The Technology Trap: Capital, Labor, and Power in the Age of Automation

The Technology Trap: Capital, Labor, and Power in the Age of Automation by Carl Benedikt Frey

What is the impact of technology on society? The answer is tricky. In the short term, current occupations are destroyed. Those that spent much time developing skills find those skills irrelevant. The skilled artisans must fight for new positions once their past jobs are eliminated. In the long run, society is usually better off. People have access to more lower priced goods. Those who lost their livelihood eventually find new work (or leave the workforce.)  New career opportunities appear.

The book details many cases of technology change through history. The response has differed depending on implementation. Workers were not thrilled when skilled jobs were replaced by unskilled children. When workers have been able to benefit from increased technology they are happier with the changes. Social safety nets also increase the willingness of people to adopt the changes.

The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Create Bad Policy

The War on Prices: How Popular Misconceptions about Inflation, Prices, and Value Create Bad Policy edited by Ryan A. Bourne

Prices are an indication of the marginal value that buyer and seller place on an exchange. They don't explicitly represent the value that went into creating something or even the worth of the object. Water is required to live, but is cheap. Prices help allocate resources to those who are willing to pay for them.

Prices of individual items go up and down to match the desires of buyers and sellers. Inflation is typically caused by changes in money supply and velocity. Price controls may cause mismatches in supply and demand and may not alter inflation. Consumers will respond to artificially low prices by consuming more. Producers will respond by producing less or reducing quality. This can lead to shortages and lead to everyone being worse off. (Though it could possibly lead to alternatives.) Artificial prices may often substitute one cost with anther. Instead of paying in money for something, people may need to pay in time by waiting in a long line or hunting for a hard to find item.

The negative impacts of price controls can be far reaching. During World War II, the US implemented wage controls. To get around these, workers offered fringe benefits, such as health insurance. This became the de facto way that health care is obtained in the US and results in a complicated system that exists today and is very difficult to disentangle.

People also are not stupid. Is there a "pink" tax requiring women to pay more than men for the same products? If it were truly so, women would just buy the men's version. However, the female products are often different in ways that females value more. The "gender wage gap" is also explained by forces. (After all, what company wouldn't want to employ as many people as possible for a fraction of the cost?) Early career men and women in the same profession tend to earn the same. However, women tend to gravitate to less risky and less remunerated careers. They are also more likely to take time off for childbirth and child rearing. They are more likely to value flexible work schedules. (Increasing maternity leave for women can make this even worse, by encouraging them to take more time off, thus limiting experience. Perhaps more paternity leave is the answer?) 

The book looks at many other examples. The general theme is that meddling with prices will impact the economy and will often have unforeseen consequences. People are quick to adapt to find new loopholes in a regulatory environment. The more more friction there is in pricing, the slower the economy will adapt. It reminds me of an interesting analysis of the German industry. Labor has a seat at the board and influences actions of the company. This makes it very friendly to existing workers. However, this also makes it difficult for pivots to electric cars and other significant changes. Will they have much of a role in the future industry?

What is the best way to regulate a market? Is allowing uber-wealthy a necessary cost of doing business? How do we appropriately set markets for externalities (like emissions, deforestation, etc.)? The current regime of regulating the response to regulations doesn't help.

Late Admissions: Confessions of a Black Conservative

Late Admissions: Confessions of a Black Conservative by Glenn Loury

This book has a lot to unpack. It includes "Black Conservative" in the subtitle. However, he is far from the typical conservative. His most cited economic paper advocates redistributing money from the rich to the poor. (The societal benefits of the poor having a few extra dollars were found to be much greater than the losses experienced by the wealthy.) However, he also published papers against affirmative action. (A lower standard for certain groups would allow them to get through the door with less skill which would end up setting them back as they are not prepared to achieve.) At times he was embraced by the right. At times he was loved by the left. He didn't blindly adopt the beliefs of either side. Instead, he focussed on what he believed in. His beliefs were also not necessarily reflected in his actions.

He dropped out of school only to come back later. (Hence one possible positive meaning of "late admissions".) He received a PhD from MIT and later served as a tenured professor at multiple Ivy League schools. He advocated for black families to stick together, yet he he was not involved in his first son's life. He was in long term marriages, yet was also a serial philanderer. He is comfortable having erudite academic discussions as he is going to the ghetto and pursuing crack and prostitutes. (The "late admissions" could be all the confessing he does in this book about his bad behaviors and the people he has hurt.) He had been arrested on drug charges and spent time in rehab. He was nowhere near perfect and did not expect other people to be perfect. However, he does want to see people putting forth the effort to improve themselves. The book is an interesting story of the challenges in a life you cannot pigeonhole together with an interesting evolution of economic thought. 

