Tag Archives: Book

Yuval Noah Harari’s “Sapiens—A Brief History of Humankind”

Homo appeared roughly 2 million years ago in Africa and Homo sapiens roughly 200’000 years ago in East Africa. Harari divides his account of the last 70’000 years into four parts: The cognitive revolution (language), the agricultural revolution (about 10’000 years ago in today’s Turkey, Iran, Levant), the unification of humankind (through money, empire, and religion), and the scientific revolution. According to Harari, Sapiens developed more efficient strategies for cooperation than other species and in particular, Neanderthals (which sapiens eradicated around 30’000 years ago). The rest is history, i.e., evolutionary biology and cultural history.

On his website, Harari summarizes:

Homo sapiens rules the world because it is the only animal that can believe in things that exist purely in its own imagination, such as gods, states, money and human rights.

Starting from this provocative idea, Sapiens goes on to retell the history of our species from a completely fresh perspective. It explains that money is the most pluralistic system of mutual trust ever devised; that capitalism is the most successful religion ever invented; that the treatment of animals in modern agriculture is probably the worst crime in history; and that even though we are far more powerful than our ancient ancestors, we aren’t much happier.

According to Harari, the agricultural revolution fostered population growth but made life harsher for most humans (due to less varied diet, harder work, infectious diseases)—and for the animals that Sapiens domesticated; religion, empires, money and trade fostered globalization and unification; the scientific revolution arose from Europeans’ admission of ignorance, and it was intertwined with imperialism and capitalism; whether humankind has become happier over time is unknown but doubtful; and we may soon confront a singularity:

Physicists define the Big Bang as a singularity. It is a point at which all the known laws of nature did not exist. Time too did not exist. It is thus meaningless to say that anything existed `before’ the Big Bang. We may be fast approaching a new singularity, when all the concepts that give meaning to our world—me, you, men, women, love and hate—will become irrelevant. Anything happening beyond that point is meaningless to us (p. 461 in the Vintage 2015 edition).

Other tidbits:

  • Settlement of Australia (“The Flood”), America, New Zealand: 45’000, 16’000, 800 years ago. Each settlement was associated with mass extinction of species.
  • “[F]iction has enabled us not merely to imagine things, but to do so collectively” (p. 27). “Ever since the Cognitive Revolution Homo sapiens has been able to revise its behaviour rapidly in accordance with changing needs. This opened a fast lane of cultural evolution, bypassing the traffic jams of genetic evolution.” (p. 36).
  • “The Agricultural Revolution was history’s greatest fraud. … These plants domesticated Homo sapiens, rather than vice versa” (p. 90). The revolution bred worries about the future. Food surpluses brought rulers and elites, palaces and temples, politics, wars, art and philosophy (p. 114). One `imagined order’ with three classes and two genders—the Code of Hammurabi—dates from 1’776 B.C. (p. 117). Writing, archiving, cataloguing (invented by Sumerians around 3’500 B.C.) preserves information about imagined social order; this is critical because the information is not preserved in DNA. Script undermined holistic thought. Hindus invented `Arab’ numerals around 800 AD (pp. 137–146).
  • Cognitive dissonance, contradictory beliefs are necessary to maintain any human culture (p. 184). Over the last 10’000 years, thousands of `human worlds’ have collapsed to a single one (p. 186). Three universal (imagined) orders: Money, empire, religion (p. 191). “Money is the most universal and most efficient system of mutual trust ever devised” (p. 201). Empires are stable, inclusive, not that bad (p. 219). Religious norms are founded on a belief in a superhuman order (p. 234). “Much of ancient mythology is in fact a legal contract in which humans promise everlasting devotion to the gods in exchange for mastery over plants and animals” (p. 236). Polytheist and animist religions recognize a supreme power in the background, devoid of biases and interests (p. 238). Humanist religions worship Homo sapiens. Liberal humanism believes in the humanity of the individual. Socialist humanism believes in the humanity of the collective. (Both build on Christian tradition). Evolutionary humanism (e.g., Nazism) believes that humankind can evolve or degenerate  (pp. 256–263).
  • Science started from the admission of ignorance; observation and math; and the acquisition of new powers (p. 279). Social stability requires that certain `scientific results’ are a dogma or that basic truths are non-scientific (p. 282). With the capitalist system and the industrial revolution, science, industry and military technology intertwined (p. 294). “[S]cientific research can flourish only in alliance with some religion or ideology. The ideology justifies the costs of the research” (p. 305). Science and empire supported each other (ch. 15, 16). The scientific revolution and the idea of progress fostered credit; this reinforced each other (p. 346). The industrial revolution has been a revolution in energy conversion (p. 379) and it was a second agricultural revolution (p. 382). Animal suffering, consumerism (ch. 17). The national time (p. 396). State and market replace family and local community (p. 398). “The state and the market are the mother and the father of the individual” (p. 402). “The nation is the imagined community of the state” (p. 406). The world is safer than ever, and war does not pay any more. Have humans become happier? Answer 1: “Lasting happiness comes only from serotonin, dopamine and oxytocin” (p. 436). Answer 2: Meaning. But “[p]erhaps happiness is synchronising one’s personal delusions of meaning with the prevailing collective delusions” (p. 438). Answer 3: Feelings are not to be trusted; of key import is whether people know the truth about themselves (p. 443). Intelligent design and extreme inequality (ch. 20).

