Economic and political rights first

I just finished readingThe Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor by William Easterly.

Russ Roberts interviewed Easterly in this EconTalk podcast.

I recommend reading the book and listening to the podcast.

Easterly’s key and powerful point is that the economic and political rights of humans in third world countries are often not considered by experts looking to prove out their prescribed solutions for alleviating poverty and often do so by working with the very leaders of those countries who suppress those rights.

Easterly made the excellent observation that Martin Luther King Jr. didn’t seek to alleviate poverty among African-Americans first. He understood that ensuring that they had economic and political rights came first.

The last half of the book provides a nice description of how the incentives work in a free market (or when people have economic and political rights) to be the most effective pill against poverty. Easterly, though, steers away from using terms that carry baggage in today’s political clime, like markets and capitalism, and keeps the focus on the individuals. Instead of calling it capitalism, he refers it to a people trying to solve other people’s problems.


Random Considerations for Fitness New Year’s Resolutions

I hadn’t thought of these before and thought they were interesting and sharing for your consideration.

I think they both stemmed from Taleb’s Antifragility book, but I’m not so sure about the first one.

1. It’s good to eat a random variety foods rather than the same things every day, or week. Why? All foods contain some natural toxins. If you eat the same things, the levels of those same toxins can build up  in your body.

I have no idea if this is true but I don’t know of too many (any?) downsides in having more variety in a diet, so why not?

2. I just read this one in Taleb’s book (it triggered my memory of #1) and made me think of a personal experience:

Randomness in the quantities and macro nutrient composition (fat, protein, carb) of your daily intake may also be good for you.

Dietary guidelines and diets assume consistent quantities and proportions of things at each meal, or each day. I think we automatically assume that too.

But, Taleb contends our bodies get stronger, more fit, with a bit more randomness. Lots of carbs one day, all protein and fat the next. Skip a meal here and there. He notes most dietary studies are based on consistent intakes, while the effect of random intakes have escaped even being a consideration in those studies.

A personal experience:

As I lost weight 12 years ago, I allowed myself one splurge every five to seven days. I figured if I was “good” the rest of the days, one bender wouldn’t hurt too bad, and would help keep me good the rest of the days.

I would splurge on random things — but it was usually carbs. One week might be a banana split. The next might be a pasta dinner.

I expected to hop on the scale the day after my splurge and see a temporary reversal in my progress. Yet, I was often surprised, on occasion to see the positive progress had continued, sometimes accelerated.

I can’t say for sure how many times that happened. It wasn’t even something I considered that could be a cause. But, it happened enough for it stick in my memory.

I never thought much about that. I thought those were flukes. I was sure there was no way that the splurge would help me temporarily. That didn’t fit with any mental model on diet and weight loss that I knew about.

Then I read #2 and it made me wonder. Maybe that 5-7 day splurge helped more than as a reward for being “good” the rest of the time. Maybe it even played a bigger role in my overall weight loss than I ever imagined.

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This post on Economic Incubator is related to discussions we’ve been having here at Our Dinner Table about the unintended consequences of affirmative action. It’s about a new book Mismatch: How Affirmative Action Hurts Students It’s Intended to Help, and Why Universities Won’t Admit It.

Two parties

In the comments of my Thank You post, Ben asked what I thought about our two-party political system.

He reminded me of my post from last November, Why I Might Throw My Vote Away. I think that should give Ben a good idea of my views about it.

I also highly recommend reading Peter Robinson’s book, It’s My Party. In it, Robinson gives a great account of the evolution of political parties in our country, including potential explanations for how the two have persisted.

I’ll have more to add-on the subject soon.

The most boring and interesting book

I finally got around to reading Hernando de Soto’s book, The Mystery of Capital, based on a recommendation from W.E. Heasley. I recommend it.

I realize the book has been out for a while and I’m very late to this party, but better late than never.

Before I read this book, I had a firm belief that law was an emergent order of an evolutionary process of humans interacting with each other, where different dynamics of interaction were constantly tested in the crucible and the most effective interactions emerged.

In other words, we stop at red lights because that practice keeps us alive, not because it’s a written law. If we were to erase the written law from the books tomorrow, we’d still stop at red lights.