Surviving Rome: The Economic Lives of the Ninety Percent

Surviving Rome: The Economic Lives of the Ninety Percent by Kim Bowes

How did the typical person live in Rome? It is amazing the quantity of data that they are about the piece together from a time a few millennia ago. Pompeii has provided a great source as things were suddenly stopped and frozen in time. Other archaeology work has been used to find details of the life, while written records provide some clue to wages and work. Analysis is influenced by those doing the work. What was needed to subsist? It appears that most of the family would work. Children would do work when they could. Farmers often had small plots that they would farm to live on and to trade with others. It was not a life of abundance, but did seem to be survivable.

Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu and James A. Robinson

Nations succeed when they adopt inclusive government. They fail when the leaders adopt extractive policies. The rest of this book provides examples to prove this thesis and poke holes at other theories of prosperity. Leaders can enrich themselves by extracting all they can for themselves. (One example had Mugabe even winning the lottery in Zimbabwe.) The extraction comes at the expense of general prosperity of a country. Strong institutions can help prevent rulers from extracting too much for themselves. However, they must be strong enough to prevent leaders from changing them even when a leader has popular support. Spanish colonization was built on extraction. Colonies that are built on extraction (such as Spanish or slave colonies) often continue this mindset well after the colonizers have left. Inclusive governments are often democracies, but all democracies are not fully inclusive. There are plenty of democratically elected rules that seek to extract value for themselves. (Is the United States moving more towards that direction?) China has been able to pivot to prosperity by opening up enough while still maintaining communist control. Many poor countries receive huge amounts of aid, yet fail to achieve prosperity. Much of the aid is consumed in overhead and waste, with much of the remaining aid used to enrich the ruling party (either directly or indirectly). Moving to inclusion is the key to maintaining prosperity, but it is hard to do.

A Brief History of Equality

A Brief History of Equality by Thomas Piketty, translated by Steven Rendall

Piketty sees the world as moving towards a state of more equality, using the definition he gives. The argument is filled with contradictions and redefinitions. There are various ideas that make sense, but are not carried out well. Including negative externalities in calculation of wealth seems like a smart move, but it becomes challenging in practice. Equality across different groups seems like a noble goal, but how far do you go in defining groups. Is equality a good thing? There is conflict between equality and freedom. People are richer with more material possessions, but are they happier? If what matters is relative difference, wouldn't equality just make everyone feel "blah"? The author is an advocate of reparations. Would these benefit the people paying or the people receiving? He gives the example of "reversing" the suffering of Haiti by returning payments made to France. Would you also make Russia pay back payments made by Finland? What about Germany's payments after World War I? Making payments can encourage thrift and hard work. Receiving payments can end up causing harm and hurting the economy. (Even in rich economies, natural resource abundance can have negative impacts. Would loads of cash in previously disadvantaged groups result in short term boost of "others" and along term negative for the community impacted? You don't often hear of dynasties started with lottery winnings.) 

The author also criticizes the conservatism and slow change of current institutions. A drastic change would be a preferred way to launch communism. Alas, the track record of this has not been good. If we enable more dramatic changes, what is to say it would happen to the left? Trump is an example of taking power to change in the opposite direction.

Cause and effect are also uncertain. Does equality lead to economic growth? Or does growth provide the ability to provide more societal benefits for all? What is the end goal for growth and equality? 

The Affluent Society

The Affluent Society by john Kenneth Galbraith

After World War II, America became rich. It was setting records producing and accumulating wealth. What should the US do? He advocates for a more attention to the government and personal sectors. Build up people. This aligns much more with modern liberal thought than classical liberalism.

The Myth of the Entrepreneurial State

The Myth of the Entrepreneurial State by Deirdre N. McCloskey and Alberto Mingardi

This book has good ideas, but is not well written. It was written as a refutation of Mazzucato's Entrepreneurial State. It tries too hard to refute points and often comes across as pedant bickering. The style is also very loose and casual. It is a book, but barely.

