Category Archives: Book Review

Book Review, “The Age of Turbulence”, by Alan Greenspan

One of the most enjoyable books I’ve read in a while is “The Age of Turbulence.” I’ll confess up front that I’ve always had a great deal of admiration for the seeming stability with which Greenspan ran the Federal Reserve Board, and while I consider myself a political liberal, my undergraduate degree is in business, and I think I absorbed too much capitalism to be an economic liberal. I’d heard that this book was a very readable peek into global finance & economics, and I certainly concur.

Greenspan starts the book with two chapters on his childhood and education, and from there goes into the beginnings of his career as an economist. I think there’s something I related to in his account of his academic years…he left his doctoral studies for his career and life. While I started graduate school after I began my working career and I did finish a Master’s, I left the doctoral program with the coursework behind me before starting a dissertation. The fact that Greenspan finished his PhD in later years gives me hope.

After discussing his schooling and his years at Townsend-Greenspan, he turns to his introduction to politics on the campaign of Richard Nixon, and then his work with and admiration for Gerald Ford. Greenspan went back to private life during the Carter administration, but was tapped for his Federal Reserve post by Reagan.

The book was informative on the workings of the Fed, but the parts I found most fascinating, personally, were the descriptions of the workings of the government and politics and their intersection with the economy. Greenspan was very comfortable with Bill Clinton, and found him not only engaged in and caring about economics, but understanding this and making good decisions. My take-away was that while Clinton indeed presided over the “dot com” boom, that this was not entirely good fortune and serendipity…the economic policies and decisions by the Clinton White House has much to do with this boom in economic history.

We all know the phrase “irrational exuberance” that was uttered by Greenspan in 1996 as the Dow charged ahead. I found it quite interesting to read the context of this and the way those words have become part of the popular culture.

The beginnings of the downturn in 2000 and the change in the presidency was a pivotal time. I found that Greenspan actually didn’t think much of Bush 43, particularly as he insisted on doing what he said vis-a-vis taxes and the economy, rather than adapting to the strategy warranted by the change in economic conditions, and that Bush 43 also did not try to rein in spending and maintain the balanced budget left him by Clinton.

His assessments of the other significant and growing world economies are quite readable and thought-provoking. America cannot be an isolated island. While de Tocqueville rightly attributed much of the early growth and stability of this country to its fortuitous geography, we no longer have that luxury. This is a global world and global economy. Decisions have to be made that are consistent with that framework. Globalization, as Greenspan says, is a positive factor “…all credible evidence indicates that the benefits of globalization far exceed its costs, even beyond the realm of economics.”

We must think about the future, Greenspan says. We have to engage the world, and we have to have an educational system that addresses the need to supply skilled workers to keep competitive and to help address income inequality.

This is an excellent book. Engaging, interesting and well written.

Book Review, “The Black Swan” by Nassim Nicholas Taleb

This is a book I’ve wanted to read since it came out about a year ago, but it just made it to the top of my reading stack. I gave a copy to my dad for Christmas, and when he finished, it came back my way. A good deal 😉

The subtitle of this book is “The Impact of the Highly Improbable” and Taleb tells a compelling story about our tendancy to ignore the unexpected. I’ll confess that I felt the topic could have been covered with fewer words (probably because I agreed with his thesis going into the book), but Taleb’s anecdotes are interesting, though I found the reading tedious at times. His hypothetical states of Mediocristan and Extremistan provide a nice framework for the argument…models and plans work in Mediocristan (a land of stability and central tendancies) but fail with the outliers, the fat-tailed (or bimodal dumbbell) distributions of Extremistan (a land of unpredictability). I’ve always been one who liked the first 80% of a problem or task, and got bored with dotting the “i’s” and crossing the “t’s”, and the idea that exhaustive planning is bound to fail in our real world of Extremistan resonates with me. Yes, you have to plan, but realize that you can’t plan for all the eventualities, and that planning and the execution of plans needs to be tempered with a knowledge that things just may pan out in a way totally outside your expectation. The Bell Curve may look appealing, but a high sigma event happens more often than it should. I liked his discussion of scalability…trying to set bounds is itself bound to fail. Why is a bound valid (except, I suppose, where there are certain physical constants that we don’t know how to move beyond…hmmm… sounds like an opportunity for a Black Swan!). The Fractal Randomness model is, as Taleb says, aesthetically pleasing, and allows us (through scaling) to at least partially anticipate the possibility of something so extreme (we are in Extremistan!) that it would have been a Black Swan, but is now a Gray Swan — at least somewhat conceptualized. Taleb says “…Mandelbrot domesticated many of my Black Swans, but not all of them, not completely. But he shows us a glimmer of hope with his method…”

So, if we can’t avoid Black Swans with exhaustive planning, what can we do? Look for ways to expose yourself to the potential of positive Black Swans, and work to mitigate the damage that negative Black Swans can bring. Expose yourself to serendipity, but beware the freak storm blowing on your house of cards.