But de Soto gives a good history of emerging law in the United States compared with other countries that are not as successful as the U.S.

U.S. “lawmakers” didn’t seek to overwrite the ‘law of the land’, or the law that had emerged through local and private arrangements from various landowner and gold claim organizations, for example. Lawmakers primarily sought to serve as a backstop for those local arrangements.

In not-so-successful countries, elites ignore the ‘laws of the land’ and try to overwrite them with their own idea of what’s best. But, it turns out that their untested ideas don’t work and people do their best to ignore them.

I’ve witnessed this same phenomena in business management. Company leaders often ignore bottoms-up successes and push their own ideas. Usually those ideas are based on their own untested preferences and they usually end up getting fired because they don’t work.

This bottoms up process was illustrated well with de Soto’s story from Indonesia. While there to launch his book, some Indonesian cabinet members invited him to discuss how they could find out “who owns what among the 90 percent of Indonesians who live in the extralegal [ignoring formal law of property ownership] sector.”

He told the story of his trip to Bali:

As I strolled through the rice fields, I had no idea where the property boundaries were. But the dogs knew. Every time I crossed from one farm to another, a different dog barked. Those Indonesian dogs may have been ignorant of Indonesian law, but they were positive about which assets their masters controlled.

I told the ministers that Indonesian dogs had the basic information they needed to set up a formal property system. By traveling their city streets and countryside and listening to the barking dogs, they could gradually work upward, through the vine of extralegal representations dispersed throughout their country, until they made contact with the ruling social contract. “Ah,” responded one of the ministers, “Jukum Adat (the people’s law)!”

Discovering “the people’s law” is how Western nations built their formal property systems.

I’d like to take a survey of U.S. population to see what percentage of people know that U.S. property law derives from local and private arrangements made by individuals. I bet it’s low. Most people believe law comes from judges and lawmakers, which is about like believing that language comes from English professors.

As W.E Heasley mentioned in the comments of this post, we shouldn’t confuse legislation with law. The best legislation usually derives from the people’s law. Ineffective legislation overwrites the people’s law.

What is Capital?

I like Hernando de Soto’s answer from his book, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (p. 41):

To unravel the mystery of capital, we have to go back to the seminal meaning of the word. In medieval Latin, “capital” appears to have denoted head of cattle or livestock, which have always been important sources of wealth beyond the basic meat they provide. Livestock are low-maintenance possessions; they are mobile and can be moved away from danger; they are also easy to count and measure. But most important, from livestock you can obtain additional wealth, or surplus value, by setting in motion other industries, including milk, hides, wool, meat, and fuel. Livestock also have the useful attribute to reproduce themselves. Thus the term “capital” begins to do two jobs simultaneously, capturing the physical dimension of assets (livestock) as well as their potential to generate surplus value. From the barnyard it, it was only a short step to the desks of the inventors of economics, who generally defined “capital” as that part of a country’s assets that initiates surplus production and increases productivity.

“Letter on Corpulence, Addressed to the Public”

William Banting wrote a 16-page diet book in 1863 with this name.  I love that name.

It appears he had it all figured out then.  His advice turned out to be the same advice that a) helped me lose weight and keep it off (going 11 years now) and b) recently helped me improve my cholesterol levels.

His advice:  Eat less sugars and starch, eat more proteins and fat.  Why?  Because too much sugar and starch throws off your hormones and tells your body to store fat.  Proteins and fat don’t.  In fact, too much sugar and starch will lead to diabetes.  Hello, diabetes epidemic coming after several decades of sugar and starch consumption!

I’m reading Gary Taubes longer than 16-page book, Good Calories, Bad Calories.  If you don’t have time to read the whole book, read the Prologue.  In it, Taubes gives great highlights on the evolution in the diet world since Banting’s book.

In the rest of his book, Taubes exhaustively reviews the “scientific” literature on diets to show that much of the conventional diet wisdom (e.g. government guidelines, the calorie balance equation, eating a low-fat diet) actually has no scientific basis.  Shocking.

But, for your own health, here’s the summary:  Follow Banting’s advice.

