Economics

Book Review: Practicing the King’s Economy

/ J.K. / 4 Comments

Practicing the King’s Economy: Honoring Jesus in How We Work, Earn, Spend, Save, and Give

My Rating- Must Read

Level – Easy read, medium length

Summary
The book basically tries to answer the question of what would it look like if we worked, ran businesses, spent money/time, and gave money/time in a way that was entirely shaped by a Biblical World View. After the intro the book is broken into 12 chapters that are based on the six ‘keys’ to practicing ‘the King’s Economy’. One chapter will introduce the key and the next is a shorter chapter that gives examples of how that key works in the real life, with examples of people/organizations that the authors know.

The six keys are – Worship, this is about who we worship. Is it God or money and how does that look in the way that we give. Community, the focus here is about having a broad community of all types of people, particularly those from different economic classes. Work, why do we work and what is the point of work? Also, what does the Old Testament concept of ‘gleaning’ look like in a modern world? Equity, based on the command that their be no poor among us, this isn’t necessarily just about making sure everyone has money, but that every one has a job and kind provide for themselves (or help to give to others), even further, it is about making sure that those jobs are enough. Creation Care, this is about environmental stewardship. Finally, Rest, and this is a call to bring back the practice of Sabbath.

My Thoughts
I really enjoyed this book. It was probably the most thought provoking and in some way challenging book I’ve read in a long time. Sadly, it isn’t often you read a book targeted at a popular Christian audience that makes you think, even rarely does one challenge the way you should live.

I’ll get the two nit-picky things I didn’t like out of the way first. I didn’t really like the intro, and this was due to their misuse of stats that is a pet peeve of mine. In the intro, they are trying to show that we are richer now than ever, but more unhappy. Unfortunately, they use GDP per capita, which is a useless statistic, because it ignores income inequality and the fact that middle classes wages have been stagnant for decades. It also ignores cost like tuition and healthcare that have risen more rapidly than anything else. However, I don’t disagree with their premise, if nothing else, we are at least more materialistic than ever and constantly surround ourselves with distraction. Second, and I think this is more on the editors or publisher, they only ever refer to Jesus as King Jesus, and this is done to reiterate the title, and it is just awkward and I wish authors/editors wouldn’t do that.

No back to the good part, if you are modern American Christian, especially on the conservative or Republican side, this book will be a challenge. I’d suspect many hardcore Republican’s won’t finish this book as it challenge the assumption that making money is the most important thing in life. It also encourages people to pay living wages, which Republicans generally oppose vehemently. Of course, there are aspects that all sides of the political spectrum will like and dislike, which is a great reminder that neither political party works from a Biblical worldview and we ought not act like they do.

The first chapter, about putting God first and showing that by how we give should challenge the way we all handle money. American’s like to think of ourselves as generous, but in reality we give about 2.5% of income. The Community, Equity, and Rest were interesting chapters that should make you think, and if you take take it seriously, will affect your life. And of course, it should right? The Bible calls us to be different, and especially the chapters on Community and Rest are reminders of just how different we should look. The Creation Care chapter was good and I agree with all of it, I’m a big advocate of environmental stewardship. However, it was probably the weakest on a Biblical basis, and I’m not entirely sure it fit well with the rest of the book.

The best chapter, and worth the price of the book alone, is the Work chapter. For one, many of us, especially white-collar workers who have a lot of options, struggle with what work should look like in out lives, but the crazy part is gleaning. In the Old Testament, the Jews were not allowed to fully harvest their own fields. God required that they leave the edges unpicked so that the poor, widows, orphans, and foreigners would have something that they could eat. Obviously, we are not a majority subsistence agricultural community anymore. So the authors dive into what it could look like and the ideas are fascinating and in some ways pretty radical to the way we view life in America.

I don’t necessarily agree with some of their options, or at least the way that they would work out in most places, but they are thought provoking nonetheless. It is certainly something I’ve never thought about before, but it has been on my mind sense I finished the book a few weeks ago. If you really want to be challenged and forced to think and try to rethink the way we view the economy today, and how we should view it as as Christians, this is a book for you. It is probably my favorite so far of 2018, and is definitely a  must read book.

*I received a free copy of this book in exchange for an honest review.

Book Review: Why Nations Fail

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Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Rating – Put it on your list

Level – Moderate, you’ll need some basic familiarity with economics, politics, and history; Long (462 pages before acknowledgements, notes, etc.) overly repetitious and a bit tedious.

Summary 
As I start to write the review, it dawns on me that perhaps the title is a bit misleading. It isn’t so much about why they fail, as to why the never even get off the ground. Some nations seem doomed from the start, however, other become wildly successful. Ultimately, I think, the point of the book is who are the ones that are successful and how does that happen? Acemoglu and Robinson pin it two factors, which taken with their opposites form something like a matrix or quadrant, and you need to overlap with the positive of both. These are whether or not you nation is politically inclusive and, and perhaps more importantly, the whether or not you have extractive institutions.

