By Arnold Kling
Recently, Tyler Cowen listed the ten books that have influenced him the most. I have a much harder time coming up with such a long list. I am more inclined to list people (Tyler among them). But here goes:1. David Halberstam, The Best and the Brightest. My take-away from that book might be described as “The Exclusive Country Club Theory.” He makes foreign policy in the 1950’s and early 1960’s in the United States sound as if it was the province of an exclusive country club of people with a certain temperament and background. Wall Street lawyers, mostly. I have to say that I have carried this model with me for a long time. To this day, I view the relationship among Treasury, the Fed, the New York Fed, and large financial institutions in Exclusive Country Club terms. These people vet one another, agree with one another, and support one another. They do not question whether their interests coincide with those of the rest of the country–they just assume that the country depends on their institutions and their class leadership.
2. George Goodman, aka ‘Adam Smith,’ The Money Game and Supermoney. He was the Michael Lewis of his time–a great storyteller who also understood the substance of finance. I think his books still read well, although I could understand it if others find the stories themselves too dated. These books sparked my interest in finance theory and in the temptation to both believe and refuse to believe in efficient markets.
3. Carl Shapiro and Hal Varian, Information Rules. Again, you may find that the examples seem old, but no better book has been written on the economic issues of the information-driven economy. Among other things, this book convinced me that Price Discrimination Explains Everything.
4. Ray Kurzweil, The Age of Spiritual Machines. At first, I did not buy it. However, I have mostly come around. It is now possible to evaluate his predictions for 2009 (made around 1997). He did score with this one (p. 190):
Computers routinely include wireless technology to plug into the ever-present worldwide network, providing reliable, instantly available, very-high-bandwidth communication. Digital objects such as books, music albums, movies, and software are rapidly distributed as data files through the wireless network, and typically do not have a physical object associated with them.
However, for the most part, his predictions are far too aggressive. He was about right on hardware capability, somewhat optimistic on software capability (he thought that functions like language translation would be pretty much mastered by now), clearly too optimistic on the emergence of applications (he predicted computer-controlled cars on main highways by now) and ludicrously optimistic about the speed at which education and health care will be transformed by technology.
5. Amity Shlaes, The Forgotten Man. Folks on the left scorn this book, and it is not without its flaws. But ultimately, I think the left hates Shlaes not for what she gets wrong but what she gets right. What she gets right pokes huge holes in the high school book narrative of the Depression (Herbert Hoover sat back and did nothing, Roosevelt saved the economy). My takeaway from this book is the importance of the battle over historical narrative. We see that today in the determination of the left to blame the financial crisis entirely on “free-market ideology,” even though that narrative is not such a good fit for the facts.
6. George Gilder, Microcosm. This was his history of the microprocessor. My guess is that it will not read well today, but at the time his emphasis on the relative unimportance of the materials in computers (he refers to silicon as “sand”) stimulated me to focus on intangibles in the modern economy.
7. Thomas Sowell, The Vision of the Anointed. This book got me started thinking about the origins of the differences between the left and the right. I do not think anyone has fully satisfactory answers, but it is a fascinating question.
8. Amar Bhide, The Origin and Evolution of New Businesses. He breaks down the business ecosystem into two dimensions–degree of capital intensity and degree of ambiguity, and he gets remarkable mileage out of the resulting matrix.
9. Bill James, The Baseball Abstact, 1987. Others can be equally analytical about baseball. What is striking about Bill James is how well he wrote–when he cared. If only Amar Bhide wrote this well…
Ernest GrahamKenneth Grahame, The Wind in the Willows. The character of Toad is brilliantly drawn and offers great insights.
11. Neal Stephenson, The Diamond Age and Snow Crash. How I came to understand nanotechnology and competitive government, respectively.