When I lost weight, I attributed my success to a lot things because I changed a lot of things.  I balanced my calories.  I ate more often.  I watched my portions.  I reduced mindless eating.  And, I increased my intake of fat and protein and decreased my intake of sugars and starches.

In his other book, Why We Get Fat, Taubes said that people with weight loss success like mine tend to confound all the reasons, but there’s really just one, the last one.

It’s worth experimenting.  Cut back on sugars, breads and starches in your diet, eat a little more fat and protein and watch your scale.

Your Mom was right: It pays to practice

I recommend reading Geoff Colvin’s book, Talent is Overrated: What Really Separates World Class Performers from Everybody Else.  I found Colvin’s storytelling interesting and the information well-presented.

Cover of "Talent Is Overrated: What Reall...

The longest book I've read on my iPhone, so far (Cover via Amazon)

It seems to be similar to Malcolm Glidwell’s Outliers, which I have yet to read.  Like Gladwell (I think), Colvin concludes that deliberate practice (and lots of it) is the key.  Which means, that what really separates world class performers and everybody else is their ability to find and persevere through deliberate practice.

Several of Colvin’s stories gelled with observations from my own experience, on page 44 (of my edition) he discusses studies done on expert race horse handicappers.

…IQ just didn’t seem to matter.  “Low-IQ experts always used more complex models than high-IQ nonexperts,” the researchers found.  Not only did handicapping expertise fail to correlate with IQ, it didn’t even correlate with performance on the arithmetic subtest of the IQ test.

The researchers’ conclusion: Their results suggest “that whatever it is that an IQ test measures, it is not the ability to engage in cognitively complex forms of multi-variate reasoning.”

That last phrase is not one that most of us use very often, but it’s actually a very good description of what most of us do every day in our working lives, and what the best performers do extremely well.  You just don’t have to be especially “smart,” as traditionally defined, to do it.

I’ve seen this over and over again.  “Smart” people (as determined by school grades and IQ tests) who struggle in the real world as they try to fit it into the supposedly “complex” (but surprisingly simple, once you get past the jargon) models they learned in school and they’re often outwitted by folks that have more contextual experience giving them a much better feel for the dynamics of the situation.

In other words, the “smart” person probably wouldn’t think to consider to factor in details of the horse’s latest bathroom break when handicapping the race, while the expert handicapper probably does that without even realizing it.

I do have one point of contention to offer Colvin.  Later in the book, he explains that folks are taking longer to make significant contributions to their fields.  For example, in 1900 a study of innovators found that people began making contributions to their field at around age 23.  By 1999 that age increased to 31.

Colvin attributes this to having more material for these folks to have to master.

I think there’s another factor, that is a key part of Colvin’s book, but he fails to relate here — the amount of deliberate practice these folks have had.

My guess is that in 1900, folks found their fields at a younger age and were able to spend more time in deliberate practice in those fields, because they didn’t have as many other subject requirements in their education distracting their attention.

My guess is that I could have done without about half or more of the liberal arts education that I was required to take to earn my engineering degree and I wouldn’t have missed a beat.

Had I spent more time while I was studying to become an engineer, doing actual engineering work (as an apprentice or intern), I may have discovered several years sooner that engineering didn’t hold my interest.  I could have spent those years getting an earlier start on my other interests instead.

The my-s**t-don’t-stink crisis

In his book, The Secret Knowledge, David Mamet gives a brief and apt explanation of the economic term moral hazard, which played a key role in causing the financial crisis.

This is from a footnote on page 187 (emphasis added):

Is it not evident that any organization believing itself to be “too big to fail,” will more likely, indeed, inevitably make disastrous decisions? Why should it not–it is Too Big to Fail.

We all know people who (and perhaps have experienced this of ourselves), at one time or another, began to believe that their own s**t did not stink.  And we all know how that story ended.  Not well.

Our last financial crises could be called the my-s**t-don’t-stink crisis.

Also, we should remember how those stories end whenever our “experts”, politicians and economists tell us that such-and-such an industry or company is too important and cannot be allowed to fail (though it usually already has, and few people recognize it yet).

“Your Teacher Said What!?” Review

I’ve been looking forward to reading Joe and Blake Kernan’s book, Your Teacher Said What?! Defending Our Kids from the Liberal Assault on Capitalism.