Despite the poor writing, the argument is sound. The state is just not good at entrepreneurship. It is very bad at picking winners. It is even bad at picking areas to invest. The lack of signals can cause it to spend way too much time investing in the wrong things. It is much more inclined to protect the status quo. After all, the state is beholden to voters who tend to like their current jobs and have difficulty seeing what could happen in the future. Central planning has been a huge failure nearly everywhere it is tried. Touted benefits of government regulation are often "fixes" to excesses that previous regulation encouraged.

The government can take credit for encouraging some innovations. It has played a huge role in the economy and thus some would be hits. However, to achieve these hits, it was required to take money out of the economy. Could there have been even greater innovations elsewhere? The Concorde was the result of huge amounts of government outlays to provide supersonic travel. It does not fly anymore. Was that money well spent? Would it have been better to allocate it elsewhere?

In the end, the state is made up of people. In a democracy, these people are selected by voters. It may be nice to envision a technocratic elite that have thoroughly studied in the area and can provide the guidance of what would be best for the country in the long term future. Alas, what we typically get is politicians with their own beliefs and cronies. Democrats are not too happy with Trump being empowered to redirect science funding. However, in empowering the state, you are beholden to people to act in whatever way they see fit. 

Causal Inference: The Mixtape

Causal Inference: The Mixtape by Scott Cunningham

This is primarily an econometrics textbook. There are dense sets of equations and programs (in Stata and R) for performing Causal inference. I skipped over a lot of that and focussed on the narrative. The book primarily deals with teasing out the cause from complex data. Natural Experiments often play a key role. Two things that are almost the same with a slight difference can often provide insight into a policy based on that difference. However, you must also be careful to control for other factors. A lot of the math in this involves doing that. Often graphic visualizations can help to tease out these bits of interest. Much of the results are "freakonomics" style. These results are often well debated. Often some other factors can be found that swing the results in another direction. (Though sometimes the study is just bad.) Having an openness to accept a different result when the data shows otherwise is important for the process. I would prefer a book that is heavier on the stories and less on the mechanics, but I could not expect more from a textbook. The author also pulls in song titles for the chapter headings (thus a "mixtape").

Time to Think Small: How Nimble Environmental Technologies Can Solve the Planet's Biggest Problems

Time to Think Small: How Nimble Environmental Technologies Can Solve the Planet's Biggest Problems by Todd Myers

Libertarianism and environmentalism can go together well. Small scale, bottom-up improvements can exceed top-down mandates. Some general principles are remarkably simple. Energy costs money. People like to save money. Making it easy to reduce energy saves them money and encourages more savings. Mandates can backfire. I have a house that was built at a time when GU24 sockets were mandated. This was a hard mandate to encourage more efficient lights. However, this used CFLs which are expensive and hard to dispose of. Shortly thereafter, LED bulbs with standard sockets became popular. These are cheaper, use less energy and are easier to dispose of. The top-down failed by mandating something, while the bottom up got something better. The author alludes to similar cases of energy markets. The west coast had heavy regulation which limited innovation possible. Even west-coast startups were first to launch out east.

The book describes many technologies and companies that have done small things to improve the environment. Many have succeeded despite the difficulty of battling against entrenched interests and regulation. Microgrids can provide enhanced resiliency and greater efficiency (since electricity does not have to travel as far.) However, they do not fit in well with the large scale regulated utilities. Providing better knowledge about electricity usage can help users cut back on waste. Small scale clean up innovations can help reduce oceanic garbage. There are many other examples. Small improvements that spread can have a much bigger impact than large mandates that people are reluctant to use. Nobody came down and said: "we will require everyone to use a vehicle that ways 10 times as much as them to get around". However, people gradually started to use cars. Government came in to "improve" some of the problems with cars by creating highways to reduce congestion, safety standards, fuel economy standards, parking requirements, etc. These were attempts to improve issues, but they have also created additional issues and entrenched the poor environmental policy. The small solutions are the ways to move away from this, but that may require breaking away from the existing government challenges.

Lombard Street: A Description of the Money Market

Lombard Street: A Description of the Money Market by Walter Bagehot

This century-plus old description of the success of British bankers and fractional reserve banking still feels fresh today. Britain became the banker of the world and was able to provide financing for many large projects as well as the continued involvement in trade. Rather than a centralized banking authority, Britain had a various banks competing with each other. Even the bank of last resort, the Bank of England, was a private entity with a special "too good to fail" mandate. The author compares British banking to that of France that is controlled by the mandate of the government. France was not able to move as quickly or provide the same benefit as British banking.

