Book Review: We Were Eight Years in Power

This book is an amalgamation of the articles written by the author for The Atlantic Magazine. Its eight thematic articles covering an overarching argument of race and political leadership in the United States during the presidency of Barrack Obama. I considered myself a student of the history of democratic governments that included the United States but the eloquence and clarity of the author's arguments profoundly affected me. The author traces the rise of the various flavors black nationalism and what motivated their leaders, some of whom advised preposterously that "Negro" development was dependent on the acceptance of subservience.

I do not subscribe to the most aggressive interpretations about the deliberate design of the United States as a racial country but still, concede that the enduring effects of slavery subsist. But the most important lesson for me is that these approaches and assumptions about race capabilities and proclivities are embedded in discourse and state operations even today. I

In general, the author concludes that Obama was a special individual, undeniably capable and an outstandingly clean governor but had to consciously calibrate his utterances and screen against those that would offend racial groups, while being particularly stern in adressing black youth and men.

By far, the best chapter is when this writer makes a very detailed case for reparations in Chapter 6. I read the magazine version of the article but the reiteration here has impressed me even as a student of economics. The level of systematic predation against black families after the civil war extended to the second half of the new century and had devastating effects on black ability to build and transfer physical capital across generations. While the author doesn't resolve the question of the quantum but fairly records the discussion with President Obama who quickly and sensibly responded by highlighting difficulties in estimating quantum in addition to government distribution of that "entitlement" (my words).

I found this paragraph on page 200 profoundly provocative
    "To celebrate freedom and democracy while forgetting America's origins in a slavery economy is patriotism à la carte." Ta- Nehisi Coates
  

My Experience with a Physical Amazon Bookstore

While I have not been a trumpeter of the view that online stores will completely replace physical stores, this idea has been closest to reality in the case of bookshops. And it is understandable since Amazon has done a fantastic job in creating a store that makes it immensely easy to purchase books. As a client of the corporation and one who has purchased both the paper and Kindle version of books, I made the trip to an Amazon bookstore in Georgetown for the first time a couple of days ago.

I am aware that Amazon tactics are driven by lots of data and their responsiveness to client needs is legendary. Thus as a client who lives in a country that does not have the physical stores, I was very alert to see what a physical store for the giant retailer looks like. I write my assessment below.

Perhaps it was my high expectation or because I stayed in the store for just half an hour but I found that there is a start stark difference in the experience between shopping online and visiting the store even if both are run by a great retailing firm. In short, the experience in that particular bookstore was not overwhelming. I attribute this assessment despite that fact that the store was well laid out, had vast volumes of books and I found all the stuff I was searching for. My main thinking is that I expected an Amazon store to be much better than others in the same way that its website is far better. 

The Amazon store that I visited did not stand out and I know a couple of independent bookstores in many parts of the world that are memorable. The one in Georgetown was not. 

Book Review: Chronicles: On Our Political and Economic Crisis by Thomas Piketty


I have read the most famous book
 
Capital in the Twenty First Century by Thomas Piketty and a good number of his academic entries but this compendium of essays is a revelation into his mind. I think, it is difficult to disagree with the subject of the essays especially as these articles were published after the great recession of 2008. Understandably, most of the essays are about the failure of European bureaucrats to assess the situation correctly and apply the right policy responses. No doubt, Thomas Piketty is a very perceptive and the complex nexus of the politics and economic choices of the European Union.

The two main themes of the book relate to his argument for the mutualization of the debts of countries in the Eurozone on the one side, and the need for higher taxes on wealth to support the existing social safety nets in France and most of Europe. debt Debt mutualization is an imperative for Eurozone countries because a single currency means the interest rates on public debt should converge. the absence of this convergence leads to the dd situation where Greece and Spain face different rates than France and Germany.

