Steve Reads

Category: Books

Walter Bagehot, Lombard Street: A Description of the Money Market — March 6, 2016

Walter Bagehot, Lombard Street: A Description of the Money Market

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This is, in my limited view, the classic introduction to what central banks do. Bagehot writes just after the Franco-Prussian War, when London has become the world’s sole financial center after Paris lost that role (and lost the war). Hence English banks are now not only responsible for keeping enough money on hand to meet domestic depositors’ needs; they’re responsible for converting other currencies to gold when foreign bankers demand it. British banking has just turned a corner, and Bagehot is trying to understand how the Bank of England should respond.

Lombard Street is maybe one-third a basic explanation of how banks work. Depositors put their money in the bank; the bank then turns around and lends out some fraction of the deposit. If all depositors then turned around and demanded all their money at the same time, banks would be unable to provide it. Normally this isn’t a problem, since normally all depositors aren’t demanding their money. But “normally” isn’t the adjective you want to be using with a banking system; you need to know that banks will be able to survive during a panic.

Panics might start when someone starts to question a major financial institution’s ability to honor its obligations; let’s call this institution “A” (or we could call it “Lehman”). Suppose bank B does a lot of business with A, and C does a lot of business with B. C knows that B gets its money from A, and C fears that A is on the verge of collapse. Hence C demands that B repay the debts that B owes to C. Now B has to find a way to come up with cash. In order to come up with cash, B calls in the debts that A owes to B. This happens on a wide enough scale; now everyone is demanding cash from everyone else.

Where does this cash come from? Let’s look, for instance, at what happens when B repays C. Maybe C owns some bonds that B has issued. C now demands the most liquid security there is (cash) in exchange for a somewhat less liquid security (bonds). Under normal circumstances, those bonds would be safe beyond question. In a panic, no one will buy those bonds, because everyone is simultaneously looking for liquid securities; today we call this the flight to liquidity. “Highly liquid securities” is a fancy term that just means “something which can always be sold, no matter what.” Cash will always be exchangeable for goods and services, even when bonds are not.

Central banks “create liquidity.” As we mentioned above, (non-central) banks never have as much cash on hand as their books say they do; so if everyone is panicking, and rushing to get their hands on cash, it’s quite likely that their banks won’t be able to help them. It’s in cases like this that central banks are “banks of last resort”: when no one else will provide cash, they will. A smaller bank (think Citibank, for instance) sells the Federal Reserve some security which under ordinary circumstances could be turned into cash without hesitation; the Fed hands bank cash. As Bagehot put it in the 1870s, quoting a Mr. Harman:

We lent it … by every possible means and in modes we had never adopted before; we took in stock on security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on the deposit of bills of exchange to an immense amount, in short, by every possible means consistent with the safety of the Bank, and we were not on some occasions over-nice. Seeing the dreadful state in which the public were, we rendered every assistance in our power.

Bagehot adds, “After a day or two of this treatment, the entire panic subsided, and the ‘City’ was quite calm.”

As Bagehot describes it, a central bank should buy during a panic any assets that it would buy under ordinary circumstances. If the central bank refuses to buy some normally-safe asset, the rumor will spread rapidly that the market is illiquid, and then the panic will go into overdrive. A central bank, unlike a commercial enterprise, is supposed to be immortal; hence a central bank should be able to take a longer view — the central bank sees that a panic will subside in a few months, and that those assets can be sold back at non-fire-sale prices when the panic is over. (For a recent illustration, see TARP.)

This is still, if I understand correctly, the basic outline of how central banks work: during panics, central banks provide liquidity when no one else will. But are there limits to that liquidity? That is, does the central bank have unlimited power to create liquidity, or are its hands tied? During Bagehot’s time, the Bank of England’s power was strictly limited: one desk, called the Issue Department, issued currency, while another, called the Banking Department, held reserves. When a panic happened, banks would draw on the central bank’s reserves; those reserves could, in principle, run out, at which point liquidity would be at an end. When reserves ran out, the Issue Department could not print new currency to meet the demand for liquidity. This structure came out of the Bank Charter Act of 1844. As J.K. Galbraith put it in his magnificent Money: Whence It Came, Where It Went — which really ought to be viewed as a 20th-century updating of Bagehot’s book —

In 1844, after an intense discussion of the respective roles of currency and banking in monetary management, Sir Robert Peel put the Bank firmly in a straitjacket — what Walter Bagehot, thirty years later, was to call the “cast-iron” system. The Bank Charter Act of that year fixed the note issue of the Bank of England at £14 million. This amount was to be secured by government bonds. Beyond that, more notes could be issued only as there was gold and silver (no more than one-fourth the latter) in the vault. The cast-iron system was much too rigorous for another of the previously mentioned functions that the Bank was by now acquiring — that of supplying funds when people came in distressing numbers for their deposits in the lesser banks. This fault was remedied by suspending the law whenever it proved unduly inconvenient.

My naïve take is a simple supply-and-demand story: there’s a demand for cash which spikes during panics, and there’s a supply of cash in the world that’s available to meet that demand. If the demand exceeds the supply, there are two ways to handle that problem: either increase the supply, or reduce the demand. The way to reduce the demand is to increase interest rates; that is, if I come to the Federal Reserve pleading with them to give me cash in exchange for my bonds, they can agree to give me cash, but only via a short-term loan for which they charge me a high rate of interest. This is meant, Bagehot says, to ensure that the central bank truly is a lender of last resort — that borrowers come to the central bank only during periods of real panic.

Alternatively, they could increase the supply of cash by printing money. But as Bagehot and Galbraith explain, increasing supply was not one of the Bank’s powers: there was a fixed amount of money, and going beyond that limit was forbidden.