The politic aspect is fairly straight forward, are you in a dictatorship (or other controlling, top down government) or in a democracy (or other form of responsive government)? If you have no say in politics, and government is controlled by a few or just one person, it is fairly easy to see why that wouldn’t work. The more complicated and impactful side is the extractive institutions. These can take many forms, such as contract law or heavy taxation, but a good example is property rights. If you know you have solid and secure property rights, you are more likely to invest and build up your business. If you fear that an institution may step in at any moment and take your land or business from you, why bother?

The book itself is broken into 15 chapters, with an interesting preface about Mubarak and Egypt. The first chapter compares Nogales, Arizona and Nogales, Sonora; the two cities have similar culture and geography, so why is one rich and the other poor? The chapter serves as the intro to the book and leads into the second chapter where the debunk the reasons for poverty being related to genetics or weather, among others. Chapters 3 through 12 are basically case studies where the authors look a different political situation throughout history through the lenses of responsiveness and extractiveness. In 13 and 14, the authors discuss nations that fail today those that have become successful. The final chapter looks at our attempts to help impoverished nations and how understanding the causes, as the have proposed, will help us to better understand why those attempts have failed and how we can do better going forward.

My Thoughts
First, about the book itself – the authors are both academics, and the book certainly reads that way to an extent. The book could have been much more concise, dropping at least 100 pages without missing any case studies are points. I think part of the issue may come from the publisher/editor, in that instead of setting up most of the chapters as case studies that then looked at their points each time, it might have been better to make their points, and then touch on case studies as proof. Instead, each chapter could almost be read independently, meaning there is too much repetition of their point.

To the content of the book – it was fascinating, anyone with interest in economics, history, or politics, this book is a must read. One of the the more interesting points of history to me, was the impact of the Plague on serfdom in Europe. Eastern Europe reacted one way, England another, which would then impact America (as it was founded with this change as part of history), which ultimately effects me today. Had the reaction in England been the same as the Austria-Hungary reaction, who knows how different the Western World would look, perhaps I wouldn’t be writing this review right now.

Another point the spend some time on that is worth considering is looking beyond just economics. The point to growth of the economy under Stalin, but that the nation still failed. It is also helpful to see and understand how the impacts of colonialism, which was not inclusive but very extractive, still effects those countries and peoples today. The point was driven home a little more for me because I live in the South, which they actually spend some time on. The impacts of slavery on the economics of white people is still being felt today, though less so than a few decades ago. The discussion centers on the fact that obviously slavery is extractive and was horrible for black people, but it also never would have worked politically because it included so few people in the institutions. Most white people were shut out of the economy and wages and this impact lasted a long time. They point out the that median income in the South was about 40% of the median income through the rest of the nation as recently as 1950.

All of this works back to a reminder that part of why life is good for me today is pure luck. From serfdom in England, to the Civil War, on through today. If Lincoln had let the South succeed and be it’s own country, it clearly would have failed, based on the theories of the authors. Meaning, I could be living in a failed state right now, instead of America. They call it ‘small differences and critical juncture’ in history, but it is basically an accident of history; it is somewhat sobering to consider.

Overall, and interesting and challenging book. It could certainly be a bit shorter and cleaner, which is why I didn’t rate it higher, but a book that is well worth the read and one to put on your list.

Book Review: Misbehaving

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Misbehaving: The Making of Behavioral Economics

My Rating: Put it on your list

Level: Moderate to difficult, depending on your base knowledge of Economics and Psychology. Moderate in length, but reads quickly

Summary
Part Thaler autobiography, part time line of the development of the field, with plenty of humorous anecdotes and academic ‘anomalies’, this book does not read like a history of an academic discipline. The book is broken into eight broad chapter based around years in which Thaler worked through differing parts of the development of the field. The chronology starts with him as a graduate student, where he is just starting to look into ideas that would become the discipline, and proceeds up to the present, where he seems poised to hand over the reins to the next generation. Along the way are his stories of getting the discipline recognized by academic journals, struggles with the establishment, and gaining allies (across other disciplines, as well) and students that will become the next generation.

My Thoughts
This book, like the somewhat related book (Thinking, Fast & Slow) by his fellow collaborator, Daniel Kahneman, kind of annoyed me in how well it is written. Thaler has had a nearly five decade career as researcher and writer, so he should write well, but that is not what I mean. His book is funny and reads quickly like a narrative. As I said above, it it part autobiography, and lends itself tremendously to humorous narrative that leaves you interested in reading more. As a pretend internet researcher and writer, I am envious that someone with actual credentials writes so well.

All that being said, I think I missed the subtitle of this book when I first heard about it a few years ago. I heard Thaler on a interview, and knew he was related to behavioral economics, but didn’t quite realize this was book he was promoting. I must have searched his name on amazon and bought the first book I saw, without noticing the reference to ‘Nudge’ on the cover. Nudge was really the book I was looking for, which is more about the research out of Behavioral Economics as it relates to topics like money and health. ‘The Making of Behavioral Economics’ should have clued me in to this book being more of a history. Luckily, I enjoy history and biographies, and as I said above, he is a very talented writer.

