Links for Later 12-31-15

1. A book cave of about 5000 books, made by a student at Yunnan Normal University (via Marginal Revolution).
2. Venture capital disrupts itself.

3. Kobe said he’d go back & tell his younger self "to understand compassion & empathy." I asked why those two things: pic.twitter.com/ZnpNQ2a6W6

   

   — Baxter Holmes (@BaxterHolmes) December 28, 2015

My Answer to the Question: 90% of the wealth goes to top 1%. Is that good for the country?

Over on Quora, someone wanted to know whether high levels of inequality are good for the country. Here's my answer:

 

A High Level of Economic Inequality is  Economically Inefficient

If we were talking about a microeconomic market where there was extreme market concentration, such that one company either represented 90% of the supply or 90% of the demand, we would have no problem saying that this was a near-monopoly situation (in the case of supply) or near-monopsony (for demand), and that this was undesirable. A monopoly causes high prices in the market, a smaller market overall, and a social deadweight loss from all of the lost transactions that would have benefitted both buyers and sellers. These are all symptoms of a market disease or an economic dysfunction.

Extreme disparity in income and wealth is an economic dysfunction that produces poor results for the economy as a whole. It results in labor resources that are underpaid and underemployed, oversaving by the 1%, underinvestment in public assets, and anemic growth. Growth is anemic for several reasons: 1) the average consumer is too budget constrained to reach optimal choices and not sufficiently incentivized to work any harder, and 2) the consumers who are part of the wealth-holding class become increasingly harried due to the increasing slope of the wealth curve. In other words, if you are poor, you can't afford the necessities of a good life, and also can't improve your life by working more or more effectively, you aren't an efficient participant in the economy, so the economy will tend to shrink or stagnate. If you are rich, you will look to your next door neighbor, who is twice as rich as you, and you will feel poor; you will then look at your other neighbor, who fell on hard times and who is now half as rich as they once were. Looking at these two things, you will spend more and more of your time worrying about what will befall you tomorrow. Instead of being an efficient participant in the economy, you will either begin making unwise gambles to try to catch up to your successful neighbor, or become very thrifty and risk averse to avoid the fate of your unsuccessful neighbor. You will, like the budget-constrained worker, be an inefficient part of the economy, and both you and society will suffer a loss for it. The economy, lacking the driving force of both rich and poor, will stagnate or shrink.

 

A High Level of Economic Inequality is Unethical and Undesirable

The arguments in favor of gross economic inequality fall into three groups: 1) utilitarian arguments that arrangements leading to inequality produces positive results relative to any other arrangement, 2) arguments that some abstract good, such as economic freedom, are so valuable as to outweigh the negatives, and 3) arguments from market theodicy.

With regard to argument (1), there is evidence that some degree of inequality is healthy, because it offers incentives to compete economically, to be financially prudent and to work hard. While society might value everyone equally, and therefore try to offer a fair and level playing field, it doesn't value equality to the exclusion of any other abstract good, and the cost of creating and enforcing complete equality is as impractical and undesirable as creating and enforcing complete inequality (where one person controls all assets, and everyone else is a serf or slave). For these reasons, mixed market economies are favored on the grounds of openness, fairness, freedom, growth, happiness and flexibility, among other abstract values. We tolerate mild inequality of outcomes because the millionaire's success helps make the beggar's life better, and because stamping out mild inequality would be very, very costly relative to the benefit.

To justify gross inequality in this framework, we would have to believe that the social value of an additional dollar's worth of happiness is greater for the millionaire than for the beggar. The more you have, the happier you are to have more, and the happier we should be to give it to you. If this is true for wealth, then wealth is the only known material good for which it is true. This is nonsense.

With regard to argument (2), if we are unwilling to grant equality uncontested priority over all the other abstract goods, then we should also be skeptical that freedom can be an uncontested, singular value. Maximizing economic freedom at all costs leads to unconscionable results, just as does maximizing economic equality.

Instead, societies have a plurality of values, a plurality of abstract goods in tension with one another, and just like physical goods, it's necessary to balance them and arrive at the best possible basket of goods under changing conditions.

As for argument (3), that the market is somehow a perfect moral judge, this is equally foolish. As Mark Twain observed, if God seeks to punish us with thunderbolts in this life, then His aim must be very poor indeed, given the distribution of lightning strikes. The market is a wonderful tool and a servant, but a terrible master. Its thunderbolts (good and bad) are no better distributed than the lightning.

 

In conclusion: No, it's not healthy for the economy or the country to have extreme inequality.