There really is nothing magical about how central banks work. When they need to “create money,” they do it by buying securities (usually highly safe assets like corporate or government bonds, though — again, see TARP — not always). It’s a simple sale: bonds (or mortgage-backed securities, or whatever) disappear from the market, and cash goes into the market. During ordinary times, people trust one another, so they don’t demand liquidity; hence you’d expect that during ordinary times, society is relatively more indebted than during panics — party A is more willing to loan money to party B, and therefore A is more willing to hold security from party B than A would be during times of panic. When the amount of trust in the economy is higher, the central bank can withdraw cash from the market because, again, demand for cash is lower than the supply. The central bank’s job is to match demand for liquidity with the supply of cash. Modern banks, unlike in Bagehot’s time, can “print money” to achieve this goal.

One alternative that really leapt out at me when reading Bagehot was simply: why not forbid banks from loaning out depositors’ money? I put $100 in the bank, and then … there’s $100 in the bank. As opposed to today, when some fraction of that $100 will immediately be lent out to someone else. I’ve not thought through all the consequences here, so maybe this is an absurd idea; but my understanding is that this was part of the Chicago Plan during the Great Depression. If panics come about because people aren’t sure that their money will be in the bank when they come to ask for it; and if, in response, we set up a “lender of last resort” infrastructure; well then, why don’t we just make it a certainty that people’s money will be in the bank when they come to ask for it?

This gets to another principle of banking systems, which in the United States is made flesh in the form of the FDIC: if everyone knows that their money will be in the bank, then the panic will never even get started. We no longer have bank runs, because if your bank goes out of business, the government will make your account whole (up to $250,000).

But the FDIC has its problems, as does any system of insurance on anything. It’s called “moral hazard”, and it’s a quite general principle: if you know you’re insured, you’re more likely to do the thing that insurance protects you from. The way the system works today is, in short, that the government will backstop your bank, in exchange for which the bank submits to regulation. The regulation ensures that deposit insurance will never need to be used. The bank gets a guarantee that bank runs will never happen; if they do happen, the government will make them whole; and in exchange, the bank agrees to behave responsibly. That’s the theory, but read about the FDIC’s role in the savings-and-loan crisis.

So again … wouldn’t it be easier just to prevent bank runs by preventing banks from lending? This would require a massive reorientation of American society, away from credit and away from an emphasis on growth, and the topic is probably far too large to consider here. But it does seem like a natural option to consider, and it surprises me that Bagehot didn’t even mention a word about it. It’s particularly surprising, given that Bagehot didn’t even have deposit insurance in his time: banking panics happened every few years. At least today, we can shrug and reject the Chicago Plan because we have the FDIC; what was Bagehot’s excuse? Panics were, I suppose, just considered an unavoidable part of nature. Bagehot also seemed to take it as given that the Bank of England would be a profit-making enterprise, and that it was required to return a dividend to its stockholders. A Bank of England which never had to lend during panics would be forced to charge lower rates of interest, and hence would return less to its owners. Seems wise that the Bank eventually was nationalized.

There are questions here which, to me, quite difficult. If the central bank can satisfy an unlimited demand for liquidity by “printing money” (i.e., buying bonds in unlimited quantities), and if modern central banks are — by design — somewhat insulated from the political process, then isn’t there a risk that the bank will print too much money? Again, that’s a much larger topic that I can’t get into here (and about which I have no expertise). I could gesture vaguely in the direction of “the central bank’s interest in securing its reputation,” and that’s probably the truth. But it requires more discussion.

Today we’re in the era of “shadow banking”. That is, the problem now isn’t panics in ordinary depository institutions; the problem is panics in hedge funds, investment banks, and so forth. We have the FDIC to protect our deposits, but there’s still a risk of systemic collapse when trust between investment banks disappears. Even if you were to separate, let’s say, Bank of America’s investment functions from its depository functions — the 21st-Century Glass-Steagall Act that Bernie Sanders, Elizabeth Warren, and others support — it does seem like you’d still have the problem of shadow banks collapsing. I need to understand this problem more deeply; in particular, I need to understand why shadow banks have suddenly become such a problem. Weren’t there always non-depository financial institutions?

It’s good to read Bagehot to understand that the more things change, the more they stay the same. At the same time, I’d like to see an update to Bagehot’s book, to explain how certain things really have changed, and what to do about it.

I would like to commend another stellar piece of Richard Posner’s writing to you — March 5, 2016

I would like to commend another stellar piece of Richard Posner’s writing to you

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…while at the same time I would like to lament the legal profession’s continuing habit of using barbarous citation practices.

The evidence of benefits that was presented to the Texas legislature and discussed by the Fifth Circuit was weak; in our case it’s nonexistent. The principal witness for the State of Wisconsin, Dr. Thorp, mentioned earlier, testified that the death rate for women who undergo abortions is the same as for other pregnant women. But he could not substantiate that proposition and admitted that both rates are very low. His expert report states that there are “increased risks of death for women electing [abortion] compared to childbirth,” but the studies he cited measured long-term mortality rates rather than death resulting from an abortion, and also failed to control for socioeconomic status, marital status, or a variety of other factors relevant to longevity. See David Reardon & Priscilla Coleman, “Short and Long Term Mortality Rates Associated with First Pregnancy Outcome: Population Register Based Study for Denmark 1980–2004,” 18 Medical Science Monitor PH71, PH75 (2012); Coleman et al., “Reproductive History Patterns and Long-Term Mortality Rates: A Danish, Population-Based Record Linkage Study,” 23 European J. Public Health 569, 569, 573 (2012). In contrast, the plaintiffs’ expert Dr. Laube tendered a more apt study which concluded that the risk of death associated with childbirth is 14 times higher than that associated with abortion. See Elizabeth G. Raymond & David A. Grimes, “The Comparative Safety of Legal Induced Abortion and Childbirth in the United States,” 119 Obstetrics & Gynecology 215 (Feb. 2012)

Emphasis mine, to call out just how much of the paragraph is taken over with inline cites. Who are the legal monsters who came up with this style? Have they never heard of footnotes?

Anyway, the passage is from Planned Parenthood of Wisconsin v. Schmiel. As with all of Posner’s work that I’ve read (and by now I’ve read quite a lot), the arguments are concise, to the point, and at times relentlessly cutting in the most intellectually rigorous style. I would call your attention in particular to his decision in a Wisconsin gay-marriage case, or to his review of Scalia’s judicial philosophy.