One of the first things that stuck out to me was how long he as been in the field. His book starts in 1970, with him as a grad student. I wouldn’t be born for another decade and a half, and I don’t consider myself very young. I’ve heard that Millennials will have between seven and 17 careers over their lifetimes, so it amazes me to read of someone’s history in a field that is longer than my lifetime.

Reading history is always fascinating, because you, with the addition of hindsight, can read and say, ‘how did these people miss this?’ I couldn’t believe some of the resistance he and others would face as the argued against the efficient market hypothesis. I was in high school during pets.com (look it up kids) and the tech bubble and finished grad school a few months before the housing bubble popped, so I struggle to believe in any way the the market is efficient and that people are well informed. Thinking back to my undergrad economics courses, I believe I was taught the distinction between theory of economics (people who Thaler calls Econs) and actual behavior (called Humans). In grad school, the distinction was called that of theory and practice. So, it is interesting to see that a few decades before, saying things like this, which to me are clearly true, would get you laughed out of conferences and barred from academic journals.

This history was interesting, and the debates with other academics were amusing and insightful, but the book really shines with the anecdotes. I won’t go through all of them here, but the include an economist who refuses to sell his wine (for a gain) at the market price while also stating he would never buy it at the price and companies whose stock prices are lower than their subsidiaries (even when purchasing the larger company stock means getting the smaller companies stock included; this means the larger company is valued in negative dollars relative to market cap).

These types of stories are what I enjoy reading. They are amusing on their own, but also challenge your assumptions about certain areas, but even more, make you really question whether you actually know what you are doing. You may think you do everything rationally, but you probably don’t, and that is illustrated time and again in this book. If you are looking for just stories and research results, you are probably better off with Nudge or Thinking, Fast and Slow. However, if you are interesting in Behavioral Economics in general, this is definitely a book to put on your list.

Book Review – Thinking, Fast and Slow

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Thinking, Fast and Slow – Daniel Kahneman

My Rating – Put it on your list

Level – moderate to difficult read, it is well written but some of the concept are tough, fairly long, but ready a little quicker then the 400+ pages

Summary
Broadly speaking, this book is about thinking. More specifically, the two systems (fast and slow), basically how you suck at thinking, and finally ‘the two selves.’ Technically, the book is broken up into five parts – two systems, heuristics & biases, overconfidence, choices, and finally the two selves.

Page 20 starts off his quick definitions of the two systems. System 1 is automatic and works quickly with little to no effort. System 2 ‘allocates attention to the effortful mental activities that demand it’ and this usually requires concentration and can be interrupted and disrupted.

The middle three sections could possibly be rearranged but essentially include research biases, design, and problems (fallacies, sample size issues, etc.). This part of the book will blow your mind. It is unbelievable some of the things that affect research, especially anchoring. It should make you terrified to ever go before a judge.

Finally, the two selves. This is basically the self that exists (or existed, experienced something) and the ‘remembering’ self, not necessarily what happened, but what you remember happening. The implications of these two differing selves have far reaching affects. As an example, researchers had two groups of people that underwent a procedure. One group experienced the procedure and long with a high peak of pain, and then slowly fading out. The other group had a shorter experience, but didn’t fade as much, but also didn’t peak as much.

The participants rated pain levels during the event. Later, researchers asked the participants about their experience. Whom had the worse experience? Well, plot twist, it was the shorter one with the lower peak pain. Why? Because all anyone remembered was the end. The ones in pain at the end, rating their procedure as worse than those whom had the longer more painful one. Those participants rated their experience as not that bad, as all they remember is the end, which was just some amount of discomfort, instead of pain.

My Thoughts
This book is crazy. There are so many mind bending things that you will reread some sections over and over again. Some thing you just will not believe. It confirms our worst fears, we really aren’t as smart as we think. We are incredibly susceptible to leading. Subliminal messages and marketing have a much, much greater impact than we think.

Even while reading it, I wanted to think of myself as smarter. Especially the sections about coin tosses and chance. As an experienced gambler, I knew most of these things, especially if you are familiar with probably and things like ‘pot odds’. However, I’m not, as clearly showed in later examples. It is unbelievable how open to suggestion your mind is. We like to all think we are special, unique, and different, however we all fall for the same thing.

If you are looking for a book to challenge your way of thinking, put this on your list. You’ll find yourself arguing with the author, even as he argues with himself, and even as you see the clear evidence. You can learn a great from this book, especially as it related to major life decisions. Additionally, Kahneman is a great writer. I found myself jealous at various points as his summaries of complex research can read almost as easy as a novel. He is also a Nobel Laureate and if you know anything about Richard Thalor (whom makes an appearance) or behavioral economics, this book is for you.