Wikipedia points to critical scholarly reception.

Jack Kerouac’s “On the Road”

280 pages of frantic search for an end. New York, Denver, San Francisco, New Orleans, Mexico City, and the miles in between. Music, drugs, talk, sex.

Wikipedia:

Inspired by a 10000-word rambling letter from his friend Neal Cassady, Kerouac in 1950 outlined the “Essentials of Spontaneous Prose” and decided to tell the story of his years on the road with Cassady as if writing a letter to a friend in a form that reflected the improvisational fluidity of jazz. In a letter to a student in 1961, Kerouac wrote: “Dean and I were embarked on a journey through post-Whitman America to find that America and to find the inherent goodness in American man. It was really a story about 2 Catholic buddies roaming the country in search of God. And we found him.”

Arnold Kling’s “Specialization and Trade, A Re-Introduction to Economics”

Arnold Kling (2016), Specialization and Trade, A Re-Introduction to Economics, Washington, DC, Cato Institute.

Kling’s central theme in this short book of nine main chapters is that specialization, trade, and the coordination of individual plans by means of the price system and the profit motive play fundamental roles in modern economies. Most mainstream economists would agree with this assessment. Their models of trade, growth, and innovation certainly include the four elements, with varying emphasis.

But Kling criticizes the methodological approach adopted by post-world-war-II economics, which he associates with “MIT economics.” An MIT PhD himself, he argues that economics, and specifically macroeconomics, should adopt less of a mechanistic and more of an evolutionary perspective to gain relevance. In the second chapter, entitled “Machine as Metaphor,” Kling asserts that under the leadership of Paul Samuelson post-war (macro)economics framed economic issues as programming problems that resemble resource allocation problems in a wartime economy. Even as the discipline evolved, Kling contends, the methodology remained the same, pretending controllability by economist-engineers; in the process, the role of specialization was sidelined in the analysis.

I think that Kling is too harsh in his assessment. Economics and macroeconomics, in particular, has changed dramatically since the times of Paul Samuelson. The notion that, given enough instruments, any economic problem can be solved as easily as a system of equations, has lost attraction. Modern macroeconomic models are based on microeconomic primitives; they take gains from trade seriously; they involve expectations and frictions; and they do not suggest easy answers. The task of modern macroeconomics is not to spit out a roadmap for the economist-engineer but to understand mechanisms and identify problems that arise from misaligned incentives.

Kling is right, of course, when he argues that many theoretical models are too simplistic to be taken at face value. But this is not a critique against economic research which must focus and abstract in order to clarify. It rather is a critique against professional policy advisors and forecasters, “economic experts” say. These “experts” face the difficult task of surveying the vast variety of mechanisms identified by academic research and to apply judgement when weighing their relevance for a particular real-world setting. To be useful, “experts” must not rely on a single framework and extrapolation. Instead, they must base their analysis on a wide set of frameworks to gain independent perspectives on a question of interest.

