Steve Reads

Category: Books

Steven A. Sass, The Promise of Private Pensions — October 6, 2013

Steven A. Sass, The Promise of Private Pensions

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I imagine that for most people, the word ‘pension’ calls to mind a large set of painfully uninteresting things. So let me explain why this is relevant and interesting and in fact something that you really, really cannot afford to ignore: this book elucidates why we are fucked.

Working backwards from where we are now: most of us don’t save nearly enough for retirement. It doesn’t help that wages for the median household have barely risen over the last 30 years or so.

The United States basically has three types of retirement systems:

* Social Security: replaces c. 40% of pre-retirement income for the poor, less for wealthier folks
* Defined benefit: you get a certain known amount throughout your retirement
* Defined contribution: you pay in a certain known amount, but you don’t necessarily know what you’ll get when you retire.

“Defined contribution” is basically your 401(k): you put in a fixed amount with every paycheck, but it could well be wiped out by a stock-market collapse. “Defined benefit” is practically synonymous with “pension”. Over time, pensions are going away and 401(k)s are insufficiently taking their place.

Steven Sass’s book is a thorough review of pensions from their inception in the late 1800s to the present day. Actually, it’s not quite the present day; it’s the Clinton era, when even as sober a scholar as Sass could find himself taken in by dot-com fantasies. Employees were now part of a dynamic economic world, says Sass, and they often wanted to be compensated with equity. Such was the dream, but it turned out to be illusory. I suspect that if Sass wrote this book today, 15 years or so later, his story would be quite a lot different.

In a much earlier era, a pension was run in a boring way: companies would contract out their pensions to boring insurance companies, which invested in boring securities like bonds which yielded low returns but featured low risk. Insurance companies are tightly regulated by the states they’re in; in return for following prudent investing standards, the government agrees to step in and make them whole if they melt down. Seems like a sensible place in which to put one’s retirement savings.

But capitalism, as I’ve come to realize, will eventually do as capitalism does. Soon enough, the companies that had been contracting out to insurance companies thought to themselves (imagine here large companies like AT&T or GM, at the height of U.S. economic power), “I’m just as safe and secure as an insurance company. Why should I put my pension in the hands of some dumb insurer, when I can run it myself, do a better job, and save the maintenance fee?” But employers didn’t follow the prudent investing standard that insurers followed: they wouldn’t, for instance, just set aside all their employees’ funds in a separate bank account, managed by someone at arm’s length from the company. Often their pensions were just accounting fictions, on a different piece of paper from the piece of paper holding their revenues and expenses. If they needed to, they’d raid the one piece of paper to supply the other piece of paper. That’s an altogether different beast than a pension run by a government-regulated insurance company.

Then there was the question of how, exactly, to fund the pension. For many years, pensions guaranteed you a certain fraction of your pre-retirement income, averaged over the last ten years of your employment. Since workers tend to earn the most at the end of their careers, this guaranteed generous payouts, and made it hard to predict in advance how much to set aside in the pension account. So another, more sustainable alternative was to guarantee a certain fixed amount of retirement income for every dollar paid in throughout the worker’s career.

Let’s back up even further: why would employers bother at all with a system like this? Turns out that pensions solved two large problems:

* They were a way of guaranteeing employee loyalty over a lifetime: if you knew, in particular, that you’d earn retirement income that grew with your *final* pre-retirement income, you’d stick around longer.
* They were a way of shuffling workers out the door once they’d grown old and lost productivity (i.e., they’d become “superannuated”).

In short, they were a way of managing employment throughout the capitalist life-cycle: workers train, build their skills, work for many years, spend a few years in retirement, and die. You really can see, encoded into pensions, capitalism as she is lived in the lives of her consumable raw materials.

But as I said, capitalism will do as capitalism does. As the 20th century wore on, companies came to find bonds too boring, and they found raiding the pension account too tempting. When Studebaker closed its plant in South Bend, Indiana in 1963, it turned out that its pension fund was so poorly funded that the company couldn’t pay employees what it had promised them. So Congress stepped in and created ERISA, the Employee Retirement Income Security Act, which placed certain requirements on pension funds so that a Studebaker-like collapse could never happen again.

