books are good, but the notes within the text are not quite up to the level of his earliest books.  The same thing was true of his last book (translations of the Psalms)--obviously, he had much more insight into the Books of Moses and the David story--but he has now become a translation machine.  (It will be interesting to see how much of the Old Testament he eventually translates--I would guess that Ruth, Esther and Song of Solomon are next.  And it is hard to imagine he won't do Isaiah and Lamentations at some point.)  But, even with the weaker set of textual notes, the book is well worth reading, if for no other reason than that the book of Job will never seem the same again.

Wisdom, by the way, has really fallen out of favor in the modern age.  We value intelligence and charisma, to be sure.  But wisdom?  When was the last time you heard a public figured being praised as being particularly Wise?  Who is the Wisest person in the modern age--the equivalent of the Public Intellectual or Leader? 

(Does Mick Jagger count as an answer to that last question?)

The Age of Frances Perkins

The Forgotten Man: A New History of the Great Depression by Amity Shlaes is a rare object: it is an economically-literate history book written for the general reader.  That combination is depressingly rare--mostly because economists are notoriously bad writers and popular authors know notoriously little economics.  This book, though, is a very nice tale about the Great Depression--giving vivid portraits of Hoover and FDR as well as a host of other characters.  (And, in what will endear the book to MHC students and alums--Frances Perkins comes off rather well in the book.  I assigned this book in my intro class; I suspect it is the first time most of the students learned anything about Frances Perkins beyond the fact that there is a subset of MHC students called Frances Perkins scholars (For non-MHC folks, the Frances Perkins scholars are "nontraditional students" which in effect means they are over the age of 21 or they are married or they have children when they matriculate.).)  (Also, by the way,  in her convocation speech, Lynn  referred to Frances Perkins as a former Secretary of the Treasury--so apparently the confusion about who she was extends up to the President's office as well.) 

The big lesson of the book is something macroeconomists have known for some time, but has never permeated the popular conscience:  the New Deal was a miserable failure.  It never did any good, and may in fact have prolonged the Great Depression.  In the cartoon history of the Great Depression which is in high school history books, the New Deal saved the economy.  But when you actually go back and look at the range of the New Deal programs and evaluate what they actually did, it's hard to find anything coming out of the New Deal which had and immediate positive effect on the economy

I think Hoover comes off better than FDR in the book, but not much better.  In fact the other big lesson of the book is that Hoover and FDR really didn't differ all that much in the types of things they were trying during the Depression. 

The most curious character in the book is Father Divine--I had never heard of him before.  (Here is a 7 minute intro, or you can just read Shlaes' book.)  [When I was having lunch with George Nash after I read the book, I talked to him about it, and threw out a few oddities like the existence of Father Divine--he knew about every one of them--plus, of course, he added a bunch more interesting anecdotes about the era--someday I will discover a bit of historical trivia about the Hoover era or the history of conservatives which is unknown to George, and then I will be able to say to that moment, "Tarry a while! you are so fair!"]

All in all, The Forgotten Man is a pretty good book if you like reading history books.  Lots of great stories which capture the whole era.

Incidentally, the reason I decided to assign the book in my intro class was because I am really tired of hearing people talk about current events as if we are in a situation comparable to that of the 1930s.  There is no way to read something about the 1930s and think modern times are anywhere near the same neighborhood.

Two Cheers for Imperialism

Paul Collier, The Bottom Billion

I recently reread this book after assigning it to my introduction to macroeconomics course.  It is part of the genre "Books trying to explain recent thinking among economists about how to turn poor countries into rich countries."  This one, like most of the others, suffers from being less a general overview and more "Let me, the author, tell you why my research is the most important research in the whole world explaining how to turn poor countries into rich countries."  So, in effect, the book is also just a summary of Paul Collier's research.

But, at least Paul Collier's research is interesting.  The "Bottom Billion" are the roughly billion people living in countries which are not only not growing, but stagnating or regressing with no real hope that they will start growing anytime soon.  So, while the other 5 billion people on earth can reasonably expect that the quality of their lives will improve over time, the bottom billion have no such expectation.  Figuring out what could be done to help the Bottom Billion is easily the most pressing economic problem in the world today.  Yet, it is a problem which does lend itself to an easy solution.

Collier does a nice job identifying what it is that keeps the Bottom Billion from improving--a combination of bad government and bad neighbors and wars and too many natural resources.  (Note the last is too many, not too few--if you are sitting on a lot of natural resources, it is bad for you because you spend all your time extracting wealth from the natural resources, which does not lead to economic growth, instead of doing all the sorts of things which lead to a vibrant economy.)

But  here is the ultimately depressing thing about this book and all the other books like it--identifying the problem is relatively easy.  Writing down solutions is also relatively easy.  But, the very things that create the problem in the first place also prevent the solution from ever being implemented.  If your problem is that your rulers are power-hungry kleptomaniacs, then saying you need a better government is not the sort of policy recommendation likely to be implemented.  If your problem is that a few people can get very wealthy selling off the country's natural resources, saying that you should switch your economy over to something more broad-based isn't going to be very persuasive to those who are enriching themselves.

