The Theory of Moral Sentiments, by Adam Smith

The Theory of Moral Sentiments is much more readable than The Wealth of Nations. WoN is a long slog. Read TMS instead.

TMS is less directly about economics. It’s more about how we care about each other. There were several places where I wondered: “How did Smith know this about me?”

I see it as sort of a guide to being nice and how to conduct yourself in society.

Here are my favorite parts:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

What can be added to the happiness of the man who is in health, who is out of debt, and has a clear conscience?

The man who barely abstains from violating either the person, or the estate, or the reputation of his neighbors, has surely very little positive merit. He fulfills, however, all the rules of what is peculiarly called justice, and des everything which his equals can with propriety force him to do, or which they can punish him for not doing. We may often fulfill all the rules of justice by sitting still and doing nothing.

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Lochner v. New York

Lochner v. New York is a 1905 Supreme Court decision invalidating a New York law that forbids bakers to work more than 60 hours a week.

It’s now widely-reviled as an example of the heartlessness of a Supreme Court that always sides with businesses against workers.

There are modern scholars, though, who like it because it upholds the right to contract. And it looks like this law was passed by big bake shops who wanted to make business more difficult for (mostly-immigrant) competitors.

This article, by Damon Root of Reason, offers the clearest articulation of that view. David Bernstein of GMU has written a book on Lochner, but this article sums it up nicely.

At issue in the case was a provision capping working hours in New York’s 1895 Bakeshop Act, which banned bakery employees from working more than 10 hours per day or 60 hours per week. In its 5-4 decision, the Court nullified this provision for violating the liberty of contract secured by the Due Process Clause of the 14th Amendment.

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The Bourgeois Virtues and Bourgeois Dignity, by Deirdre McCloskey

My favorite quote of Deirdre McCloskey comes from a sarcastic review of her book How to Be Human – Though an Economist by Gregory Clark: “When the gods handed out gifts they gave her enough eloquence, style, and panache that whole cities and tribes must have been rendered mute and dull.”

(That may apply to Gregory Clark as well, given the number of choice phrases in that review.)

The Bourgeois Virtues and Bourgeois Dignity are two of a three-part by McCloskey about commerce and ethics. Specifically, she says that respect for merchants and commercial life explains what she calls the Great Fact: Humans have gone from living on about $3 a day in 1800 to as high as $150 a day, in constant dollars. Yes, an attitude explains this phenomenal growth in wealth.

One by one she moves through materialist arguments and historical arguments, rejecting them for this cultural/psychological one. Proof by contradiction is a dangerous way to reason, but McCloskey has struck down a lot of different and popular arguments; it’s hard to imagine that there are a great deal of good ones left.

Most of these two books are difficult to get through. They’re about 1200 pages combined. Much of it is boring. Whole chapters are dedicated to proving a single researcher wrong. Those part’s aren’t always fun. Neither are the parts that deal heavily with Church teachings.

Still, the breadth of her knowledge is breathtaking, and there’s so much historical and cultural knowledge in these two books.

The best part of the first book is the 50-page apology that kicks it off. It’s an apology in the ecclesiastical sense: a defense a position. And what does she defend? Capitalism. You can read a sample of it here.

 

 

Average is Over, by Tyler Cowen

Average is Over is billed as a follow-up to The Great Stagnation, but it doesn’t really read that way. They’re both really interesting works on what the future might look like.

There’s no need to have a summary of Tyler Cowen’s most recent work when it’s so easy to find around the web comprehensive outlines of his argument. This summary, for example, is good. Here are some of the nuggets of insight that I didn’t find in articles about Average is Over.

According to the air force, keeping an unmanned Predator drone in the air for twenty-four hours requires about 168 workers laboring in the background. A larger drone, such as the Global Hawk surveillance drone, needs about 300 people working in the background to make the mission feasible.

To hire a risky and iffy worker, without a competent overseer, simply isn’t worth it, no matter how low the wage. It’s not just that the bad workers are lazy or maybe destructive. It’s that low quality workers spread bad morale to many others in the building.

The premium is on conscientiousness, namely whether the worker can follow some straightforward requests with extreme reliability and basic competence… If you’re a young male hothead who just can’t follow orders, and you have your own ideas about how everything should be done, you’re probably going to have an ever-tougher time in the labor markets of the future.

