Book Review: The Colony

Title

The Colony

The Harrowing True Story of the Exiles of Molokai

Author

John Tayman

Publication Information

Simon & Schuster: 2006

318 pages

Reason for Reading

I was thinking about doing a paper on the quarantining of people living with HIV/AIDS for a class last fall (which ended up changing to something completely different). While I was doing some background research on the topic, I happened upon some information related to a leper colony (aka Hansen's Disease) in Hawaii that was enforced for over 100 years ending in 1969. The story intrigued me and I started reading this book over the semester break last Christmas. I didn't finish it when the semester started, so I re-read it this summer.

Synopsis

The book details the entire history of the colony on the island of Moloka'i, located on the island between Oahu and Maui. Throughout this time, it details the key people involved in the formation and maintenance of the colony, as well as notable people living in the colony itself. The most famous of these appears to be Father Damien, who essentially became known worldwide as the healthy white man who ventured to live alongside the lepers to do God's work, for which he was eventually honored as a saint. He follows through the end of the colony's official status as a place of exile and through the early 2000's when a few remaining exiles still maintained residence on the island.

Review

I very much enjoyed the book. Writing the history of something like this could prove difficult to write in a manner that doesn't occasionally get bogged down in details, but I never found that to be the case. The author made it quite easy to keep track of the figures he decided to include in the history so the book is a relatively fast read.

Quotes

"For 103 years, beginning in 1866, the Hawaiian and then American governments forcibly removed more than eight thousand people to a remote and inaccessible peninsula on the Hawaiian island of Molokai, and into one of the largest leper colonies in the world. The governments did so in the earnest belief that leprosy was rampantly contagious, that isolation was the only effective means of controlling the disease, and that every person it banished actually suffered from leprosy and was thus a hopeless case. On all three counts, they were wrong." (1)

"Hawaiians of the era had several descriptive phrases for leprosy, but perhaps the most apt was 'the sickness that is a crime.' " (8)

"Although Leviticus contains no explicit moral diagnosis, scholars have determined that priests likely viewed any skin disorder as a sign that someone had offended God, and had been punished with a sinful mark. In the context of the Bible, this blurring of boundaries between medical and ethical diagnoses had one critical consequence: almost all skin conditions became stigmatized." (97)

Book Review: Polio: An American Story

Title
Polio: An American Story
(Winner of the 2006 Pulitzer Prize in History)

Author
David M. Oshinsky
George Littlefield Professor of American History, Department of History, University of Texas

Publication Date
2005

Publication Information
Oxford University Press; 288 pages

Book Review: The J Curve

Title
The J Curve
A New Way to Understand Why Nations Rise and Fall

Author
Ian Bremmer
Adjunct Professor, School for International and Public Affairs, Columbia University
President, Eurasia Group

Publication Date
2006

Publication Information
Simon & Schuster Paperbacks; 291 pages

Reason for Reading
The author, Ian Bremmer was on The Daily Show on May 13th pitching his newest book, “The End of the Free Market.” In the interview, he seemed to be knowledgeable, thoughtful, and articulate so I thought his book would be worth checking out. While searching, I discovered a previous book of his in the bargain section of Amazon, so I thought I’d try that one first.

Book Review: On the Social Contract

Title
On the Social Contract (Du Contrat Social)

Author
Jean-Jacques Rousseau

Publication Date
1762

Publication Information
Dover (Dover Thrift Edition); 97 pages

Reason for Reading
In keeping with my goal of learning more of the American Revolution and the era in which it took place while simultaneously focusing on political theory to better understand the political system installed at that time, I picked this book by Rousseau discussing social contract theory. Given the time of publication, I would hazard a guess that many of the founding fathers of America (at least those involved in drawing up the new Constitution) would have read this. Whether or not it had any direct influence on either the Articles of Confederation or the Constitution I’m not certain. The little I’ve looked up online seems to indicate its effects on America’s founding were negligible, but it may have been more influential in the French Revolution. Regardless of this, the text remains noteworthy in the field.