I found this latest Posner decision, by the way, when Dahlia Lithwick offhandedly quoted Justice Breyer mentioning Posner, in Lithwick’s hilarious piece on the Supreme Court TRAP-law case. You should be listening to Lithwick’s Amicus podcast.

Finally, I would be remiss if I didn’t mention Katha Pollitt’s book Pro. It convinced me that when I thought I was being judicious and moderate in feeling discomfort about abortion, I was really just unknowingly subscribing to Republican brainwashing.

Matt Taibbi on Trump — February 26, 2016
As a postscript to what I wrote the other day — December 29, 2015

As a postscript to what I wrote the other day

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…about The Great Inversion, I’d direct you to the episode of The Weeds dealing with gentrification (inter alia). The Weeds is a podcast on the Panoply Network, which also hosts the quite excellent Amicus podcast starring Dahlia Lithwick. The Weeds features three people from Vox: Matt Yglesias, Sarah Kliff, and Ezra Klein. It has rapidly become my favorite podcast, and I eagerly listen to every new episode right when it comes out.

In the gentrification episode, Yglesias makes the point that there are lots of cities that would dream of experiencing a “great inversion”, where wealthy people move in and poor people move out. When we talk about a great inversion (which, as I mentioned in the aforelinked review of the book, should more accurately be called a “marginal inversion”), we’re really talking about a small number of cities on the coasts: Boston, New York, San Francisco, Seattle, L.A. … maybe 15 cities if we were really generous about it. We’re not talking about Cleveland or Detroit or Buffalo or Hartford or Erie. And when we’re talking about this “great” inversion, we’re really talking about a fraction of the rich people within those cities’ metro areas. But the media, the political system, and (I’m looking at you, San Francisco) too much elite discourse are dominated by people living on the coasts, so it’s not surprising that we’d be talking about a great inversion.

Now, granted, I’ve not looked at the data on this. Maybe Toledo and Gary are marginally inverting just as well as San Francisco and Boston. And maybe it’s more than marginal in New York and L.A. But my hunch is that it’s not. And The Great Inversion didn’t offer evidence in support of its claim.

Where to start reading Max Weber? — December 12, 2015

Where to start reading Max Weber?

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This is a quick question. I read The Protestant Ethic a while ago, and found it very uninteresting. But everyone says that Weber is one of the founders of sociology. Francis Fukuyama’s most recent two books are entirely framed around Weber — specifically, that governments have reached their ideal form when they evolve out of clientelistic, patronage-based rule into professional, bureaucratized, meritocratic administration. As I recall, Fukuyama gave many hat tips to Weber’s Economy and Society; it seems to be Weber’s summa.

However, starting with Economy and Society wasn’t the right way to go. It’s a massive two-volume work, and I recall that it was actually lecture notes assembled by his students; it very much seems to be sociology for sociologists.

So my big-picture question is: how would you recommend that I get into Weber, assuming that he’s worth getting into? I hope the professional sociologists in the room don’t think that my dismissal of The Protestant Ethic is heresy; I’d be surprised if they did, so consequently I’d be surprised if they thought that that book was the proper entrée into Weber’s work.

So what is the right entry point? I am perfectly willing to read multiple books, if that’s what needs doing, and if the payoff justifies the investment. And of course, if the right answer is to start with secondary works — or to read secondary works in parallel with the primary works — I can absolutely do that.

(Those of you who think that the correct answer is “take a class” are probably right. However, my employer is not likely to pay for me to enroll in a sociology class. Hence: to the library we go.)

“If the misery of our poor be caused not by the laws of nature, but by our institutions, great is our sin” — December 11, 2015

“If the misery of our poor be caused not by the laws of nature, but by our institutions, great is our sin”

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I’m reading Henry George’s Progress and Poverty, prompted in part by the 99% Invisible episode about the origins of Monopoly (the board game), but more prompted by having seen him cited many, many times; at the latest, I first saw him cited when I read The Worldly Philosophers as a callow youth.

Most of the attention the book gets is from its focus on land and the single tax. But I was really struck just now by his attack on Malthus. I’m embarrassed to say that I’ve seen Malthus cited not quite approvingly, but more as though he had proven some basic truths about the universe that were beyond all questioning. The Malthusian idea, of course, is that humanity will always remain teetering on a knife’s edge: whenever we accumulate a little extra in agricultural surplus, we immediately fritter it away by making more children, who consume all the surplus and return us to conditions of famine. The most anyone bothers to engage with this idea is to say that it used to be true, that it stopped being true at the Industrial Revolution, and that Malthus was unlucky enough to have written it five or ten seconds before the Industrial Revolution really got going in the early 19th century.

George rejects the whole Malthusian idea. As far as I’ve read, he doesn’t reject it because it’s obviously false, but rather because there’s no evidence that it’s true. The examples Malthus apparently cites are India, Ireland, and China, all of which — George says — are examples of famine caused by the intercession of a brutal government. (George disdains equally the Mughals and the Raj.) It may well be that humanity eventually reaches the carrying capacity of the land, kills itself off through famine, rebuild its numbers, and repeats the whole bloody cycle, but we’ve certainly (George says) not yet seen this pattern.

It embarrasses me that I’ve never read Malthus himself. Indeed, it embarrasses me that I’ve never even read anyone who questioned Malthus all that much. Gregory Clark’s annoying A Farewell To Alms more or less takes Malthus for granted, then explains that we in the UK and its dominions escaped the Malthusian curse by good old-fashioned Protestant self-abnegation. Malthus is alive and well; Henry George, 150 or so years ago, tells us that he shouldn’t be.

More generally, George feels that Malthus and his ilk are yet more examples of people ascribing the sad fate of the poor to their bestial natures rather than to the institutions that continually grind them into the dirt. My having accidentally gone along with this is what embarrasses me the most.

Alan Ehrenhalt, The Great Inversion and the Future of the American City — December 6, 2015

Alan Ehrenhalt, The Great Inversion and the Future of the American City

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Satellite view of some city. Book title in white blocky print over top.

