Required Reading

Here are some of the pieces that have most informed my thinking about the world:

Barry Schwartz and Kenneth Sharpe, Practical Wisdom (TED talk):  Over the past few decades, we as a society have tried our very hardest to design systems that make purely self-interested people do socially beneficial things. Most of the time these efforts have involved deploying a combination of rules and incentives. Sharpe and Schwartz convincingly argue that these strategies largely miss the point. If you look at what people’s jobs actually involve—even jobs as seemingly straightforward as janitors—there is a huge amount of improvisation required, which no set of rules can hope to capture. Instead of trying to hack our way into incentivizing people to do good things, we should teach people to have the moral will and moral skill to be good on their own. Aristotle called this type of good judgment “phronesis,” or practical wisdom. It’s also a core principle of most major faiths.

Sandy Jencks, Inequality: Many Americans are fond of saying that we believe in “equality of opportunity” but not “equality of outcomes.” But equality of opportunity is not a coherent concept, as Jencks illustrates here. In about 10 pages, he shows that unless you believe in taking kids away from their parents, there will always be inequality of opportunity: using your financial, social, and intellectual capital to give your kids the best possible start in life is usually what we think of as simply good parenting. All that society and government can control, then, is the outcomes associated with this inherent inequality of opportunity. Inequality of opportunity may be inevitable, but we as a society can choose whether we want those few fortunate individuals who both have the right parents and play the game exceptionally well to end up with everything while most people grind away in abject poverty or whether we would rather have some people do better and others worse within a broad middle class.

Jencks’s logic is no less inescapable today than it was when he wrote this book in 1972. The only thing that has changed is that today, it is far more obvious that we have chosen to accept a winner-take-all system instead of supporting a robust middle class.

Aaron Renn, Urbanophile.comThis is the blog that originally got me interested in urban planning. Back around 2010-2011 I read it religiously, and one of its posts was the inspiration for my master’s thesis. It’s worth skimming through his archive, especially from 2009-2011 or so, if you’re interested in urban planning and economic development. Here are some of my favorite posts:

Steve Randy Waldman, Interfluidity.comWaldman does a better job than almost any other writer I’ve seen of understanding economic theory backwards and forwards while also being able to identify the problematic assumptions that most economists miss, and correctly situating economic questions within broader moral and political discussions. A few sample posts:

  • The Generalized Resource Curse – how technological development can corrupt developed countries in the same way that oil has corrupted many developing countries.
  • Should Markets Clear – many of the most important theorems of microeconomics—the part of economics that “just works”—implicitly assume a roughly equal income distribution. They were developed at a time when one could reasonably argue that such a distribution held. It no longer does. My classmate Nathan Robinson makes a similar observation in less technical language here.
  • The Mother of Invention is purchasing power-weighted necessity. The points Waldman makes here were recently documented by Xavier Jaravel.

Jane Jacobs, Ricardo Hausmann, and Cesar Hidalgo, Economic Complexity: Most economic analyses focus on one or two big numbers: GDP, unemployment, etc. These three theorists argue that instead of focusing on the total quantity of stuff being produced (GDP), we should be concerned with the complexity and diversity of products that cities or countries are able to make. Economic development should be thought of as the capacity to make and widely distribute complicated stuff. No more, no less. Countries who can make that stuff will tend to be richer (economic complexity measures are a better predictor of GDP growth than capital investment, education, legal frameworks, or any of the typical explanatory variables), and countries who can’t make lots of stuff will either be poor or reliant on a few commodities.

Sam Pizzigati, The Rich Don’t Always Win: Lots of people (including myself) now recognize that the mid-20th century was something of a golden age for the U.S. middle class. But very few people understand why that was or how it came to be. Sam Pizzigati shows that the creation of the mass middle class was not something that just happened, and it also wasn’t just because of WWII, although that was certainly an important contributing factor. The mass middle class, he shows, was the product of decades of hard-core political fighting and organizing–including actions as extreme as FDR’s call for a maximum wage of $25,000 a year. This history is important to know because 1) it shows that there wasn’t actually anything magical about the mid-20th century; a broad middle class society is fully replicable today, and 2) it’s not going to happen on its own.

 

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