Links to Consider, 1/17

Burt Malkiel's favorite business books; Joel Kotkin on U.S. resilience; Armin Rosen on human rights realism; David Epstein on athletes' heart attacks; Joseph Politano on measuring rent inflation

Burt Malkiel was asked by the WSJ to recommend five business books. I was pleasantly surprised by his inclusion of The Millionaire Next Door.

The typical millionaire isn’t living extravagantly with fancy homes and cars, all thanks to an inherited trust fund. Most millionaires are first-generation rich. They often started their own business. Wealth in America is more often the result of a strong work ethic, frugal spending habits, and regular savings and investing.

The book describes the typical millionaire as a disciplined household that lives well within its means for many years, often while running a small business. The authors imply that you have agency in your financial life, which I imagine would put off those who prefer a villain-victim model of the economy.

Malkiel himself is the author of A Random Walk Down Wall Street, which would be on my list of top business books. What others? Off the top of my head:

The Money Game, by ‘Adam Smith’

The Origin and Evolution of New Businesses, by Amar Bhide

Information Rules, by Hal Varian and Carl Shapiro

Liars’ Poker, by Michael Lewis

If paid subscribers would like a book discussion over Zoom of any of these, leave a comment to that effect.

Joel Kotkin writes,

the US is a great country led by small minds. In recent times, it has been ruled by a narcissistic moral reprobate and it is now being run by a cognitively deficient and scandal-plagued politician.

…how does an America led by mediocrities succeed? The secret sauce lies in two great assets – America’s geography and its constitution.

Like Peter Zeihan, Kotkin salutes our ample farmland and sources of oil and gas. And although our public sector seems to me to keep moving in the wrong direction, one thing you can say for it is that it moves slowly. We may be degenerating, but at least we’re not in a hurry about it. For that, our Constitution’s checks and balances deserve credit.

You will get annoyed with me for saying this, and I may look stupid a year from now, but to me President Biden’s re-election chances look pretty solid. Our geopolitical position appears strong, considering the internal problems faced by China, Russia, and Iran. With our standing as the world’s safe haven enhanced, the U.S. government debt bomb probably won’t go off under Biden’s watch. As for the economy, financial markets seem to be predicting a soft landing, in which inflation settles down without a steep recession. Although that would appear to defy historical patterns, it looks to me like a likely scenario. In my opinion, Biden’s policies have done more harm than good, but I do not think that swing voters will see it that way.

Armin Rosen writes,

One major difference between the regime-toppling momentum of the late 1980s and our current moment is that the struggle against communism wasn’t as lamely professionalized as the modern human rights effort, which is more an industry than a movement. Today, vaguely foreign policy-themed do-gooders follow a pipeline from Harvard’s Kennedy School to the State Department to the International Crisis Group, or maybe from SAIS to a U.N. agency to a consulting firm. A lack of meaningful accomplishments never seems to encumber their professional rise.

His article covers a meeting held in Lithuania held by activists of a different sort, with a single-minded focus on freedom. They are part of an organization launched by Gary Kasparov, among others, which is trying to figure out how to empower people living under autocratic regimes to fight for freedom.

Rosen himself argues that freedom movements depend on American moral and material support.

If American arms, markets, and popular sentiments are actually the leading factor in whether Venezuelans, Iranians, or Chinese live in freedom, then the outlook for the world’s dissident movements looks muddled. A theory of freedom centered on American actions has a host of dark implications: It means that movements against dictators only matter insofar as they can shape opinions in a faraway country whose leaders and citizens can never seem to decide how responsible they are for what happens in the rest of the world. Even worse, it would mean that idealism has little real force, and that beliefs in the inevitable triumph of justice distract from the power dynamics that determine how, and whether, the world’s people live.

David Epstein writes,

Everybody should know their family medical history better than they probably do. And preparticipation screening for high school sports could actually be a great time to help with that. The American Heart Association has a simple, 12-step screening process, much of which is just gathering some personal and family history. Do you ever nearly faint? Do you ever have chest discomfort while exercising? (Symptoms of dangerous heart conditions in young people are sometimes mistaken for asthma.) Has anyone in your family died of cardiovascular causes before the age of 50? 

If you are interested in the topic, then this essay is probably the one to read.

Joseph Politano writes,

Brian Adams, Lara Loewenstein, Hugh Montag, and Randal J. Verbrugge published published “Disentangling Rent Index Differences: Data, Methods, and Scope” where they created the New Tenant Repeat Rent (NTRR) Index and All Tenant Repeat Rent (ATRR) Index. Using the same underlying BLS microdata that composes the housing component of the CPI, the NTRR uses information on lease turnover to track rent growth in units that change tenants. The ATRR covers all housing units but attributes rent changes to when they happened, as opposed to the official CPI data which tracks price changes when units are surveyed.

This sounds like the equivalent of the Case-Shiller repeat-sales method for home prices. Certainly it is a better, more timely measure of rent inflation than what the BLS used before. For 2021 and most of 2022 the new measure showed much higher inflation than the old measure. So the inflation problem would have been apparent much sooner and much more clearly if this had been used. Now, of course, it’s the opposite, and the old measure will rise faster than the new one. So will the government try to switch to the new measure ASAP? Suspicious minds want to know.

referenced above:

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The Most Important New Inflation Indicator

Sudden Cardiac Death in Athletes — Lessons From My Reporting