The Economic Way of Thinking

It Usually Begins with Ayn Rand

Whether you love her or hate her, it usually begins with Ayn Rand (book title by that name here).  While reading the intro to Burns's Goddess of the Market, I learned that one of the great libertarian thinkers from an earlier generation, Roy Childs, was disgusted by Rand's atheism.  Here's what Heller says:

Sometimes Rand provoked an adverse reaction.  The libertarian theorist Roy Childs was so disturbed by The Fountainhead's atheism that he burned the book after finishing it.  Childs soon reconsidered and became a serious student and vigorous critic of Rand.  Her works launched him, as they did so many others, on an intellectual journey that lasted a lifetime.

If that doesn't pull you into this excellent book, turn to page 105 and see what she says about Hayek.  (Spoiler below the fold).

Books I Will Soon Be Reading

One of the few benefits of long international flights is the "free" alcohol sustained period of silence that a long flight provides.  In trying to optimize over two important margins--keep the load light and get a diverse selection of readings--here's what I've chosen as my reading when we soon head for Italy: 

Jennifer Burns, Goddess of the Market: Ayn Rand and the American Right

Malcolm Gladwell, What the Dog Saw: And Other Adventures

John Reader, Africa: A Biography of a Continent

Signals, Countersignals, and Crime

As I mentioned this weekend, I'm currently listening to the excellent book, The Monsters of Florence on CD.  (If I can just find the "opportunity" to drive another 400 miles or so, I'll have the book finished).  While listening to disk 3 (of 8), something like the following was said (I'm paraphrasing):

After the killing of two French tourists in 1985, an anonymous note was sent to the police.  In the note, the police got an important clue: the author spelled the word "republic" with one b instead of two b's.  [The appropriate and higher class way to spell republic in Italian is "Repubblica"].  Clearly, this indicated that the perpetrator was either not from Italy or poorly educated.

Boy, did my head begin to spin with mixed strategy game matrices after listening to the above passage!  If the simple misspelling of the word "republic" led most Italian criminologists to focus on foreigners and dolts, a rational criminal would misspell more often. 

But, if police learn that it's in one's interest to send a false signal by misspelling words, they'll stay on track and assume the criminal is trying to outwit them.  If the criminal knows that the police know that he's playing games, then...

And, away I went into the world of infinite regress and probabilistic equilibria.  About 10 minutes later I was done thinking about randomizing criminals; I was happy to still have my car on the road; and I realized I had missed an entire section of the book!  I guess that's a small price to pay for a novel taking you on a mind-walk like the above...

Assorted Links

(1) Here's a more literal interpretation of the fatal conceit.  Here's a link to the Australian study that found doctors had just a 9 percent hand-washing compliance rate, which is further discussed in Super Freakonomics.

(2) Speaking of Super Freakonomics, I finally finished reading it a couple weeks ago.  I'm a big fan; though, I must say that the controversial geoengineering chapter just doesn't fit with the rest of the content.  It's not really freaky (nor is it economics!), and it seems like it's included mainly to help sell copies.

(3) I've been listening to The Monster of Florence CDs in my car recently.  It's clear from the first couple of disks that Italy's history of botched crime scene investigations has a history that pre-dates Foxy Knoxy (slides describing some of the mistakes made in the Knox case here).  According to the book, serious mistakes and contamination of evidence occurred throughout Florence's string of creepy, unsolved serial murders. 

With Italy's legal system in the news (and on my mind), can someone point me to a good empirical paper on the effects of Italy's jury system vis-a-vis the U.S.?  The two judges on the jury structure of Italy's system, in particular, must be resulting in a lot of "professional" strong-arming.  And, surely, good empirical studies have been done on this difference, no? 

(4) Posner and Becker on Obama's jobs summit and increasing employment.

(5) An emergency physician who thinks about tradeoffs. 

Black Boxes

When discussing the Solow model in class yesterday, the term "black box" came up.  One of my students asked me if I was talking about the thing left on planes after they crash.  I was not.  Here's a good Wikipedia entry for black boxes that captures what I was getting at. 

Here's one of my favorite books on black boxes.  I read it as an undergad and still think it's a great book for students with a keen interest in growth theory. 

Who Is John Galt?

One of my former advisees, Ashleigh, brought to my attention the above billboard.  The billboard can be found along I-95 near the Georgia-Florida border.  Here's a story about the person behind the Galt sign.  

I have seen a Mercer student driving around in a car with a "Who is John Galt?" bumper sticker.  After learning that I was teaching Atlas Shrugged last spring, the student e-mailed me and told me he was "the John Galt guy."

Do you, our readers, have any good John Galt sightings or stories to report?  

Freakonomics Fact Check

There's plenty of controversy swirling around right now about the global cooling discussion in Levitt & Dubner's Superfreakonomics.  I haven't had a chance to read Superfreakonomics yet because I've been busy.  In part, I've been prepping a lot for my MBA classes, which involves reading all of  Freakonomics.

While reading Chapter 6 of Freakonomics and thinking about the global cooling controversy, I started to wonder about the Orangejello and Lemonjello claim.  For those unfamiliar or not remembering, in Freakonomics Levitt & Dubner claim twins were named Orangejello and Lemonjello (a-RON-zhello and le-MON-zhello); another child was named a name that's pronounced shuh-Teed but spelled S*#thead. 

