Thursday, April 28, 2011

Give Me Liberty or...

Every now and then I realize I am a curmudgeon.  (Well, truth be told, “every now and then” means “all the time,” but it sounds better to make it sound sporadic.)  OK, I am a cheerful curmudgeon, but I am a curmudgeon nonetheless.  And it is times like these that bring out my Inner Curmudgeon.

What is with this fascination with the marriage of some heir to the throne of England?  Now I can understand why the British are fascinated; it is their king after all, and if they want to spend their lives fascinated with the antics of royalty, that’s their problem.  Or, more accurately, one of their many problems.

But, over here?  Does the date July 4, 1776 mean anything to anyone these days?  Didn’t we ditch that Royal line?  Didn’t we once realize that that royal line was a Rapacious, Blood-Sucking, Thieving bunch of Tyrants?  Didn’t people die so that we would never again have to bow a knee to that very Royal Line?  So, why do Americans get so happy when some descendant of George III—insane George III—gets married?  Shouldn’t we collectively look down upon those silly English who still admire those monarchs?

Don’t we owe at least a little bit of fealty to our Founding Fathers?  Don’t we owe a little bit of allegiance to those men who pledged their Lives, their Fortunes and their Sacred Honor so that we wouldn’t have to care who was on the Throne in England?  Surely we owe something to those men who risked death in declaring:

“But when a long Train of Abuses and Usurpations, pursuing invariably the same Object, evinces a Design to reduce them under absolute Despotism, it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future security.  Such has been the patient Sufferance of these Colonies; and such is now the Necessity which constrains them to alter their former Systems of Government. The History of the present King of Great-Britain is a History of repeated Injuries and Usurpations, all having in direct Object the Establishment of an absolute Tyranny over these States.”

And so I proudly announce my disdain for the spectacle of watching the descendant of tyrants get married in an overblown spectacle.  Shame of the Kings of England.  “Caesar had his Brutus, Charles the First had his Cromwell, and George III may profit from their example.  If this be Treason, make the Most of it.”

Fight of the Century

Another most excellent Music Video.  And once again (if you missed the earlier video, it is here), the economic content is sound.  I can't wait to show it to Lily so that she will realize that Economists are really Cool.

Tuesday, April 26, 2011

The Best Medicine

One of the unexpected things about writing a blog (but, come to think of it, there wasn’t much I expected from writing a blog (well other than that I expected that very few people would actually read these musings), so I am not sure what it means to say that any particular thing was unexpected when if the reverse had happened it also would have been unexpected (and, come to think of it, is it a proper use of the word “unexpected’ to describe an event about which there were no prior expectations at all?  Does it make sense that the same word can mean “Something about which there were no expectations has occurred” and “The opposite of what was expected has occurred.”  Surely those two things merit two different words.) (And the preceding utterly useless parenthetical aside to a parenthetical aside is an example of why I expected that nobody would actually read these musings (but, people do read them (and, no, it isn’t just my family that reads them (in fact my wife and kids never read this blog, and my mother still has not discovered that it exists))))) is that (is what?  What do you mean, you have no idea what is going on in this sentence?) it is difficult to write a review of each P.G. Wodehouse novel I read.  I just read The Mating Season.  I’ve read it before.  But I had to get half-way through the book before I was certain I had read it before because one of the very many (very many) wonderful things about Wodehouse is that every single novel is the same.  And that remarkably pleasant feature makes it hard to review the novels.  The Mating Season is just like every other Jeeves and Wooster book—and every one of them is marvelously good, provides more insight into the human condition than almost every other book, and is hysterically funny. 

So, rather than attempt a review of the book (this way I can save the review of a Wodehouse book for the next Wodehouse book), I’ll relate an anecdote.  I was reading this book one night in the living room.  Clara was with me.  We read together often.  Since I was reading Wodehouse, I would periodically start laughing out loud.  Wodehouse is funny.  He makes me do that.  It annoys Clara.  Clara hates it when I read Wodehouse.  So, she told me to stop laughing.  I said I couldn’t; Wodehouse is funny.  She said that I should pretend I was in church.  I was puzzled.  I said that I’d laugh if I was reading this in church too.  Clara said that I should pretend I was reading it during the sermon.  I said I’d laugh then too.  She said I wouldn’t.  She said that if I was reading this book during the middle of a sermon, I wouldn’t laugh.  I noted that if in the middle of a sermon I pulled out a copy of a P.G. Wodehouse novel and started reading it while the pastor was preaching, then in the highly improbable event of doing exactly that, I would most certainly laugh out loud.  Clara insisted I would do no such thing.  I have been trying got figure out if I should find out which one of us is right.  Should I bring a copy of Wodehouse to church, and start reading it in the middle of a sermon just to see if I actually do laugh out loud?  And if I did end up laughing out loud, would the fact that I was performing a scientific experiment be enough to mollify my wife?