As is so often the case, this is a book whose argument I can accept up to a point; past that point, it’s not an argument, but rather wishful thinking.

The analytical core of the book is the observation that we used to live in a society where the wealthy lived in the suburbs while the inner city was for poor folks; today, when the wealthy choose to live anywhere, they choose to live in dense, walkable cities. The suburbs, meanwhile, are where new immigrants land. We’re experiencing a “great inversion” whereby the suburbs and the cities switch roles.

Well, hold up. What about the schools? The relatively affluent people I know are, at the very least, concerned about the quality of inner-city public schools. Lots of people in the Boston area move to Lexington or further out because the schools there are better. Ehrenhalt replies to this in a couple ways. First he says, intriguingly, “I think these people have it backward. The schools improve after the middle class arrives” (Kindle location 135). Unfortunately, I didn’t see any followup to this elsewhere in the book. The rest of the book is a survey of different kinds of cities and neighborhoods around the U.S., from Cleveland Heights, Ohio to Phoenix, Arizona to lower Manhattan to Philadelphia. I certainly hope Ehrenhalt’s schooling hypothesis is true; I’d love to see Boston’s public schools recover from their decades of white abandonment. But I see no further discussion of his hypothesis anywhere in the book.

Ehrenhalt’s second (implicit) reply to the schooling issue is more believable: the wealthy who are moving into the cities are either those without kids — childless young people or empty nesters — or families that form later in life and have fewer kids.

He repeatedly emphasizes that he doesn’t really know how this inversion will play out. E.g.,

We are moving toward a society in which millions of people with substantial earning power or ample savings will have the option of living wherever they want, and many—we can only guess how many—will decide in favor of central cities and against distant suburbs.

Or

The real essence of demographic inversion is based not on numbers but on choice. Increasingly over the past decade, both before and during the recession, people with the resources to live wherever they wished began choosing to live near the urban center — just as Viennese, Parisians, and Londoners at the turn of the previous century elected to do.

(emphasis mine in both quotes)

“Based not on numbers but on choice” is an important tell. It says that he doesn’t have the numbers. And that’s fine! This book shouldn’t have been trying to make an argument about the direction of social change; I don’t think I’m smart enough to forecast the vector sum of that change, and I think Ehrenhalt realizes that he isn’t, either.

The truth is probably really boring. I analogize it to presidential elections: if one candidate beats another by a margin of 55% to 45%, we would consider that a landslide. But it’s still 55-45. The country is still basically half Republican and half Democrat, with some people peeled off at the margins in one direction or the other. It may be the same with the move towards or away from suburbs: a few more people may choose to move to the cities. But The Marginal Inversion would have been a rather less powerful title.

I’d gladly take this book with the weak predictions excised. What would be left is a perfectly lovely tour of a few American cities and their own peculiar approaches to growth. New York managed to fill up the financial district in lower Manhattan with actual residents. Phoenix, on the other hand, is trying (at some scale) to fill in its historic sprawl, with mixed results. Ehrenhalt paints a rather depressing portrait of Philadelphia, which matches up with my own experiences there: Center City is lovely and thriving, while much of the rest is a boarded-up wasteland; Ehrenhalt says that locals sometimes refer to it as “Bostroit” for this reason.

As a series of sketches of interesting cities, this book is lovely; as quantitative forecast, it falls flat on its face. And I have a hard time believing that any serious attempt at making this sort of forecast would grab any headlines at all. One of the much-cited inputs to this “people are fleeing the suburbs” story, for instance, is that “millennials” are increasingly shunning cars. But look at the graph in there:

90% or so of “Millennials” (I despise that label, and as I get older I come more and more to despise generational labels in general) drive cars at least once a week; their parents, and the generation in between, drive cars 95% of the time. The difference between 90% and 95% is a slender reed off of which to hang an argument about social change.

Or let’s compare a few counties around Massachusetts and New York: mostly suburban Westchester grew by 2.5% recently, while New York as a whole grew by 1.9%; Kings County (Brooklyn) grew by 4.7%; suburban Norfolk County, Massachusetts grew by 3.2%, to the Commonwealth-wide average of 3.0%; Suffolk County (Boston) grew by 6.3%, while Middlesex County (some of the denser parts of Metro Boston, such as Cambridge and Somerville, plus some distant suburbs) grew by 4.5%. Finally, Worcester County grew by 1.9%.

What’s the takeaway from all this? Nothing too exciting, to my eye: some people like living in cities, and some like living in suburbs. Both are doing reasonably well. There’s no landslide toward one or the other in any objective sense: it’s not as though the population of the suburbs is declining, or that the population of Northeastern cities is growing at a double-digit pace. To put it in context, Houston’s growth rate blows away the Northeast’s, even while its density is something like a quarter of a typical northeastern city’s. Likewise with Phoenix.

The claims for a great urban revival, it turns out, need to be hemmed in, bit by bit, with caveats and to-be-sures. “Millennials” might be moving away from cars, but if that’s happening it’s in small amounts; the move away from cars might also reverse itself as “millennials” get better jobs and have kids. (I’ve not seen any data that compares older generations and “millennials” at the same stage of life; what I’ve seen compares “millennials” now to older folks now.) Southwestern cities that northeastern liberal élites such as myself would scoff at continue to thrive, as they have for decades. Suburban counties continue to do just fine. Urban public school districts show no signs of significant improvement. Boston’s population still has a long way to go to return to its 1950 level. Urban development is still being hampered by restrictive development policies that forbid northeastern cities to grow in the only direction they have left, namely up. Gas is still too cheap. Roads and parking are still massively subsidized, and mass transit is still being starved. The one bit of data I feel more comfortable about is that cities really have become safer over the last couple decades, for reasons that I gather no one really knows.

