Michael Lewis can tell a story like no other. Anyone who can take the financial crisis of the last few years, find a story in it that centers around sMichael Lewis can tell a story like no other. Anyone who can take the financial crisis of the last few years, find a story in it that centers around subprime mortgages and shorting the market (if you understand what that means and how to do it, you're more than a step ahead of me and about anyone else I've mentioned it to over the last couple weeks), and then make it interesting to the lay reader deserves to be read.
In many ways (if not all ways), the stock market is a giant enigma to me, which brings to mind how Winston Churchill once described Russia: "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest." If there is a key to the enigma, with that riddle wrapped in a mystery inside it, that is the stock market, perhaps the key is found in the self-interest of the individuals participating in the market. Not just the stock and bond traders that made up the named characters of "The Big Short," but even the home buyers and owners that took out second, third, and fourth mortgages, bought two, three, and four "investment" properties, the loan originators who sought them out and offered no interest loans, and the banks that sliced up the loans to fill tranches (there's another cryptic word for you) for trading as bonds to and between the financial houses on Wall Street.
In other words, as Gordon Gecko might say: greed. Greed of bonds traders, floor traders, home buyers, loan originators, strawberry pickers, and house cleaners. Greed by just about everyone involved, from the top all the way down to the bottom.
Lewis, known for his writing in "The Blind Side" and in "Money Ball," with "The Big Short: Inside the Doomsday Machine" returns to his original stomping ground covered in "Liar's Poker: Rising Through the Wreckage on Wall Street." Finding the few who saw the crash coming, he pulls together a narrative about those who anticipated the crash and saw it coming. While so many were getting rich off trading subprime mortgage based bonds, a few individuals realized that the underlying assets to the housing bubble were not stable and predicted that as interest rates on adjustable rate mortgages became due, defaults would sky-rocket and the bonds' values would crash.
And then they bet against it, cashing in lucratively when the predicted defaults began.
What makes the story fascinating, of course, is the attention to the often colorful and more than slightly eccentric personalities that comprised the handful of individuals in the story. The stock market is difficult to understand for a simple reason--its workings are data driven and few pay the price to understand the numbers and analysis behind the market. In contrast, those who did, and those who got lucky, were often driven by a narrow-minded focus the data. From an neurologist turned hedge fund manager diagnosed with Aspergers in the midst of the story to a couple of young college grads who all but lucked into it, to a loud mouthed malcontent who made a habit of sticking it to the big wigs on Wall Street who lost investors money to the crisis, the "The Big Short" is replete with Lewis's deft story telling.
Whether you are interested in finance or just looking for a great story, "The Big Short" is worth the time to read. I listened to it in the car, and often found myself sitting in the driveway waiting for the end of a section. More, it introduced me to concepts and interests that I'm exploring further in other books. Read in conjunction with "Too Big to Fail," which I read last year, it provides an up close look at what was going on and why our economy is dragging through the longest recession in a generation.
One last observation: one aspect that this book noted that continues to shock me no matter how many times I hear it over the last four years is how people with little or no credit history or ability managed to get so much financing. From immigrant strawberry pickers in California with $750,000 mortgages to house cleaners in Brooklyn with four and five town homes, obtuse financial incentives to originators and investors alike distorted the market in ways that were dangerous to all of us. While I look forward to other financial histories for other perspectives, Lewis seems to make clear that it wasn't so much the free market that failed, but the financial incentives that were built into it. In the end, the old adages "if it's too good to be true, it probably is" and "there's no such thing as a free lunch" seem even more relevant today than ever. Be careful when the snake oil salesman comes calling. He may not have your best interests at heart, and he may not even know it himself. ...more
"In 1492, Columbus sailed the ocean blue." But what happened next?
More than just the discovery of the new world that we call the Americas, Christopher"In 1492, Columbus sailed the ocean blue." But what happened next?