In chapters three to five, Kling discusses in more detail the interplay of myriads of specialized trading partners in a market economy and how prices and the profit motive orchestrate it. In the chapter entitled “Instructions and Incentives,” Kling emphasizes that prices signal scarcity and opportunity costs are subjective. In the chapter entitled “Choices and Commands,” he discusses that command-and-control approaches to organizing a society face information, incentive, and innovation problems, unlike approaches that rely on a functioning price mechanism. And in the chapter “Specialization and Sustainability,” Kling makes the point that well-defined property rights and a functioning price mechanism offer the best possible protection for scarce resources and a guarantee for their efficient use. Sustainability additionally requires mechanisms to secure intergenerational equity.

I agree with Kling’s point that we should be humble when assessing whether market prices, which reflect the interplay of countless actors, are “right” or “wrong.” However, I would probably be prepared more often than Kling to acknowledge market failures of the type that call for corrective taxes. The general point is that Kling’s views expressed in the three chapters seem entirely mainstream. While we may debate how often and strongly market prices fail to account for social costs and benefits, the economics profession widely agrees that for a price system to function well this precondition must be satisfied.

In the sixth chapter, entitled “Trade and Trust,” Kling argues that specialization rests on cultural evolution and learning and more broadly, that modern economic systems require institutions that promote trust. Independently of the norms a particular society adopts, it must implement the basic social rule,

[r]eward cooperators and punish defectors.

How this is achieved (even if it is against the short-run interest of an individual) varies. Incentive mechanisms may be built on the rule of law, religion, or reputation. And as Kling points out societies almost always rely on some form of government to implement the basic social rule. In turn, this creates problems of abuse of power as well as “deception” and “demonization.” Mainstream economists would agree. In fact, incentive and participation constraints, lack of commitment, enforcement, and self-enforcement are at center stage in many of their models of partial or general equilibrium. Similarly, the role of government, whether benevolent or representing the interests of lobby groups and elites, is a key theme in modern economics.

Chapter seven, entitled “Finance and Fluctuations,” deals with the role of the financial sector. Kling argues that finance is a key prerequisite for specialization and since trust is a prerequisite for finance, swings in trust—waves of optimism and pessimism—affect the economy. No mainstream macroeconomist will object to the notion that the financial sector can amplify shocks. Seminal articles (which all were published well before the most recent financial crisis) exactly make that point. But Kling is probably right that the profession’s workhorse models have not yet been able to incorporate moods, fads, and manias, the reputation of intermediaries, and the confidence of their clients in satisfactory and tractable ways, in spite of recent path-breaking work on the role of heterogenous beliefs.

In chapter eight, Kling focuses on “Policy in Practice.” He explains why identifying market failure in a model is not the same as convincingly arguing for government intervention, simply because first, the model may be wrong and second, there is no reason to expect government intervention to be frictionless. I don’t know any well-trained academic economist who would disagree with this assessment (but many “experts” who are very frighteningly confident about their level of understanding). The profession is well aware of the insights from Public Choice and Political Economics, although these insights might not be as widely taught as they deserve. And Kling is right that economists could explain better why real-world policy selection and implementation can give rise to new problems rather than solely focusing on the issue of how an ideal policy might improve outcomes.

To me, the most interesting chapters of the book are the first and the last, entitled “Filling in Frameworks” and “Macroeconomics and Misgivings,” respectively. In the first chapter, Kling discusses the difference between the natural sciences and economics. He distinguishes between scientific propositions, which a logical flaw or a contradictory experiment falsifies, and “interpretive frameworks” a.k.a. Kuhn’s paradigms, which cannot easily be falsified. Kling argues that

[i]n natural science, there are relatively many falsifiable propositions and relatively few attractive interpretive frameworks. In the social sciences, there are relatively many attractive interpretive frameworks and relatively few falsifiable propositions.