Book Review: His Excellency

Title
His Excellency: George Washington

Author
Joseph J. Ellis
Professor of History – Mount Holyoke College

Publication Date
2004

Reason for Reading
With all the talk recently about what the Founding Fathers intended for the country, I’ve had an increased curiosity about the American Revolution and the people involved in starting it. I figured Washington to be a good place to start and wasn’t disappointed in my selection. Both Washington as a topic and Ellis as an author were good. Ellis has written a number of books on the period, and his reputation seems to be quite good. He won the Pulitzer for his book Founding Brothers: The Revolutionary Generation.

Book Review: Better

Title

Better: A Surgeon's Notes on Performance

Author

Atul Gawande

Publication Date

2007

Reason For Reading

I've heard good things about the author from a number of sources. Most recently, the professor of my Health Management and Policy class mentioned in class that he was reading the book (or possibly one of the other two books by this author) for the second time, and strongly recommended it. One other thing he mentioned was that an article Gawande wrote for the New Yorker on health care costs was one that made a strong impression on President Obama and recommended members of Congress to read it (cited below). As such, it was also a reading we did for the class.

Book Review: Problems of Knowledge and Freedom

Title
Problems of knowledge and freedom
Author
Noam Chomsky
Date
Two Lectures originally presented at Trinity College (Cambridge) in 1971

Reason
I previously read Chomsky’s “Profit over People” and greatly enjoyed his writing style as well as his insights and conclusions precisely pointed at not just interpreting our society, but also how we may improve it. While searching for additional Chomsky books to read I came across “Problems of knowledge and freedom” which offered a glimpse of Chomsky at the precipice of public admiration (or disagreement; 1971). The book couples Chomsky’s life (linguistics and politics) succinctly into two chapters (lectures) and reveals someone whom Chomsky revered (Bertrand Russell).


Synopsis
The book is two chapters; On interpreting the world and On changing the world. The first chapter summarizes Chomsky’s thesis on the acquisition and transfer of knowledge among humans (Linguistics, naturally). Briefly, a system of knowledge results from the interplay of innate mechanisms, genetically determined maturational processes, and the interaction with the social and physical environment (Chomsky’s Thesis). Herein lay the precepts from which the rest of the chapter evolves from; including our mental faculties being limited by our linguistic fecundity, neuroplasticity (use it or lose it), original thought being preempted by prior knowledge bases, and the necessity of a fully developed limbic system to give “scope and limits” to knowledge acquisition.

In the second chapter a relatively young Chomsky (41) recognizes the late work of his predecessor (Russell) and treks a similar path critically analyzing Western cultural and specifically the United States. This chapter builds nicely describing Chomsky’s phrase “consent without consent” highlighting the use of propaganda to galvanize a people into backing the concentration of power to ensure the status quo (a firm belief in the “benevolent” autocracies will be accompanied by one’s ability to accomplish the American Dream) and the chapter ends with many examples demonstrating the use and power of state propaganda (contextual; 1970s therefore Vietnam particularly). On of the more enjoyable sections in a chapter revealing subversion at the highest levels is a mental exercise Chomsky asks his readers to try reciting current United States handlings of war and inserting USSR for U.S. For an unfamiliar reader this could be a paradigm shifter.

Review
Why you should read this book. This is a Wikipedia page on Chomsky’s work. By this I mean it is brief but succinct with many references and best of all the author is Chomsky himself. I would recommend this book as a starter for those interested in Chomsky as his other readings will likely reiterate his statements here. The only criticism I might offer is Chomsky appears to be unaware of his critics or those holding opposing views with merit. This is a criticism of this particular book and not of Chomsky in general.


Quotes
“The major point that I want to show, by this brief and informal discussion, is that there apparently are deep-seated and rather abstract principles of a very general nature that determine the form and interpretation of sentences and such principles are language universals; it is plausible to attribute the proposed language invariants to the innate language faculty which is, in turn, one component of the structure of mind.”

“The systems of knowledge that underlie normal human behavior simply cannot be described in terms of networks of association, fabrics of dispositions to respond, habit structures, and the like.”

From Russell:
“There can be no real freedom or democracy until the men who do the work in a business also control its management…and the real obstacles lie in the heart of man, and the cure for these is a firm hope, informed and fortified in thought.”