More than just the discovery of the new world that we call the Americas, Christopher Columbus set off globalization of ecology, trade, biology, and nationality beyond anything that preceded it, argues Charles Mann in "1493: Uncovering the New World Columbus Created." The discovery of America did more than just uncover lands previously unseen or mapped by Europeans. It set adrift the then current order of the entire world, changed civilizations from the Iberian Peninsula at the edge of Europe to the Ming Dynasty in Asia.
And the changes continue, today, over five hundred years later.
Mann's exploration of the world changed by Columbus' discovery began in "1491: New Revelations of the America's before Columbus," a look at what the Americas were like before the 1492 discovery. In this new book, Mann steps off from the discovery to look at the effects.
Mann follows the trail of silver mined by the Spanish from Peruvian mountains as it travels across the Pacific and Atlantic Oceans, adding so much silver to the world market that it result in high levels of inflation in Spain and to the opening of trade with silver-starved Ming China (and indeed, may have also contributed to the Ming's fall, too). In fact, more Peruvian silver may have been sent to China than to Spain. Silver would travel to Manila where it was traded for porcelain and silk bound for Spain and Europe. So great was the trade that the English privateer cum knight Sir Francis Drake would make his reputation marauding, mostly without success, Spanish silver caravans en route to the coast of South America for shipment to China and Spain.
In addition to silver, 1493 tells the story of other products that found their introduction the world after Columbus' discovery. Potatoes may have ended the perennial famines that plagued Europe (and contributed to the great potato famine in Ireland) and became a staple, along with manioc, across Europe and China. Rubber became so valuable that it defied usual economic laws of supply and demand as the price rose even when supply increased. Tobacco and sugar cane together brought plantation slavery to the Americas, as well as millions of Africans. Modern day cultures continue to bear the echoes of the assimilation of cultures and traditions amalgamated in the soup of escaped slaves, native American tribes, and Europeans.
If Mann deserves any criticism, it is that the story is just too large, too vast, and too complicated. The reach and the effects of the homogenocene--the period of mixing of insects, germs, plants, and every other biology through man's action over the last 500 years--are perhaps too great for one book. Indeed, one associate complained to me that Mann just goes on and on about each aspect. "I get it already..." In his effort to be thorough, Mann cannot perhaps be sufficiently thorough to cover impact of the mixing of the Old and New Worlds.
Despite the scope of his effort, Mann succeeds in a fascinating tale that deserves a place among histories of the world. As Niall Ferguson might argue, too few histories look at the broad paths of history and ask "why" while too many look at the small pieces and tell what. Mann looks at the why, and he looks at a why that impacts us all. For that reason, I recommend it as important reading for the interested historian in all of us. Our world is not moved only by kings, presidents and generals, but also by the bugs, goods, trade, and cultures that mix as a result of our actions. Our ecology matters, if in ways we might not suspect or guess. After five hundred years, the effects are still felt and still changing. What might we find out tomorrow?
I recently read the short brochure “A Free-Market Monetary System,” a compilation of Friedrich A. Hayak’s 1974 Nobel Prize speech “A Pretense of KnowlI recently read the short brochure “A Free-Market Monetary System,” a compilation of Friedrich A. Hayak’s 1974 Nobel Prize speech “A Pretense of Knowledge” and a short essay on proposing a free-market monetary system (hence, the name, see?). Both are short, and neither waste any time proposing radical changes to what was then, and indeed what is still, the status quo in monetary and economic policy. Both the essay and the speech are worth reading.
In “A Free Market Monetary System,” Hayek warns that as long as central banks are in control of the money supply, we can expect to see the economic highs and lows that we have come to expect, better known as “bubbles” and “recessions.” Both are part of the market corrections that result when markets try to correct for artificial highs created by monetary policy in the control of a central bank. Hayek’s recommendation? Let private enterprises issue their own money for circulation.
I am more convinced than ever that if we ever again are going to have decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which ic can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject.