Sunday, April 24, 2011

My Three Daughters

It is a truth universally acknowledged that the only reason that parents have children is because they dream of free labor during the teenage years of the Offspring.  It is a truth universally known among parents of teenagers that said Dreams remain unfulfilled.   Offspring do provide other benefits, though.

In chronological order:

1. Yesterday morning, it was raining.  I had to go outside and move some of Janet’s plants and figured that since I had two healthy young’ins lounging around in pajamas at 10 AM on a Saturday, I could get some of that “help” thing about which I have heard so much.  So, I suggested to Lily and Clara that they should don some appropriate outerwear and come out into the rain with me to move their Wonderful Mother’s plants.  Lily said never would she ever do such a thing.  Janet laughed.  Clara then exclaimed that she was “Astonished” that Lily would deliberately ignore the request of her father.  She then turned to Lily and said, “Commissioner!”  This left us all a little puzzled.  Clara was quite earnest in calling Lily a Commissioner.  Then light broke and I realized what Clara meant.  “Do you mean that Lily is committing a Sin of Commission and is thus a Commissioner?”  That is indeed what young Clara meant.  A debate immediately began about whether refusing to do what your parents ask you to do is a Sin of Commission or a Sin of Omission.  Clara was adamant on the point.  Lily, being a semi-able debater, immediately realized that this discussion was not to her advantage and changed the terms of the Debate.  She looked intently and Clara and noted, “Well, I don’t see you getting ready to go out in the rain.  You are a hypocrite!”  A debate then began about whether Hypocrisy is a Sin of Omission or Commission.  I didn’t stay for the resolution.  I went out and moved the plants.  Alone.

2. Later in the Day, Emma was looking over the course offerings at Mount Holyoke.  She was unusually excited (as in it is rare to see Emma excited about anything other than horses) about the possibilities when it came to courses.  She was having a hard time figuring out the Distribution requirements, though.  Mount Holyoke requires courses in each of the three Divisions: Humanities, Sciences, and Social Sciences.  Emma’s trouble was discerning the difference between the divisions.  After looking over assorted classes and realizing which division said courses were in, Emma figured it out.  “I get it,” Emma exclaimed. “If the course looks really interesting, it is in the Sciences.  If the course looks tolerable, it is in the Social Sciences.  And if the course is ‘No way, Jose,’ it is in the Humanities.” 

3. Lily this morning, out of the blue, asked, “Do you know what my favorite Bible verse is?”  “Jesus wept,” I guessed—incorrectly as it turns out.  “No,” Lily replied (but you knew she replied that from the preceding sentence—this sentence, therefore, is what is known as Redundant.  It was inserted merely to aid in providing a dramatic pause in the Narrative before revealing which verse Lily meant—the anticipation of the announcement adds to the enjoyment of Discovery).  Then in a complacently smug voice she went on to explain, “I was listening to a sermon once and there was this verse mentioned about the Lilies of the field and how they do No Work and Dress Really Well.”  I am unsure about how one is supposed to feel when one's daughter has adopted a Biblical verse as a Guiding Principle for her life, but in a “Well, that is sort of the point, but not really” kind of way.

Friday, April 22, 2011

The Unexpected Peril of Rereading Great Books

One of the many pleasure of teaching a tutorial is the ability to read Great Books and discuss them with really smart students.  This semester, my tutorial read War and Peace.  (It was written by Tolstoy—I wasn’t going to mention that fact because it is hard to imagine that anyone reading a blog post here would be unaware of that particular bit of common knowledge, but then it felt so weird not listing the author that I felt compelled to include the Present, Entirely Pointless Aside to assuage my misbegotten feelings of guilt for not mentioning the author.)

The quick summary:  War and Peace is a Great Book.

But, you already knew that.  Nonetheless, the preceding paragraph is not without some interest.  If you had asked me back in January to name The Greatest Novel Ever Written, I would have said War and Peace.  The astute reader will notice a not-so–subtle difference between what I would have said in January and what I said in the preceding paragraph.  And therein lies a tale.  (Not a terribly interesting tale to anyone but the author of the tale, but a tale nonetheless.)

