Category: Books

Stigler’s Account of Friedman’s “Exhilarating” Conversion of 20 Chicago Economists to Coase’s Theorem

(p. C8) Although he never reached the renown of his lifelong friend Milton Friedman, George Stigler was a founding member of the Chicago school of economics. His charming and readable memoir—really a linked series of vignettes—recounts his time at Chicago, from graduate school to professor.

. . .

Riveting accounts of notable moments in the history of economic thought include the “Coase conversion evening”—a long argument that ended with Friedman convincing 20 economists to embrace a founding theorem of the law and economics movement. “What an exhilarating event,” Stigler recalls. “I lamented afterward that we had not had the clairvoyance to tape it.”

For the full review, see:

Jennifer Burns. “Five Best on Biographies of Economists.” The Wall Street Journal (Saturday, November 4, 2023): C8.

(Note: ellipsis added.)

(Note: the online version of the review has the date November 3, 2023, and has the title “Five Best: Lives of Economists.”)

The book under review is:

Stigler, George J. Memoirs of an Unregulated Economist. New York: Basic Books, Inc., 1988.

FTX Fraudster Sam Bankman-Fried Gave “More Than $5 Million” to Biden’s Winning 2020 Presidential Campaign

Bankman-Fried was convicted of fraud on November 2, 2023.

(p. B4) On the same day that Sam Bankman-Fried’s trial on federal fraud charges begins, the best-selling author Michael Lewis is set to publish a widely anticipated book on Tuesday [Oct. 3, 2023] about Mr. Bankman-Fried’s failed cryptocurrency exchange, FTX.

Mr. Lewis, the author of “The Blind Side,” “The Big Short” and “Moneyball,” spent months interviewing Mr. Bankman-Fried and other top FTX executives, and had access to the company’s headquarters in the Bahamas for the book, “Going Infinite.”

The book features previously unreported details about Mr. Bankman-Fried’s empire, from its founding in the Bay Area to its epic collapse in the Bahamas last year. Here are some takeaways.

. . .

Mr. Bankman-Fried started his first company, the hedge fund Alameda Research, alongside Tara Mac Aulay, an Australian mathematician who moved in the same philanthropic circles.  . . .

According to the book, Ms. Mac Aulay grew to consider Mr. Bankman-Fried “dishonest and manipulative,” and other senior figures at Alameda accused him of mismanagement.

. . .

When FTX was thriving, Mr. Bankman-Fried became a prolific political donor, contributing more than $5 million to Joseph R. Biden Jr.’s 2020 presidential election effort.

For the full story, see:

David Yaffe-Bellany. “Takeaways From a New Book on Sam Bankman-Fried.” The New York Times (Tuesday, October 3, 2023): B4.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date October 2, 2023, and has the same title as the print version. Where the online version has more detailed wording, the passages quoted above follow the online version.)

The book reporting new details on the FTX debacle is:

Lewis, Michael. Going Infinite: The Rise and Fall of a New Tycoon. New York: W. W. Norton & Company, Inc., 2023.

P&G CEO Defended Using Harsh Criticism of Workers

Deirdre McCloskey frequently says we should use more “sweet talk.” Edwin Artzt defended using harsh talk. Is there room for both?

(p. A8) Edwin Artzt, who expanded Procter & Gamble Co.’s global reach in the 1980s and then, as chief executive officer in the early 1990s, rattled the company’s managers with cost-cutting drives and harsh criticism of their work, died at the age of 92, the Cincinnati-based company said.

As CEO from 1990 until 1995, Mr. Artzt was known for berating managers and using words including “stupid” and “imbecilic” to describe some of their proposals, as recounted in “Soap Opera: The Inside Story of Procter & Gamble,” a 1993 book by Alecia Swasy, a former Wall Street Journal reporter. He didn’t sugarcoat his desire to eliminate weak brands and underperforming employees.

Mr. Artzt, who died on April 6, was sometimes called “The Prince of Darkness.” Some colleagues said the nickname reflected a hot temper. He said it came from his habit of working late.

“I certainly don’t want to have a short trigger with people and not give them a chance,” he told The Wall Street Journal in 1991. “But sure I’ve cleared out deadwood. Probably some of it was still breathing when it was cleared out.”

Two years later, he said: “Terrifying people is not my intention…People come to me years later and say, ‘Remember that meeting 10 years ago? You laid it on me, but I sure remember that lesson.’”

For the full obituary, see:

James R. Hagerty. “P&G CEO’s Harsh Talk Rattled a Bureaucracy.” The Wall Street Journal (Saturday, April 15, 2023): A10.

