Guess Who

Bet you can:

[A] hurried fasolada. Nassim Taleb, Steve Jobs, Malcolm Gladwell, David Brooks, Rumi, Harvard professor, Northwestern University. “As physicist Paul Davies wrote in Scientific American,” the Slow Food movement, The Sound and the Fury, “Whether it’s CollegeHumor teaming up with Malaria No More . . .”; Elon Musk and Kurt Vonnegut. “Joan Halifax is a Zen Buddhist priest, anthropologist, and hospice worker.” Places she has visited include Pompeii, Tokyo, Shantiniketan, Munich, South Central Los Angeles, and “a small village on the island of Rhodes.”

Somehow I thought Shantiniketan was an alternative high school in Hartford CN. Wait, maybe it is.  Anyway, if you have a strong stomach, go here.

Irwin's Alchemists

I've finally made my way through Neil Irwin's The Alchemists, and it's been a worthwhile trip. Well: it's been a long slog actually, but that remark isn't nearly as negative as it may sound. In many ways it's a very good book, sometimes spectacularly good. And while it has its limitations, I have to admit I'd be hard put to know how to make it much better.

Anybody who reads this far will already know the terms of engagement: Irwin proposes to bring us up to date on three central bankers: Ben Bernanke (of course); Jean-Claude Trichet, president of the European Central Bank from 2003 to 2011; and Mervin King, governor of the Bank of England from 2003 to just this year. In short, the three most powerful voices in banking during the late uproar (for extra credit: who is the Ben Bernanke of China?).

It's a promising framework and it almost works, with the qualification that the institutional limits on Trichet were strong enough that it makes him hard to compare. And like it or not—the Brits will not like it—the hard fact is that Britain comes across as a second-tier player, mostly mired in its own problems, sometimes buffeted by its larger neighbors.

There's an additional problem that I will specify in the moment, but first the good stuff: Within the limits of the engagement, Irwin has done a splendid job of marshaling and presenting so much abstruse material. Clearly, his time out at Columbia Business School served him well: he's got a (seemingly) easy mastery of arcanae of central banking, with a good teacher's knack for making the tough stuff accessible. If nothing else, you could do worse than pull this one down whenever you need to pretend that you understand the virtues and limitations of, say, inflation targeting or the twist. [Just as an aside: would I be right that financial journalism has improved markedly since 2008? Back in the old days, we had Greg Ip: now we have half dozen or more first-stringers who can go pretty much toe to with their sources. Brad DeLong likes to ask why we can't have a better press core. I wonder if maybe we have one).,

There's a limitation, as I've already suggested, in that the three stories are not quite comparable: even though they overlap, each faced his own issues with his own tools and institutional limitations. A bigger problem is the focus on central banking. For good or ill, the point (which the book makes abundantly clear) is that central banking could serve at best as only part of the solution. If you're an American reader, you probably already understand that; you whatever fiscal policy emerged in Washington between 2008 and today was a joint effort of the Fed and Treasury. You can't really blame Irwin for not telling the whole story—his book would have been twice as long and many times as unwieldy had he tried—but you really are getting only part of the picture without it. The European situation is even stranger, what with its multiple sovereignties and its single currency. I don't feel I have much of a handle on it, but my consolation is I really don't think anybody else does either. The British experience is simpler, but perhaps starker. King seems to have been unconstrained about dipping his finger into the political pot (you get the impression that Irwin really doesn't like King very much). British leaders do seem to have made some catastrophically bad decisions lately, but for the most part, hey, it's only Britain and how much can it matter?

In short, I'm just as glad Irwin didn't try to tell us "the full story.” But if we want “the full story,” we'd better have read—or be prepared to read—somebody else.

A difficulty, less important than the others, but it may account for my feelings of slog. Irwin shares a vice with a number of journalists-turned-bookies, and that is: the closer you get to the present, the more you feel like you are reading the pages of his notebook, the less you get by way of sustained analysis. At times, I found myself remembering what Dr. Johnson said about Paradise Lost. On the other hand, I'm glad I read that one, too.

Reading Note: Zombie Ecnoomics

  John Quiggin's Zombie Economics has achieved a respectful reception.  It does have its virtues but on the whole I found it a bit of a disappointment.