Book Review: Asleep

Title
Asleep: The Forgotten Epidemic That Remains One of Medicine's Greatest Mysteries

Author
Molly Caldwell Crosby

Date of Publication
March, 2010

Reason for reading
Micki got an advance copy from the book store she works part-time at because she thought I'd be interested in it, and it did look interesting.

Book Review: A Long Way Gone

Title
A Long Way Gone: Memoirs of a Boy Soldier

Author
Ishmael Beah

Date of Publication
2008

Reason for reading
A general interest in foreign cultures & current events.

Book Review: Who's Your City

Who's Your City?: How the Creative Economy Is Making Where You Live the Most Important Decision of Your Life

Author
Richard Florida

Date of Publication
2007

Reason for reading
My roommate had Florida's 2002 book in his favorite books (on Facebook). I read the background of the author and then read the book at the bookstore and have now ordered it on amazon.

Genre and/or Themes
Environment and psychology, society (public vs private collaboration), systems and networks

Author Background
Richard Florida is a professor at the University of Toronto and does research social theory and economies. He has a PhD. from Columbia and worked at the George Mason University School of Public Policy and at Carnegie Mellon's I-school (information school). He seems like a decent person but it's hard to say - his temperament is even (from what I've read of how he responds to his criticism) but again my data here is too limited to draw any meaningful conclusions.

Synopsis
This is the best book I've ever read on networks (and the only one outside of my business classes). The last and greatest utility of man that has not been replaced by computers is innovation and creativity. Our economies are now reflecting this but not in a homogenous fashion. Certain parts of the country (and world) "have more spikes" according to Florida. The creative output is higher in places you may have already guessed: San Francisco, Boston, Pittsburg/Chicago beltway etc. Florida believes (and has large data to support) the thesis that creativity is the valued commodity and certain regions are better than others for those who want to exploit this.

Review
At the level of the idea, this is not entirely new. It synthesizes what we already had intuited and presents the information in a way that is more scientific but I'd argue quasi-scientific (which doesn't normally bother me but some of his assumptions appear to be false). The book is broken into four parts. Why Place Matters is the first section detailing Florida's "mega-regions". I would like to direct you to this article by Florida: http://www.bnet.com/2403-13070_23-193140.html which gives the data on the mega-regions. Are you wondering if Minneapolis is one of the regions? It does not make his top 10. A megaregion must meet three key criteria. First, it must be a contiguous, lighted area with more than one major city center. Second, it must have a population of 5 million or more. Finally, it must produce more than $100 billion in goods and services. By that definition, there are some 40 megaregions in the world.
Historical Context: David Ricardo and Adam Smith analogy - these mega regions of 2009 would equal Ricardo's "nation-state." Ricardo and Smith both seem to borrow this term for more classical thought. If we recall, Socrates describes nation-state in The Republic. I'd postulate every civilization has had its version of a nation-state. See the wikipedia article for more information (http://en.wikipedia.org/wiki/Nation_state) Also, these ideas have been in science fiction. Futuristic concepts of what cities actually can become (think Judge Dread sp).

I remember in college looking at this picture:
http://members.wolfram.com/billw/images/earth_lights.jpg

This appears to be the impetus for Florida and his research team. "The use of light footprints to define megaregions produces a precise and complex boundary to each region." He and colleauges then combine this and cross-analyze with other metrics such as traffic density and GDP by region. He goes onto to say that Thomas Friedman was wrong about the world becoming flat (flat here means that technology basically connects us all and gives everyone equal opportunities for financial success). Minneapolis falls into the Chi-Pitts megaregion. This is very interesting because about 2 weeks ago I remember listening to an MPR piece on creating a high-speed railway between Minneapolis and Chicago and then I found this just now: http://correspondents.theatlantic.com/richard_florida/2009/05/mega-regions_and_high-speed_rail.php

The highspeed railway does not look to be built anytime soon (in short, too much opposition from existing mass transit authorities and employees eg bus, plane).

Section 2 deals with how the individual will respond to this (assuming part one is true). There will be greater opportunities to the person who can not just move to the economic megaregions but remains mobile in mindset. Those who are rooted to one area will find more economic hardship basically.