I first read War and Peace when I was in graduate school—so it must have been around 1990.  (For reasons I cannot explain, I am pretty certain I read it in February—why I would have a distinct impression of the month in which I read War and Peace, but no certainly at all about the year, and similarly, why I remember the month in which I read this book, but couldn’t even guess in which month I read any other book I read, is a genuine puzzle.)  When I first read it, I was stunned; I was so amazed by the book, I didn’t want it to end; even though it is rather long, I wished it was even longer.  I loved everything about it.  Everything.  And for the last two decades I have told everyone it was the best novel ever written.

So, I reread it with anticipation.  I had the new translation by the indefatigable Pevear and Volokhonsky, so I was anticipating an experience like nothing else.  And, I thought the book was Great.  Really Great.  But, not the best novel ever.

This leaves me in an odd position; I just read an utterly amazing novel, truly an exceptionally great book, but my dominant impression is…disappointment.  That’s depressing in a way.

So, why the change in opinion?  I think my earlier enthusiasm came from the fact that when I read it in grad school, it was shortly after I decided that after 16 years of schooling, I had absolutely no education, and that I should probably remedy that fact by reading all the books I should have been assigned in high school and college, but since high schools and colleges don’t actually assign Great Books, I never read them.  One of the first books I decided I needed to read was War and Peace.  So, my enthusiasm was undoubtedly a combination of a thoroughly proper appreciation of the fact that it is a Great Book and a lack of many books with which to compare it.  Comparing Tolstoy to Robert Ludlum will naturally make Tolstoy seem pretty good.

Between the time I first read the book two decades ago and now, I have read a lot of other Great Books.  A lot of other Great Books.  So, this time, in reading it, I seemed hyper-aware of all the weak parts in the book.  And in a book this long, there are bound to be weak points.  It is a bit repetitive; the digressions on Tolstoy’s theories of history are fantastically interesting, but he says he same thing too many times.  Nikolai’s relationship with Marya is a bit forced at the end.  The first epilogue is terribly weak.  (The second epilogue?  Does anyone actually ever mange to read the second epilogue with any measure of attention?)  A few plot twists seemed a bit too cute—the death of Helene, for example, was far too convenient.  And so on.  Nothing, in other words, stands out as actually seriously lowering the quality of the book, but the collection of lots of little things just made the book seem something less than perfect.  I am, in other words, no longer twitterpated with War and Peace.  And it is a little sad.  Everyone should read it still, but I can no longer recommend it as the Best Novel Ever Written.  It is a Great Book.  That is really high praise, but not quit the same.

Anyway, in my new rankings, The Brothers Karamazov has moved to Best Russian Novel.

And the Greatest Novel Ever Written:  Pride and Prejudice.

Wednesday, April 20, 2011

Once Upon a Dime

Another semester’s worth of reading is done—herewith is the review of the last book I assigned in an economics class this semester.  (I also finished my the book for my tutorial—review forthcoming.)  So, as soon as I get through the assorted articles I assigned (5 left to read) and all the grading (I don’t even want to think about that), it is on to Summer Reading.

But, before the Summer Reading Reviews commence, my money and banking class ends with:
Davies and Green, Banking on the Future

This book is in a class of its own.  At one level, it is a textbook on modern monetary policy.  But, it doesn’t read like a textbook—it is actually well-written and doesn’t have all the annoying features of modern textbooks (high prices, lots of multi-colored graphs and boxes and sidebar notes—it actually reads like a, you know, book).  But, even though it doesn’t look like a textbook, it is one.  It is meticulously organized, with each chapter being a very good overview of the state of the art conventional wisdom on each topic covered.  Curiously, this leaves the book without much of an audience.  I liked it because it is a fantastic reference book.  I am not sure if my students will like it though because it doesn’t have a gripping narrative flow—it is probably better read one chapter at a time than all at once.  And outside the college class market, I am not sure if anyone would want to read it—you’d need someone who thought, “I’d like to take a course on monetary policy, but I am not in college, and I don’t want to read an insipid, overpriced textbook.  I wonder if there is a well-written book that covers all the sorts of topics which would be covered in a class on monetary policy.”  I am not at all sure how large that world is.  And if by some chance you do fit that category, don’t hesitate to buy this book.  If you are looking for a great causal read, though, this book won’t fit the bill.