As a close friend has so evocatively put it: capitalism picks its nose like this (whereupon the actor reaches his right arm behind his head to grab his left nostril). Or maybe it’s more accurate to say that American society does that, with capitalism as the machine by which we do the picking. Rather than simply guarantee Americans retirement security, through a massively beefed-up Social Security system, we go through this dance:

1. Allow the market to solve the problem on its own.
2. Realize that the market won’t solve the problem on its own, given the way incentives are naturally structured.
3. Put in place regulations to encourage the market to solve the problem on its own, by leaning on the incentives somewhat.
4. Eventually realize that, when there are mountains of money on the line, nothing but draconian regulation will lean hard enough in the right direction.
5. Go to 1.

You see this in pensions, and you see it in health care: rather than just *providing health care for Americans*, we provide tax incentives to encourage companies to provide health insurance for their employees. The outcome is, if not predictable, at least completely obvious in retrospect: we don’t cover our population very well, and we do it for a lot more money than any other nation.

So okay, we’ve chosen to provide our social welfare system through employers. That’s bad enough; what do we do about those who can’t work, for instance? But what I have also never understood is why companies like this system. Pension obligations have brought many companies to their knees; so have health-care expenses. Wouldn’t companies prefer to shift the burden onto the American public as a whole, and get those giant obligations off their books? It’s not as though General Motors is fundamentally skilled at running a pension system or choosing among health-care plans. Why not let someone else take care of that? In particular, why not make it Medicare-for-all and Social Security-for-All and be done with it?

That’s not the way it’s turned out, of course. Social Security remains in a purely manufactured fiscal danger zone, and ObamaCare takes the first tentative steps toward severing the link between insurance and employment.

Workers are left holding the bag, at least on pensions. We now have to decide how much to save in our 401(k)s, and how to allocate our savings; and smart people tell me that 401(k)s are usually terribly managed, with lots of fees going to the people who run them; so smart investors will shift money from their 401(k)s to an IRA whenever they change jobs. Are you keeping track of all the things you need to be keeping track of? If not, you should probably hire a financial advisor to navigate all of this for you. He’ll just skim some management fees off the top, of course …

I am frustrated. I wish I could end on a happier place than that, but alas.

Actually, I can find a happy place: Sass’s book is really very, very good. I found it gripping throughout, even while it’s covering its topic in great detail. It’s an excellent reference if you want to understand how pensions have been and could be structured, and how pensions have been prudently managed in the past, and why that prudently managed system eventually collapsed.

One can pull a particularly valuable point from Sass’s book: the next time people tell you that Social Security can’t survive the aging of the population or the slowing of American wage growth, point them to Sass’s book. These problems have been well understood for at least half a century. [book: The Promise of Private Pensions] is a necessary handbook in the retirement-security war.

Dave Eggers, Zeitoun — September 17, 2013
Wealth of Nations: all done — September 15, 2013

Wealth of Nations: all done

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It is well past the point where I need to describe what this book is about. So maybe it’s just worth noting that, even after I’ve been steeped for my whole life in a culture that reveres Smith as a god, there was still room to be surprised by how far ahead of its time [book: The Wealth of Nations] is. It still holds lessons on the power of institutions, on trade policy, and on why nations succeed or fail. Indeed, despite its title, I think we’ve become accustomed to thinking of Smith’s book as a mere celebration of capitalism. But no, it’s really about what it says it’s about: how nations become and remain wealthy. This includes long digressions about, say, the pernicious influence of religious education. But it also contains lots of nitty-gritty about the folly of trade restrictions and a million other things besides.

