Category: Books

“Rand’s Entrepreneur Is the Promethean Hero of Capitalism”

(p. B1) Few, if any, literary philosophers have had as much influence on American business and politics as Ayn Rand, especially now that Donald J. Trump occupies the White House.

President Trump named Rand his favorite writer and “The Fountainhead” his favorite novel. Secretary of State Rex W. Tillerson has cited “Atlas Shrugged” as a favorite work, and the C.I.A. director, Mike Pompeo, said the book “really had an impact on me.”

. . .

(p. B2) In business, Rand’s influence has been especially pronounced in Silicon Valley, where her overarching philosophy that “man exists for his own sake, that the pursuit of his own happiness is his highest moral purpose, that he must not sacrifice himself to others, nor sacrifice others to himself,” as she described it in a 1964 Playboy interview, has an obvious appeal for self-made entrepreneurs. Last year Vanity Fair anointed her the most influential figure in the technology industry, surpassing Steve Jobs.

. . .

“Rand’s entrepreneur is the Promethean hero of capitalism,” said Lawrence E. Cahoone, professor of philosophy at the College of the Holy Cross, whose lecture on Rand is part of his Great Courses series, “The Modern Political Tradition.” “But she never really explores how a dynamic entrepreneur actually runs a business.”

. . .

“Mention Ayn Rand to a group of academic philosophers and you’ll get laughed out of the room,” Mr. Cahoone said. “But I think there’s something to be said for Rand. She takes Nietzschean individualism to an extreme, but she’s undeniably inspirational.”

As the mysterious character John Galt proclaims near the end of “Atlas Shrugged”: “Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours.”

For the full commentary, see:

James B. Stewart. “COMMON SENSE; Tough Times For Disciples Of Ayn Rand.” The New York Times (Friday, July 14, 2017): B1-B2.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 13, 2017, and has the title “COMMON SENSE; As a Guru, Ayn Rand May Have Limits. Ask Travis Kalanick.”)

Ayn Rand’s magnum opus, quoted above, is:

Rand, Ayn. Atlas Shrugged. New York: Random House, 1957.

“Results Are Often Suspiciously Consistent with the Political Dispositions of the Modeler”

(p. 14) For scholars and popular writers alike, the Great Depression has long been a kind of economic Rorschach test. Free marketers look at the economic disaster and blame the Smoot-Hawley tariff, which inaugurated a global trade war; monetarists attack the Federal Reserve for its tight-money policies; Keynesians berate Herbert Hoover for his attempts to balance the budget as the crisis worsened.

. . .

Generally, . . . , Morris is remarkably evenhanded, giving both sides of scholarly debates in deep detail. This is particularly the case in his coverage of the New Deal, where he weighs the practical effects of the dizzying array of policies begun by Roosevelt, from his devaluation of the dollar to the creation of the Civilian Conservation Corps. And Morris explains in accessible prose how economists have used modeling to study the New Deal (he wryly notes that this “is still a work in progress — if only because results are often suspiciously consistent with the political dispositions of the modeler”).

Continue reading ““Results Are Often Suspiciously Consistent with the Political Dispositions of the Modeler””

Table 7.1 and Table 7.2 Correctly Formatted in Free PDF

Table 7.1 from p. 95 of Openness to Creative Destruction, corrected for OUP post-proof formatting errors.
Table 7.2 from p. 96 of Openness to Creative Destruction, corrected for OUP post-proof formatting errors.

After my last viewing of the page proofs for my Openness to Creative Destruction, formatting errors were introduced by Oxford University Press (OUP) into Table 7.1 and Table 7.2.

A PDF with corrected versions of the tables can be downloaded for free at:
https://www.artdiamond.com/DiamondPDFs/CorrectedPages_94_%20thru_96withHeading.pdf

Openness to Creative Destruction Released Today

Art Diamond next to sign saying "Congratulations!".
My wife Jeanette decorated the mantelpiece to celebrate the publication of Openness. Our daughter Jenny, and dachshund Fritz, joined the celebration.

Today, June 3, 2019, is the official release date of my book Openness to Creative Destruction: Sustaining Innovative Dynamism.