My favorite chapter, partly because it was material I have never seen before, was the one which examined the efficiency of central banks—how much do they spend relative to their output?  If we treat central banks like firms and look a their costs, how well do they do?  The variance here is surprising, really surprising.  Some central banks are enormously inefficient compared to others—I would have thought they all had some general base level of inefficiency which would have been about the same across countries.  The reality—some countries have central banks whose input measures (costs, employees, etc) are off the charts even compared to other central banks.  Consider, for example, employees per one million inhabitants.  The Bank of England has 31 employees per million inhabitants.  For Japan the number is 40.  The US is at…68, which sounds high, until you look further.  Belgium is at...210.  France has 220, Greece has 279, and Luxembourg has 446.  And the last four countries are part of the European System of Central Banks which has its own staff of 161 per million inhabitants.  The Fed suddenly looks like a model of efficiency.

Also, it is worth noting that the reading for my money and banking class this year was far above average in overall quality—2010 was a good year for  money and banking papers and books.  The only downside is that one of my favorite things to assign is now out of print.  It was published by the Federal Reserve Bank of New York, and given that they aren’t all that efficient anyway (see above), you would think they could have just kept it in print.  You can still read it here, but it loses something not holding the actual book in hand.

Monday, April 18, 2011

The State of First Things, April 2011

Next in the continuing series.

A) Must Read Articles
1) Meilaender, “Thinking About Aging”
A really interesting reflection on the desire to live longer.  The question of aging is increasingly important as the ability to extend life becomes greater and greater.  But, why should we want to live longer?  In part, the desire to live longer is part of the modern desire to deny the reality of death.  So, if we accept that death is an obvious and natural part of life, why should we want to live longer?  And, then, when you think about it, few people would really want to live longer if it meant constantly aging; we desire to live longer with youthful minds and bodies.  So, the real question is not simply how to prolong life, but also how to retard aging.  Is there any good reason to want to live longer, to prolong our time in this world?  Meileander argues that the desire to prolong our love for others is a legitimate aim in desiring a longer life.  I am not so sure his answer works—after all, if we aren’t going to Love even more in Heaven, then Heaven must be a very odd place.  So, if the desire is to maximize Love, surely we should want to die sooner.  An interesting puzzle, this—once my children are old enough to care for themselves, is there any reason I should wish to prolong my life?  I do want to do so (and not simply because I am not sure my children will ever be able to take care of themselves), but why?  If I can’t answer that question, then isn’t my desire to live longer simply a fear of Death, and if it is that, isn’t the desire inherently Wrong.  If I say with Paul “To live is Christ, to die is gain,” then shouldn’t I necessarily be indifferent as to when I die?

2) Weigel, “All War, All the Time”
A great account of the conflict between the Communists and the Catholic Church.  This is one of those behind the scenes battles of the Cold War.  Incredible.  I’d ask “Who knew the Communists were so petty and vile?,” but the answer is that everyone who was paying attention knew.  This is a cursory account, just outlining the details of what will be a definitive book sometime.  Weigel concentrates on the conflict in Poland (touching on the conflict elsewhere) since John Paul II was Polish and Weigel wrote The Biography of him.  The anecdote which surprised me the most—the Communists had actually forged a diary of a woman who claimed to have had an affair with Wojtyla (John Paul II before he became Pope)—they had planned to blackmail him, but the plan was ruined when the guy in charge of planting the diary got drunk.

B) Flawed, but worth reading

1) Woodward, Memories of a Catholic Boyhood
A Charming account of growing up Catholic.  But, I am not sure there is a point.  “Catholics are normal people too” seems to be the closest thing to a point, but I am not sure when the last time was that anyone believed differently.

2) McDermott, “Evangelicals Divided”
I wasn’t sure what to make of this article; on the one hand, there isn’t much that surprised me, on the other hand, it is a decent survey of the growing Evangelical Divide.  The Divide is between what McDermott calls the Meliorists, who seek to find a way to make evangelicals more palatable to the general population, and the Traditionalists, who seek to keep the evangelical movement theologically pure.  The Meliorists are ultimately going to drive their wing of evangelicalism into the same irrelevance as the Mainline denominations currently have.  Why do Christians worry so much about being popular?

3) Esolen, “Restoring the Village”
A wandering essay with one interesting point.  Governments tend to think of themselves as the institutions by which society persists over time.  But, families predate governments.  And if you think of the family as an institution that predates the State, where did the State get the authority to interfere with the prerogatives of the family?

Editor update:  The new editor, Reno, still hasn’t taken the helm.  Maybe next issue?  This holding pattern, waiting to see what happens next, is getting old.  This issue like the last few was decent, but since we all know things will be changing within the year, it would be nice to get some idea of how.