If your schooling was at all like mine, you’ve heard that [book: TWoN] was an attack on “mercantilism”, which has always been accompanied by the only use of the word “specie” that you’re likely to hear in your life. The doctrine is that a nation is wealthy or poor depending upon how many or few pieces of gold it has; this doctrine, in turn, leads to policies that aim to maximize exports (which would send, say, corn out of the country in exchange for gold coming in) and minimize imports. But this fetishization of gold and silver confuses the map with the terrain. The ultimate wealth of a society doesn’t come from how many coins it has on hand; wealth comes from the productive labor of its workers. Smith adopts the simplification — which maybe was appropriate in its time — that an hour of labor is a fungible commodity, which over all time is worth the amount of food necessary for the worker’s survival (and no more than his survival). So any measure which increases the cost of feeding the worker — like restricting corn imports to keep gold within a country’s borders — is going to increase the *real* cost of that labor, even if it’s decreasing the *nominal* cost.

That was the most surprising piece of [book: The Wealth of Nations] for me: that its most central argument is essentially about the real-versus-nominal distinction. Nowadays we’re inclined to think of real-v.-nominal as inflation-adjusted versus not, but Smith was using it in what feels like a more natural sense.

The book is well worth reading. But having worked through all 1200-odd pages of the unabridged original, I can now safely say: it is not important that you read the unabridged original. Much of it is given over to minute discussions of tax policy over the course of several centuries of British kings. Then there are many-page digressions which I thought were some sort of 20th-century British affectation when I read them in Wilson’s [book: The Victorians] or in Ernest Gellner, but apparently started hundreds of years before. A better modern edition, which would leave in only the parts that a modern reader would need to know about, would be a vast improvement over this one. I’m sure such editions exist. (And no, this is not similar to asking for an edition of Shakespeare that translates it into hip-hop idiom. Smith is interesting and readable, but his prose is not so special that it needs to be preserved.)

The edition I read also thinks it’s very important to note the differences between Smith’s first, second, and third editions in the footnotes. Turns out that’s not important; those differences amount to the use of the subjunctive “were” in place of the indicative “was”; I learned within the first couple pages to ignore the footnotes entirely.

So: worth reading, but maybe not worth reading just exactly *this*.

Adam Smith: way more interesting than I expected — August 11, 2013

Adam Smith: way more interesting than I expected

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Profile portrait of Adam Smith, sepia-toned. He's wearing a powdered wig, and we're viewing him from his right side.
It was almost three years ago that I invited people to read Adam Smith with me. A couple weeks after I wrote that post, I started a new job (where I still work today), life caught up with me, and nothing came of that reading.

…*until now*.

I’ve been quite happily chugging away through [book: Wealth of Nations]. It is much, much more interesting than I ever would have guessed, because basically all anyone ever talks about in this book are a few quotes: the division of labor (starts on page 8), specifically the pin factory; self-interest (page 18); when businessmen meet, they always conspire to raise prices (page 144); and the invisible hand (page 477). The book is around 1000 pages long. Surely he has other stuff to say.

And indeed he does! I’d like here to single out just a few things:

1. Macro dictates micro:
> Masters of all sorts, therefore, frequently make better bargains with their servants in dear than in cheap years, and find them more humble and dependent in the former than in the latter. They naturally, therefore, commend the former as more favourable to industry.

I was really surprised to see that Smith appreciates the importance of macro conditions (how the economy as a whole works) on micro interactions (e.g., negotiations between boss and employee). That’s an idea that I more commonly associate with Paul Samuelson.

I also read this as an attack on the self-serving words of businessmen, and against the belief that what businessmen want is always what’s best for the society at large.

2. The importance of institutions. I don’t have a quote ready to hand for this, but he says somewhere that it’s obvious why business hasn’t returned to some country: the lack of a functioning government makes it impossible to conduct your affairs. I had thought that this idea was more associated with early-20th-century economists and their early-21st-century descendants.

3. While enumerating the different kinds of capital, we get this on page 297:
> The Second of the three portions into which the general stock of the society divides itself, is the fixed capital; of which the characteristic is, that it affords a revenue or profit without circulating or changing masters. It consists chiefly of …

> Fourthly, of the acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expence, which is a capital fixed and realized, as it were, in his person. Those talents, as thy make a part of his fortune, so do they likewise of that of the society to which he belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, and which, though it costs a certain expence, repays that expence with a profit.