According to Kling, economic models are interpretative frameworks, not scientific propositions, because they incorporate a plethora of auxiliary assumptions and since experiments of the type run in the natural sciences are beyond reach in the social sciences. Anomalies or puzzles do not lead economists to reject their models right away as long as the latter remain useful paradigms to work with. And rightly so, according to Kling: For an interpretative framework with all its anomalies is less flawed than intuition which is uninformed by a framework. At the same time, economists should remain humble, acknowledge the risk of confirmation bias, and remain open to competing interpretative frameworks.

In the chapter entitled “Macroeconomics and Misgivings,” Kling criticizes macroeconomists’ reliance on models with a representative agent. I agree that representative agent models are irrelevant for applied questions when the model implications strongly depend on the assumption that households are literally alike, or that markets are complete such that heterogeneous agents can perfectly insure each other. When “experts” forecast macroeconomic outcomes based on models with a homogeneous household sector then these forecasts rest on very heroic assumptions, as any well-trained economist will readily acknowledge. Is this a problem for macroeconomics which, by the way, has made a lot of progress in modeling economies with heterogeneous agents and incomplete markets? I don’t think so. But it is a problem when “experts” use such inadequate models for policy advice.

Kling argues that the dynamic process of creative destruction that characterizes modern economies requires ongoing change in the patterns of specialization and trade and that this generates unemployment. Mainstream models of innovation and growth capture this process, at least partially; they explain how investment in new types of capital and “ideas” can generate growth and structural change. And the standard framework for modeling labor markets features churn and unemployment (as well as search and matching) although, admittedly, it does not contain a detailed description of the sources of churn. The difference between the mainstream’s and Kling’s view of how the macroeconomy operates thus appears to be a difference of degree rather than substance. And the difference between these views and existing models clearly also reflects the fact that modeling creative destruction and its consequences is difficult.

Kling is a sharp observer when he talks about the difference between “popular Keynesianism” and “rigor-seeking Keynesianism.” The former is what underlies the thinking of many policy makers, central bankers, or journalists: a blend of the aggregate-demand logic taught to undergraduates and some supply side elements. The latter is a tractable simplification of a micro-founded dynamic general equilibrium model with frictions whose properties resemble some key intuitions from popular Keynesianism.

The two forms of Keynesianism help support each other. Popular Keynesianism is useful for trying to convince the public that macroeconomists understand macroeconomic fluctuations and how to control them. Rigor-seeking Keynesianism is used to beat back objections raised by economists who are concerned with the ways in which Keynesianism deviates from standard economics, even though the internal obsessions of rigor-seeking Keynesianism have no traction with those making economic policy.

There is truth to this. But in my view, this critique does not undermine the academic, rigor-seeking type of Keynesianism while it should undermine our trust in “experts” who work with the popular sort which, as Kling explains, mostly is confusing for a trained economist.

In the end, Kling concludes that it is the basics that matter most:

[B]etter economic outcomes arise when patterns of sustainable specialization and trade are formed. … It requires the creative, decentralized, trial-and-error efforts of thousands of entrepreneurs and millions of households … Probably the best thing that the government can do to encourage new forms of specialization is to rethink existing policies that restrict competition, discourage innovation, and retard mobility.

This is a reasonable conclusion. But it is neither a falsifiable proposition nor an interpretive framework. It is the synthesis of many interpretive frameworks, weighed by Kling. In my own view, the weighting is based on too harsh an assessment according to which many modern macroeconomic models are irrelevant.

Kling’s criticism of contemporaneous macroeconomics reads like a criticism of the kind of macroeconomics still taught at the undergraduate level. But modern macroeconomics has moved on—it is general equilibrium microeconomics. Its primary objective is not to produce the one and only model for economist-engineers or “experts” to use, but rather to help us understand mechanisms. A good expert knows many models, is informed about institutions, and has the courage to judge which of the models (or mechanisms they identify) are the most relevant in a specific context. We don’t need a new macroeconomics. But maybe we need better “experts.”