Collier has lots of nice sounding ideas, but ultimately he founders on this implementation problem.  He seems aware of this problem, and thus one of his solutions is, and I kid you not, military occupation.  If the wealthy stable countries would just take over the governments of the poor, dysfunctional countries, then there is some hope for reform.  Now saying that sort of thing does not make you popular at the cocktail parties which all the Right and Beautiful People attend, and in the wake of Iraq, Collier certainly has his work cut out for him to avoid sounding like one of Them (you know, the Neanderthals voted for Bush).  So, Collier hints here and there that Iraq isn't really what he means, it is just, you know, other military occupations.

So, the real virtue of Collier's book is not exactly what he intended--it presents a pretty coherent case that rich countries are morally obligated to intervene in the countries in which the Bottom Billion live, whether the  rulers of those countries want such intervention or not.  That argument is a nice Rorschach Test--which is more important: 1) Improving the lives of the Bottom Billion or 2) Keeping you hands clean of anything that might even appear to be imperialistic?  If you can't have both, which do you choose?

I Love Jacoby Ford

Seriously.  I love him.  Unbelievable game.  The Raiders were horrid on offense all day, and won in overtime anyway, thanks to my new hero.  Captain Kirk, step aside for the day; I have a new hero for tonight.  And they beat the Chiefs.  What an unbelievably wonderful day.  The Raiders haven't played like this for almost a decade.  The Defense was incredible all day.  And Jacoby Ford was unbelievable.  A KO return for a TD.  A huge catch, stealing the ball from a DB to set up the tying FG.  A huge catch in OT to set up the winning FG.  We haven't seen a Wide Receiver dominate like that since Tim Brown was in his prime.  Life is very, very good.

The State of First Things, November 2010

Well, this month's review will have a different format because this month's issue is quite different.

First Things, in what we can only hope is not the first of an annual series, decided to publish a College Issue.  And the first item in this College Issue is a 38 page long College Guide with college rankings and descriptions of the schools being ranked.  And, it is, in a word, Terrible.  Or Silly.  Or Pointless.  Or one of the most absurd publishing ploys I have seen in a long time (OK, that's more than one word.).  Seriously, it is Awful, just Awful.  They decide to rank schools on three measures: academic, social and religious.  Their method for giving each school a rank (on a 50 point scale) for each category is absurd--truly absurd.  (I have spent quite  a bit of time thinking about college rankings for a research project I worked on for quite some time, so I flipped to the description of how they calculated their index numbers before I read anything else--I was shocked at how utterly ridiculous their method of evaluation was.  It was not designed by anyone who had given more than about 10 minutes of thought to how to construct an index number which would have any actual meaning.).  Then they get overall rankings by combining the goofy scores they just calculated.  The top four schools in America:  1) Wheaton; 2) Ave Maria; 3) Princeton; 4) The United States Air Force Academy.  Since 2003, when Ave Maria was founded, there has not been a single student who sat down to try to debate about which of those four schools he should attend--fortunately, First Things has weighed in to tell us how to rank those four schools.  Then the write-ups on the schools?  I just read the write-ups for the schools about which I know something (including Mount Holyoke (and Amherst, but not Smith (there was no review of Smith (grin!))))--they are trite beyond belief--you can get more information about any of the schools from any other college guide on the market.

I could go on, but what's the point?  This enterprise was so ill-conceived it boggles the mind.

The rankings are followed up by four articles about education.  The first two essays at least have an audience--Hauerwaus gives decent advice to a college student about how to think about being in college (nothing in it surprised me and I have a hard time thinking of a single student I have ever known that would have benefited from reading this article, but at least there was nothing in the article that made me wince); Eberstadt relates that colleges are, as her title says "Bacchanlia Unbound."  (Shocking to be sure--did you know there is a lot of alcohol and sex at fraternity parties???)  Then it goes downhill:  D'Souza, Starr and Garvey, presidents of Christian Colleges (King's  College, Baylor and the Catholic University of America) turn in essays about how wonderful their schools are--all three articles read exactly like the boilerplate which constitutes a university's mission statement.  Finally, Reno provides an impressionistic review of Ph.D. program in theology--I think all 10 of the people who might care about this article already knew everything in this article.

If this is the future of First Things, then it doesn't matter whether I decide to renew my subscription or not--the magazine will be dead in 2 years.

But, at least two of the book reviews were good.  David Hart has a great review of the first volume in Twain's autobiography which has some really interesting insight into Twain.  "And this, I think, turns out to have been the strange secret that was usually concealed behind Mark Twain's legendary mirth: a vision of the world marked by an utterly abysmal, utterly unrelieved bleakness."  Also worth reading was Douthat's review of Franzen's Freedom, mostly because it has some interesting reflections on the nature of the modern novel and how it differs from the old-style novel with "big, thick stories of intimate life."

But two decent book reviews in an utterly depressing issue of a magazine--not much consolation at all.

One night just isn't enough...

As everyone knows, this week marks a very important moment in determining the future of this country.  On Wednesday, the Fed will be announcing the next incarnation of the continuing evolution of monetary policy.  (What? You thought I was talking about the election on Tuesday?)  And in anticipation of that announcement tomorrow, I offer the following:

Quantitative Easin'

Ah, Macroeconomist Humor.  The best kind.