Virtues: Quiggin does have a knack for explaining complicated economic ideas in a straightforward and intelligible manner. He has the makings of a good teacher though I certainly hope he is prepared to say it all more than once if expects to get adequate comprehension from ordinary undergraduates.  In any event, he's a pretty good cheat sheet on some of the structural issues that define or beset modern macro.

Defects: one defect is that the book bears all the earmarks of a rush job.  I can only guess--he wanted to respond to the moment, on is own or at the urging of others; or he simply wanted to move on to other things. Still, you can' escape the feeling that this is the product of months when it could have profited from the gestation of years.

Two: I do think Quiggin rigs the game in his favor at more than one point.  Example: his treatment of the Efficient Capital Market Hypothesis.  He does a creditable job of demonstrating just how intellectually bankrupt ECMH is in dealing bub bles and the bursting thereof.  So far so good.  But he glides over the core of good sense at the heart of ECMH which underlies its role (or non-role) in understanding the late meltdown.  That is: prices impound information.  Not always, and not as quickly or completely as its proponents pretend.  But faster than most investors can move.  The practical fact  is that investing remains a savagely competitive game at which amateurs will achieve an upper hand over professionals only with an extraordinary mix of luck, skill, and hard work.  Anybody who doubts tht the market was and remains broadly "efficient" in that sense--any such investor will soon part with his portfolio.

Another example:  privatization.  I think Quiggin states the case in favor of privatization in  manner that makes his own job too easy.  He says "the central teneet of the ideology of privatization is simple."  That is:

It is the claim that an economy in which all  major decisions on investment, employment and production are left to private firms will outperform a mixed economy where governments play a significant role in such decisions.  Provided private firms are free to compete on a "level playing field," this means they will always have a higher value than they would have under public ownership.

The italics are mine but the exaggeration is his. I wonder who has thought that all major decisions must be left in private hands and that properly guided they will always have a higher value.  Perhaps Murray Rothbard or Ayn Rand.  I doubt that Milton Friedman believed it, or Friedrich Hayek--certainly not on their good days. What they did believe--what I believe--is that there are sound practical and moral reasons to favor decentralized decision-making, and good experiential reasons to suspect that governments may impede more often enhance the likelihood of achieving the desired goals.  This doesn't justify selling government capital assets to cover cyclical budget shortfalls, nor the transfer of public monopolies into the hands of unregulated private monopolies.

I don't know of anyone who has tried to do a comprehensive assessment of the effect of privatization over, say, the period since World War II: probably way too ambitious.  Still, I suppose we could all agree that the pell-mell privatization of post-Soviet Russia was a horrendous botch which greatly enhanced the suffering of masses of ordinary Russians (and bye the bye, led to a spectacular increase of the death rate).  We could go further and say that at least part of the blame lies on meddling Western economists with ideological blinders.  But do we really pine for state-run Soviet industry--bloated and senescent, draining the lifeblood out of a society and putting wealth into the pockets of only a selected few?

And it is hardly Russia alone: rail as one will against Maggie Thatcher and her ism, was Britain a better, stronger, happier country when the sovereign owned coal and steel?  Actually, Quiggin may think so; I do not.

I could go on but let me segue instead to my other major complaint which follows naturally from what has gone before.  That is: however shrewd and sophisticated Quiggin may be in seeing  intellectual bankruptcy of modern economics in the markerplace, he is utterly slack-jawed when it comes to his evaluation of the state.  A few fragmentary passages aside, you'd think he'd learned nothing from all the good work that has been done over the past couple of generations by way of critique of state as an institution.  Granted that the critics may have gone overboard; granted that they may harbor the unworthy purpose of destroying the state by fair means or foul.  There are tangential bibliographic references to James Buchanan and Gordon Tullock; also to Anthony Downs, on what Quiggin calls "the 'market for votes' model of [politics."  But then he says:? "In one of my own earliest papers ... I pointed out numerous problems with the public choice approach."  Well, I guess that settles that.   But readers who think that the critiques of the state cannot be dismissed with the flic of a self-citation--those readers will find themselves disappointed that his critique of the state is so flaccid as contrasted with his critique of the market.