As part of the discussion the author discusses some of the political issues of the day that related to banking. I suppose that would have been at the top of mind at the time, but today that is the one part that did not seem relevant. 

No One Makes You Shop at Wal-Mart: The Surprising Deceptions of Individual Choice

No One Makes You Shop at Wal-Mart: The Surprising Deceptions of Individual Choice by Tom Slee

Economics is based on individual choice. People "vote by their feet". If everyone chooses something, that will win. However, it is not so simple. The large corporations have power that make it difficult for others to compete. There is an amalgamation of benefits and costs with an imbalanced relationship. Game theory comes into play. People may prefer to have a vibrant local downtown. However, they also want the lower prices that walmart offer on some things. Alas, by getting those low prices, they decimate the downtown. The book has some interesting cases of how decisions are made for us by the big entities, leaving us with little opportunity. Big movie studios and big businesses make things their way, leaving an illusion of free choice, but providing little of it. The book has interesting thoughts, though does get a bit disorganized.

Reflections on the Revolution in France/Rights of Man (Giants of Political Thought)

Reflections on the Revolution in France/Rights of Man (Giants of Political Thought) by Wendy McElroy and George H Smith, discussing works by Edmund Burke and Thomas Paine (Contributor)

This is a quick audio introduction to two famous works from over two centuries ago. The audiobook includes various voice actors to discuss the essays and their authors. There was some controversy with Burke as he seemed to take on different views. This short audiobook provides good background, but is not a source of the original works. 

The Communist Manifesto [fake]

The Communist Manifesto [fake], not really by Karl Marx

I'm not sure what this was, but it wasn't the Communist Manifesto. There was some introductory material on Marx and the background of communism. The last part contained a catalog of available publications from some 100-year old British Socialist Society. This is the epitome of false advertising. Don't claim this is the "Communist Manifesto" by Marx when there is almost nothing that he wrote.

Let Colleges Fail: The Power of Creative Destruction in Higher Education

Let Colleges Fail: The Power of Creative Destruction in Higher Education by Richard K. Vedder

Colleges tend to expose liberal ideologies, but institutionally they are extremely conservative. The organizational structure and institutions are very slow to change. Huge amounts of money flow through colleges with little validation of the value returned. Perhaps the only significant crack down has been on for-profit players. These players realized there was money to be made by making some small improvements. However, there is much more that needs to be done. The government provides fast subsidies through various routes. This may be justified for educating the populace and preparing people for careers. However, much of college is an early adulthood social experience. If government subsidizes this, should it also subsidize cruises and other social experiences for different populations? For education, the government has little validation of the value of a degree. The government may spend much more subsidizing a liberal arts degree at a low-tier private college than an engineering degree at a public university, despite the engineering degree enabling much greater career prospects. Schools are incentivized to invest more in "experience" rather than job prospects. College attendance costs have increased at a rate much greater than inflation. Colleges have significant facilities, much of which are highly underutilized. A dose of the free market may be best for colleges. The smaller schools could fail. Loans and other funding can be based on value returned. Innovation can be encouraged rather than letting accreditation bodies focus on sameness. (Why do all degrees take 4 years?) Universities are essentially government entities without regular elections. There are competing goals and missions. Improvements can be made, but will require some gradual approach.

Making Sense of Chaos: A Better Economics for a Better World

Making Sense of Chaos: A Better Economics for a Better World by J. Doyne Farmer

The author uses data models to look at complex problems. This has been done at times to piece together opportunities in the market. (The author also points out that efficient markets imply that there are no easy arbitrage opportunities. However, markets are efficient because arbitrageurs will come in and eliminate inefficiencies.) Some of these models can help predict things with greater accuracy than other more conventional approaches. He is able to point out cases where his models have worked well. He then uses this as a way to predict future activity. This may get a little more questionable as things move to the unknown. (For example, the cost of renewable energy may be steadily going down making it cheaper to focus investments there. However, storage and roll out could have other impacts.)

Economics awards Nobel prizes for "good ideas" while physics requires "proof". Should economics theories be fully validated in the real world? It is an interesting concept. The big data models could be the future. How would this impact economics and the world in the future?