(Note: the online version of the obituary was updated April 12, 2023, and has the title “Edwin L. Artzt, P&G CEO Known for His Tough Talk, Dies at 92.”)

The book on Proctor & Gamble mentioned above is:

Swasy, Alecia. Soap Opera: The Inside Story of Proctor & Gamble. New York: Crown Publishing, 1993.

Early Wealthy Cell Phone Adopters Funded Innovations That “Made Cellphones Affordable to the Masses”

In Openness to Creative Destruction, I argue that early new technologies are often primitive, expensive, and buggy. They are initially bought by the rich who allow the technology to survive while it is being made better and cheaper. See below that cellphones are another example.

(p. A14) On April 3, 1973, four months after the last manned moon mission, a 44-year-old Motorola engineer took a small step onto Sixth Avenue outside the New York Hilton. There Martin Cooper did something commonplace now but at the time revolutionary: He made a call on a cellular telephone.

“Joel,” Mr. Cooper said to the man who picked up, “I’m calling you from a real cellular telephone—a handheld unit.” Joel Engel worked at Bell Labs, the research division of AT&T. Mr. Cooper was calling to gloat about surpassing the phone monopoly.

. . .

“The function of a cellphone—I can’t express it any better—it is to set people free,” Mr. Cooper, 94, says.  . . .  “A cellphone gives a person the freedom to be connected to the rest of the world, wherever they are and whenever they want to.”

. . .

“We expected the first phones to go to wealthy people,” Mr. Cooper says. “To a large extent that was true. But it turns out that one of the biggest users were real-estate people.” They needed to take calls from clients and go out to show properties. “The cellphone allowed them to do both at the same time. They could be showing a home and still answer the call. So to them the phone, even at that huge price, doubled their effectiveness.”

These early adopters, for whom the technology was worth the cost, helped fund further innovation, which ultimately made cellphones affordable to the masses. Advancements in data-transmission, display and input technology made possible the inexpensive, versatile smartphones we take for granted today.

They also brought ill effects, especially for young people, such as compulsive cellphone use and social media that promote both groupthink and bitter division. “Those are all big problems,” Mr. Cooper says.

. . .

But he accentuates the positive. “We are just starting to figure out what the value of the cellphone is,” he says. “Humanity will solve these other problems if the advantages are big enough. And the advantages—the services you get out of the cellphone, the value to you to make you more efficient—are so great that there’s no question in my mind that humanity is going to solve these problems.”

He is confident that the benefits already outweigh the costs. “Today, people are healthier. There are fewer people in poverty. They live longer than ever before. Something has made that happen, and I think the cellphone is one of the contributors.” By improving efficiency, “it has taken away a lot of the time issues, given people more time to do other things.”

For the full interview, see:

Faith Bottum. “THE WEEKEND INTERVIEW; From the ‘Shoe Phone’ to the Smartphone.” The Wall Street Journal (Saturday, April 15, 2022): A13.

(Note: the online version of the interview has the date April 14, 2023, and has the title “THE WEEKEND INTERVIEW; Opinion: From the ‘Shoe Phone’ to the Smartphone.”)

My book that I mention above is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

“The Sense of Freedom That Flight Creates”

(p. B12) Frank Frederick Borman was born on March 14, 1928, in Gary, Ind.  . . .  When he was 5, Frank visited Wright Field in Dayton, Ohio, and a lifelong passion for aviation was kindled.

“Dad took me for a five-dollar ride with a barnstorming pilot in an old biplane,” he recalled in “Countdown” (1988), a memoir written with Robert J. Serling. “I sat next to Dad in the front seat, with the pilot in the cockpit behind us, and I was captivated by the feel of the wind and the sense of freedom that flight creates so magically.”

. . .

What awed him most, he said, was his view of Earth from Apollo 8. As he put it, “The contrast between our memories of the Earth and the color on the Earth and the totally bleak and dead moon was striking.”

It was an image, he said, that he would “recall till the day I die.”

For the full obituary, see:

Richard Goldstein. “Frank Borman, 95, Astronaut Who Led First Orbit of the Moon, Dies.” The New York Times (Saturday, November 11, 2023): B12.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the obituary has the date Nov. 9, 2023, and has the title “Frank Borman, Astronaut Who Led First Orbit of the Moon, Dies at 95.”)

The memoir Borman co-authored that is mentioned above is:

Borman, Frank, and Robert J. Serling. Countdown: An Autobiography. New York: Silver Arrow Books, 1988.