A couple of weeks ago I heard a thoughtful presentation by Pete Boettke that contrasted the role of economist as scientist and as savior. He plausibly claimed that one of my mentors, George Stigler, defended the economist as scientist.

But as is true of many of us, Stigler was not always consistent. He sometimes said that whether you are a fireman or an incendiary, you need to know how fire works. And I generalize that if you want to be effective at saving the world, you need to know how the world works. Science as a method of tolerant inquiry, and not as a body of unquestionable doctrine, helps you to know how the world works.

So my immodest hope for Openness is both that it advances the science of economics, and that it helps to save the world.

PS: Openness can be purchased from Oxford University Press for 30% off using the discount code ASFLYQ6.

“You Don’t Venture into the Wilderness Expecting to Find a Paved Road”

(p. 40) I, . . . , always considered the heart a pump, much the way a doctor explained it to Sandeep Jauhar during his cardiology fellowship. “In the end,” the doctor said, “cardiology is mostly a problem of plumbing.”

Jauhar quickly learned otherwise. His gripping new book, “Heart: A History,” had me nearly as enthralled with this pulsating body part as he seems to be. The tone — a physician excited about his specialty — takes a sharp turn from his first two memoirs. The first, “Intern,” was filled with uncertainty; the second, “Doctored,” with disillusionment.

. . .

We go into an operating room where a young girl is having open-heart surgery, tethered to a heart-lung machine. Then we learn that the concept for this machine began with one doctor’s brazen idea of connecting a patient to another person’s blood supply. He was inspired by the way a fetus feeds off its mother. Six of seven cases ended with a death.

Eventually, the heart-lung machine replaced the volunteers. The machine got off to a rough start too: 17 of the first 18 patients died. As one of the mid-20th-century researchers remarked, “You don’t venture into the wilderness expecting to find a paved road.”

Continue reading ““You Don’t Venture into the Wilderness Expecting to Find a Paved Road””

Are We “Made of Sugar Candy”?

(p. 11) Less a conventional history than an extended polemic, “Capitalism in America: A History,” by Greenspan and Adrian Wooldridge, a columnist and editor for The Economist, explores and ultimately celebrates the Austrian economist Joseph Schumpeter’s concept of “creative destruction,” which the authors describe as a “perennial gale” that “uproots businesses — and lives — but that, in the process, creates a more productive economy.”

. . .

. . . , Greenspan’s admiration for the rugged individualists who populate the novels of Ayn Rand (who merits a nod in this history) and the frontier spirit that animated America’s early development shows no sign of weakening as Greenspan has aged. He and Wooldridge lament that Americans are “losing the rugged pioneering spirit” that once defined them and mock the “trigger warnings” and “safe spaces” that now obsess academia.

The authors quote Winston Churchill: “We have not journeyed across the centuries, across the oceans, across the mountains, across the prairies, because we are made of sugar candy.” But now, they conclude, “sugar candy people are everywhere.”

Their prescription for American renewal — reining in entitlements, instituting fiscal responsibility and limited government, deregulating, focusing on education and opportunity, and above all fostering a fierceness in the face of creative destruction — was Republican orthodoxy not so long ago. Before the Great Recession it was embraced by most Democrats as well, and more recently by President Bill Clinton, the recipient of glowing praise in these pages.

No longer. “Capitalism in America,” in both its interpretation of economic history and its recipe for revival, is likely to offend the dominant Trump wing of the Republican Party and the resurgent left among Democrats. It’s not clear who, if anyone, will pick up the Greenspan torch.

For the full review, see:

James B. Stewart. “Creative Destruction.” The New York Times Book Review (Sunday, Nov. 4, 2018): 11.

(Note: ellipses added.)

(Note: the online version of the review has the date Nov. 2, 2018, and has the title “Alan Greenspan’s Ode to Creative Destruction.”)

The book under review, is:

Greenspan, Alan, and Adrian Wooldridge. Capitalism in America: A History. New York: Penguin Press, 2018.