King Dollar: The Past and Future of the World's Dominant Currency

King Dollar: The Past and Future of the World's Dominant Currency by Paul Blustein

The dollar is the dominant reserve currency today. It has a huge, liquid market with well established court systems and rule of law. It will likely remain the reserve currency of choice unless the USA botches it. With great power comes great responsibility. Most transactions between two countries are denominated in dollars because that is the easiest way to do it. Shutting off dollar access can be used to sanction other economies. However, if this is used too often, it could drive the search for more alternatives and lesson the dollar's strength. There just isn't anything else as good as the dollar now. The book has convincing arguments, but also gives caution to the misuse of dollar strength. There are pros and cons of being a global reserve currency.

The Theory of the Leisure Class

The Theory of the Leisure Class by Thorstein Veblen

I bought this book a few decades ago, but didn't get around to reading it. I had missed out. Veblen has a great critique of the "leisure class" and their conspicuous consumption. He tells things with flat out seriousness, yet lays it on hard. Was he trying to be truly serious or was this meant as a satire? It hits it well either way. The points seem so true today, it is hard to believe it is over a century old. 

The Leisure Class does not busy themselves with manual endeavors. They have servants to take care of that. Instead, the work on intellectual and "charitable" pursuits. Much of their consumption is "conspicuous". They consume to be noticed. They may flavor their food with substances precisely because they are expensive, not because they impart any particular taste.

Veblen calls out colleges and sports. These sports are how the leisure class unites and carries out violence. Sports like football are seen as emblematic of the leisure class. Why are they connected to institutions of higher learning? It is because these are made to be class differentiators. I can only imagine what he would think about college sports today. 

Hive Mind: How Your Nation's IQ Matters So Much More Than Your Own

Hive Mind: How Your Nation's IQ Matters So Much More Than Your Own by Garett Jones

Countries with a higher average IQ tend to be more prosperous. This book explores the topic and analyzes reasons why. One concern that jumps out is test bias. This is brushed aside as irrelevant. Even if the tests are hugely biased, a group that excels on the test tends to show attributes that lead to success. Those with higher IQs tend to be more patient and have greater analytic skills. They can plan for the future and build out structure for long term improvements. The crowd effects lead others to follow the positive crowd. Immigration also tends to help these countries. People in the high-IQ countries work on more complex tasks. Even if lower-skill people come, they free up those working in low-skill tasks to migrate to the complex ones, increasing the overall economy of the country. The high-IQ people tend to be less likely to accept garbage and corruption from politicians because they understand what is going on. The book contains some stats and analysis. It rambles on a bit, but it is pretty short and presents a fairly solid argument for the "aggregate" rather than the individual. 

The Shock Doctrine: The Rise of Disaster Capitalism

The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein

The book has a few different theses that it jumbles together. The "shock doctrine" is the idea that big government changes can be made when there is significant shock to the system. The Great Depression and World War II helped allow social security and other welfare programs to be pushed through. Even though it mentions these left-wing changes in passing, it focuses exclusively on shocks used to push through right-wing changes.

This brings up a second topic of government forcing in right-wing regimes, possible at the expense of democratically elected governments. There are numerous cases in South America where the US has supported right-wing dictators over democratically elected left wingers. There may be problems with some of these countries, but problems seem to be fairly equal-opportunity. Venezuela is basket case with a strong left-wing government. Argentina has got itself into messes with dictators, left-wingers and right-wingers.

A third topic of concern is people getting rich at the government's expense. In some countries, the dictator simply pockets the country's money or take bribes. In the US there tended to be more layers of indirection. Some people would go back and forth between government and private sector and use their influence to get contracts. Others would bill the government excessive amounts and then farm out work to subcontractors. The author criticized the right wing "outsourcing" of government to private groups. Alas, government contracting graft tends to be equal opportunity.

And finally there was a fourth topic of torture. This was generally done in clandestine fashion. There were also psychology experiments to "wipe" somebody's brain to put in a blank slate. This was also attempted on a country level. It never seemed to work well.

These disparate topics were all pieced together in an attempt to piece together a narrative. The examples from Iraq, Russia and Katrina were all covered in detail. There was a lot of examples of things gone wrong with people naively thinking they could implement what they wanted. 

The book jumbled a lot of things together and seemed to intent on criticizing figures from the Bush administration. The argument just rang hollow. The end totally flipped it on the head. The Katrina survivors took a cue from Thailand and decided that they would fix things up themselves rather than wait for government help. This seems to be exactly what the right wing goal would be. Government is no capable, so people will do it themselves. This would be the end result of government hands-off activitiy.