Get it? Rather than “Dollars,” we would buy, and spend, money that might be called something else. Nike “Swooshes,” perhaps, or American Express “credits.” The point is that business does not have a monopoly on money the way that government–i.e. central banks–does and therefore has a greater incentive to protect the integrity of that money from inflation and against other currencies by good policies. If it doesn’t, people won’t use it and it’s value will drop. (Can you hear the invisible hand clapping?)
“It is a business which competing enterprise can maintain only if it gives the public as good a money as anybody else,” said Hayek. Meanwhile, central banks have no such limits or restraints. Just ask Ben Bernanke.
Could it work? Would the government ever give up its control of the money supply?
Ha! Good one. Have you ever known the government to willingly give up any power?
For an interesting look at how an economy where private enterprise issues its own money, check out the speculative novel “The Unincorporated Man” by Dani Kollin and Eytan Kollin. _______________________
The second part of the brochure is the text of ”A Pretense of Knowledge.” Hayek’s speech upon receiving the Nobel Prize for economics in 1974 (he shared the prize with Gunnar Myrdal for their work in “the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena”) was a thunderhead of a critique of policies recommended by economists and implemented by governments that had, in his words, “made a mess of things.” He attributed the failure of economists to guide public policy more successfully to a “propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences[...]” That attempt, he said, “in our field may lead to outright error.” Economics is not an exact science, and the application of “habits of thought to fields different from those in which they have been formed” lead to a “‘scientistic’ attitude” that the unknowable is knowable.
Economies involve an “organized complexity” that is too deep for economic researchers to obtain. Speaking of wages and prices as an example, Hayek argues that “the determination of [prices and wages] will enter the effects of particular information possessed by every one of the participants in the market process–a sum of facts which in their totality cannot be known to the scientific observer, or to any other single brain.” What he is saying is that while my wife at the grocery store may know enough to decide whether one can of salsa is better priced than another–based on a list of criteria only she knows, including flavor, cost relative to other salsas, cost relative to other stores and whether it is worth driving to those other stores to get the salsa, as well as how much my daughters are fussing in the shopping cart to hurry, whether we need salsa at all, and so on–the observer, the economist or market researcher or whoever is watching, can never know all that goes into her mind.
"It is indeed the source of the superiority of the market order, and the reason why, when it is not suppressed by the powers of government, it regularly displaces other types of order, that in the resulting allocation of resources more of the knowledge of particular facts will be utilized which exists only dispersed among uncounted persons, than any one person can possess."
Only the market–the composite of my wife, and the hundreds of thousands (or millions) of shoppers out there can determine what the market value–the price–of the salsa should be.
This is why governments mess things up when they try to intervene. Whether it is propping up failing auto companies (go google “GM volt january 2012 sales” to find out that the company bailed out by Washington, D.C. sold a measly 603 Volts last month) or promoting and subsidizing “green” energy companies (for this only, google “Solyndra scandal” where even the New York Times admits that the government took risks that the market would not take. I wonder why the market wouldn’t risk it?), when government tries to pick winners better than the market, it inevitably fails or produces less success than the a free market.
This isn’t to say that economics is entirely unable to offer predictive power. Quite the contrary. It just can’t do so with the same ability as the “hard sciences,” such as physics, or chemistry.
Often all that we shall be able to predict will be some abstract characteristic of the pattern that will appear–relations between kinds of elements about which individually we know very little.[...] The danger of which i want to warn is precisely the belief that in order to have a claim to be accepted as scientific it is necessary to achieve more. This way lies charlatanism and worse. To act on the belief that that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which we do not possess, is likely to make us do much harm.
Neither the Members of Congress making laws, the President and his Executive Branch (proposing, executing, and, also, making laws), nor judges in their black robes know enough to out think the decisions of millions or billions of people that make up a market.
