Book Review – 7 of ’em

Lord of the Rings 1, 2, and 3 by JRRT

The last (and only other) time I read these was in 5th grade, before any of the movies had come out. They felt like one long series of events until they (spoiler alert!) finally destroyed the ring. I remembered Gandalf dying-but-not-really, the ents being badass, and that gollum was a pain yet important in the end. Reading them again having seen the movies a couple times gave me many more plot touchstones to rely on and look forward to, so I had a lot more fun this time around. They also did not feel painfully long. Most importantly – the MAPS. I’m a very spatial thinker, so knowing where in the topography they were trekking actually made the stories feel more grounded and less random. And I’m old enough now to appreciate some of the larger themes and subtleties of the character actions. Plus having taken too many doses of Harry Potter over the years, you notice way too many commonalities (wormtongue? really?) All in all, a great summer read.

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Atul Gawande – The Checklist Manifesto

An absolutely great little book. I had to read just a portion of it for a class and did not put it down that evening until I read the whole thing. The writing is accessible and easy and full of great anecdotes (but if you’re squirmy about gory medical stories like me, be prepared).

Essentially, Gawande is reminding the reader that people inherently forget things. Even routine things. This is a problem when we engage in certain tasks where forgetting key details is detrimental. The solution? A checklist.

A couple salient examples: in building construction, they use huuuuuuge checklists of all the parts and people and the schedule of when which has to arrive and do their job. They even have a checklist of who has to be consulted when something goes wrong in order to properly and thoroughly troubleshoot every problem. Second – airline pilots. They have scads of little checklists that help them out when any kind of problem arises. The lists might even feel facetious sometimes when they start out with “fly the plane” but sometimes in emergencies when you are dealing with all sorts of stresses, you forget even the most obvious of tasks, which can be critically important before going down to “flip this switch, adjust this dial” sorts of tasks.

Gawande is a surgeon, and there are apparently few checklists in medicine. He decides to implement them to some absolutely astounding improvements in medicine that no single pill or procedure could possibly create. Seriously.

Interestingly, people resist checklists. We don’t like to feel incapable. But (and we discussed this in class) the way to think about it is not that we are “stupid” but that checklists can actually be an aide. Without the list, we would have to devote mental space and energy to remembering each little task. Using a physical list both ensures that we never forget AND that we can devote our brains to the more complex tasks.

My summary might be decent, but really you should read the book. There are several other important points in it that I can’t even get to.

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Michael Lewis – The Big Short

The Michael Lewis of Moneyball fame brings his excellent writing to illuminate the characters who predicted the financial crash of 2007/8 and therefore made money off of it. For me, it taught me more thoroughly what actually caused the crash, since I had never really read very deeply into it. And it gave me another glimpse into the world of Wall Street, its language and sensibilities and players. It showed/reminded me that there is still a lot that I don’t know. A good book – I recommend to anyone who wants to learn the details behind the crash. The details are pretty mind-numbing (“credit default swaps”) if you don’t have something entertaining to lead you through them. Lewis provides that needed narrative.

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John Cassidy – How Markets Fail (The Logic of Economic Calamities)

Oh my god. I just finished a Stanford degree in public policy in which I took a lot of classes in economics. Those classes handed me a lot of analytical puzzle pieces. This book gave me my first outline of what the whole puzzle might look like finished. So good.

There are many (MANY) people who are champions of free markets all day every day. As in, free markets will guide our society to the best and most desired ends. In case the title wasn’t obvious, this book takes a shit all over that idea.

First off, the book takes you through some history of the field of economics. To anyone whose taken classes, be prepared for a greatest hits of economic minds. Smith, Hayek, Keynes, Friedman, Walras, Stiglitz, Summers, Pigou, Arrow, Volcker, Coase Greenspan. Hell, he even got Hotelling in there. Cassidy tells a tale of a field of study that spins some simple, grand theories that rest on some incredibly important assumptions that just do not exist in the real world. That nagging feeling that some of what you were learning in economics class didn’t fully apply correctly is because a lot of economists work in theoretical la-la land.

Then he gets into all the ways markets fail. Much of this I had heard before, but here it was all pulled together. Prisoner’s dilemmas can give firms the incentive to do something less beneficial for all (namely, the tragedy of the commons is an n-person PD where everyone would be better off taking less, but the incentive is to cheat and take more). Or when different sides in a trade have imperfect information, or the research by Kahneman and Tversky that links some of economics to psychology and is part of what’s called “behavioral economics” (which, sadly, one of my economics professors called “not real economics”). On and on. I might summarize that whole section of the book in another blog post just because it’s all so important.

Finally, he gets into the financial sector. I’ll give one description to illustrate what Cassidy explains to the reader. In a theoretical market in economics, the supply curve (price vs demand) is a positive relationship. At higher prices, the firm will sell more goods. The demand curve is inverse – at higher prices, people will buy fewer goods. Standard fare econ 101 (in my case Econ 1A). BUT. In a financial market, the demand curves can be all screwy, and  even a positive relationship. A high stock price that is getting higher means people want even more. I laughed when I read him describe this because it was so obvious and went so counter to basic economic theory you learn at the very beginning. It’s part of what creates bubbles – everyone sees everyone making money so they all buy in and drive prices up higher. Then something finally pops those expectations and bam. Clearly, financial markets are not the normal markets of economic theory. Thus, the “let the market be free and unregulated” argument falls apart in this sector. Unless you like bubbles and the pain when they pop. Or the government bailouts.

Anyways, great book. I want to go read some opposing arguments.

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Jared Bernstein – Crunch

To those who pay attention to economists, Bernstein is a liberal. This book ultimately has what are liberal policy prescriptions.

But I found a fair amount of his explanations to be rather persuasive. The most salient point I got from this book is the role of power in the economy. The free market removes a lot of price-fixing and production-level power that is centralized under other systems. However, there are still power dynamics within firms that allow money to flow up the chain or give certain people some control over others’ wages, benefits, and even employment. Sure it’s legal for bosses to cut wages and to fire workers, but those power dynamics have distributive consequences. Namely, they distribute the earnings of the firm to the top. So when people express allergic reactions to “redistributing wealth” by government, just know that it’s not the only place in society where wealth distribution decisions can be made.

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Phew. Lots of reading. And it’s only the surface of some economic issues that I want to explore more. Considering some kind of graduate degree in economics more than a month ago now…

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