Julian Baggini’s “Freedom Regained: The Possibility of Free Will”

In his book, Julian Baggini points out that materialism, not determinism, undermines the notion of free will. He accepts that man is subject to the laws of nature but simultaneously seems to argue for a holistic model of man and human choice. He concludes that the concept of free will is consistent with predetermined causes; with unconscious choice; and that it does not require that a choice could have been different.

Discussion in The Guardian.

Douglas Adams’ “The Hitch Hiker’s Guide to the Galaxy”

In Douglas Adams’ book (volume one in the trilogy of four) we learn, among other things:

  • Towels are particularly useful for interstellar travelers on a shoestring.
  • It’s not clear whether humans conduct experiments on mice or vice versa.
  • The answer to Life, Universe, and Everything is “forty-two” as Deep Thought found after an extended period (seven and a half million years) of number crunching.
  • But what is the question? To find out, an even more powerful computer was built: The Earth. “Deep Thought designed the Earth, we built it and you lived on it.”
  • Unfortunately, the Vogons destroyed the planet just five minutes before the program was completed. The badly timed intervention was communicated as follows: “This is Prostetnic Vogon Jeltz of the Galactic Hyperspace Planning Council. As you will no doubt be aware, the plans for development of the outlying regions of the Galaxy require the building of a hyperspatial express route through your star system, and regrettably your planet is one of those scheduled for demolition. The process will take slightly less than two of your Earth minutes. Thank you.” And after some moments: “There’s no point acting all surprised about it. All the planning charts and demolition orders have been on display in your local planning department in Alpha Centauri for fifty of your Earth years, so you’ve had plenty of time to lodge any formal complaint and it’s far too late to start making a fuss about it now.”
  • Another artificial planet may be under construction. It might feature fjords as in Norway (on the original Earth), but this time in Africa.

See here or here for quotes from the book(s).

Daniel Quinn’s “Ishmael”

In Daniel Quinn’s “Ishmael,” a gorilla offers his perspective on human civilization and the narratives surrounding it.

Ishmael—the gorilla—characterizes the early agricultural revolution as the takeoff of the nowadays-dominant “Takers’” culture, a culture that does not only reject the hunter-gatherer and herder life of “Leaver” tribes but also finds it acceptable to eradicate the latter. The Takers reject the notion that man is part of a balanced, competitive and evolving natural system; but this rejection places humanity on a trajectory ultimately leading to self-destruction.

The gods realized that “of all the trees in the garden, only the Tree of the Knowledge of Good and Evil could destroy Adam.” (9, 6) And so they forbid Adam to taste the fruit of that tree. (He tasted anyway.) The ban constitutes a mystery for Takers. For they think of themselves as destined to rule the world, and “knowledge of good and evil is fundamentally the knowledge the rulers of the world must exercise, because every single thing they do is good for some but evil for others.” (9, 7)

According to Ishmael, the mystery is solved by noting that Genesis reflects a narrative of the Semites, a Leaver people, who experienced the expansion of the Taker culture as Cain slaughtering his brother Abel. The Hebrew later adopted the tale but could no longer make sense of it because they had adopted the Taker culture.

Ishmael makes some other points: “The Takers accumulate knowledge about what works well for things. The Leavers accumulate knowledge about what works well for people.” (10, 8) “The Takers are those who know good and evil, and the Leavers are … those who live in the hands of the gods.” (11, 6) The Leavers are in a position to evolve; they are part of the general community of life, while Takers believe that creation came to an end with man. (12, 3) “The Takers’ story is, ‘The gods made the world for man, but they botched the job, so we had to take matters into our own, more competent hand.’ The Leavers’ story is, ‘The gods made man for the world …; this seems to have worked pretty well so far, so we can take it easy and leave the running of the world to the gods.’” (12, 6)

Benjamin Todd’s “80,000 Hours”

80,000 hours, that’s how many hours we typically spent working over a lifetime, according to Benjamin Todd and the 80,000 hours team. They have published a book/ebook on how to make the best of it.

Their advice for a dream job: Look for

work you’re good at,

work that helps others,

supportive conditions: engaging work that lets you enter a state of flow; supportive colleagues; lack of major negatives like unfair pay; and work that fits your personal life.