"But in the social field the erroneous belief that the exercise of some power would have beneficial consequences is likely to lead to a new power to coerce other men being conferred on some authority. Even if such power is not in itself bad, its exercise is likely to impede the functioning of those spontaneous ordering forces by which, without understanding them, man is in fact so largely assisted in the pursuit of his aims."
We may not always understand why the market chooses what it does, but in large part the market chooses, through spontaneity, that which helps man get what he wants.
In other words, Hayeks’ message to economists and policy makers is simple: get out of the way and let the market choose. It’s much smarter than you are....more
If he's too liberal for Yale, then...well, you know. Probably too liberal for me, too, right?
Or maybe not. If just to understand why the leaders of the Occupy Movement believe what they do, it might be worth the effort to read what he has written.
I heard about Graeber's Debt: The First 5,000 Years from, of all places, a science fiction blog review (and my apologies for not remembering which one). The review described how sordid and strange certain cultures were in how they dealt with debt. It intrigued me: cultures on our own planet as foreign and strange as something that might appear in Star Trek or some other fictionally created world.
The descriptions don't disappoint. But the strange trading rituals and bizarre debt arrangements between tribes, families, and individuals of the Australian outback, the African savanna, or the American forests that Graeber describes in his look at the last 5,000 years are just prelude. As the language of debt conflates sin, morality and finance, we come to Graeber's central question:
What, precisely, does it mean to say that our sense of morality and justice is reduced to the language of a business deal? What does it mean when we reduce moral obligations to debts? What changes when the one turns into the other? And how do we speak about them when our language has been so shaped by the market?
It's a fascinating question, and it's hard to not sympathize with the quandary that Graeber sees in the language that we have developed to talk about debt, our capital systems, and markets. Even so, Graeber's conclusions make straw men out of the theories underlying the modern market economy, starting with Adam Smith, dismissing them with only short thrift.
This isn't to say that Graeber doesn't see a place for markets. It is capitalism, as means for power and form of slavery, that Graeber despises. "It is the secret scandal of capitalism that at no point has it been organized primarily around free labor." For example, the conquest of the Americas is integrally connected to mass slavery, in the forms of African slavery and debt peonage. Chinese contract laborers built the North American railroad system, while "coolies" from India built South African silver mines. Peasants of Russia and Poland were free landholders through the middle ages, only becoming serfs at the dawn of capitalism.
And so on. The choice between state and market is wrong, he says, and it's domination of political ideology over the last centuries has "made it difficult to argue about anything else."
Capitalism requires constant consumption and destruction, Graeber argues, and for that reason has always been created by warfare and conquest, rather than as a replacement for barter as we have generally accepted (see Adam Smith). With less and less to consume, humanity is reaching its social and ecological limits.
Graeber's conclusions are, to say the least, a rewriting of history as we've been taught, to say nothing of how we view markets and capital.
I would like, then, to end by putting in a good word for the non-industrious poor. At least they aren't hurting anyone. Insofar as the time they are taking time off from work is being spent with friends and family, enjoying and caring for those they love, they're probably improving the world more than we acknowledge."
It's a rosy look at people who need not work to produce because they are free from debt, and in that sense, completely free. It sounds great...but it's rosy, and ignores human nature's desires to create and work.
Graeber's Debt: The First 5,000 Years is a monster of a book, difficult even, though always fascinating. While I do not agree with the extremities to which his conclusions take him, there is something to be said for the corruption created when capital and political power are conflated. Crony capitalism is a distortion of the free market, just as political interference in the market is a distortion.
At the very least, Debt measures up as an interesting anthropological history of cultures as disparate from my western world as Vulcans or Klingons are from us. More importantly, and more to the point why I recommend you read Debt, unlike cultures created for science fiction, they are real, and that in itself is worth the read....more
The elevator pitch for Niall Ferguson's "Civilization: The West and the Rest" is simple: Western civilization has risen to dominate world affairs over The elevator pitch for Niall Ferguson's "Civilization: The West and the Rest" is simple: Western civilization has risen to dominate world affairs over the last five hundred years, a record unmatched in world history and at odds with its population and geography relative to other countries and civilizations, due to six "killer apps" that have provided an advantage on the international stage. Further, it may be the West's loss of those same "apps" that is leading to decline now.