In Section 3 Florida explains the results by linking the dominant forms of employment in the areas with the personality traits: manufacturing regions require people who are agreeable (follow rules) and conscientious (work with dangerous machinery), openness comes from areas with high immigrant populations, and extroversion from areas with management headquarters and sales related jobs. Florida finds that his Gay and Bohemian Index, which connected gay and artistic communities to high growth and wealth generation areas, is actually a proxy for regions with large concentrations of the openness personality trait.

Florida is taking a lot of liberties in this part of the book but making the argument that culture of a city contributes to its economic success is hard to make with pure data alone. Part of it is going to have to be subjective and I'm willing to buy this idea. But, referring to psychological profiling, I'd simply say open-mindedness in culture begets open-mindedness is the economy of ideas (and ultimately financial power).

Section 4 is about how you personally respond to this information. I'll simply cut and paste from wikipedia (as their treatment is as good as mine or better since I don't know how to make tables in the blog-composer):

The final part of the book, Where We Live Now, suggests that the average life has three big moves: when leaving a parent's home, when starting a family, and when retiring (or when children move out). When youth leave their home (or when they leave college), those who can move away, choose to locate in areas that offer attractive job markets, cultural or recreational amenities, and rank high in quality of life factors. When they get married or have children, people are choosing areas that are perceived as safe and family-friendly. Florida suggests using a Trick-or-Treater Index, do parent feel safe allowing their children to go door-to-door on Halloween; or Catherine Austin Fitts's Popsicle Index, how far are parents willing to allow their children to walk to buy a treat. Once retired, or when kids leave home, the parents tend to gravitate towards similar areas as young people, but in quieter neighborhoods. They desire opportunities for hobbies or a second career and proximity to grandchildren. The final chapter lists five factors to consider before choosing a location to reside followed by a 10 step plan to help people choose. The five factors to consider are (1) short and long term career goals (2) importance of being physically close to family and friends (3) desirable lifestyle options (e.g. access to beaches, water bodies, mountains, etc.) (4) locating close to similar personality types, and (5) current life stage. The ten step plan is outlined below:

Florida's ten-step plan to help narrow the field and make a decision on where to live

	Description of step	Notes
1	Get your priorities straight	Write down preferences, including the grand and trivial.
2	Generate a short-list	The previous step should rule out many locations and identify suitable broad regions.1
3	Do your homework	Collect information on each potential location by doing research, such as reading local newspapers or asking questions of local residents.2 considering leadership or direction of officials, social values of people or organizations, and aesthetics of the place.
4	What do they offer?	Assess and rank the potential locations by local economic conditions, especially with respect to jobs, professional development, and networking opportunities.
5	Getting the basics right	Assess and rank the potential locations by educational facilities, safety, health care, housing, transportation and other similar services.
6	Does the place get it?	Assess the potential locations by the initiatives that political and community leaders have been taking
7	Values check	Assess the potential locations by the predominant social values displayed by residents and organization, especially in attitudes towards tolerance, trust, and self-expression.
8	Come on city, light my fire	Assess and rank the potential locations by recreational, cultural and aesthetic interests.
9	Tally it up	From these rankings, weigh the pros and cons of the short-listed places and decide which place fits best.
10	Go there	Before committing, visit the decided upon location first. Choose the location that meets expectations upon a visit.

Problems with the logic:

Richard throws into the Creative Class almost everybody and groups them in two categories: the Super Creative Core and the "creative professionals". These two groups include: scientists, professors, poets, novelists, artists, entertainers, actors, designers, architects, non-fiction writers, editors, cultural figures, researchers, analysts, programmers, engineers, filmmakers, financial services, legal and health care professionals, business management and the list goes on.

I of coure do not think (actually I KNOW) that health care professionals are not in his creative class. Physician-scientists are, but just barely. And the argument for financial services needs to be stronger. Of course, whoever controls the capital controls the people (labor supply), but the average financial service person is doing nothing creative; he's just making money. The Federal Reserve and central banks however, have a lot of control (arguably the most). Politicians you note, are left out. This is very interesting and leads me to my addition to this book.