“You Will Do Your Best Creative Work by Yourself”

(p. A12) The value of gathering to swap loosely formed thoughts is highly suspect, despite being a major reason many companies want workers back in offices.

“You do not get your best ideas out of these freewheeling brainstorming sessions,” says Sheena Iyengar, a professor at Columbia Business School. “You will do your best creative work by yourself.”

Iyengar has compiled academic research on idea generation, including a decade of her own interviews with more than a thousand people, into a book called “Think Bigger.” It concludes that group brainstorming is usually a waste of time.

Pitfalls include blabbermouths with mediocre suggestions and introverts with brilliant ones that they keep to themselves.

. . .

Plenty of people have always bemoaned brainstorming. Longtime Wall Street Journal readers may recall a 2006 “Cubicle Culture” column that skewered the popular practice, and Harvard Business Review published a research-based case against the usefulness of brainstorming in 2015.

. . .

Sometimes leaders bring employees together to create the illusion of wide-open input, says Erika Hall, co-founder of Mule Design Studio, a management consulting firm in San Francisco. In-person brainstorming is part of the back-to-office rationale for many of her clients, and she generally advises the ones that truly want to improve collaboration to first carve out some alone time for their workers.

When Hall needs inspiration, she goes for a run.

“It’s freaky,” she says. “I will go run on a problem, and things will happen in my head that do not happen under any other circumstance.”

Others might find “Aha!” moments in the shower or while listening to music. Leaving breakthroughs to private serendipity can feel, to bosses, like losing control, she acknowledges, but it might be more effective than trying to schedule magic in a conference room.

For the full commentary, see:

Callum Borchers. “ON THE CLOCK; Switch Off Brainstorming If You Want Brighter Ideas.” The Wall Street Journal (Thursday, May 18, 2023): A12.

(Note: ellipses added.)

(Note: the online version of the commentary was updated May 18, 2023, and has the title “ON THE CLOCK; Office Brainstorms Are a Waste of Time.”)

The book by Iyengar mentioned above is:

Iyengar, Sheena. Think Bigger: How to Innovate. New York: Columbia Business School Publishing, 2023.

Milton Friedman Made the Case for Freedom to 15 Million Viewers

New York Times reviewer Szalai says that watching Milton Friedman’s “Free to Choose” documentary today is a surreal experience. To the contrary, I say that watching Milton Friedman’s documentary today is an exhilarating experience and watching the the evening news today is a surreal experience. (As a graduate student at the University of Chicago, I was in the audience for a couple of the episodes of Milton Friedman’s “Free to Choose” documentary.)

(p. C1) The documentary series “Free to Choose,” which aired on public television in 1980 and was hosted by the libertarian economist Milton Friedman, makes for surreal watching nowadays. Even if Ronald Reagan would go on to win the presidential election later that year, it was still a time when capitalism’s most enthusiastic supporters evidently felt the need to win the public over to a vision of free markets and minimal government.  . . .

They had an enormous audience: The 15 million viewers who watched the first episode saw an avuncular Friedman (diminutive and smiling), leaning casually against a chair in a Chinatown sweatshop (noisy and crowded), surrounded by women pushing fabric through clattering sewing machines. “They are like my mother,” Friedman said, gesturing at the Asian women in the room. She had worked in a factory too, after immigrating as a 14-year-old from Austria-Hungary in the late 19th century. Friedman explained that these low-wage garment workers weren’t being exploited; they were gaining a foothold in the American land of plenty. The camera then cut to a tray of juicy steaks.

For the full review, see:

Jennifer Szalai. “Sounding an Alarm Over America’s Values.” The New York Times (Saturday, February 18, 2023): C1 & C4.

(Note: ellipsis added.)

(Note: the online version of the review was updated Feb. 17, 2023, and has the title “Is the Marriage Between Democracy and Capitalism on the Rocks?”)

The book based on Milton Friedman’s documentary is:

Friedman, Milton, and Rose D. Friedman. Free to Choose: A Personal Statement. New York: Harcourt Brace Jovanovich, Inc., 1980.

Lister Used Data, Results, and Amiability to Convince Physicians to Sterilize Hands, Scalpels, and Wounds

(p. C6) What was the most dangerous place in the vast territories of the British Empire in the 19th century? Was it the savage savannas of Zululand? Perhaps the frozen wastes of the Northwest Passage, or the treacherous high passes of the Hindu Kush?