A thought provoking book and worth a read.

Book Review, “The Big Switch” by Nicholas Carr

I recently read “The Big Switch, Rewiring the World, from Edison to Google” by Nicholas Carr. I enjoyed the book, even though I’m a technologist who actually thinks he understands a lot about how the Internet and its applications work. Carr does a nice job of comparing the “utilification” of computing with the conversion of the electrical power industry from locally generated and managed power points to the grid of today (though interestingly, we’re now seeing more “point” generation — personal power. Many technologies seem to oscillate between centralization and decentralization, just like computing). He highlights the disruptive nature of internet technologies and points out that utility computing and ubiquitous access will change the world and the economy in profound and not completely predictable ways. After all, many of the technology decisions of the early industrial age looked sound but were quickly rendered obsolete — technological obsolescence is not a phenomenon of the computing age alone.

Carr’s “big picture” approach is good for those of us who labor in technology, especially in management positions, to help us keep in our minds exactly how much we don’t know and can’t predict, except with 20/20 hindsight. This is also a good book for the educated layman trying to understand the macro-level impacts of computing on society. Carr could have speculated more on the economic and societal implications, but he leaves that as an exercise for the reader 😉 . While it’s not in the same league as Friedman’s “The World is Flat,” this book complements Friedman’s themes very nicely.

Here’s an Amazon link to the book…

Book Review, “Collapse” by Jared Diamond

Just finished reading “Collapse” by Jared Diamond (I mentioned this book in my 12/24 post). I will admit to being a card-carrying liberal (but also a card-carrying member of the NRA!), however also note while I have a technical graduate degree, my undergraduate degree is in business, and I believe in capitalism. To my mind, Jared’s book is a very thoughtful and scholarly tome on the life and times of societies, and ties economic success to environmental awarness.

Diamond begins his book with a comparison of a historical farm in Norse Greenland and a farm in present-day Montana, talking about the challenges that each face(d), setting the stage for understanding larger societal collapses due to failure to adapt to changing conditions and recognition of resource limitations. He lays out the plan for his thesis, including a discussion of his positions on economics and the environment, trying to proactively defuse perceptions of bias. After the introduction, Diamond turns to a lengthy discussion of modern Montana, including a treatment of issues with mining, forestry, soil & water conversation, native & non-native species, as well as discussion of views toward regulatory frameworks.

Next, Diamond looks at past societies — Easter Island (once covered in dense forest) is particularly poignant. He often returns to a simple question at many places in the book, viewed from many angles — what did the Easter Islander who cut the last tree think about it? Then he considers Pacific islands, comparing differently resourced islands and the way their natives either did or did not adapt. No study of collapse is complete without discussion of the Anasazi and other southwestern US peoples. The level of detail in anthropological knowledge here, from both accessibility and the preservation of wood and packrat middens, provides particularly clear insights. He considers the Maya, a complex case with tantalizing incomplete records and information. The Norse and their expansion from Scandanavia to Iceland, Greenland, and the fringes of North America provide interesting studies in the way that cultural norms can play to the success or failure of a society; Diamond devotes 100 pages to these discussions.

Diamond then turns to modern societies with discussion of Rwanda, Hispaniola (the dichotomy illustrated by Haiti and the Dominican Republic, and the perhaps “accidental” conservation that has made such a big difference), China, and Australia. I was particularly interested in the coverage of China and Australia, but for different reasons. China is such a huge force in today’s world in population, resources, and the growth of consumption. China is building one coal-fired power plant each week! Understanding the Chinese connection to world economic and environmental stability is critical. Australia fascinated me, as I was surprised to learn of the extent of resource depletion and the marginality of many of its agricultural endeavors. On a personally first-world selfish consumer level, I hope that the wonderful Shiraz of the Barossa Valley, for example, continues to be available at accessible prices ;-).

After he discusses the past and present, Diamond attempts to explain why some societies seem to make disasterous decisions, including the “tradgedy of the commons” (this is the view that of a common resource, I better make sure I get all I can get because if I don’t, you will get mine and yours). He then works to tie economic success to environmental awareness, and in my mind, does a good job. Diamond is clearly not a man who simply says “business = bad” but recognizes the symbiotic relationship that exists there, particularly in sustainable resource exploitation. He lists our serious problems, but then optimistically closes with reasons for hope that we will “get it” and effectively address the problems that face us.

I heartily recommend this for your reading pleasure.

Here’s an Amazon link to the book

The World is Flat….

So, I finished reading “The World is Flat: A Brief History of the 21st Century” this week. Here’s an Amazon link if you wish to take a peek. This is a book that I wish everyone in the country would take time to read. I read Friedman’s previous book, “The Lexus and the Olive Tree,” and that was good, but it didn’t have the same impact on me that TWIF did. I encourage anyone who cares about the economic future of the good ol’ US of A to pick up a copy and spend a bit of time on this…and then go sharpen up your job skills.