Ferguson pegs the rise of the West to dominance at about the same time as the discovery of the Americas, and so, having just finished a look at that chapter of history in "1491" and "1493", I decided to take a closer look at Ferguson's argument. What was the secret of the West? And could we really be headed towards decline or collapse?
Where many histories today focus on the specific "modules" of history, drilling down to look closely at specific persons or events (think Goodwin's "Team of Rivals" on Abraham Lincoln's political management or Horowitz's "Midnight Rising" on the John Brown raid at Harper's Ferry), Ferguson takes another tact by looking at the broad strokes of history to find themes, the grand "narratives" of history, as he calls them. Where other historians dig into the details, Ferguson wants to look at the big picture. As he explains in the preface:
"Watching my three children grow up, I had the uneasy feeling that they were learning less history than I had learned at their age, not because they had bad teachers but because they had bad history books and even worse examinations. Watching the financial crisis [of the late 2000s] unfold, I realized that they were far from alone, for it seemed as if only a handful of people in the banks and treasuries of the Western world had more than the sketchiest information about the last Depression. For roughly thirty years, young people at Western schools and universities have been given the idea of a liberal education, without the substance of historical knowledge. They have been taught isolated ‘modules’, not narratives, much less chronologies. They have been trained in the formulaic analysis of document excerpts, not in the key skill of reading widely and fast. They have been encouraged to feel empathy with imagined Roman centurions or Holocaust victims, not to write essays about why and how their predicaments arose."
With that flippant, matter of fact, almost "devil-may-care" attitude then, Ferguson determines to take the reader through a grand narrative of the last five hundred years, identifying six "killer apps" that Western civilization adopted to rise to a dominance unmatched in breadth and duration in human history. It is this broad overview, as told in Ferguson's urgent and quick-witted voice, that makes the extended argument so interesting and in an age of multicultural relativism, refreshing. Welding his argument--not just about the cause of Western civilization's success, but also that "the historian can commune with the dead by imaginatively reconstructing their experiences" to inform and predict the future--Ferguson spins together the documents, events, and personalities to form a narrative, a story, about why the West succeeded in the face of larger, richer, and, at the onset, more wealthy civilizations.
The "tools" to which he attributes the rise of the West are likened to "apps," downloadable software that augment computers and mobile devices. By looking at the narrative, Ferguson finds the roots of the West's success, as well as why, perhaps, the West as begun to decline while other civilizations advance. Not specific to the West, but, like the real world apps in the metaphor, the values can be "downloaded" by any culture for similar results, and in the closing Ferguson addresses the adaptation by non-Western cultures that have done, and are doing, just that with success.
The "apps" Ferguson finds, while not necessarily surprising, are informative: competition, science, property rights, medicine, consumption and the birth of the "consumer society" (“without which the Industrial Revolution would have been unsustainable”) and Max Weber's Protestant “work ethic”. While the narrative is anything but chronological, Ferguson's grasp of history and the sweeping strokes with which he paints the narrative provide fascinating reading. One cannot sense, however, that Ferguson, almost anything but apologetic, is on the verge of glorying in the success of the British Empire during its hey-day as a colonial power, noting with statistical explanation the improvements brought to the world through Western influence, whether it be in medicine, literacy, and education. Or blue jeans, for in the end, one side effect of rise of the West is not diversity, but conformity as cultures imitate and emulate Western styles, habits, and philosophy.
Ironically to this writer, who sees such deep and lasting value in the political institutions of the West, Ferguson notes that one area where the West has not been uniformly imitated is the political.
"Only in the realm of political institutions does there remain significant global diversity, with a wide range of governments around the world resisting the idea of the rule of law, with its protection of individual rights, as the foundation for meaningful representative government."