Friday, April 15, 2011

Living on the San Andreas

Fault Lines by Raghuram Rajan is one of the more interesting 70 page works of non-fiction I have read in a while.  Unfortunately, the book is actually 229 pages long.  It’s a common problem in the non-fiction book world.  What do you do if you are an author with a thesis that needs between 70 and 100 pages to explain?  The idea is too big for a journal article, because a short version won’t be nearly as compelling.  But, there isn’t, it turns out, a particularly big market for 100 page books—I suspect the market for 100 page books is thin because the fixed costs of publishing means that it costs about the same amount to publish a 100 page book as it does to publish a 250 page book, and if you see two books, one of which is 100 pages and the other is 250 pages, and they cost the same amount, which are you more likely to buy?  And won’t you feel like you are overpaying for a 100 page book when there are those 250 page books which cost the same amount?  And so, a nice 70 page book becomes a 230 page book.

This leads to the next problem—what do you do if you have to triple the length of a book?  Padding the argument isn’t enough—that gets Rajan up to 153 pages.  Still too short.  So, he adds three more chapters of “policy suggestions” which a) have only a slight resemblance to the interesting part of the argument, b) are all really superficial, and c) read like a laundry list of suggestions for things that Rajan clearly likes whether they relate to the argument or not.  In other words, I have a hard time imagining anyone getting much of anything at all out of pages 154 to 229 of this book.

But, enough about the bad.  I liked this book.  The first 150 pages has a really interesting argument, well worth reading.

Rajan’s general thesis is that the 2007-2009 economic problems were fundamentally the result of a series of fault lines (hence the title) in the world economy.  The fault lines analogy is cute (see, we had an economic earthquake!), but despite that, the general argument is thought-provoking.  The major fault lines:

1) The gap between the wealthiest and poorest Americans.  As a result of the wealthy getting wealthier, Washington wanted some means to buy off the poorer members of society (poorer here means the middle and lower classes, by the way).  So, we had a deliberate attempt to make getting credit easier, so people could consume at levels above their income.  In particular, there was a deliberate attempt to make getting a home mortgage easier, so that the poorer members of society will see themselves achieving the American Dream, rather than noticing that their incomes aren’t rising at 10% a year.

2) A number of countries which had staggering economic growth rates in the last 50 years did so by focusing their economies on the rapid rise of exporting industries.,  Such economies became seriously unbalanced.  As a result, the economies need to maintain a big demand for their products outside their borders.  When external demand became weaker, these countries were in serious trouble because they did not have well-developed internal industry.  Rajan notes, “There are no large Japanese banks, for example, that rival HSBC in its global reach, no Japanese retailers that approach Wal-Mart in size or cost competitiveness, and no Japanese restaurant chains that rival McDonald’s in its number of franchises.”  That’s a tough problem to overcome; if your domestic service market is small, and your export industry can’t find buyers, what happens?   A slump that last decades.

3) Many developing countries had weak financial systems, but decent prospects for growth.  As a result, capital flowed in from outside, but always on short term contracts; you want to save in a country with high growth prospects, but you also want to be liquid enough that if things go bad, you can get out.  For a small, poor country, chasing this hot money became a temptation and a trap.

The result of all these fault lines?  The crisis of 2007-2009.  In summary, superficial form:  item 1) gets you the US housing bubble; item 2) gets you a demand to sell goods in the US, which means capital must flow in from aboard (the trade deficit is by definition equal to the inflow of capital from abroad)—that capital provides the funds in the domestic markets which allow for the housing bubble; and item 3) meant that when all that hot money was looking for a home, a stable financial system in a booming economy was really attractive.  Then item 1) hits a wall and the housing bubble bursts, the US goes into a recession meaning it can’t buy as many goods in 2), and the hot money in 3) is left homeless.  Result: worldwide recession.

Is this right?  I’m not sure; I am a bit skeptical that these fault lines are as important as Rajan makes them sound, but there is no doubt the general idea is intriguing.  There is enough there that is true that there is at least a plausibility about the story.  And it leads to a really tough problem—if Rajan is right, what is the solution to the problem?  There really isn’t one.  Rajan tries to offer solutions (as noted above), but his solutions really don’t get anywhere—these are deep, deep problems that are not fixed by some more IMF meet-and-greets.

In the end, this is a book well worth reading if you have the patience to wade through a book that is much longer than it should be.