If you can recall Sim City, then this will make perfect sense, if not then it won't. Politicians actually are not like the nerve-center deciders that they should be. They seem more to play games where they protect themselves first and worry about resources/people second. Keep in mind, no formal training is required to be a mayor but he still gets to handle the resources. I am forced to ask the question of whether this kind of governance will work in the future. If the society is truly democratic, then if it's possible I believe adults will have to live three lives: the life of their specialization and job (the ant function), their family life (especially if they decide to have kids), and their societal job (sim city function). As has been discussed here already, we do not seem to have democracy. The assumption for this model changes to take into account the kind of democracy we do have and we find that while the rest of the society is evolving and adapting to technology, politics is not. I'd like a focus of our discussion to be whether this is dangerous and incompatible with the current society.

Quotes
I'd simply say to look at the images I've provided and the additional reading (figures and tables sections). This is better than any quote I could give you to aid your memory.

Additional Reading:

http://www.rotman.utoronto.ca/userfiles/prosperity/File/Rise.of.%20the.Mega-Regions.w.cover.pdf

http://images.google.com/imgres?imgurl=http://earthobservatory.nasa.gov/Newsroom/NewImages/Images/earth_lights_lrg.jpg&imgrefurl=http://www.maximizingprogress.org/2008_01_01_archive.html&usg=__DqUg-3lKlzNkjb2fPMmY9ugjgfg=&h=1200&w=2400&sz=535&hl=en&start=22&sig2=TNzrH1rLKUjx1hRzKxYSJg&um=1&tbnid=o6sBlhky9YpPhM:&tbnh=75&tbnw=150&prev=/images%3Fq%3Dearth%2Blight%26ndsp%3D20%26hl%3Den%26client%3Dfirefox-a%26rls%3Dorg.mozilla:en-US:official%26sa%3DN%26start%3D20%26um%3D1&ei=tk7TSt3qFqKyNNKPgZUD

Book Review: The Undercover Economist

Title
The Undercover Economist

Author
Tim Harford

Date of Publication
2005

Reason for reading
As I’ve mentioned before, I’m trying to learn more about economics in order to better understand the current financial climate, as well as to be a more informed voter. Josh Miller (Ryan’s old roommate) recommended the book, in addition to a textbook, and I have to say it was a good recommendation.

Book Review: A Brief History of Time

Title
A Brief History of Time

Author
Stephen Hawking

Date of Publication
1988 (original version)
1996 (updated version)

Reason for reading
An increased interest in physics lately, partially spurred on by discussion with you guys, and the lack of knowledge I have in comparison, but mostly spurred on just because the little I’ve read of the topic lately has interested me far more than it did while I was in college (unfortunately).

Synopsis
Hawking gives a great introduction to many concepts of physics that are normally beyond the scope of normal people (without spending a significant amount of time investigating it), and makes them easily understandable to the relative layman reading the book, dealing with many topics, including the expanding universe, the arrow of time, Heisenberg’s Uncertainty Principle, scientific determinism, black holes, wormholes, unification theory, and other things.

Review
As I mentioned to Brent, this is one of the best books I’ve ever read, at least in terms of science topics outside the realm of the traditional textbook. I specifically enjoyed the sections on the expanding universe and black holes, as I didn’t know the details of how it’s known that the universe is expanding, nor why it must be, and as for the latter, I only had a vague grasp on what black holes even were. Now I have a fairly solid understanding of both (and hopefully I’ll follow up to reinforce that learning instead of forgetting it). Also, he mentions God fairly regularly throughout the book, and what I liked is that he didn’t really take a side and ridicule the other (as a Dawkins might). Instead, he just brings it up and essentially discusses the options as if it were a regular scientific point to discuss.

Quotes
“The eventual goal of science is to provide a single theory that describes the whole universe. However, the approach most scientists actually follow is to separate the problem into two parts. First, there are the laws that tell us how the universe changes with time. (If we know what the universe is like at any one time, these physical laws tell us how it will look at any later time.) Second, there is the question of the initial state of the universe. Some people feel that science should be concerned with only the first part; they regard the question of the initial situation as a matter of metaphysics or religion. They would say that God, being omnipotent, could have started the universe off any way he wanted. That may be so, but in that case he also could have made it develop in a completely arbitrary way. Yet it appears that he chose to make it evolve in a very regular way according to certain laws. It therefore seems equally reasonable to suppose that there are also laws governing the initial state.” (11)
-this I thought interesting mainly for the 1st part dealing with the eventual goal of science.