Focus on Global Warming Distracts Bird Lovers from Protecting Habitat

(p. 15) . . . [in] a piece called “Save What You Love” as [Jonathan Franzen] tells the story, he was “already not in a good mood” when he read a news release from the Audubon Society explaining that climate change was “the greatest threat” to America’s birds. That statement deepened his tetchy ill humor, because he believed that it might distract bird lovers from what he considered the more immediate work of protecting habitat. “I felt bullied by its dominance,” he writes of global warming, and so he conceived of the essay, which turns into an extended whine about environmental groups for focusing so heavily on carbon emissions.

For the full review, see:

Bill McKibben. “Forest for the Trees.” The New York Times Book Review (Sunday, Dec. 9, 2018): 15.

(Note: ellipsis, and bracketed words, added.)

(Note: the online version of the review has the date Dec. 3, 2018, and has the title “Jonathan Franzen Despairs of a Planet Inhospitable to Birds.”)

The book under review, is:

Franzen, Jonathan. The End of the End of the Earth: Essays. New York: Farrar, Straus and Giroux, 2018.

Permissionless Surgical Innovation

(p. 15) When a patient’s heart gave out on the cardiac surgeon Denton Cooley’s operating table in 1969, he refused to let the man go gently into that good night. Instead, he dispatched an associate to find a sheep and pluck out its heart. Cooley sewed it into his patient’s chest. This was apparently the kind of thing you could do — without asking anyone’s permission — in the 1960s.

The patient died (of course) but Cooley pressed on. A year later, he tried another experimental procedure — an artificial heart developed and some would say stolen from his rival at Baylor University in Houston. He never asked the university’s permission because, well, that would have required going through a committee run by said rival. “We administered to Baylor University the biggest enema,” Cooley reportedly told a colleague after the surgery. “It will be remembered in years to come.”

And this, readers, is how the first artificial heart came to be implanted in a patient. (The man survived three days with the device, before receiving a transplant from a donor and dying the following day.) Such are the brazen feats that Mimi Swartz chronicles in her book “Ticker,” a brief history of the artificial heart. Swartz is an executive editor of Texas Monthly, and she is based in Houston, home to four medical schools and much of the last century’s pioneering heart research. These are physicians who have a lot more in common, she writes, “with the people who crossed Everest’s Khumbu Icefall or took the first steps on the moon.”

For the full review, see:

Sarah Zhang. “The Tin Man’s Dilemma.” The New York Times Book Review (Sunday, Sept. 22, 2018): 15.

(Note: the online version of the review has the date Sept. 17, 2018, and has the title “The Quest to Create and Perfect an Artificial Heart.”)

The book under review, is:

Swartz, Mimi. Ticker: The Quest to Create an Artificial Heart. New York: Crown, 2018.

“Confidence Stops You from Learning”

(p. A15) Mr. Karlgaard, a former publisher of Forbes magazine, has plenty of vivid anecdotes to make his case for late bloomers.

. . .

Bill Walsh, the great coach of the San Francisco 49ers, got his first NFL head coaching job when he was 46 and won his first Super Bowl at 50. He was famously twitchy, self-deprecating and eager to learn, and had this to say about confidence: “In my whole career I’ve been passing men with greater bravado and confidence. Confidence gets you off to a fast start. Confidence gets you that first job and maybe the next two promotions. But confidence stops you from learning. Confidence becomes a caricature after a while. I can’t tell you how many confident blowhards I’ve seen in my coaching career who never got better after the age of forty.”

Late bloomers, Mr. Karlgaard argues, are not just people of great talent who develop later in their lives. They also possess qualities that can only be acquired through time and experience. They tend to be more curious, compassionate, resilient and wise than younger people of equal talent. This may be true, Mr. Karlgaard notes, of older people generally, who are being flushed out of the workforce much too early.

For the full review, see:

Philip Delves Broughton. “THE WEEKEND INTERVIEW; Standing Against Psychiatry’s Crazes.” The Wall Street Journal (Tuesday, April 30, 2019): A15.

(Note: ellipsis added.)

(Note: the online version of the review has the date April 29, 2019, and has the title “BOOKSHELF; ‘Late Bloomers’ Review: Please Don’t Rush Me.”)