The book discusses strategies to build a career plan, and a career. The main text closes with this summary:

Explore to find the best options, rather than “going with your gut” or narrowing down too early. Make this your key focus until you become more confident about the best options.

Take the best opportunities to invest in your career capital to become as badass as you can be. Especially look for career capital that’s flexible when you’re uncertain.

Help others by focusing on the most pressing social problems rather than those you stumble into – those that are big in scale, neglected and solvable. To make the largest contribution to those problems, consider earning to give, research and advocacy, as well as direct work.

Keep adapting your plan to find the best personal fit. Rather than expect to discover your “passion” right away, think like a scientist testing a hypothesis.

And work with a community.

In an appendix, the authors advise (potential) undergraduates to

aim for the most fundamental, quantitative option you can do i.e. one of these in the following order: mathematics, economics, computer science, physics, engineering, political science / chemistry / biology,

or otherwise,

focus on developing communication skills in philosophy, history or English.

The best choice is a combination. There is high demand for people who can understand quantitative topics and communicate clearly.

Appendix 8 contains useful career review summaries with “facts on fit” and “next steps” (see also this link for updates). For example, the authors advise that

[a]n economics PhD is one of the most attractive graduate programs: if you get through, you have a high chance of landing a good research job in academia or policy – promising areas for social impact – and you have backup options in the corporate sector since the skills you learn are in demand (unlike many PhD programs). You should especially consider an economics PhD if you want to go into research roles, are good at math (i.e. quantitative GRE score above 165) and have a proven interest in economics research.

But they warn that an Economics PhD takes a long time and

[d]oing highly open‐ended research provides little feedback which can be demotivating.

A final appendix discusses areas where people who want to help others possibly can have a large impact. As very promising areas, the authors identify

  • Biosecurity,
  • Climate change (extreme risks),
  • Factory farming,
  • Global priorities research,
  • Health in poor countries,
  • Land use reform,
  • Nuclear security,
  • Risks posed by artificial intelligence,
  • Smoking in the developing world, as well as,
  • Promoting effective altruism (the movement related to the book).

Roger Farmer’s “Prosperity for All”

On his blog, Roger Farmer advertizes his new book, “Prosperity for All,” and argues that governments should stabilize asset prices:

Following the Great Stagflation of the 1970s, economists backtracked and revived the classical economic theory that had dominated academic economics for a hundred and fifty years, beginning with Adam Smith in 1776 and culminating in the business cycle theory described by Keynes’s contemporary Arthur Pigou in his 1927 book, Industrial Fluctuations. That backtrack was a big mistake. It is time to realize that much, but not all, of Keynesian economics is correct. …

In my book Prosperity for All: How to Prevent Financial Crises, … I do not conclude that more government spending is the right way to cure a depression. Instead, I argue for a new policy in which central banks and national treasuries systematically intervene in financial markets to prevent the swings in asset prices that have such debilitating effects on all of our lives.

The control of asset prices will seem like a bold step to some, but so too did the control of the interest rates by the Open Market Committee of the Federal Reserve System when it was first introduced in 1913. We do not have to accept hyperinflations of the kind that occurred in 1920s Germany. Nor should we be content with the 50% unemployment rates that plague young people in Greece today. By designing a new institution, based on the modern central bank, we can and must ensure Prosperity for All.

And in another post:

The New Keynesian agenda is the child of the neoclassical synthesis and, like the IS-LM model before it, New Keynesian economics inherits the mistakes of the bastard Keynesians. It misses two key Keynesian concepts: (1) there are multiple equilibrium unemployment rates and (2) beliefs  are fundamental. My work brings these concepts back to center stage and integrates the Keynes of the General Theory with the microeconomics of general equilibrium theory in a new way.