“The final result was a joint paper by Penrose and myself in 1970, which at last proved that there must have been a big bang singularity provided only that general relativity is correct and the universe contains as much matter as we observe. There was a lot of opposition to our work, partly from the Russians because of their Marxist belief in scientific determinism, and partly from people who felt that the whole idea of singularities was repugnant and spoiled the beauty of Einstein’s theory. However, one cannot really argue with a mathematical theorem. So in the end our work became generally accepted and nowadays nearly everyone assumes that the universe started with a big bang singularity. It is perhaps ironic that, having changed my mind, I am now trying to convince other physicists that there was in fact no singularity at the beginning of the universe-as we shall see later, it can disappear once quantum effects are taken into account.” (53)
-this I found interesting because I’m very curious about both how scientific determinism fits into Marxism, and also because of the second part, with him arguing against his original theory. I just wonder if he has another mathematical theorem that disproves the original one, and if so, why couldn’t that be used as an argument to his original mathematical theorem, as he claims you can’t do.

“In effect, we have redefined the task of science to be the discovery of laws that will enable us to predict events up to the limits set by the uncertainty principle. The question remains, however: how or why were the laws and the initial state of the universe chosen?” (189)

“Up to now, most scientists have been too occupied with the development of new theories that describe what the universe is to ask the question why. On the other hand, the people whose business it is to ask why, the philosophers, have not been able to keep up with the advance of scientific theories. In the eighteenth century, philosophers considered the whole of human knowledge, including science, to be their field and discussed questions such as: did the universe have a beginning? However, in the nineteenth and twentieth centuries, science became too technical and mathematical for the philosophers, or anyone else except a few specialists. Philosophers reduced the scope of their inquiries so much that Wittgenstein, the most famous philosopher of this century, said, “The sole remaining task for philosophy is the analysis of language.” What a comedown from the great tradition of philosophy from Aristotle to Kant!” (190-91)
-This I thought interesting due to the fact that Brent loves Noam Chomsky, and he’s a linguist, which according to Wittgenstein is the sole remaining task of philosophy (or was at the time). But another interesting point is that while in a Barnes & Noble in Minnesota, I glanced through a book on the 100 most influential scientists, and on the list saw Noam Chomsky (rather high, I think at ~31). So where does linguistics fit?

Questions
-On page 72, Hawking notes that gravity is unique of the four forces in that it is the only one that acts over large distance, and also is only attractive. What is unique about gravity that makes it only attractive, and is it possible that it could also be repulsive, but that hasn’t been discovered yet? I’m sure there’s a simple answer to this question, I’m just curious what it is. I have a tremendous list of questions I didn’t understand. I just thought this was a decent one to put up since you guys might know and if so, might be able to easily relay the answer.

Further Reading
God Created the Integers
Stephen Hawking
2007

The Elegant Universe
Brian Greene
2000

Book Review: The Ascent of Money

Title

The Ascent of Money (book review is reposted from previous blog)

Author
Niall Ferguson

Date of Publication

November, 2008

Reason for reading

I felt I needed a better understanding of finance, and this appeared to be a logical starting point.

Synopsis
The book has just six chapters, with each focusing on the origin of different areas of finance - money & credit, bond markets, stock markets, insurance, housing, and international finance.

Review
In the introduction to the book, he cites a few studies that reveal the ignorance of people in regards to money, whether it's the difference between 401(k) and social security or how compound interest works, so the goal is to give people the origin of these things in order that they may be better able to grasp the concepts and terminology in place today.

It doesn't have the most in-depth history of any individual topic, but each of those I'm sure could cover books (or volumes) themselves. A couple things he could have done a little more on are wages/salaries and taxes (the latter especially), but he may have left those out specifically because people are at least a bit knowledgeable about those already.

For his stated objective, I'd give the book an 8 on a 10-point scale.