The book under review, is:

Karlgaard, Rich. Late Bloomers: The Power of Patience in a World Obsessed with Early Achievement. New York: Currency, 2019.

IPO of Vanguard Achieved Only 5% of Goal

(p. A15) The First Index Investment Trust, which tracks the returns of the S&P 500 and is now known as the Vanguard 500 Index Fund, was founded on December 31, 1975. It was the first “product,” as it were, of a new mutual fund manager, The Vanguard Group, the company I had founded only one year earlier.
The fund’s August 1976 initial public offering may have been the worst underwriting in Wall Street history. Despite the leadership of the Street’s four largest retail brokers, the IPO fell far short of its original $250 million target. The initial assets of 500 Index Fund totaled but $11.3 million–falling a mere 95% short of its goal.
The fund’s struggle for the attention (and dollars) of investors was epic. Known as “Bogle’s folly,” the fund’s novel strategy of simply tracking a broad market index was almost totally rejected by Wall Street. The head of Fidelity, then by far the fund industry’s largest firm, put the kiss of death on his tiny rival: “I can’t believe that the great mass of investors are [sic] going to be satisfied with just receiving average returns. The name of the game is to be the best.”
(p. B4) Almost a decade passed before a second S&P 500 index fund was formed, by Wells Fargo in 1984. During that period, Vanguard’s index fund attracted cash inflow averaging only $16 million per year.
Now let’s advance the clock to 2018. What a difference 42 years makes! Equity index fund assets now total some $4.6 trillion, while total index fund assets have surpassed $6 trillion. Of this total, about 70% is invested in broad market index funds modeled on the original Vanguard fund.

For the full commentary, see:
John C. Bogle. “The Father of the Index Fund Sees a Reckoning Ahead.” The Wall Street Journal (Saturday, Dec. 1, 2018): B1 & B4.
(Note: the online version of the review has the date Nov. 29, 2018, and has the title “Bogle Sounds a Warning on Index Funds.”)

Bogle’s commentary is based on his book:
Bogle, John C. Stay the Course: The Story of Vanguard and the Index Revolution. Hoboken, NJ: John Wiley & Sons, Inc., 2018.

Future Population Lower Than U.N. Estimates, Perhaps by Billions

(p. A15) Is a dangerous population explosion imminent? For decades we’ve been told so by scientific elites, starting with the Club of Rome reports in the 1970s. But in their compelling book “Empty Planet: The Shock of Global Population Decline,” Canadian social scientist Darrell Bricker and journalist John Ibbitson lay out the opposite case: “The great defining event of the twenty-first century,” they say, “will occur in three decades, give or take, when the global population starts to decline. Once that decline begins, it will never end.”

. . .

So why exactly is everyone still worried about the opposite problem? The authors pin the blame on faulty assumptions by the population establishment, as represented by the U.N. Population Division. They don’t use the United States as an example, but I will: The U.N.’s most recent population forecasts suggest that the average U.S. total fertility rate from 2015 to 2020 should be 1.9 children per woman. In reality, CDC data shows U.S. fertility has averaged about 1.8 children per woman from 2015 to 2018. In 2019, early indications are that fertility will probably be nearer 1.7 children per woman.

. . .

As Messrs. Bricker and Ibbitson point out, U.N. forecasts are substantially out-of-step with existing data from many countries, including China, India and Brazil. As a result of these mistakes, the most widely used population benchmarks in the world are probably wrong. The future will have far fewer people than the U.N. suggests; perhaps billions fewer.

For the full review, see:

Lyman Stone. “BOOKSHELF; A Drop In Numbers.” The Wall Street Journal (Thursday, February 7, 2019): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date February 6, 2019, and has the title “BOOKSHELF; ‘Empty Planet’ Review: A Drop in Numbers; Governments stoke fears about overpopulation, but the reality is that fertility rates are falling faster than most experts can readily explain.”)

The book under review, is:

Bricker, Darrell, and John Ibbitson. Empty Planet: The Shock of Global Population Decline. New York: Crown, 2019.