There is no high morale without exclusion, no integrity without exclusion, and no corporate culture without exclusion. If the management style at today’s quality companies seem so nice, so friendly, and sometimes so downright heartwarming, it is possible only because those cultures are so very picky, snobbish, and elitist at the same time.

Imagine yourself as an economist back in 1969, being asked to predict the course of American male wages over the next forty years or so. You are told that no major asteroid will strike the earth and there will be no nuclear war. The riots of the 1960s will die out rather than consuming our country in flames. Communism would go away as a major threat and most of the world would reject socialism. Who would have thought that wages for the typical guy were going to fall? It’s a stunning truth.

After the first quarter of 2009, per-labor-hour productivity rose dramatically. Why did that happen? It’s because we laid off a lot of workers who weren’t producing enough for their level of pay. Bosses were pulling the less productive workers out of the higher-paying jobs. And afterward they didn’t want most of them back. That caused average productivity to rise.

Newly minted PhD economics candidates are extremely proficient with data, but a lot of them don’t have much microeconomic intuition. You could ask them some simple microeconomic questions, of the kind the University of Chicago used to pose at the undergraduate level, and not get an answer. If you ask job market candidates with newly minted PhDs, “Under what conditions will allowing brands to purchase shelf space in supermarkets, as opposed to banning the practice, benefit customers?” you will end up with a fair number of blank stares.

If I see an important economics paper, circa 2013, odds are it was based on a clever way to find or generate a new data set, not a new theoretical idea.

Steve Jobs, by Walter Isaacson

This was a slog to get through. It’s good if you really want to learn the history of Apple. Also good if you want to know what a mean person Steve Jobs was. He’s a not a nice person person, and his face is plastered on so many inspirational posters. He should not be a role model.

Moments I remember best:

  • When he refused to give stock to employee #12, college friend Daniel Kottke.
  • When he abandoned his daughter, and acknowledged paternity only after a lot of pressure. He swore in a court document that he was sterile in order not to provide care.
  • When he cheated Wozniak out of a few thousand dollars when they designed a circuit board for Atari.
  • When he hardly acknowledged his parents as they dropped him off at Reed, after they sacrificed a great deal so that he could go.
  • And being a very mean boss in general.

Apple is mostly a design firm, hardly a company that’s revolutionizing technology. Sure he might be a genius, but there are CEO’s who better deserve our respect. I wish that we’d all be a lot more measured in our praise for this guy.

 

Breakfast at Tiffany’s, by Truman Capote

The movie’s good, but the book is much better. The writing is so polished. It’s short, too, at 1000 Kindle marks.

It’s a delight to to read ‘40s Americanisms, particularly towards the end, where for paragraphs you have no idea what the characters are talking about.

A good deal of good lines:

Like many people with a bold fondness for volunteering intimate information, anything that suggested a direct question, a pinning down, put her on guard.

Except for a lack of youth, the guests had no common theme, they seemed strangers among strangers; indeed, each face, on entering, had struggled to conceal dismay at seeing others there. It was as if the hostess had distributed her invitations while zigzagging through various bars; which was probably the case.

He was a middle-aged child that had never shed its baby fat, though some gifted tailor had almost succeeded in camouflaging his plump and spankable bottom. There wasn’t a suspicion of bone in his body.

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In Praise of Commercial Culture, by Tyler Cowen

This was the first “academic” book I read. I got my hands on it in the second month of college. It’s not clear what prompted me to read it. I hadn’t yet gotten into the econ world and didn’t know much about the blogs out there.

In Praise of Commercial Culture made me decide to major in econ. At the time I was seriously considering going into music, and this showed me that I can synthesize both interests.

The argument is that the market economy is good for the arts. The case is well-presented, and I loved the digressions into the lives of artists and music history.

The book is about economics, arts, and most importantly their interaction. You can use economics, for example, to think about the split between low and high art. So: artists struggle between indulging their own taste or the taste of their audience. When society on average is richer, artists may not have to pander. And that’s part of the reason we got Schoenberg and Chagall.

It’s not meant as a history of culture, I learned so many interesting tidbits about composers and artists, enough for me pick up other books after this one to read them in more depth.

Cultural facts are easy to acquire. This book showed me what it’s like to impose an economic framework for thinking about these facts more rigorously.