Quotes (italics are mine)

"Politicians, central bankers and businessmen regularly lament the extent of public ignorance about money, and with good reason."
page 12
-This quote caught my eye looking for a summary of the chapters since I have my doubts about some politicians' knowledge of money.


"The Rothschilds had decided the outcome of the Napoleonic Wars by putting their financial weight behind Britain. Now they would help decide the outcome of the American Civil War - by choosing to sit on the sidelines."
page 91

-This one is more notable to summarize a large section dealing with the Rothschild dynasty, which I had never heard of before this, and to learn what power they had is staggering.

Further reading:
(these aren't books I've read, rather ones I've come across that I think need to be read and I intend to soon)

The House of Rothschild: Volume 1: Money's Prophets: 1798-1848
Niall Ferguson
November, 1999

The House of Rothschild: Volume 2: The World's Banker: 1848-1999
Niall Ferguson
September, 2000

The General Theory of Employment, Interest, and Money
John Maynard Keynes
1953

Capitalism and Freedom
Milton Friedman1962

Book Review: The Return of Depression Economics and the Crisis of 2008

Title

The Return of Depression Economics and the Crisis of 2008

Author
Paul Krugman

Date of Publication

2009

Reason for reading

The author is a recent nobel laureate in economics, and the book is an update of an earlier version from ~1998, so I felt it was a good book to read on the topic of the recent financial events in which the author had written on the topic previously, rather than some other books where I get the impression the authors had no foresight of the coming problems, yet somehow feel compelled to write an explanation of what happened within a couple months of it happening.

Synopsis
The book doesn't necessarily attempt to explain the current situation, though offers a lot of insight into some of the factors that contributed. Rather, the author starts by saying that many people thought fundamental problems that lead to depressions had been eliminated, and that people/governments had essentially learned their lesson. However, in the 1980's and 1990's, a lot of the significant factors (or symptoms) of depressions had started showing up in other economies (Argentina, Mexico, Japan, Thailand/Asia, etc.). He discusses each country's economic situation individually, as well as the responses made by the respective government. Additionally, he ties these things into the current global crisis.

Review
I have a tough time reviewing things on a 4 or 5 point scale. I require a 10 point scale. I would give it 7 out of 10. I'm not sure if this should be referred to as points, stars, or anything else (blogos?). I thought it was good background information that didn't try to put the financial crisis into a cookie cutter situation and say it was easily explainable.

Quotes (italics are mine)
"The standard response to a recession is to cut interest rates. . . Japan was slow to cut interest rates after the bubble burst, but it eventually cut them all the way to zero, and it still wasn't enough. Now what?
The classic answer, the one that has been associated with the name of John Maynard Keynes, is that if the private sector won't spend enough to maintain full employment, the public sector must take up the slack. Let the government borrow money and use the funds to finance public investment projects-if possible to good purpose, but that is a secondary consideration-and thereby provide jobs, which will generate still more jobs, and so on. The Great Depression in the United States was brought to an end by a massive deficit-financed public works program, known as World War II. Why not try to jump-start Japanese growth with a more pacific version of the same?"
page 71


"If government spending is one standard response to a stalled economy, pumping up the banks is another. One widely held view about the Great Depression is that it persisted so long because the banking crises of 1930-31 inflicted long term damage to credit markets. According to this view, there were businessmen who would have been willing to spend more if they could have gotten access to credit, and who would in fact have been qualified borrowers. But the bankers who could have made those loans were themselves either out of business or unable to raise funds because the public's confidence in banks had been so shaken."
page 72


This is more of an excerpt than a quote:
"The financial crisis has, inevitably led to a hunt for villians.

Some of the accusations are entirely spurious, like the claim, popular on the right, that all our problems were caused by the Community Reinvestment Act, which supposedly forced banks to lend to minority home buyers who then defaulted on their mortgages; in fact, the act was passed in 1977, which makes it hard to see how it can be blamed for a crisis that didn't happen until three decades later. Anyway, the act applied only to depository banks, which accounted for a small fraction of the bad loans during the housing bubble.