This is, in essence, what we today call “human capital”. I was shocked to read this idea in a 237-year-old book.

Now I’m eager to see whether other ideas which we consider more modern — like marginalism, say — got their start in Smith.

I’ve been obsessed for some years with the economist Sam Bowles, one of whose projects has been to return economics to its roots in larger philosophical questions. What’s important about economics is not downward-sloping demand curves, or whether people substitute chicken for beef when the latter becomes more expensive; what’s important is understanding how we build a functioning society out of members who have wildly differing conceptions of the good. More mechanical questions, like what the proper level of taxes ought to be if we want to encourage the development of renewable energy, are also important, but (as I understand Bowles) that’s not what animated our intellectual fathers.

In this light, I’m really quite charmed by how widely and deeply Smith casts his net. He’s not spending 1000 pages repeatedly informing us that the free market works best; he’s constructing a conceptual taxonomy of how economies work. It’s really a work of philosophy, studded at all points with empirical bits. If at points he’s repetitive (for instance, in the chapter distinguishing between real and nominal price levels), it’s because he’s clarifying these concepts for maybe the first time in history. (I’ll have to go read, say, the Physiocrats if I want to understand pre-Smith economics.)

It’s hard to write about this book without feeling like the worst kind of college freshman (of which I was one): “No, you guys don’t understand! The market, guys! The market!” I realize that nothing I say about Smith has gone unsaid before now. Please don’t read anything I say here as though it were novel; read it instead as one man’s revelation that Smith is just as good as everyone says he was. Reading him is going to inform my upcoming reading of, for instance, Amartya Sen.

__P.S.__: To understand Sen, I think I’m going to want to tackle the [book: Theory of Moral Sentiments] first. Approximately no one talks about this book, relative to the number who talk about [book: Wealth of Nations], but I gather that Sen thinks it’s vital.

Carl Van Doren, Benjamin Franklin — July 28, 2013

Carl Van Doren, Benjamin Franklin

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Oil painting of Franklin.

I didn’t know, before reading this book, why Benjamin Franklin is often honored as the greatest American. Having now read 800 grippingly constructed pages that are as close as possible to a first-person account of Franklin’s life, I now understand, and I agree. A philosopher, printer, diplomat, scientist, sage, and a revolutionary starting in his 70s, it’s hard to imagine a more complete person. Or to put it as Carl Van Doren does in the concluding paragraph of this book, in words that had tears streaming down my face,

> The death of a great man begins another history, of his continuing influence, his changing renown, the legend which takes the place of fact. This is not a biography of the posthumous Franklin. He has here told his story, which ends with his life. Nor should there now be need of a further comment on the record. Let the record stand, and explain itself. It has meant to make clear that Franklin was not one of those men who owe their greatness merely to the opportunities of their times. In any any age, in any place, Franklin would have been great. Mind and will, talent and art, strength and ease, wit and grace met in him as if nature had been lavish and happy when he was shaped. Nothing seems to have been left out except a passionate desire, as in most men of genius, to be all ruler, all soldier, all saint, all poet, all scholar, all some one gift or merit or success. Franklin’s powers were from first to last in a flexible equilibrium. Even his genius could not specialize him. He moved through his world in a humorous mastery of it. Kind as he was, there was perhaps a little contempt in his lack of exigency. He could not put so high a value as single-minded men put on the things they give their lives for. Possessions were not worth that much, nor achievements. Comfortable as Franklin’s possessions and numerous as his achievements were, they were less than he was. Whoever learns about his deeds remembers longest the man who did them,. And sometimes, with his marvellous range, in spite of his personal tang, he seems to have been more than any single man: a harmonious human multitude.

Truthfully, I couldn’t help but say out loud, “GodDAMN” when I reached those final four words. Franklin the genius met a biographer who deserves him.

Van Doren’s emphasis on the record, at the beginning of that paragraph, is not for nothing: his book feels, to the extent possible, like a stitched-together collection of Franklin’s letters and diaries. One might wish that the biography would contain more context from the 18th-century United States and Europe, but there is no such context — unless Franklin himself was aware of that context. Imagine a biography that ruthlessly forbids itself to step outside of the world of its subject; there you have Van Doren’s [book: Franklin].