The more controversial proposal is that which proposes that taxation of endowments and wealth should be raised because the existing fiscal policy favours passage of wealth to people who do not have to work, unlike those who are employed. Piketty argues that higher taxes on wealth would be ensured if countries collaborated on disclosures of wealth held by their citizens across borders. While the argument that society faces a trade off between taxation of labour and capital is real, I am less convinced by the implicit assumption that a large state is inherently preferable.

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Thoughts on The Fight of The Century

The domain of professional sports is most interesting because these athletes make the job look so easy that their supporters sometimes forget to be objective. In the next couple of days, the city of Las vegas will host a major boxing event pitting Floyd Mayweather Jr. and Manny Pacquiao. Both have fans and critics in large numbers but this fight has its own underlying story. It may make sense for the promoters to refer to this upcoming match as the "fight of the century" but thats hyperbole because the century is still too young.

Because this fight has been so long in coming, the punditry claims that Floyd Mayweather Jr. has ducked the his opponent for fear of losing. Despite the firm belief by Floyd Mayweather's detractors, I find this claim unconvincing because the same pundits claim that he is too interested in making money. So why would he have avoided a big payday like this for so long?

About the fight, I wager that Floyd Mayweather Jr. will prevail over Manny Pacquiao. My reason is just because I trust the analysis by real boxing analysts and thinkers and not people whose commentary starts with the deserved criticism of Mr. Mayweather's unsavoury behaviour. But the fundamental error of these analysts is to assume that floyd's  Floyd's indiscipline in personal relations translates into his behaviour in the ring. This analysis by fivethirtyeight.com goes through the data and comes to the conclusion that the odds favour Mayweather Jr.

I will update this post soon after the match is over and provide my impressions of what was the difference between the boxers would be.

Visit to The Smithsonian Zoological Park

Earlier today, I made a quick trip to the Smithsonian National Zoological Park in Washington DC. As readers may have guessed already, my purpose was to catch sight of the giant pandas that are the main attraction at this fine zoo.

The photo to the right of this blog post shows the phone camera image of one of the giant pandas resting outside the shelter.  Granted, the picture is a manifestation of my lack of skills in photography together with use of a phone without an attached zooming lens but I am still proud of it because it was my first sight of this highly regarded mammal from China.

If as stated, the government of the People's Republic of China cautiously gives the panda partly to strengthen diplomatic skills links, then my cursory assessment is that it is an unqualified success.

First, while I am not an American citizen, it became clear to me that the families and groups visiting the zoo considered sighting of the panda as the highlight of the visit. In addition, the children who were here were excited at encountering animals generally but the AsiaTrail, that culminates with a sighting of the giant pandas was the busiest of them all. Panda diplomacy is very smart politics. oOne hopes that this will help these animals to survive for many more generations.

The curious thing was that entry to the the Smithsonian National Zoological Park does not require payment. Instead, there are notices all around stating that the park is maintained through private donations and coupled with evidence of bequests from corporations and families. A second source of funding is the sale of the map of the park and items in the shops. This presents an interesting model because one would consider that the rarity of the panda would almost make it very lucrative to charge for entry. The economics of pricing for entry to this zoo is helped by the panda and the bequest that supported the establishment of the park to begin with.   

A Prize Would Speed Up Search for Malaysia Flight 370

Three months ago, a Malaysian Airlines plane carrying more than 200 passengers and flying between Kuala Lumpur and Beijing lost contact with flight controllers and failed to arrive at destination. Since then, there has been a multi-country search on both sides of the destinations with no success. As it stands now, the plane is missing and there is no clue about what happened to the aircraft and its passengers.

Understandably, the relatives of the missing passengers together with individuals do not believe official claims that this plane is missing and that nobody has found it. This state of affairs presents a fertile ground for all manner of conspiracy theories about what happened to the plane, its cargo and final resting place. All this is not helped by another statement such as that covered in this NYT piece stating that the search area has been changed once again. In short, the level of confidence in official statements and whether a proper search is being made in good faith is low.