You might hypothesize some long-term changes here. Maybe the U.S. government will eventually realize that a carbon tax is the smartest way out of its fiscal problems; maybe northeastern zoning will eventually get with the program; maybe, for reasons unspecified, “millennials” really are done with cars: Ehrenhalt writes that it “seems likely … that more of the social life of the next adult cohort, compared to that of the previous one, will be lived in a public realm, not a closed-off private one, in a more active and vibrant streetscape and in parks and other public spaces”, but really offers no convincing evidence for this claim. (Also, is the apartment I live in a closed-off private realm? Does my generation spend more time in parks than previous generations did? When I sit in a coffeeshop working with my headphones on, am I in a public realm or a private one? And where is Robert Putnam when you need him?)

I am deliberately being a killjoy here. I read a lot of books and essays and blog posts by people who love northeastern-style cities as much as I do, and they are too often filled with wishful thinking. Wishful thinking is quite useful — I personally pray that when it comes time for me to have kids, I’ll be able to send them to a quality public school rather than move to an inner suburb on the commuter rail — but a wish is not the same thing as a plan, nor is it the same thing as data.

I am also making a meta-point: you should be especially critical of ideas that you are predisposed to believe in. Don’t let wishful thinking get between you and the world.

On the other hand, I absolutely understand that there’s a difference between what members of a movement say to themselves and what they say to the outside world. Within a movement, people can, should, and very often do express reservations about the direction of the movement; to the outside world, any such doubt would be counterproductive. I get that. To the extent that Ehrenhalt’s book is trying to be part of the walkable-urbanism movement, maybe it’s justified in expressing certainty where there is little to be had.

So let’s take books like The Great Inversion for what they are: expressions of a wish. They are trying to be part of a movement for walkable urbanism, of which Matt Yglesias’s The Rent Is Too Damn High and Donald Shoup’s The High Cost of Free Parking are a part. I wish them all the luck in the world as they try to form that movement, and I hope to be part of it.

PSA about Yotam Ottolenghi — November 15, 2015

PSA about Yotam Ottolenghi

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My partner and I are obsessed with Yotam Ottolenghi’s cookbooks. We have nearly all of them: Jerusalem, Plenty, Plenty More, and now NOPI. They’re all astonishing. The two Plenties are particularly great for vegetarians: they’re 100% vegetarian-friendly, and they’re all what you might call modern vegetarian. Up until at least 1990, and probably more recently (pre-modern), the “vegetarian option” in a restaurant or at a wedding was something really boring like roasted vegetables or pasta with something boring on it. There’s a virtuous circle here: the more interesting vegetarian options are available, the more appealing it is to be a vegetarian (or at least, the less appalling it is to skip meat at a meal), which in turn leads to more people eating vegetarian food, which leads to a greater market for vegetarian cookbooks and vegetarian meals in restaurants, which leads to restaurants and authors producing more desirable options for vegetarians. Ottolenghi is at the head of this generation of vegetarian-friendly restaurateurs and authors.

NOPI is a bit of a different cookbook: he starts with recipes that he makes in the book’s namesake London restaurant, and adapts them for the home kitchen, rather than starting with the home cook in mind. (Ottolenghi gets into this in a recent interview on the Bon Appétit podcast.) I would like to single out one such recipe from his restaurant, which seemingly isn’t on the Internet yet: the savory cheesecake made with queso de Valdeón. It is spectacular; you can find the recipe if you use Amazon’s Search-Inside-the-Book feature, and look for the word ‘Valdeon’ (the search feature is smart enough that you can leave off the accent and it’ll know what you mean). The only reason I didn’t eat the whole thing within 24 hours was that I have a modicum (and only just) of restraint.

The cookbook says that the recipe isn’t easy, but I thought it was. Just run some digestive biscuits, some Parmesan, and some toasted pumpkin seeds through a food processor, press them down into a spring-form pan like you would for an ordinary sweet cheesecake; then caramelize some leeks, add a few kinds of cheese (again, same as for a sweet cheesecake), blend the cheese-and-leeks together with a mixer, pour into the spring-form pan, and bake until it’s set. There’s a step in the recipe where you pickle some beets and let them sit in the fridge for at least 24 hours, but that’s time-consuming rather than hard. It’s also not strictly necessary; when I brought the cheesecake to work for lunch, I didn’t bother carrying the beets with me, and it tasted extraordinary even without them. Oh, and I didn’t make the cheesecakes in individual ramekins, because I don’t own any; I followed the instructions for a single large cheesecake. Maybe the recipe would work in a jumbo muffin pan, which I do have. But if you have a spring-form pan, in any case, you’re set.

The NOPI book fills a certain fancy niche. It doesn’t have much for everyday vegetarian meals, but it does have sections for cocktails, desserts, and brunches, all of which look delicious. The few vegetarian dinners that it does have are well-curated.

If you’re just getting started with Ottolenghi, I’d recommend trying Plenty and Plenty More first. They’re indispensable.

“Dark Sun: The Making of the Hydrogen Bomb” and “The Fall of Constantinople 1453” — November 8, 2015

“Dark Sun: The Making of the Hydrogen Bomb” and “The Fall of Constantinople 1453”

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Herewith, a couple more less-than-complete book reviews. They were exceptional books, so I don’t want a devotion to completeness to prevent my endorsement.

  • Richard Rhodes, “Dark Sun: The Making of the Hydrogen Bomb”. If I’ve not already said so, Rhodes’s earlier “The Making of the Atomic Bomb” is one of the three or four greatest books I’ve ever read. (Others would include “Common Ground” by Lukas and “Nature’s Metropolis” by Cronon.) What makes the earlier work so unbearably good is that it is one of the few best pieces of science writing I’ve ever read, at the same time that it’s a meticulously researched and grippingly told piece of storytelling.

    “Dark Sun” is, perhaps, even better; I’m shocked. I spent the last 12 hours or so reading it, practically without blinking. It’s got several threads going simultaneously, and delivers on each flawlessly. First it has the detailed engineering explanation of the various failed attempts at an H-bomb, culminating in the successful Teller-Ulam design. Then it has the story of the many-years-long Soviet espionage, starting early in the Manhattan Project, that allowed the Soviets to detonate their first atomic weapon years before anyone thought they could; Rhodes suggests that nearly every Soviet success in weapons development was a direct copy of something they’d secreted out of the United States. This brings us to the third strand in “Dark Sun”, namely the hunt for those who were giving American discoveries to the Soviets (most prominently Klaus Fuchs). Soon that strand transmutes into McCarthyist paranoia about traitors penetrating every level of U.S. government. But as the saying goes, “Just because you’re paranoid doesn’t mean they aren’t after you”: Rhodes documents pretty conclusively that the U.S. and Canada were riddled throughout with spies, that the U.S. had no similar presence in Russia, and that the Rosenbergs really were guilty.