Jonathan McMillan’s “The End of Banking”

Jonathan McMillan proposes a systemic solvency rule which stipulates that

[t]he value of the real assets of a company has to be greater than or equal to the value of the company’s liabilities in the worst financial state. (p. 147)

That is, the financial assets of a company have to be financed by equity. This reminds of Kotlikoff’s limited purpose banking, see here and here. McMillan (who is actually two persons, a banker and a journalist) argues that Kotlikoff’s proposal

is a step in the right direction to address the boundary problem, [but] it creates an overwhelming public authority [that monopolizes monitoring]. Moreover, it does not solve the boundary problem. Limited purpose banking requires the regulator to differentiate between financial and nonfinancial companies. … Finding clear legal criteria to categorize a company as financial is impossible. (p. 140)

Mathias Binswanger’s “Money Out of Nothing”

In his recent book Geld aus dem Nichts (Money out of Nothing), Mathias Binswanger discusses the role of banks in creating money, and money’s role in affecting the macro economy. The book is written for a non specialist audience and the arguments are often quite loose.

In the first part of the book, Binswanger describes how money mostly is created by commercial rather than central banks.

Part II provides a nice historical overview. Binswanger describes the origins of modern banking with goldsmiths first storing gold for their merchant clients, then lending some of the stored gold to third parties, and finally issuing more “receipts” than what corresponds to the gold deposits they actually accepted. From there, he argues, it was a small step to state licensed national banks like the Bank of England. On p. 120 Binswanger describes how minimum reserve requirements got out of fashion, not least because they suffered from circumvention when they were binding.

Part III lacks precision and is misguided (see also pp. 30 or 66). It covers the link between money creation and growth but confuses national accounting concepts and their relation to money and credit. Clearly, growth can occur without credit (think of an economy with just one agent to see this most directly) but Binswanger seems to dispute this point, in line with earlier writings by his father. A “model” on p. 144 does not help to clarify his views because it is orthogonal to the argument. Binswanger criticizes mainstream economics for refusing to accept the presence of long-run links between money and growth but this critique remains vain. Part IV deals with money creation and its effect on financial markets.

Part V, on reform, is sensible. Binswanger rejects proposals to move (back) to the gold standard or a 100%-money regime (or, essentially equivalent, “positive money”). His arguments against the Swiss “Vollgeld” initiative resonate with points I made here and elsewhere, including the point that it would be difficult to enforce a “Vollgeld” regime (see also p. 122). Binswanger criticizes the “Vollgeld” initiative’s vagueness concerning actual implementation of monetary policy. He ends with more limited, rather standard proposals (relating to regulation, monetary policy objectives and capital requirements) to address problems in financial markets.

Ayn Rand‘s “Atlas Shrugged”

Ayn Rand‘s master work about mind, productive man and his liberation. More than a thousand pages long but rarely tiresome (except for John Galt’s radio speech) the novel blends thriller with common economic sense and Rand’s philosophy of objectivism.

The economics makes sense—incentives matter and give rise to a trade-off between efficiency and equity; but it is crude—market failure is neglected. The most interesting element in the incentive problem faced by the government sponsored “looters” and “leeches” is the sanction of the victim.

The philosophy (as summarized at the end of the paperback) is less convincing; it certainly does not follow from the economics. Much more on objectivism on the website of the Ayn Rand Institute.

Philippa Perry’s “How To Stay Sane”

Philippa Perry’s short book provides a succinct perspective on mental health. Perry argues that mental disorders fall into two groups: one associated with behavior that displays a tendency to stray into chaos; the other with behavior that manifests itself in excessive rigidity. She discusses the structure of the brain and the role of nature vs. nurture in integrating emotions and reasoning. The former rules.

Perry points to several areas that are central to successfully navigating between chaos and rigidity:

  • Self-observation: Wisdom and sanity build on a non-judgemental, self-observing attitude that fosters self-awareness and avoids self-justification. Self-observation amounts to re-parenting oneself. It helps develop compassion (internal and external) and it grows the brain. It requires to use feelings rather than be used by them. Keeping a diary helps, as do prayers or meditation. “Toxic chatter” doesn’t.
  • Relating to others: Brains need brains; nurturing relationships are key to staying sane. True dialogue requires honesty and thus, vulnerability. “Adhering to strict guidelines about how to behave around others is a form of rigidity. Not being mindful of your impact upon others is a form of chaos.” The “daily temperature reading” fosters emotional honesty.
  • Stress: Positive stimulation is fruitful; it fosters learning, creativity and brain plasticity and it strengthens the immune system. But it must not become overwhelming as to trigger panic and brain dissociating. Physical activity generates good stress.