In other words, we'll take your blue jeans, your medicine, even your work ethic, but you can keep the Bill of Rights and representative government, they say. Indeed, it is that imitation of the West that has brought China from the depths of the Cultural Revolution to heights today when its economy can weather the financial crisis without more than a hiccup.
After Ferguson's narrative through the six "apps", then, we reach the essential question suggested by any study of the West's rise: is the West now in decline? And if so, is it too late to reverse?
Perhaps not. Although China's rise seems ominous, and indeed, Ferguson cites China's relative nonchalance towards doing business with the dictators and warlords of the world business "it's just business" as evidence that China is more concerned about rising than its popularity, China still faces problems that could arrest its progress, especially from social unrest, political pressure from its growing and unrepresented middle-class, or friction with its neighbors in Asia.
Noting that a "retreat from the mountains of the Hindu Kush" (Afghanistan) seems to proceed the fall of any empire--be it Alexander's, British, Russian, or most recently American--Ferguson is unwilling to give up on the West, yet. No, the things that set the West apart are no longer distinct, but nor has the entire package of "apps" been embraced.
"The Chinese have got capitalism. The Iranians have got science. The Russians have got democracy. The Africans are (slowly) getting modern medicine. And the Turks have got the consumer society. But what this means is that Western modes of operation are not in decline but are flourishing nearly everywhere, with only a few remaining pockets of resistance. A growing number of Resterners [Ferguson's name for non-Westerners] are sleeping, showering, dressing, working, playing, eating, drinking and travelling like Westerners. Moreover, as we have seen, Western civilization is more than just one thing; it is a package. It is about political pluralism (multiple states and multiple authorities) as well as capitalism; it is about the freedom of thought as well as the scientific method; it is about the rule of law and property rights as well as democracy. Even today, the West still has more of these institutional advantages than the Rest. The Chinese do not have political competition. The Iranians do not have freedom of conscience. They get to vote in Russia, but the rule of law there is a sham. In none of these countries is there a free press. These differences may explain why, for example, all three countries lag behind Western countries in qualitative indices that measure‘national innovative development’ and ‘national innovation capacity’."
True, the West is not without its faults, he says, but our downfall will come from within, not from external pressure. It's the loss of the "killer apps" by our culture that will, in the long and short run, lead to our continued decline. Don't mistake the adoption, however, by others as the reason for the decline of the West. Rather, it is the West's abandonment of the values that brought them prominence that is leading to the decline. Here, again, Ferguson picks up the theme in his preface--we must learn from history. If we are to maintain the great values that gave the West its rise, we must study and learn the great works--the documents--that teach those values.* Add up all the values, and, like any follower of Churchill, it adds up to courage and action.
"Today, as then [1938 and the German Nazi threat to Western civilization], the biggest threat to Western civilization is posed not by other civilizations, but by our own pusillanimity – and by the historical ignorance that feeds it."
If you're interested in a brief version of Ferguson's views on the six "apps" that he discusses in the book, check out his speech at TED.
* Ferguson's recommended "standard works" for Western civilization are:
The King James Bible Isaac Newton's Principa John Locke's Two Treatises of Government Adam Smith's Moral Sentiments and Wealth of Nations Edmund Burke's Reflections on the Revolution in France Charles Darwin's Origin of the Species William Shakespeare's plays Selected speeches of Abraham Lincoln and Winston Churchill Also, if he could select only one of the above, it would be Shakespeare's collected works. Related articles
With a page count a bit lower than Civilization, The Great Degeneration is based on his 2012 "Reith Lectures" on the BBC and walks through four institutions that Ferguson sees as crucial to the prosperity of the modern state. Faced with growing symptoms of decline, such as slowing growth, crushing debts, increasing inequality, aging populations, antisocial behavior, Ferguson believes that our institutional degeneration may be the major cause.