I surfed around quite a bit and found a lot of claims that the Orangejello and Lemonjello story is an urban legend.  But, then, I stumbled upon the Big-Brother like site, Intellius, and used their Advanced Search tool to look up a few names.  If you trust their results, Orangejello and Lemonjello live right here in the great state of Georgia in a small town along the border of Alabama.  There's another Lemonjello in Florida, and there are nine different shuh-Teeds scattered around the US. 

Again, I haven't had the time to read and form an opinion about Superfreakonomics, but I'm glad to see that Levitt & Dubner appear to have their facts straight about something many believe is an urban legend.

Books On My Desk This Friday Morning

* Karl Marx, Grundrisse

* A.J. Polan, Lenin and the End of Politics

* Andre Gorz, Farewell to the Working Class

* Andre Gorz, Paths to Liberation

* Mihailo Markovic, From Affluence to Praxis

Books On My Desk This Friday Morning

* Ludwig Lachmann, Capital, Expectations, and the Market Process

* Roger Koppl and Gary Mongiovi (eds.), Subjectivism and Economic Analysis: Essays in Memory of Ludwig M. Lachmann

* Don Lavoie (ed.), Expectations and the Meaning of Institutions: Essays in Economics by Ludwig Lachmann

* A.J. Polan, Lenin & the End of Politics

Ayn Rand's School for Tots

In my favorite Simpson's episode, Maggie is sent away to the "Ayn Rand School for Tots."  While at the school, posters hang above childrens' beds that read "A is A."  Children are read "The Fountainhead Diet" by Ms. Sinclair, a woman who looks a lot like Ayn Rand.  And, when children ask for the bottle, they are reminded that they are behaving like leeches.  More on the episode can be found here.

Over at the Austro-Athenian Empire blog, Roderick Long discusses an episode from Ayn Rand's own childhood that may have been formative in her future work.

(HT: Eric Crampton)

A Night of Enlightenment

Jim Otteson's talk here at Mercer last week was titled "The Scottish Enlightenment on the Promise and Peril of Commercial Society."  Jim gave us a wonderful overview of the Enlightenment (with particular emphasis on Adam Smith).  According to Otteson, the promise of commercial society was material abundance and greater freedom of choice; Smith, the great empiricist, speculated about the causes of economic abundance, and, with hindsight, his conjectures appear to have been on the mark. 

Jim then went on to discuss the perils of commercial society.  He started by explaining a concern Adam Ferguson had about the "voluptuousness" that comes with abundance.  Otteson then linked the concerns the Enlightenment writers had about voluptuousness up to the present by discussing happiness research and the progress paradox.

While I got to spend plenty of time with Jim while he was in town, there were still a number of questions I never got to ask him while he was in town.  Several of them can be found below the fold:

Books On My Desk This Friday Morning

*George Selgin, The Theory of Free Banking

*F.A. Hayek, Contra Keynes and Cambridge

*L. Randall Wray, Understanding Modern Money

*L. Randall Wray, Credit and State Theories of Money

*John Smithin (ed.), What is Money?

*Louis-Phillip Rochon and Sergio Rossi (eds.), Modern Theories of Money

*G.F. Knapp, The State Theory of Money

Books On My Wife's Nightstand

I've come to realize that there are a number of books on my nightstand that just stay there and collect dust.  Anything I want to read gets cycled through quickly; others remain on the nightstand indefinitely and remind me how challenging it is to ignore sunk costs. 

My wife, Anemone, on the other hand cycles through books far more quickly than I do and has a far more interesting assortment on her nightstand.  Along with a ton of magazines and poetry journals, here were the books I saw stacked up there this morning (from top to bottom):

Brave New World, Aldous Huxley

Lila, Robert Pirsig

Living in Truth, Vaclav Havel

Common Sense, Thomas Paine

The Anticapitalist Mentality, Ludwig von Mises

Dream Songs, John Berryman

Economics in One Lesson, Henry Hazlitt

Ambition and Survival, Christian Wiman

Independent People, Harold Laxness

Bryan Burrough's Public Enemies

The movie Public Enemies was good but not great; the same goes for Bryan Burrough's book, Public Enemies, which was a bedside page turner that I finished last night.  Of course, after reading the book, I'm left shaking my head about some of the gross exaggerations and leaps made by the movie producer.  One thing the movie producers did well, however, was re-create the July 22, 1934 killing of John Dillinger outside of the Biograph. 

Some thoughts about the content of the book can be found below the fold.

Books On My Desk This Friday Morning

*Friedrich von Wieser, Social Economics

*Joseph Schumpeter, History of Economic Analysis

* Richard Swedberg (ed.), Joseph Schumpeter: The Economics and Sociology of Capitalism

*Carl Menger, Principles of Economics

*S. Herbert Frankel, Two Philosophies of Money

*Snowden, Vane, and Wynarcyk, A Modern Guide to Macroeconomics

*Ludwig von Mises, The Theory of Money and Credit

*Richard Ebeling, The Selected Writings of Ludwig von Mises vol. 3

*Peter Boettke (ed), The Legacy of Friedrich von Hayek, vol. III