I am not too familiar with flight science and therefore unable to find reason to distrust official statements from the airlines and the malaysian government. It is clear to me that many more people in that government are just as clueless but issue statements with more confidence than is warranted.

To my mind, the insurers of this airline together with the government would be best served to crowd source the finding of the aircraft. The incentive for them would be to display their own good faith and support that with a monetary incentive to ask teams of engineers and meteorologists who understand flight science to either find or suggest the final point of the fuselage. With these parameters broadly drawn, I am sure that a prize of up US$ 10 million would be placed out there to be claimed by the first team that provides the most useful answer or identifies the location of the flight.

This approach would serve the Malaysian Airlines and the government well because it would buttress their claim that there is no conspiracy to cover up the accident and provide relief to waiting families. The sum suggested here is affordable for both the airline, its insurers and the government of Malaysia. With that prize established, the governments that are assisting in the search could continue to conduct searches based on the best information at their disposal.

Quote of the Day

"Wise management includes making the best use of scientific, technological and artistic knowledge". Becky Norton Dunlop. 

A New Way to Invest in Athletes

Sports franchises are understandably peculiar businesses because they rely on a fan base that is often based on a city or place of residence.  The most important assets for most teams are the players who are the performers and therefore crate a fan base for merchandise sales, tickets and additional publicity. For that reason, it is understandable that with the exception of a few such as the Green Bay Packers, the trend is that most franchises are held as corporations with shareholders.

As the most visible and important assets held by teams, the franchises are used to negotiating with athletes as such with the help of their managers. It is sensible to ask the question whether this is still the most efficient way for athletes to bear the risks of their careers in professional sports. Arian Foster, a football athlete with the NFL's Houston Texans is a pioneer in the diversification of risks by floating shares in his person as an athlete. As covered here, the athlete has sold shares in his personal brand by promising to distribute a portion of future incomes to individuals who invest in him today.

What the athlete has done is to assure himself of a level of income and asks those who have confidence that he will be successful in the future to but futures in his career. In addition, this share purchase comes with a facility that enables holders to trade that stock over time. While the story overwhelmingly concentrates on the risks that come from the possibility that an athlete may be injured and thereby lead to losses for the owners, I am inclined to think that all those risks would be built into the cost of the shares to ensure that the pricing is appropriate.

Unlike the author who thinks that this activity will be a niche investment for die-hard fans, I think that this is a legitimate form of market creation that provides opportunities for real gains and losses too. injury aside, there will be fine investments of this kind just as there will be poorer one too. its just about who can make the well-informed bet. 

David and Goliath: First Impressions

David and Goliath by Malcolm Gladwell
My rating: 5 of 5 stars

To my mind, while it is an easy read, this book represents the most complex idea that Malcolm Gladwell has attempted to communicate. The first chapter is written well and it makes it look like it will always be easy to apply the David and Goliath metaphor throughout. It is not easy and that may explain the harsh judgement of critics. As usual, the author uses a deceptively simple metaphor to explain phenomena starting from war, crime, education attainment and social change. Few authors are capable of making such a tactical tour de force and in pushing such a wide circle, it is possible that some claims will be incredulous. Still, hard earned money well spent if you one chooses to read this book.  


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Tiger on Course For Record

Earlier this year, Tiger Woods retained the top rank among professional golfers. This was significant achievement because it marked the return of this individual to the top of his sport and inspired confidence among his supporters that his earlier troubles notwithstanding, he would win another of the top four golf majors and be on his way to beating the record held by Jack Nicklaus. In truth, I have been very bullish about Tiger Woods and considered that this was the year when he would not only retain top rank in the PGA rankings but would also take at least two of the majors.