I highly recommend it. It exceeded my expectations.  I found it well-written, easy-to-read, entertaining, critical, well researched and fair.

In the book, Kernan describes how he handled presenting ideas of about liberty, free markets, business and the government to his daughter.  We can all benefit from it.

For those unfamiliar, Joe Kernan is the morning host of CNBC’s market and business program Squawk Box and an unabashed capitalist.  His daughter is (or was) ten-years-old and attends public schools.

Despite the title, the book doesn’t focus a great deal on what Blake’s teachers say.  Though, in the book he gives credit to her teachers for doing a fine job of teaching everything other than liberty, markets and business (an example of where he is fair).

Here’s another example of his fairness (p. 3).

When Barack Hussein Obama took the oath of office, I admit I understood the proud cheers of the hundreds of thousands of people lining the parade route in Washington that day.  I didn’t vote for the guy, but I’m not a complete dolt, and I could see how his election said something pretty positive about America.

The hangover didn’t take long coming.  My hangover isn’t the result of concerns about the president’s birth certificate. Or worries that he is some kind of Manchurian candidate in the pay of a foreign power.  I don’t think he’s Muslim, or racist, or anticolonialist, or un-American.

No, my problems with the president are on an entirely different plane: I hate what he’s doing to my children’s future, and I don’t have to think that Barack Obama is the devil to know that he has a very different idea than I do about what America should look like when Blake and Scott are adults.

It’s a belief thing.  Penelope (Kernan’s wife) and I believe in free markets–that the best economic decisions are made by the largest number of individuals acting in what they believe to be their own interests.  President Obama and most of his administration believe in an economy that depends on the cleverest people acting in what they believe to be the interests of everyone else.  We believe in voluntary associations.  They prefer compulsory ones, at least when it comes to health insurance or union organizing.

This sets the stage.  Kernan is not out to make unsubstantiated personal attacks.  Rather, he presents why he thinks his beliefs are right.

In one chapter, Kernan dives into anti-business portrayals and caricatured markets in movies like WALL-E and Avatar.   He concludes:

…I still don’t understand the reflexive hostility of the entertainment business to free markets and capitalism.  Maybe the best explanation is that the writers, directors, and actors who produce our filmed entertainment are allowed (maybe even encouraged) to retain a child’s view of the world.  Like ten-year-olds, they retain a belief in obvious heroes and villians, in perfection as a place where things don’t change (especially as the result of human action), and in happy endings.

A little later, Kernan defines Progressivism (p. 127):

The desire to regulate economic life might be the defining characteristic of Pregressive philosophy.  It combines a mistrust of the free market in allocating resources; an appeal to a vague and indefinable virtue (“fairness”); a desire to achieve perfection in economic outcomes; a deference to experts over the judgement of ordinary folks; and, best of all, a chance to tell other people what to do.  Oh, heck, let’s just say it: Regulation is progressivism.

It is also the perfect way to illustrate just how much Progessive thinking depends on treating adults like kids.  Because kids love regulation.


“Yes, Dad?”

“You know cigarettes are bad for you, right?”

Eyes roll upward.

“And you know that people aren’t allowed to smoke in restaurants or lots of other places, right?”

“They shouldn’t be allowed to smoke anywhere.”

“Why not?”

“Because it’s bad.”

These two previous passages spurred the idea that many people form their sense of how government, business, markets and the economy work when they are about 10-years-old.  And, they don’t reconcile these views with the real world often, even against compelling evidence.

This brings to mind folks I know who haven’t realized that markets have made available, even to folks with modest income, a standard of living unmatched on this planet, ever.

Or folks who haven’t yet realized that all politicians should be considered narcissists only interested in their own political gain.  I admit, this one took me some time.  I spent too many of my younger days defending “my” politicians for their disappointing behavior before I realized that was a waste.  Assuming all politicians are in it for themselves dispels with the vacuous “I really like that guy” vote and helps you focus on whether or not you agree with the politician’s positions.

If it’s true that many folks think of government using their 10-year-old logic, this may make Kernan’s book one of the most important of the year because it provides nice advice on how to deal with this.