To judge from “The Butchering Art,” a fine and long overdue biography of the great physician Joseph Lister by Lindsey Fitzharris, the answer might be a much more domestic corner of empire: the Victorian teaching hospital.

. . .

Infection rates plummeted when Lister used carbolic acid to wash hands and scalpels, to dress wounds, and to sterilize sutures. He even sprayed it into the air of the operating room. But other physicians were skeptical and bitterly resisted the notion that their sloppy and unhygienic practices were the cause of so many deaths.

. . .

Lister won over his opponents, not with bile and rhetoric but with a relentless focus on data and results, coupled with his innate amiability. He paid particular attention to audiences of medical students, perhaps anticipating Max Planck’s observation that bitter disciples of old dogmas are never won over by new theories, they simply die off and are replaced by a new generation.

The modesty and compassion of Lister would have been remarkable in any man, let alone a surgeon. His patients and students adored him. Lister taught his residents that “every patient, even the most degraded, should be treated with the same care and regard as though he were the Prince of Wales himself.” After he drained a young girl’s knee abscess, the girl showed him her doll, which was missing a leg. As Ms. Fitzharris writes, “The girl fumbled around under her pillow and—much to Lister’s amusement—produced the severed limb.” Lister called for needle and thread and “stitched the limb back onto the doll and with quiet delight handed it back to the little girl.”

For the full review, see:

John J. Ross. “BOOKSHELF; The Butchering Art.” The Wall Street Journal (Saturday, Oct. 14, 2017): C6.

(Note: ellipses added.)

(Note: the online version of the review has the date Oct. 13, 2017, and has the title “BOOKSHELF; Review: ‘The Butchering Art’ Resurrects Joseph Lister.”)

The book under review is:

Fitzharris, Lindsey. The Butchering Art: Joseph Lister’s Quest to Transform the Grisly World of Victorian Medicine. New York: Farrar, Straus and Giroux, 2017.

The reviewer repeats the plausible but debunked view of Planck that old scientists do not change their views. The debunking occurs in:

Diamond, Arthur M., Jr. “Age and the Acceptance of Cliometrics.” Journal of Economic History 40, no. 4 (Dec. 1980): 838-41.

Hull, David L. , Peter D. Tessner, and Arthur M. Diamond, Jr. “Planck’s Principle: Do Younger Scientists Accept New Scientific Ideas with Greater Alacrity Than Older Scientists?” Science 202 (Nov. 17, 1978): 717-23.

Exponential Growth Is Not Inevitable and Has Seldom Occurred Outside of Computer Chips

(p. C5) Nothing has affected, and warped, modern thinking about the pace of technological invention more than the rapid exponential advances of solid-state electronics. The conviction that we have left the age of gradual growth behind began with our ability to crowd ever more components onto a silicon wafer, a process captured by Gordon Moore’s now-famous law that initially ordained a doubling every 18 months, later adjusted to about two years.

. . .

Bestselling tech prophets like Ray Kurzweil and Yuval Noah Harari argue that exponential growth will allow us to disrupt our way into a future devoid of disease and misery and abounding in material riches.

. . .

The problem is that the post-1970 ascent of electronic architecture and performance has no counterpart in other aspects of our lives. Exponential growth has not taken place in the fundamental economic activities on which modern civilization depends for its survival—agriculture, energy production, transportation and large engineering projects. Nor do we see rapid improvements in areas that directly affect health and quality of life, such as new drug discoveries and gains in longevity.

. . .

The conclusion that progress is not accelerating in the most fundamental human activities is supported by a paper published in 2020 by the National Bureau of Economic Research. The authors, four American economists led by Bryan Kelly of the Yale School of Management, studied innovation across American industries from 1840 to 2010, using textual analysis of patent documents to construct indexes of long-term change. They found that the wave of breakthrough patents in furniture, textiles, apparel, transportation, metal, wood, paper, printing and construction all peaked before 1900. Mining, coal, petroleum, electrical equipment, rubber and plastics had their innovative peaks before 1950. The only industrial sectors with post-1970 peaks have been agriculture (dominated by genetically modified organisms), medical equipment and, of course, computers and electronics.

For the full essay, see:

Vaclav Smil. “Tech Progress Is Slowing Down.” The Wall Street Journal (Saturday, Feb. 18, 2023): C5.

(Note: ellipses added.)

(Note: the online version of the essay has the date February 16, 2023, and has the same title as the print version.)

The essay quoted above is adapted from Smil’s book:

Smil, Vaclav. Invention and Innovation: A Brief History of Hype and Failure. Cambridge, MA: The MIT Press, 2023.