As the season gets towards the end, it is evident that Tiger Woods will accomplish only one the two goals contemplated here. Whereas he retains the number one spot, he has failed to add to his stock of majors and the doubts have resurfaced. And the disappointment among the pundits has been aggravated by some missteps that Tiger Woods has taken by shifting the position of the ball during play. Ewan Murray, writing for The Guardian here not only questions the frequency of the illegal moves that Tiger has been involved in but insinuates that the "dishonesty" may be characteristic of a player whose troubles commenced with infidelity. This is not only unfair but illustrates the point that this blogger has made about the tendency of the punditry to kick a man when he is down. Tiger is still far ahead of his peers and I would wager my small fortune that he will at the least match Jack Nicklaus' record. 

Quoting Bart Wilson

"The positive facts about how we became the most prosperous species in the history of the planet are unappreciated in the humanities, often because the facts and logic of wealth creation are regrettably unknown". Bart Wilson in, Economics as a Branch of Literature. 

How India's Caste System has Endured for 1900 Years

As a person with interest in social stratification in modern society, I have been particularly alert to explanations for the rise and persistence of the the caste system in India and other societies. In blog posts such as this and this, I have shown interest in understanding both the backward justifications and the visible and indirect economic and social consequences of India's enduring caste system. Predictably, my view has been that the value of the caste system in India is that it leads to some inefficiencies and also unjustly denies a large population of Indians of true dignity and opportunity for achievement. In essence, to my libertarian mind, caste systems, like other discriminatory structures exist to support aristocracies and justify the existence of inherently flawed hierarchies.

A legitimate question is to ask under what circumstances the caste system of India developed and why it has endured. Joshua Keating's piece in Slate Magazine summarizes  a recent article in the American Journal of Human Genetics which reports results of a genetic study to determine when various groups of people diverged from one another. The theory is that this divergence would be a marker for the commencement of the caste system and is dated at 1900 years. While I am not fully qualified to debate the exactness of this date, i am surprised that the article seems to suggest that the systematic social stratification based on arbitrary considerations has a "short history".

I disagree with this characterization of discrimination and enforced poverty because two millennia of systematic discrimination and prejudice proves that the biases were self-reinforcing and created the stability in that system. bear in mind that leading democracies in the world and related political institutions have existed for less than three centuries. Stratification based on castes has endured for too long and its effects will maintain for longer still. the length of this injustice, similar to slavery and other forms of discrimination should not be downplayed. 

Renewing The Social Sciences

Few students of the social sciences would dispute the broad argument made in this NYT article by Nicholas Christakis. The tenor of the piece is that unlike the natural sciences, the pantheon of social sciences have hardly changed and are still stand alone disciplines that allow for little mixing and integration with other to create newer and more useful areas of study.

This assertion is demonstrably true because the major social sciences including economics, sociology and anthropology are taught and learned in the traditional ways that they have been for at least a century. While this has provided for stability and expanded the body of literature, it is not clear that the disciplines have made meaningful progress in asking new questions and using modern tools. One would add that this conservatism is seen in the fact that fact that in spite of the proximity of subject, these departments still have different foundational courses and traditional structures at the academies.

However, I am less convinced that the desired shake-up of the social sciences would provide for a definitive theory or closure of long-standing areas of enquiry. This is possible in the natural sciences because foundational ideas such as gravity and calculus remain the same but social phenomena changes with observation and with social structures. For instance, the causes and drivers of crime varies by the age profile of society and this has changed substantially over the last century. For that reason alone, it is not possible to have a definitive theory of crime for more than a generation.

What the article states eloquently is that the traditional silos of the social sciences do not make much sense and that knowledge creation is stifled by the singular lenses by which professors in the social sciences approach their subject. In sum, disciplines such a s sociological economics and behavioural economics point to the future.    

Rendition of the Declaration of Independence

Today is the 4th of July and the United States of America marks the 237th Anniversary of its independence. While I am not a citizen of the US, I remain impressed by the enormous and unmatched progress that a nation started by men determined to secure their freedom has become. Bearing in mind that this is a union  built of a bold declaration recited above, it speaks for itself and demonstrates why, within limits, this nation is a beacon for democracy, represented in freedom for its citizens. This rendition is dramatized by citizens of that nation who represent the deep labours that the successors of the founders endured and contested among themselves and with others. May it continue to inspire well-meaning human beings for many more centuries.