There is so much to say about this book, and so much to quote — because Franklin was, if nothing else, endlessly quotable. I will limit myself to the following; it gets to one of my hobbyhorses, namely that when “libertarians” claim to be “classical liberals”, they are merely putting on daddy’s big-boy business suit in the hope that they’ll gain all the respect that daddy earned. But the suit doesn’t fit. Classical liberals believed in, say, progressive taxation (look in there for the phrase “support of the government”), and here we see Franklin essentially telling us that “You didn’t build that”:

> In November 1789 [Franklin] was firmly opposed to the plan to alter the constitution of Pennsylvania so that, as was proposed, the upper house in the legislature should represent the property of the state and the lower house the people, with equal authority between them. “Why should the upper house, chosen by a minority, have equal power with the lower chosen by a majority? Is it supposed that wisdom is the necessary concomitant of riches, and that one man worth a thousand pounds must have as much wisdom as twenty who have only 999? And why is property to be represented at all? … The accumulation … of property … and its security to individuals in every society must be an effect of the protection afforded to it by the joint strength of the society in the execution of its laws. Private property therefore is a creature of society and is subject to the calls of that society, whenever its necessities shall require it, even to its last farthing; its contributions therefore to the public exigencies are not to be considered as conferring a benefit to the public, entitling the contributors to the distinctions of honour and power, but as the return of an obligation previously received, or the payment of a just debt … The important ends of civil society, and the personal securities of life and liberty, these remain the same in every member of the society; and the poorest continue to have an equal claim to them with the most opulent, whatever difference time, chance, or industry may occasion in their circumstances. On these considerations I am sorry to see … a disposition among some of our people to commence an aristocracy by giving the rich a predominancy in government.”

(The ellipses are in Van Doren. Unsure if they’re in Franklin.)

That quote is a prelude to my lifelong project of taking the Founders back from the “libertarians” (which I’m constantly going to put in quotes, because I simply hate how they have claimed ownership over liberty). I include the quote, not because Franklin’s having said it makes it correct, but rather because “libertarians” themselves claim to be the sole legitimate heirs of the Framers’ philosophy, and claim that the Revolution sprang fully formed from John Locke’s brow. Any number of scholarly works refute this idea; I’d cite, just off the top of my head, Pettit’s [book: Republicanism], Bailyn’s [book: Ideological Origins of the American Revolution], Pocock’s [book: Machiavellian Moment], and Wood’s [book: Creation of the American Republic]. If the bulk of “libertarians'” justification for their radically anti-American minimal-government project comes from mythical origins in the Framers’ minds, then it’s more than fair to fire back at them from the same source.

(I should add a general note here: looking for a single story of what the Framers wanted is a fool’s errand. They fought over whether they should even have a Constitution, and the document that resulted was the result of compromise between passionately opposed views. The document that resulted contained visible fractures that the country only mended after a civil war. Read Elkins and McKitricks’ [book: Age of Federalism], and you’ll find the Framers arguing over what their “original intent” was *even while the Framers themselves were still alive*. This would be hilarious if we weren’t still suffering from Supreme Court justices who believe that they, 200+ years on, know what the original intent was when the Framers themselves could not agree on it.)

Van Doren’s [book: Franklin] should be required reading for anyone who wants to understand the origins of our republic, and anyone who wants to read biography from the hand of a scrupulous artist.

Taylor Larimore et al., The Bogleheads’ Guide to Retirement Planning — July 13, 2013

Taylor Larimore et al., The Bogleheads’ Guide to Retirement Planning

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This book is “okay”.

A year or so ago, I finally paid off my college loans, after 12 years of bearing that giant psychic weight. My employer is good to me, so now I’m at a point where I can think about saving. My first impression was — and still is — that everyone is out to screw me over. There are financial advisors, but their incentives are well-known; there are mutual funds, but all my reading tells me that they can’t be expected to beat the market consistently, and hence that your best bet is to just place your money in an index fund and be done with it. Or you come to the topic of buying a house, and you can’t help but feel that everyone *there* is also trying to pull a fast one on you: the realtors, the banks, the owners of the homes themselves.