When things go wrong Perry recommends to aim at re-writing one’s narrative:

  • Personal narrative: Grasping one’s guiding beliefs helps developing new perspectives. Narratives are co-constructed and form minds. They pass down “identity, wisdom and experience” from generation to generation. Telling one’s own story helps gain distance and independence, and it creates “a place of freedom” (Perry refers to Victor Frankl’s Man’s Search for Meaning). Narratives are self-reinforcing; a genogram can help uncover and trace their roots. But stories are flexible, they can be changed, and so can lives that build on them. “Creating a consistent self-narrative that makes sense and feels true to ourselves is a challenge at any stage in life.” Optimism is productive and self enforcing; but hearing good news must be learned. Fear of losing love comes with penny-pinching. Certainty is a trap.

Apostolos Doxiadis and Christos Papadimitriou’s “Logicomix”

“Logicomix: An Epic Search for Truth” (Wikipedia) is a nice graphic novel by Apostolos Doxiadis and Christos Papadimitriou about Bertrand Russell’s life and work. Whitehead, Frege, Poincaré, Hilbert, Wittgenstein, Gödel, von Neumann and many others as well as Greek tragedy make appearances.

Dietrich Schwanitz’ “Bildung (Cultured Education)”

Dietrich Schwanitz’ book (Wikipedia) covers “Wissen” und “Können” against the background of the German “Bildungskanon”, the liberal education of a cultured, well-bred German-speaker. The very ambition of the endeavor is breath taking and provokes disagreement and objection. But Schwanitz delivers. A lengthy book of nearly 700 pages it is concise and dense and contains lots of food for thought.

Among hundreds of tidbits, here are some:

  • Footnote on the footnote (pp. 461–462).
  • On Switzerland (p. 596):

Was die Schweizer auf dem Hintergrund ihrer eigenen Geschichte bei den Deutschen am wenigsten begreifen, ist, daß sie mit der antiautoritären Kulturrevolution alle bürgerlichen Tugenden so restlos über Bord geworfen haben. Es sind die Tugenden, die ehemals als besonders deutsch galten und jetzt nur noch in der Schweiz eine Heimstatt haben: Solidität, eine gewisse Ordnungsliebe und Pedanterie, Zuverlässigkeit im Ausführen von Aufgaben und Präzision bei der Produktion von Apparaten, und ein Standard der Sauberkeit und Wohlanständigkeit weit über dem europäischen Durchschnitt sowie ein fest verankerter Glaube an Normen und Regeln.

  • In the section about intelligence, a ranking of what might have been the 10 most intelligent men ever (p. 604):

1. John Stuart Mill; 2. Goethe; 3. Leibniz; 4. Grotius; 5. Macaulay; 6. Bentham; 7. Pascal; 8. Schelling; 9. Haller; 10. Coleridge.

  • Short summaries of “books that changed the world” (pp. 635–654).

Viktor Frankl’s “… trotzdem Ja zum Leben sagen (Man’s Search for Meaning)”

The English language translations of Viktor Frankl’s book “… trotzdem Ja zum Leben sagen: Ein Psychologe erlebt das Konzentrationslager” (Wikipedia German, English) were published as “From Death-Camp to Existentialism” and “Man’s Search for Meaning: An Introduction to Logotherapy.” Frankl describes his experience in Auschwitz and other concentration camps with a focus on the psychological changes the inmates went through. The narrative is shocking and Frankl’s ability to maintain a positive attitude to life in spite of the horror he experienced admirable. But I was less impressed by the book than millions of readers before me—it neither provides a systematic account nor a personal narrative.

The sketch “Synchronisation in Buchenwald” at the end of the book (featuring Socrates, Spinoza, Kant, KZ inmates and others) is the best part of the short book. Structured as a stage play it provides insights into Frankl’s thinking.