    Eventually (I’m not giving anything away here), the U.S. did develop a hydrogen bomb, the first of which had hundreds of times the explosive power of the bomb that destroyed Hiroshima. Its stated aim was deterrence, but it’s not clear to the reader — and barely seems clear to Rhodes — why the ability to engulf all of Manhattan in a single fireball would have any more deterrent value than dropping a few Hiroshima-sized bombs on it. Hence Rhodes’s book naturally turns to geopolitical and moral questions, helpfully embodied in the person of Curtis LeMay. LeMay wanted to destroy the Soviet Union while the U.S. had a nuclear monopoly, and to the end of his days believed that the U.S. had “lost” the Cuban Missile Crisis. This is a frankly monstrous definition of “losing”; that we made it through the half-century after Hiroshima without ending all life on earth — despite the apparent attempts of LeMay and his Strategic Air Command to provoke the Soviets on a few occasions, outside of any civilian authority — is nothing short of a miracle.

    Like David Halberstam’s “The Fifties”, Rhodes demonstrates that the civilian leadership had a better grasp of the big picture than the military did. The civilian leadership saw that nuclear war would be insane. No U.S. president or Soviet premier could allow the destruction of even one city by nuclear weapons; the destruction of 100 cities would be a horror beyond imagining. So what additional deterrent value does the thousandth nuclear weapon offer over the nine-hundred-ninety-ninth?

    Rhodes has now written the definitive works on the U.S. development of fission and fusion bombs. These books deserve to be on the shelves of anyone who appreciates stellar writing, and anyone who wants to know about one of the great tragedies of the twentieth century.

  • Steven Runciman, “The Fall of Constantinople 1453”. This has now filled in an important part of my historical knowledge: from the formation of the Ottoman Empire, through its conquest of much of Eastern Europe, through to its final destruction of the Byzantine Empire. Mehmet II comes across as a brilliant military commander, and Runciman mostly avoids a certain WASPy British habit of barbarianizing the “orientals.” It’s a compulsively readable book.

    Among many other little things, Runciman’s book clarified for me the geographic boundaries of historic Constantinople. When I visited Istanbul a few years ago, I stayed in Beyoğlu, which I now understand was historically a separate town called Pera. (Separate enough that when Constantinople was under siege, Pera went to great pains to remain neutral.) If I’m reading Runciman correctly, Constantinople proper was the part of modern-day Istanbul south of Pera on the western side of the Bosphorus. When the city’s tourist agencies today trumpet the city’s “spanning two continents”, that seems historically incorrect: the Asian part, opposite the Golden Horn, was a separate town called Scutari (today Üsküdar).

    I’m slowly approaching European history pre-1700 from a number of different angles. My obsession with Venice starts to pick at pre-Napoleonic history from near the eastern edge of Western Europe, facing nervously toward the Muslim invader to the east. The Ottomans are, of course, a fascinating subject on their own, so I’ve picked up Osman’s Dream. I still need to understand what happened from, say, the 17th to 19th centuries that suddenly made Europe turn from weak, unstable feudal arrangements (including endless redrawing of allegiances within Italy) to a world of recognizably modern nation-states; other than “Napoleon” and “the Industrial Revolution,” I don’t have a very precise story.

In lieu of proper reviews — October 30, 2015

In lieu of proper reviews

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Attention-conservation notice: capsule reviews of 12 books that I’ve read this year, averaging 250 words apiece. This isn’t a complete list of books I’ve read this year — just the books that I a) hadn’t yet reviewed, b) felt great shame in having not yet reviewed, c) still remembered well enough, and d) felt strongly about in one direction or another.

Having just finished a book, and seeing that I’ve read a bunch of books without reviewing them, I’m going to throw some really quick capsule reviews in here.

  • Oliver Sacks, “Uncle Tungsten”: just finished this tonight. Truly remarkable. Unlike anything I’ve ever read. If you combined “The Making of the Atomic Bomb” with … I dunno, maybe “An American Childhood” (but in Britain … and only ending a few years after World War II), you’d get Sacks’s book. It’s scientifically rigorous, makes the science exciting, is deeply personal about Sacks’s family, and really draws a lot of parallels between the scientific community and the community of scientists in his family who gave him endless support as his interest in chemistry developed.

    Sacks wrote elsewhere, heartbreakingly, of his parents’ reaction when he revealed to them that he was gay: his mother declared him an abomination and said she wished he’d never been born. His attitude toward his parents in “Uncle Tungsten” is almost reverent, and certainly always respectful; it may not be coincidental that the story in “Uncle Tungsten” ends before he turns 18.

  • Oliver Sacks, “Migraine”. Interesting in a lot of ways, but too clinically written — seemingly with only a specialist audience in mind — to recommend. Though the details about migraine auras — which sometimes include others’ faces dissolving into mosaics, or time itself fracturing like the frames of a film — are fascinating.

  • John Maynard Keynes, “Essays In Persuasion”. These are essays starting at the Versailles Treaty and ending in the early 30s. The Versailles era is covered in Keynes’s startling “Economic Consequences of the Peace,” which I’d recommend without reservation. The “Essays In Persuasion” argue passionately that Britain should get off the gold standard, and that it should continue to spend to put people to work; without much modification, I think these essays could have been spoken by Paul Krugman from 2009 to now. They contain some of Keynes’s most famous lines, such as when he refers to the gold standard as a “barbarous relic” or calms readers during the Depression when he tells them that “the resources of nature and men’s devices would be just as fertile and productive as they were. The machine would merely have been jammed as the result of a muddle.”