Some High Performers Find Ways to Avoid Accumulating Microstresses

(p. C5) Have you had days that exhaust you extraordinarily without any particular reason why?

. . .

There’s a common but little-understood reason for that exhaustion. We call it “microstress”—brief, frequent moments of everyday tension that accumulate and impede us even though we don’t register them.

. . .

One study published in the journal Biological Psychology in 2015 found that exposure to social stress within two hours of a meal leads your body to metabolize the food in a way that adds 104 calories on average. “If this happens daily, that’s 11 pounds gained per year,” noted Lisa Feldman Barrett, a psychology professor at Northeastern University and author of “Seven and a Half Lessons About the Brain.”

. . .

In our research, we observed that some of the high performers—a small subset that we came to call the “Ten Percenters”—were much better at coping with microstress than the rest of those we studied, and perhaps than the rest of us, too. What do they do differently?

. . .

. . ., they’re better at removing themselves from interactions that generate microstress in their lives, whether or not they realize the dynamic. Ten Percenters are more likely to shape these interactions by dealing with simmering disagreements head-on or by limiting such contacts.

. . .

Our Ten Percenters were also thoughtful about not creating the kinds of conditions that cause microstress for others. Think about what happens—to both of you—when you push your child too hard on their grades and it comes back in the form of a rebellious attitude. Or the stress you may create as a manager by unnecessarily shifting expectations. Stopping this cycle helps to prevent microstress from boomeranging back on us.

For the full essay, see:

Rob Cross and Karen Dillon. “Combating the ‘Microstress’ That Causes Burnout.” The Wall Street Journal (Saturday, April 22, 2023): C5.

(Note: ellipses added.)

(Note: the online version of the essay has the date April 21, 2023, and has the same title as the print version.)

The essay quoted above is adapted from Cross and Dillon’s book:

Cross, Rob, and Karen Dillon. The Microstress Effect: How Little Things Pile Up and Create Big Problems—and What to Do About It. Boston, MA: Harvard Business Review Press, 2023.

Public Sector Unions Make Government Unaccountable to the Will of the People

(p. A17) In 2008, six years after securing control over New York City’s public schools, Mayor Michael Bloomberg and schools chancellor Joel Klein put forward a program to tie teacher tenure to student performance. The goal was to reward the best-performing teachers with job security, encourage better student outcomes, and hold teachers accountable for demonstrated results. To most New York residents, it surely sounded like a good idea.

To New York’s teachers’ unions, however, the program was utterly unacceptable. Union leaders lobbied Albany, threatened state lawmakers (who could pass legislation binding the mayor) with the loss of political support, and walked away with a two-year statewide prohibition on the use of student test performance in tenure evaluations. In short, the union thwarted the mayor’s authority over the city’s schools and commandeered the state’s legislative power.

In this case and many others, a public-sector union served its own interests at the expense of the public’s. In “Not Accountable,” Philip Howard shows in vivid detail how such practices have made government at all levels unmanageable, inefficient and opposed to the common good. He argues that, in fact, public unions—that is, unions whose members work for the government—are forbidden by the Constitution. The argument, he notes, would have been familiar to President Franklin Roosevelt and George Meany, the longtime president of the AFL-CIO, both of whom championed private-sector labor but believed that public workers—teachers, fire fighters, policemen, civil-service employees—had no right to bargain collectively with the government.

. . .

Mr. Howard makes a persuasive case, but the chances of seeing it affect American political life are, at the moment, remote.

. . .

Still, the goal is admirable and worth pursuing. In place of public-sector collective bargaining, Mr. Howard calls for a merit-based system for hiring and evaluating government employees. Instead of stultifying work rules that thwart creativity, he envisions a public-sector structure in which employees can use their talents and judgment to improve the functioning of government. Fundamentally, Mr. Howard views the Constitution, and the law generally, as a mechanism for both action and accountability, one that entrusts powers to inevitably fallible human beings while subjecting them to the checks of others in authority and, ultimately, to the will of the people.

For the full review, see:

John Ketcham. “BOOKSHELF; Unelected Legislators.” The Wall Street Journal (Tuesday, March 14, 2023): A17.

(Note: ellipses added.)

(Note: the online version of the review was updated March 13, 2023, and has the title “BOOKSHELF; ‘Not Accountable’ Review: Unelected Legislators.”)

The book under review is:

Howard, Philip K. Not Accountable: Rethinking the Constitutionality of Public Employee Unions. Garden City, NY: Rodin Books, 2023.