Introducing Yuki Kawauchi

It has become unquestioned today that superior and consistent performance in sports is the result of the application of scientific methods of training, nutrition and use of cutting-edge equipment. Thus in most of the sporting activities today, the level of professionalism required for consistent performance is necessarily costly and that explains the partnership between performers and corporations or sponsors who pay for the training and equipment. bearing this in mind, i am particularly fascinated by this story in Slate Magazine about a Japanese marathoner whose methods and techniques for performance provide a resounding exception to this rule. 

Yuki Kawauchi is a leading marathon runner in japan who is different because he runs a personal training regime, enters races more regularly than is considered ideal, has no corporate sponsor while also maintaining a 40-hour per week job with the government. As the article states, his training regimen consists of daily running and entering for long distance races with very regular frequency. the surprise is that despite his peculiar approach to a very difficult discipline, he not only thrives but records better performance than his colleagues who are sponsored and trained by the national athletics institution.

The lack of professional coaching is evident in his running style that inevitably leads to wrong posture and poor stride but his performance in none the worse. As stated, a maverick of this kind inevitably attracts hostility from sports bosses who would like to see a performer under their direct control. 

As a person who runs a annual marathon race in the tropics with virtually no prior training, I agree that it is possible to exert oneself and perform reasonably well without adherence to the conventional professional advise. What I find truly impressive about Yuki Kawauchi is the consistency in performance and the ability to enter a large number of races. Perhaps his good performance is proof of the 10,000 hour rule described by Malcolm Gladwell in this book. In spite of this, my belief is that his athlete is overtraining and while he has kept risk of injury low, is likely to take longer to recover. the ultimate price hough is that Yuki is shortening his career substantially by the overwork of his body and would probably peak soon and decline much faster thereafter. It is still possible that he may prove the exception and have a truly long career because so far, nothing about this athlete is conventional. His career and times are worthy of keeping for close study. 

Amartya Sen's Take on the Race of the Asian Giants

Due to my declared libertarian inclination, I have weighed in with arguments on this blog about the longer-term prospects of India and China. In summary, my consistent contention has been that India may be a bungling democracy but will continue to make steady steps and eventually catch up and outrace China into sustained development. All this is because of my belief that the advantages of a sustained democratic order for more than half a century are not only unique but will be enduring. Despite the steady leadership of China's political party and the surface calmness, its political institutions are not comparatively advanced. This unequalled strength of the Chinese Communist party is perhaps its achilles heel too because of the absence of competing ideas in the political market.

Amartya Sen has written a timely and very incisive article in the NYT here, not only noting the difference between the two Asian neighbors but also seeking to explain why one leads the other. In spite of his being an Indian citizen, he makes the profound statement that India has trailed for so long that it may not be able to catch up with China at all. In this Nobel laureate's view, the gap in development outcomes between india and China is explained by the weakness of the India's public sector and the poor provision of public services.

Of particular concern is that india has failed to internalize the lessons of the Asian miracle which placed a huge premium on provision of good healthcare and education.  The stark comparison is real and reveals India's contradictions and great differences in the capability of citizens. In india's case, the world's largest producer of generic medicine also has appallingly underdeveloped public health systems. To sum it all, India's best industries can compete internationally but the large differences between its best and least educated undermines a longer and sustained growth path. While Amartya sen does not mention it, I am led to ask myself why the seeming comfort with vast inequalities in access and outcomes of health and education services in india is an enduring legacy of the social stratification engendered by the caste system.

Whatever the answer may be, I am aware that the odds of my bet that India will outrace China have shortened substantially. Sen's summary leads me to wonder how badly india would be doing if it did not have the single engine of democracy to begin with.  