Best Books (I Read) In 2015

On the Move and Gratitude Oliver Sacks
A while ago on reddit, there was a massage therapist who said that 1) everyone's body sags and has other imperfections, and 2) when people relax, they become luminous, lit from within. Oliver Sacks is the patron saint of this dual nature of humanity. He wrote about it, he saw it in his patients, and he lived it. In his writing, he became luminous. In the process, he inspired thousands of future scientists with stories of human beings afflicted in some horrible ways, but also able to connect as humans. Gratitude, which consists of four late essays written after his terminal cancer diagnosis, is really a coda to On the Move, Sacks' record of a remarkable life.
Taken together, these two are the book of the year.

Natural Born Heroes Christopher McDougall and Patrick Leigh Fermor: An Adventure Artemis Cooper
As Oliver Sacks is my favorite science writer, Paddy Leigh Fermor is my favorite travel writer. He is most well known for his pre-World War II walk across Europe from the Hook of Holland to Istanbul, and his actions during the Battle of Crete, during which he kidnapped one of the two German generals in charge of the forces occupying the island. Natural Born Heroes tells this story and the story of the other remarkable people in the Cretan Resistance and the British "Firm", coupled with advice on how to run and climb like a Greek shepherd and fight like the Heavenly Twins. Artemis Cooper's Fermor biography fills in a lot of detail before and after Fermor's travelogues, and makes an excellent companion to his works.

Syllabus and What It Is Lynda Barry
Two classes, ostensibly about how to draw, but also about how to think, how drawing helps you think, and the value of sketching daily. These will do interesting things to the inside of your head.

Galileo's Middle Finger Alice Domurat Dreger
Scandals and controversies involving scientists and activists for whom discretion is not the better part of valor. Alice's own work on human sexuality and anatomy has been at the center of two or three controversies since the book came out earlier this year. I liked this book so much that I invited Alice to be a guest on the podcast.

Lost Enlightenment: Central Asia’s Golden Age from the Arab Conquest to Tamerlane S Frederick Starr
I knew next to nothing about Central Asia during this period (600-1200 CE), other than that the Silk Road ran though it, and that Marco Polo traveled there on his way to China. The area between Persia and China of a thousand years ago remained a blank space until I read Lost Enlightenment and learned about the scientists, conquerors, poets and citizens of this region.

Werner Herzog's Guide for the Perplexed Werner Herzog and Paul Cronin
I have a rule that I have to read any book recommended to me by three or more people. This was the most recommended book of the last year. A series of interviews between Herzog and Cronin covers all of Herzog's movies and much of his biography.
Key lessons learned: The truth is not very good at dispelling a rumor: only a juicier rumor works. Always carry a set of bolt cutters with you. When scouting the top of Cerro Torre, where the winds can blow up to 100 mph, always carry chocolate, always tie in to your fellow climbers, and if you get blown off, remember to enjoy the spectacular view as you glide to your death a mile below. It is possible to haul a steamboat up a mountain if you are sure you have a large enough tree trunk for a linchpin. People are endlessly fascinating. It may take twenty years for you to realize that John Waters is gay.

The Raven Boys, The Dream Thieves, Blue Lily, Lily Blue and The Scorpio Races by Maggie Stiefvater
If, like me, you remember reading Susan Cooper and Madeleine L'Engle's books as a key childhood experience, you will want to pick up some of Maggie Stievater's books. If, on the other hand, you get your media recommendations from Tumblr and fanfiction sites, you'll also want to pick up these books. Books where place is a character. Books where even the villains are three dimensional characters, or perhaps just enjoy exotic cheeses and magical artifact collecting. Books where the heroes are cross with each other, or insecure, or just difficult to get along with. Books with dead Welsh kings, forests that speak Latin, and bloodthirsty horses from the sea.
Stiefvater is also an accomplished artist, musician and race car driver, which is a distressing amount of talent to find concentrated in one person.

Golden Son Pierce Brown
Pair Stiefvater's YA fantasy books above with Pierce Brown's Golden Son, follow up to Red Rising, about a highly stratified society spanning the Solar system, and Harrow, the man from the lowest caste, the Reds, hidden among the society's elite, the Golds. Good old-fashioned, over the top space opera paired with bildungsroman. I can't wait for the third volume to come out in a few weeks.

Links for Later 12-15-15

1. Another mansion with an invisible owner, this time in Los Angeles.
2. What was going on in London in 1606, the year Shakespeare wrote Lear?
3. Lengthy profile of strategist Edward Luttwak.
4. Emma Willard's "Temple of History", a memory palace or just an infographic?
5. Why there will not be a draft.

Drawing Technique: Foreshortening

Using the "coil technique" to do foreshortening during the sketching phase. This method is so good that you'll think, "Why didn't I know this already?"