Mini-Review: Abba Eban

To celebrate the 40^th Anniversary of the Six-Day Arab-Israeli war, I’ve been holed up most of the last couple of days reading the Autobiography of Abba Eban. And I come away a believer: he’s got to count as one of the first-tier political figures of the modern age, fit company for Churchill and deGaulle.

This is a strong claim for a guy who never served as head of government, or even head of state, and who does not rate much attention in standard histories of Israel in his time. But I think I can justify it. What Eban did was to define a nation, both to the world and (perhaps to a lesser extent) to itself. He had a clear notion of what it meant to be Israel, a notion which he stuck to with persistence and defended with skill and guile. But at least as important, he articulated that vision with almost unparalleled rhetorical skill. Israel’s founding narrative has plenty of heroes, but I doubt that there is any single person—no not even David Ben Gurion—who did more to establish the identity of the new state.

Happily (for it is a long book) his fluency and magnetism come across as well on paper as they seem to have registered in the General Assembly of the United Nations—so much so that after a while you forget you are not listening to a real person; you want to say: “Abba, this is wonderful, but shouldn’t you go back to take your place on the world stage? Oh—you’ve been dead for five years, sorry, my bad.”

Eban had a set of qualifications that peculiarly equipped him for his job although in other ways it may have served also as a limit. Among the first generation of Israeli leaders, he was virtually the only one who was not either Israel-born, or directly from Eastern Europe: he had grown up in London, where he learned Greek and Latin at day school, Hebrew from his grandfather. He went on to Cambridge where he achieved what may be the best academic record in the history of the school—a triple-starred first—plus a dazzling record as a student debater. His particular skill was languages: it is said he was fluent in ten of them in all, including Arabic (he translated an Arabic novel into English). Indeed it was the breadth of his cultural background that prompted London Zionist leaders to pluck him out early for diplomatic work.

After service in colonial Palestine in World War II, he threw himself into Zionist work full time and found himself, almost by accident, in New York at the UN as the man charged to introduce the new state of Israel on the world stage. Indeed skeptics will say that his entire career sums up in a handful of speeches. This isn’t true, but if it is true, it is true in the same sense as it is true for Churchill or Lincoln: a few speeches at the right moment can change the course of history.

Eban’s fall in that class. But like Churchill and Lincoln, he in fact did a great deal more than speak. Indeed Eban proved indefatigable in his off-stage diplomacy, establishing himself with virtually every important world leader and saving Israel’s bacon (okay, poor choice of words) more than once in his tumultuous career.

Eban worked at the UN through the founding of Israel in 1948, and on through the ill-fated Suez adventure in 1956. He moved back to Israel in 1959, hoping to find a place in domestic politics. In fact, his important work continued to be his role as Israel’s public face, which he assumed again in and around the Six-Day War in 1967, and again in the disastrous Yom Kippur War in 1973. Aside from that, he never quite made it to the top rung of national politics. Indeed he remarks in an aside, that there are any number of important diplomats who have proven more effective abroad than at him: he no doubt understood that the class might include itself.

Eban recounts all this in detail that is exhaustive to a fault, sustained by the drive and vigor of his prose. Yet one can’t help be haunted by the stark fact underlying every discussion of Israel: contrary to what we all seem to have thought at the time, the place was not empty when the Israelis got there, almost everything the Israelis have accomplished has had to be scratched unwillingly from somebody else.

This fact is inescapable. But the devil is in a thousand details, and we can imagine one, a hundred, a multitude of Israels, each different from the one we have and many uglier and less inviting. It is no small part of Eban’s achievement that he helped to define Israel at its (at least) potential best.

Eban’s book (and, in large measure, his political career) ends just about when “modern Israel” begins—with the advent of Likud, and the quarrel over continued occupancy of Gaza and the West Bank. It’s vain to speculate on how things would have been different if he had been present at Madrid, at Oslo, at Camp David, whatever. One can’t help but believe that it would have been different somehow: indeed by his own account, from the day the 1967 War ended, Eban understood that the real job was to win the peace—to use the military victory as the basis for a sustained and lasting resolution of conflict in the Middle East. And we’re not there yet.

Source: Abba Eban, An Autobiography (1977)

Background and framework: Shlomo Ben-Ami, Scars of War, Wounds of Peace: The Israeli-Arab Tragedy (2007)