So I asked around on Twitter, and Austin Frakt helpfully pointed me to The Bogleheads’ books. A Boglehead, if you’re unfamiliar, is a discipline of John Bogle, founder and former CEO of The Vanguard Group, a mutual-fund company now managing around $2 trillion in assets. If you didn’t know about the Vanguard Group before picking up this book, you soon will; much of the book reads like an advertisement for Vanguard.

I’m still a little confused, after reading it, what exact purpose it’s supposed to serve. Is it a beginner’s guide to retirement planning? If so, I think it was incorrectly structured. It contains a chapter on defined-benefit retirement plans (i.e., pensions), for instance, which only 29% of the population even has access to. That number drops to 17% if you exclude the public sector. Yet it’s one of the first chapters in the book. That is part of the testimony to this book’s odd structure.

So let’s imagine that the book were restructured into a more appropriate form. Honestly, I think the best form would be as a web app of some sort, à la TurboTax: ask you a series of questions, and let previous questions guide subsequent ones. “Do you have a defined-benefit retirement plan?” 7 out of 10 of your readers would answer “no”, and on you’d go. That would also allow most people to skip over the “are you in the middle of a divorce?” section, or the “are you in the middle of a financial crisis?” section, or the “here’s the order in which you should withdraw from your retirement savings when the time comes to withdraw from them” section. I submit that that last section isn’t really helpful to someone like me, who’s 35 years old and (hopefully) many years away from drawing down his retirement savings.

What I *do* want to know, and what I haven’t yet found the appropriate book for, is how to spread my money around across various buckets. Right now, I can choose to save money for a house, for retirement, for future children, for a rainy day, etc. How should I split things up? This retirement guide provides a bit of useful guidance in that direction, inasmuch as it taught me that profits on the sale of your primary home are non-taxable (at least for now). That’s fantastic news. It certainly suggests that your primary home should be considered a central part of your retirement strategy; maybe you should buy the largest home you can afford, and tax-shelter the appreciation in its value. Unfortunately, the Bogleheads’ book only approaches the home when retirement time comes; they suggest that you consider selling the home, downsizing, and pocketing the difference. That all sounds correct, but what do I do *now*? Suppose I have $1,000 lying around; do I put it in my 401(k), or put it in a house? And how about buying a triple-decker and using it for rental income; is that a thing I should do?

That’s one problem I’ve noticed with a good many books of this sort: they focus on one problem, like buying a home or saving for college or planning for retirement, but don’t necessarily treat those problems as parts of an integrated whole.

To the extent that it *does* treat them as part of an integrated whole, the Bogleheads’ book seems to have one bit of advice: all the various things you need to think about — which life insurance to buy, which mutual funds to invest in, how to write a pre-nup — require professional help. You and your partner should write your pre-nup with two lawyers; find an insurance broker you can trust; choose a financial planner who doesn’t live off commissions. (They illustrate this with a nice quote: where are the *customers’* yachts?)

Which just brings us back to where we started: the problem is finding people whom you can trust. Find trustworthy insurance brokers, trustworthy realtors, trustworthy lawyers, etc. How do you decide whether they’re trustworthy? Well, ask your friends, I suppose. But how do you know whether, for instance, your friends have been suckered into buying a life-insurance policy that will not actually help out their beneficiaries when your friends die? To paraphrase that famous story about the scientist explaining the origins of the universe, it’s trust all the way down.

What I conclude from reading this book, and from life more generally, is that I am too stupid to make above-market returns. I’m willing to go further and suggest that the vast bulk of Americans are also too stupid to make above-market returns. And if we *do* make above-market returns, they’re frittered away by fees from investment companies, who are the ones making all the money. So one conclusion is: invest stupidly. Put my 401(k) in a low-fee, passively managed mutual fund that invests in a broad market index.