Ferguson opens by first addressing other arguments about why wealthy countries have declined. China and India's impressive economic growth, in contrast to relative stagnation in western democracies, is not a matter of the rest of the world catching up to the West, but is also a result of actual decline in real terms in western countries of certain institutions, especially in the decline of political, economic, legal and social institutions.
The west's success, relative to "the rest," over the last few centuries has been in large part due to four institutions: democracy, capitalism, the rule of law, and civil society.
Democracy has deteriorated not so much due to access, but rather due to the breakdown of the social contract between generations, says Ferguson. For this, he cites the expensive benefits that older generations have voted themselves to be left to the next generation to pay for, noting that Edmund Burke, in his Reflections On The Revolution In France saw the generations as an important part of the social contract. By taking on astronomical amounts of debt, we have put future generations on the hook for our expensive lifestyles.
When it comes to capitalism, Ferguson is not so much anti-regulation as he is anti-bad regulation. There is not such thing as a market without some kind of regulation, he says, but the regulation must makes sense and malefactors must be made to pay. On the contrary, in the recent recession, Wall Street came out ahead, despite risky behavior and dangerous bets, while average Americans bailed them out with giant debt producing stimulus packages.
Where once the rule of law protected contracts and property rights, tort law has slowed down the legal system, raised the costs of doing business, increased the costs of products, and failed to produce a corresponding benefit, stifling innovation and creativity.
It is when Ferguson reaches civil society that I am most intrigued. He quotes from both Bowling Alone: The Collapse and Revival of American Community by Robert Putnam and Coming Apart: The State of White America, 1960-2010 by Charles Murray, both landmark works on the dramatic decrease in voluntary associations over the last century. Where as at one point both wealthy and poor attended the same churches, participated in the same organizations (think Lions Club or Rotary or even Boy Scouts), and lived in the same neighborhoods, recent decades have seen lower and lower membership and participation in these voluntary associations that have brought people together for a common purpose. Instead, government has replaced these voluntary associations in many cases as the source of resort and not often with improved results. We may have more "Friends" on Facebook, but the relationships there are no more substantial than the effort to click "Like." The result is less civic-mindedness and less civic-participation.
And no, showing up to vote does not reflect civic participation. Voter turnout is merely a symptom of increased, or decreased, civic engagement.
Since I listened to the book over the course of several days commute and while doing a bit of home improvement, I found the shorter analysis and references to other works useful and was unsurprised to hear, as Ferguson closed up the book, that it was based on a series of lectures. While The Great Degeneration is a fascinating, if bite-sized, look at the problems assailing western civilization, it proceeds along lines that are more prescriptive than proscriptive. As a gateway, however, it is a starting point, and on that score, I recommend it as a place to begin your examination of the future of our democracy. ...more
I can't recall who exactly recommended this to me when I first picked this up back in 2010 or 2011, but I do recall the cautionary note that they tookI can't recall who exactly recommended this to me when I first picked this up back in 2010 or 2011, but I do recall the cautionary note that they took as they described it and the author's conclusions. The global recession had begun four years earlier, since which time I had just barely been able to sell a house (seriously--I closed the sale of the house the same week that Bear Sterns ceased to be), had graduated from law school at perhaps the worst time for new attorneys to be entering the work force, and had managed to find a good, but not great paying, job at a local company. Financially speaking, the future seemed bleak, and I was not sanguine about my prospects for future income. Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown seemed like a warning voice against future economic calamity, so I picked it up and gave it a read.
Unfortunately, I was, largely, disappointed. Falling into that category of financial reading that seems to best be described as "fear mongering," I found it full of doom and gloom, threatening prognostications, and warnings about the future. I suspect that authors David and Robert Wiedemer, and Cindy Spitzer have made better money of the sale, and subsequent editions of, the book than most readers have from the advice they give.