  • Annie Dillard, “An American Childhood”: kinda fun, but felt like it was trying too hard. In general it’s a book about a child slowly coming to discover herself. Near the start is a pretty clever and engrossing scene, in which Dillard sees a shadow monster climb from the foot of her bed and up the wall of her bedroom before disappearing, and screams for her parents to come protect her. This happens night after night before Dillard realizes that the monster comes from the headlights of passing cars. This is the beginning of her self-awareness. She becomes progressively more human throughout the book, enters her teenage years, and experiences an uncontrollable rage. We leave her when she’s just beginning to regain control.

    Despite the occasional bursts of cleverness, I can’t recommend this book. It didn’t hold my interest. As always, this is likely as much about me as about the author.

  • Daniel Okrent, “Last Call: The Rise and Fall of Prohibition”: I knew — we all know — that Prohibition was a disastrous failure, that it led to the rise of the Mafia, etc. I don’t think I realized just how farcically bad a failure it was. Daniel Okrent is practically giggling throughout “Last Call”: Prohibition didn’t work, it was never going to work, and there was never any mystery about whether it would eventually work. Okrent creates a bit of suspense here and there, as when a tough-as-nails administrator joins the FBI (I believe it was the FBI — forgive me; it’s been a couple months since I read it, and I’m trying to dash these off without checking sources) and for a moment you think, “Here’s where it’s going to turn around.” But no: it was never going to turn around. The loopholes were there from the beginning: for sacramental wine, for industrial alcohol, etc. Indeed, some of the most horrifying parts of Okrent’s book were tied up with these loopholes — as when the government added toxic chemicals to industrial alcohol so that it couldn’t easily be turned into drinkable alcohol, and consequently killed thousands of people. The government was so eager to morally purify Americans that it intentionally caused their deaths.

    Prohibition, in Okrent’s telling, could only have happened through the confluence of three forces: women’s suffrage, racism, and the income tax. Women were the natural advocates for Prohibition, since they suffered from their husbands’ drunken rampages. Advocates of Prohibition knew this, so they fought hard to get women the vote. And once women did get the vote, they lined up for Prohibition as expected. Racism’s role was to play on ugly stereotypes, particularly the animalistic black man who, under the influence of drink, would perform his savage acts upon pure white women. And the income tax was necessary to replace income lost from the departed alcohol tax; fortunately World War I came along and made the income tax necessary.

    There’s loads more I could comment on here, including Okrent’s history of the Bronfman (aka Seagram’s) family’s ill-gotten gains. And for that matter, all the fascinating parts about ships lining up three miles offshore in international waters, filled to the brim with fifths of bootlegged whiskey. (The boundary of international waters is now twelve miles out, in no small part so that little U.S. boats would have to go through more work to reach the bootleggers.) It’s a delightful and infuriating parade of pitch-perfect storytelling. Just an extraordinary book, with the passion of a moral crusader and the journalist’s eye for the perfect, evocative detail. Recommended in the strongest terms.

  • Ta-Nehisi Coates, “Between the World and Me”: this is a brutal, honest letter from a black father in the wake of the deaths of Eric Garner and Freddie Gray, explaining to his son that white society has always tried to control black bodies and would always try to control black bodies. It’s part rationally controlled rage, part historical consciousness, and essentially pure poetry. He writes it from a bleak time in American history, and he pulls no punches. I read it on a long train ride while my partner slept beside me, and I was filled with a bottomless sadness; there’s not much room in Coates’s book for hope. Hope is what a Martin Luther King would experience, whereas someone like Malcolm X would view the world in material, visceral terms: these are our bodies, and white society exercises its power over those bodies.

    It’s a must-read, but as a white man I left it feeling sad and powerless. Coates would seem to say that white America is just confused about the lives of black Americans. His own dawning consciousness came through reading Garvey, Fanon, and others while at Howard University, but much more of that consciousness came through — again — watching white America destroy the bodies of his friends. There’s no way I’ll ever experience that constant feeling that my body is not my own. Merely reading what Garvey had to say will never get me a visceral experience of life as a black man.

  • Adam Swift, “How Not To Be A Hypocrite: School Choice for the Morally Perplexed Parent”. The most important thing that this book probably brings to a lot of people is that there is a morally perplexing aspect to sending your kids to private school if you, at the same time, feel that public schools are worth supporting (in the abstract). The moral dilemma is, of course, that you know that it would be better for everyone if the public schools had rich kids alongside poor kids, black kids alongside white kids, and you simultaneously want what’s best for your kids.

    To the extent that I understand Swift’s argument, it’s that you only have a right to demand so much for your kids. In part this is because schooling has some aspects of a “positional good”: school is valuable for me inasmuch as my kid gets ahead, which means that my kid does better in school than yours does. But of course you feel the same way. The result is that some part of schooling is a pure zero-sum game: my kid can only get ahead to the extent that your kid falls behind. On the other side, there’s the aspect of education that is truly nourishing to the child; you should be entitled to as much of that as you can get, so long as in doing so you’re not depriving anyone else’s child of it.

    This quickly turns from philosophical questions to empirical ones. Am I, essentially, entitled to claim a marginal unit of quality for the education of my child so long as I subtract less than a unit of quality from the education of everyone else’s? And is private school really so much better than public school? Or is it just that private school gets richer, whiter, better-prepared students with more-involved parents than public schools do? If so, maybe the problem with your sending kids to private schools isn’t that you’re a hypocrite; it’s that you’re wrong.

    It’s a book by a philosopher, so it doesn’t spend a lot of time engaging with the empirical evidence (as, say, a Diane Ravitch would); Swift, I think, views his role as clearing away the dross of bad arguments, which would then leave room for matters of empirical evidence to be argued more directly. It’s not clear to me that the philosophical argument here is really necessary — the empirical arguments for public schools seem more convincing than the philosophical ones — but every little bit helps.

    (I’ve been using educational comparisons — white students versus black students, etc. — that are relevant in the U.S. context. Swift’s book is written from a UK perspective, but you can divide through to get the U.S. analogue.)