This adds fuel, by the way, to the book I want to write. Americans are told that we can’t afford to provide the good life for our people, and specifically for our retirees; the best we can hope for is that Social Security will be cut less than Republicans would like. In fact we can afford the good life; it’s just that the story over the last 40 years or so has been that we 1) remove people’s safety net, 2) tell them to take care of themselves, and 3) turn the safety net over to private companies, thereby creating a rentier class that siphons the public’s money into the pockets of the already-wealthy. We can certainly afford the good life; it will just require that the rentiers be euthanized.

Paul J. Nahin, Dr. Euler’s Fabulous Formula: Cures Many Mathematical Ills — April 27, 2013

Paul J. Nahin, Dr. Euler’s Fabulous Formula: Cures Many Mathematical Ills

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On the basis of its title and cover art, you might believe that [book: Dr. Euler’s Fabulous Formula] is a work of popular mathematics on the level of, say, [book: How To Lie With Statistics] or [book: Innumeracy]. Don’t get me wrong: both of those books are spectacular — must-reads, in fact. But you don’t read them in the expectation that they’ll contain interesting mathematical content. If you have a background in mathematics or statistics, you in fact don’t read them; you assume that you already know everything that’s in them. ([book: Naked Statistics] is like that for me, though the author’s recent appearance on Planet Money makes me think again about reading it.)

[book: Dr. Euler’s Fabulous Formula] is not like that. It is accessible to anyone with a basic college calculus education, and its rewards are astonishing. Starting from the premise that the Euler formula “e^(i theta) = i sin theta + cos theta” is amazing — which is a correct premise — Nahin is off and running. He runs through Fourier series, Fourier transforms, proof that pi is irrational, how to design radio circuitry, whether a tailwind helps or harms a runner on a circular track, and a hundred other things besides.

But not only is the content remarkable; Nahin pulls off the trick — which is incredibly rare among mathematical writers — of being completely, 100%, crystal clear in his proofs. His book is filled with full-frontal integrals, but every step is spelled out so clearly, and so conversationally, that I never missed a single step in the argument. I love mathematics, but I’ve long wished that I were better at it. Nahin makes me wonder if the mathematicians are the problem, rather than me. (Though it doesn’t matter what the answer to that question is: if I want to learn more math, I need to learn to read mathematics as she is written [by people other than Nahin]. Sad but true.)

So Nahin’s book is both filled to the brim with extremely interesting mathematics, and written clearly enough that any college sophomore could understand it. It’s a trick that I’m not sure I’ve ever seen before. On this basis, I’m strongly inclined to read Nahin’s other work, starting with [book: An Imaginary Tale: The Story of the Square Root of Minus One]; apparently Nahin’s Euler book is best viewed as the second half of [book: An Imaginary Tale].

Many thanks to Chris Young, of the long-defunct Explananda blog, for the pointer to this fabulous book.

Some thoughts on Adam Smith — April 19, 2013

Some thoughts on Adam Smith

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My memory of [book: The Major Transitions in Evolution] is a little hazy, but I believe the thesis is that there have been several important jumps in the history of life on earth, wherein life took a jump from a simpler form to a complex form in such a way that a movement back to the simpler form was impossible. (Synopsis on the wiki.) I seem to recall, for instance, a story going like this: a single-celled organism one day became parasitic on another, until they fused into a multicellular organism, and from that day forward the two organisms could only function in the presence of the other. Each of these transitions, as I recall the story going, involved a new mode of information transmission, which made the transition stick. (This synopsis is likely wrong. My knowledge of biology is even weaker than my knowledge of, well, everything else. “Symbiosis” is the keyword here; it’s associated with the late Lynn Margulis.)

I wonder whether complex market economies are a new transition, in the sense that we have simply ceased being able to function without a division of labor. None of us in Western capitalist democracies could even consider living as economic hermits, tending our solitary farms or whatnot, because all the components necessary to *even start* that farm presuppose so much from the society around us: a government to maintain the roads that bring our products to market; a state with a monopoly on violence so that we don’t need to pay off the Mafia every time we want to *get on* those roads; industrial corporations to manufacture the steel tools that we use to plow the land; miners to dig up the iron that the corporations convert into steel; other corporations to build the pickaxes that even primitive miners would use to extract the iron ore from the ground; and so forth.