This isn't to say that there may not be substance to their arguments. Looking at a succession of financial bubbles, including both the dotcom bubble and the more recent housing bubble, they posit that the bubbles have led the Federal Reserve to engage in reckless market manipulation that is going to result in 50% unemployment, a 90% stock market crash, and 100% annual inflation, starting in 2012.
Their advice? Sell your home, cash out your stocks, and convert your assets into gold and inflation pegged securities.
That's a stark transition, and from a set of authors who are perhaps inflating their own expertise in economic prophesy a bit further than their resumes merit.
Meanwhile, we find ourselves in 2014, the economy on the mend, and the catastrophic events predicted by Aftershock as yet unrealized. I suppose that there is still time, and I don't want to give the impression that everything is smelling of roses, but perhaps the take away is that the success of Aftershock is more about marketing for its authors than about economic prediction relevant to readers. ...more
Perhaps we’re doing third world development all wrong.
That was the thought that stuck with me most after I finished reading James Tooley’s The BeautifPerhaps we’re doing third world development all wrong.
That was the thought that stuck with me most after I finished reading James Tooley’s The Beautiful Tree: A Personal Journey into How the World’s Poorest are Educating Themselves, a surprisingly readable book about the role of private schools in education in some of the world's poorest neighborhood. In The Beautiful Tree, Tooley tells his story about discovering private schools in some of the world’s poorest neighborhoods and discovering that in case after case they are doing well, are educating the poor, and are often, if not always competitive with the much better funded government schools that are found nearby.
It’s a proposition that surprised me, and for good reason: the private schools in my neighborhood—which is already among the higher income brackets in the state—are prohibitively expensive. Fortunately, I have a high degree of confidence in the public schools available to my family, but what about in places where public schools are failing or are inadequate? What choices do those who live there have?
Tooley found himself in some of these places while researching private schools in India for the World Bank. One day, he wondered into one of the poorer neighborhoods Hyderabad’s Old City and found it overflowing with small, parent-funded schools. At first, such schools seemed to be the exception rather than the rule, but as Tooley began to look for schools in other countries where his World Bank research took him, he found similar schools and similar stories, often existing in spite of the protests of government officials that private schools could not and did not exist for the poor (Tooley finds them specifically in India, Nigeria, Ghana and China, though this latter case is unique from the others).
Ironically, the book is not a critique of what is going wrong in the world, but rather seems expository of something that is going right and without the interference or help of the state. Parents, dismayed at slovenly, under-motivated and underperforming schools, banded together to form schools that are accountable to them, and the results are astounding, providing education to student who would not otherwise have opportunity.
Did I mention that these private schools are not subsidized, let alone acknowledged, by the government? Rather, parents scrimp and save, putting a premium on the education of their children. No one is going to get rich teaching at private school, thought: Tooley quotes fees at $10 per year in some cases, and generally in the range 4-20% of the minimum wage of the country. Some schools even offer scholarships to help students who still cannot afford the fees.
How do private school students rate against their peers? Tooley tested 24,000 students in India, Nigeria, Ghana and China in math and language proficiency. In India and Africa, children in private schools almost always excelled over those in public schools; in China, private schools were more likely to be limited to remote locations where travel to public schools was not safe. The one place that the government did better than private schools was in providing playgrounds for schools.
Tooley seems to attribute the cause to a general lack of accountability among government teachers, whereas private school teachers were held directly accountable by parents. With no incentive to excel among government teachers, they often delivered high rates of absenteeism, failed to teach altogether, or allowed classes to collapse into chaos. Tooley also notes that government inspectors meant to assure teaching standards were easily paid off and kept away from government classrooms.
If there’s more I would have asked from Tooley, it would have been how to replicate the successes that he saw in India, Ghana, and Nigeria. If there’s a way to bring about serious and long-term change to the third world, it should be replicated.
Tooley tells the story in a series of anecdotes that is appealing and makes the reading easy. not to mention powerful. Even if third world development is not your cup of tea (it’s not mine), the story is fascinating....more