Other accusations have a grain of truth, but are more wrong than right. Conservatives like to blame Fannie Mae and Freddie Mac, the government-sponsored lenders that pioneered securitization, for the housing bubble and the fragility of the financial system. The grain of truth here is that Fannie and Freddie, which had grown enormously between 1990 and 2003-largely because they were filling the hole left by the collapse of many savings and loans-did make some imprudent loans, and suffered from accounting scandals besides. But the very scrutiny Fannie and Freddie attracted as a result of those scandals kept them mainly out of the picture during the housing bubble's most feverish period, from 2004 to 2006. As a result, the agencies played only a minor role in the epidemic of bad lending.

On the left, it's popular to blame deregulation for the crisis-specifically, the 1999 repeal of the Glass-Steagall Act, which allowed commercial banks to get into the investment banking business and thereby take on more risks. In retrospect, this was surely a move in the wrong direction, and it may have contributed in subtle ways to the crisis-for example, some of the risky financial structures created during the boom years were the "off balance sheet" operations of commercial banks. Yet the crisis, for the most part, hasn't involved problems with deregulated institutions that took new risks. Instead, it has involved risks taken by institutions that were never regulated in the first place.

After that, I'd argue, is the core of what happened. As the shadow banking system expanded to rival or even surpass conventional banking in importance, politicians and government officials should have realized that we were re-creating the kind of financial vulnerability that made the Great Depression possible-and they should have responded by extending regulation and the financial safety net to cover these institutions. Influential figures should have proclaimed a simple rule: anything that does what a bank does, anything that has to be rescued in crises the way banks are, should be regulated like a bank.

In fact, the Long Term Capital Management crisis, described in Chapter 6, should have served as an object lesson of the dangers posed by the shadow banking siystem. Certainly many people were aware of just how close the system had come to collapse.

But this warning was ignored, and there was no move to extend regulation. On the contrary, the spirit of the times-and the ideology of the George W. Bush administration-was deeply antiregulation. This attitude was symbolized by a photo-op held in 2003, in which representatives of the various agencies that play roles in bank oversight used pruning shears and a chainsaw to cut up stacks of regulations. More concretely, the Bush administration used federal power, including obscure powers of the Office of the Comptroller of the Currency, to block state-level efforts to impose some oversight on subprime lending.

Meanwhile, the people who should have been worrying about the fragility of the system were, instead, singing the praises of 'financial innovation.' 'Not only have individual financial institutionsbecome less vulnerable to shocks from underlying risk factors,' declared Alan Greenspan in 2004, ' but also the financial system as a whole has become more resilient.'

So the growing risks of a crisis for the financial system and the economy as a whole were ignored or dismissed. And the crisis came."
Pages 163-4

The First Book Review: Confessions of an Economic Hitman

Where the fuck is the book review format

Title

Confessions of an Economic Hitman

Author

John Perkins

Date of Publication

2004

Reason for reading

I thought I remembered him on the daily show but when I went to their site I couldn't find him. I still don't know how I heard of this book.

Synopsis

The book is the story of its author who worked as an economic consultant for international consulting firms. Specifically, he would work in less developed countries to convince their officials in adopting huge loans (from the IMF oftentimes) for big infrastructure projects which these countries couldn't really afford. After these countries would fail on their loans, as a special sort of repayment of debt, companies like Haliburton, Bechtel, Brown and Root would come in and "lay waste" to the country.

Review

If it's true, 5/5 stars for bravery (although the writing was average). If it's a lie, 0/5 stars for greed.

Quotes

I forgot to write these down so I'll just take one from wikipedia:

I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation’s largest and least understood spy organization; but ultimately I worked for private corporations. The first real economic hit man was back in the early 1950’s, Kermit Roosevelt, the grandson of Teddy, who overthrew the government of Iran, a democratically elected government, Mossadegh’s government who was Time‘s magazine person of the year; and he was so successful at doing this without any bloodshed—well, there was a little bloodshed, but no military intervention, just spending millions of dollars and replaced Mossadegh with the Shah of Iran. At that point, we understood that this idea of economic hit man was an extremely good one. We didn’t have to worry about the threat of war with Russia when we did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He was a government employee. Had he been caught, we would have been in a lot of trouble. It would have been very embarrassing. So, at that point, the decision was made to use organizations like the C.I.A. and the N.S.A. to recruit potential economic hit men like me and then send us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government.