3-D Printing is Not Alchemy

Any person who can read this blog post is aware of the fact that 3-D printing has been demonstrated to be able to make usable copies of prosthetic limbs, useful materials and even a firearm. And yet most of the press coverage about the potential of 3-D printing is obviously overstated. reading many commentaries, one would get the impression that this technology renders every physical object subject to production through 3-D printing and therefore that it will have a profound effect on manufacturing and virtually all industrial processes.

Carl Bass, writing in Wired here, adopts a more circumspect approach to the claims and goes through a detailed explanation of 3-D printing. Among the most important points he makes is that the explosion in the use of the technology is still constrained by the fact that this technology seems to be in an experimental stages. But the most profound statement is that 3-D is unlikely to reach mass use and thereby wipe our industrial manufacturing because of the economics of the technology. In particular, the author argues that in scaling up models, 3-D there is a significant cost barrier because the cost appreciates with scale. Calling this the Third Power of 3-D printing, it is empirically established that the time, costs and material required scales up to the third power. Thus a proper business model dos not exist yet and so it is constrained by volume. 

This means the technology is unlikely to displace conventional manufacturing and will be used at small scale by individuals. In essence, 3-D printing will improve over time but is not the equivalent of alchemy for manufacturing. 

Dan Brown's Take on Population Growth

In the interview embedded here from the Guardian's website, Dan Brown, an author of highly popular fiction mentions the fact that world population has trebled in 85 years. Implicit in the question from the interview and the author's answer is the unquestioned assumption that rapid population is undoubtedly a threat to survival of humanity. From the short interview, it is clear that the author and questioner take it that a concern for the fate of the earth is warranted.

My quick review of the acts state that this is true and most of the growth has been in poorer parts of Asia, Africa and Latin America. However, that most of the population still exists should lead to greater caution is asserting that most of the world's ecological and environmental problems are driven by overpopulation. Noting that the publication under discussion is fiction, it must be accepted that the author should communicate his ideas as he sees them. Still, I would suggest that this author should read a couple of books and understand the dynamics of population growth because it is almost a neutral in factor in overall economic performance. The structure of the population is far more important than the absolute number of people.

Added June 21, 2013: Perhaps a subtle issue such as the primary drivers of population growth as oppossed to the absolute population does not make for good plot in best selling fiction.

The Trade of of Graduate Economists

"Most economists start graduate school not having spent much time thinking about social problems or studied much else besides math and economics. The incentive and hierarchy systems tend to reward those with the technical skills rather than interesting questions or research agendas." Dani Rodrik in, World Economics Association newsletter. 

The Real Lesson of the Excel Error

As reiterated by this NYT article by Robert Pollin and Michael Ash, the main debate that animates commentators is the relationship between national debt and GDP growth. This discourse has arisen from an error that on an Excel sheet during the publication of the paper under reference in the article. My view is that the paper looked a bit too neat in determining the threshold at which debt begins to constrain further growth and provided ammunition to ideologues to justify sharp reductions in debt and to counter-punch against those economists who considered a Keynesian approach as a solution.

To my mind, this state of affairs reflects the state of affairs in academia today and more particularly in economics. To be clear, the discipline of economics integrates quantitative tools impressively and provides meaning to phenomenon that would not be tractable. However, that supremely capable economists made this error and that the paper was then taken as a holy grail in the effect of the nexus between debt and economic growth is cause to pause and contemplate. This is because while the quantitative tools are sufficiently developed, it is worrying that it took a couple of years for the error to be discovered and for an explanation to issue. This merely highlights my concern that too much of economic reasoning is suspended whenever a paper is issued that claims to find a connection that answers a topical policy issue.

To my mind, the lesson is that all professionals economists must be as suspicious as they are impressed with the tools that they deploy. The whole profession suffers when errors are that easily missed and that verification is not performed before the studies are given prominence.