  • Rob Delaney, “Rob Delaney: Mother. Wife. Sister. Human. Warrior. Falcon. Yardstick. Turban. Cabbage.”: If you know the comedian on Twitter, I imagine you already love him. He’s filthy and absurd. His book is funny, but it’s really the story of how the author, an alcoholic, hit rock bottom and struggled out. If you like him on Twitter, you really need to read the book. If you don’t know him on Twitter, you should remedy that.

  • Ernest Gellner, “Plough, Sword, and Book: The Structure of Human History”: this book is too intricate to go into in the space I’ve allotted myself, and to be honest I need to give it a second reading; it would be well worth the effort. Gellner also gave us “Nations and Nationalism”, which is a little book that has lodged itself in my brain in the few years since I read it.

    In Nations and Nationalism, Gellner gives us a disarmingly simple model of where nationalism comes from. Essentially capitalism begets nations. First capitalism upends the static pattern of history, whereby a son can expect to do the same work that his father and grandfather did. The son also needn’t expect to live where his ancestors lived. The constant destruction of old industries means that workers must be able to retrain, at least once per generation, for the new work that capitalism demands of them. This, in turn, demands mass education. Mass education demands a common language. There’s a bit of the argument in here that I can’t reconstruct from memory, namely: how do we get from “all these people must share a common language” to “the people who share this common language must therefore be their own nation”? Apart from “the language constructs an imaginary grouping of people who come to believe they share Englishness or Frenchness or Germanness”, the path isn’t totally clear to me.

    Gellner’s stock-in-trade are these sorts of large questions. In N&N, the large question was how nations form. In “Plough, Sword, and Book” it’s the intellectual structure of human history. Gellner contrasts today’s “single-stranded” rationality, in which all experiences, facts, and arguments must be subjected the same Enlightenment-derived standard of evidence, to earlier societies’ “multi-stranded” perceptions of the world. In a multi-stranded understanding, it’s okay to treat religious statements as, say, metaphors, while putting empirical reality in its own bucket. Post-Enlightenment rationality simply won’t allow this division.

    Gellner wouldn’t quite echo Schumpeter here, but Schumpeter saw something analogous happening: capitalist rationality had driven away all modes of reasoning apart from cost-benefit calculations. We’re now all good little utilitarians, even in the decision of whether to have kids or how many to have. This is such a part of our wiring now that it would seem absurd to treat the decision any other way.

    Gellner has a weird habit of rarely allowing himself a proper noun: “This perpetuated, at the level of national politics, the idea that military power and territorial expansion were paramount goals and/or the conditions of prosperity. The brilliant postwar economic performance of the two prime losers of [World War II], deprived of all empire (and more), finally put paid to this illusion.” Would it have killed him to have written “Germany and Japan”? This replacement of proper nouns with disguised definite descriptions is meant, I think, to lend his books some abstraction and some timelessness, but often it just removes some of the grounding that would make them easier to reason through.

  • Ammon Shea, “Reading the OED: One Man, One Year, 21,730 Pages”: It’s what you’d expect, namely a curio cabinet of words that the author found interesting, and his observations on them. It’s a two-legged stool; one leg is how interesting the words are, and the other is how tiresome the author is. The author tries to affect a persona of being generally an introvert and a hater of humanity, and I don’t doubt to some degree that he is; hard to see how someone who loved being out in the world would agree to spend a year holed up in libraries or his apartment with his walls of dictionaries. But it seems mostly affected; I think Shea is probably a nice guy, despite his best attempts to pretend otherwise.

    (Shea was on You’re The Expert, and he was charming. His wife, to whom he referred repeatedly throughout “Reading The OED” when they weren’t yet married, appeared on YTE a few weeks earlier; she was also delightful.)

  • Hans Zinsser, “Rats, Lice, and History”: Zinsser tells us that the often-unmentioned prime mover behind much of human history is epidemic disease, particularly typhus. Zinsser’s experience here is not purely academic: he worked during World War I as sanitation inspector of the Second Army, and kept thousands of soldiers from dying. Contrast this with the Civil War where (if memory serves) Zinsser tells us that twice as many soldiers died of disease as died at the wrong end of a rifle. Napoleon’s retreat from Russia also had a lot to do with raging infectious disease among his troops.

    Part of why disease is so underreported as a crucial part of military success or failure might be that we like to focus on individual acts of valor rather than unromantic things like disease control or logistics. We’ve all read a lot about the brave American soldier storming the beaches at Normandy, but quite a lot less about how, say, the Office of Price Control managed to control inflation while the nation’s factories churned out vast quantities of military materiel.

    And when public health succeeds, it’s invisible: thousands or millions of people don’t get sick. Whereas when a doctor saves just one patient’s life, he’s revered as a saint and a genius. I hypothesize that this is connected to the American epidemic of naïve and infantile libertarianism, but I don’t have the space to expand on that right now.

  • Katha Pollitt, “Pro: Reclaiming Abortion Rights”:

    1. Abortion is actively good
    2. It should be considered unapologetically as part of the repertoire of useful birth control
    3. The cloak of regret that American culture hangs around abortion is unfounded and not borne out by the actual experiences of women who’ve had abortions.
    4. Third-trimester abortions, which are the ones that seem to horrify so many people, and around which so many people focus their opposition to abortion, are vanishingly rare. To the extent that they happen, they happen because women are genuinely unaware that they’re pregnant, and because state laws mandate waiting periods for abortions that push abortions into the third trimester.
    5. Liberals have been in a defensive crouch on abortion for decades, and they shouldn’t be. It’s time to take back abortion as a positive good.
    6. Reluctance to claim abortion as a positive good is tied up with the general war on women, whereby men insist upon the legal right — only recently revoked — to control women’s bodies.

    Everyone should read this book. You should read it in particular if, like me, you at some point felt it was the height of judicious centrism to say that you “support a woman’s right to choose, but feel uncomfortable with abortion.” Pollitt would say that that’s nonsense, and that your discomfort was put there by a dedicated, focused, decades-long campaign to demonize abortion and demonize the women who have them (while not, curiously, demonizing the men involved in the pregnancy). After reading “Pro,” I am 100% convinced.