All of which is just to say: Boston is shut down right now, and I’m out of food, and the restaurants are closed, and I’d really like to eat dinner. Thanks.

Richard Feynman, The Character of Physical Law — March 3, 2013

Richard Feynman, The Character of Physical Law

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Lest I develop a reputation as a Negative Nancy, I should note that I also recently read Feynman’s [book: The Character of Physical Law], which has been sitting on my shelf for certainly more than a decade. Just a delightful book; I had forgotten how remarkable a teacher Feynman is. The whole book has the tone of Feynman’s little bit on uncertainty:

which is to say a certain extremely rehearsed casualness. The book’s casualness is in the teaching of things that are actually extremely complicated: symmetry laws (i.e., laws stating that certain quantities are unchanged when certain actions are performed), conservation laws (that the total amount of some quantity in the universe is constant), the relationship of mathematics to physics, etc. Just a delightful little gem, which ought to be read just before or just after Wilczek’s [book: Longing for the Harmonies].

Two books to dis-recommend — February 23, 2013

Two books to dis-recommend

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* Siobhan Roberts, [book: King of Infinite Space: Donald Coxeter, the Man Who Saved Geometry]. The problem with this genre — biographers of scientists, or maybe more broadly “science literature for everyone” — is that it needs to please two masters at once: those who know the subject reasonably well and want to know about the men and women behind it, and the general public that is concerned with quirky people first and the subject matter second. This is a very, very fine line to walk, and the number of books I’ve read that do manage to walk it can be counted on one hand. Or maybe zero hands.

Roberts, sadly, is not the person we want reporting on Donald Coxeter. She wants to convince us that he singlehandedly saved geometry, and she wants us to know a bit about the man. Coxeter’s whole life was geometry, though, so Roberts had better know the subject decently well. And if she knows it, she’d better present it to a nontechnical or semi-technical audience fairly well. It’s not at all clear to me that she knew the subject well. She tries her best to make Coxeter sound interesting on his own, but he sounds either extremely boring or just not a very nice person outside of mathematics; in particular, he seems to have lived a fairly loveless marriage, and to have been not very good to his kids.

So we end up not really liking the man, finding him desperately boring, and not understanding much of what makes him a great mathematician. Roberts protests too much about his greatness, telling us over and over again how important he was without really being able to prove it. It’s too bad, because he probably was a first-rate mathematician. I picked up Coxeter’s famous [book: Introduction to Geometry] while I was reading Roberts. Hopefully I’ll like Coxeter’s book more than I liked Roberts’s book about him.

* Joshua Ferris, [book: Then We Came To The End]. I’m really disappointed to be dis-recommending Joshua Ferris’s first novel, given how much I loved his second. So the thing to say here is: go read the second and absolutely skip the first. [book: Then We Came To The End] is a boring story from a boring advertising office in Chicago toward the end of the dot-com boom, when everyone is getting laid off and the economy is in slow-motion deflation. People fill their empty lives spreading rumors about one another … and that alone would offer space for a little moral about the insanity of rumors, if it didn’t turn out that all the rumors are basically true.

I know what boring office jobs are like; I’ve worked in them. I don’t need to read a book about them, unless that book shines some sort of interesting light on the plight of office workers. It doesn’t, really at all. The office workers are either contemptible, pitiable, or noble, and I would gladly read a novel about the two noble characters. In the novel I actually read, though, there are 400 pages about bored, despicable people. There’s a bit of a redemptive love fest at the end for no good reason. The final sentence of this 400-page atrocity could have resolved a big question mark that the reader will have carried with himself or herself throughout. But that resolution would involve turning back a few pages and methodically checking off who’s at the love fest, so that we can see who’s *not* there; and By The Time I Came To The End, I was so desperate to put it down and do something enjoyable that I didn’t even care about a resolution.

So please, go read Ferris’s [book: The Unnamed]. It’s great. Let’s just pretend that that was his first novel, and speak no more about his real first one.