Things to Read on the Morning of October 11, 2014

Must- and Shall-Reads:

• Andy Dubbin: As sea level rises, so does money spent denying it
• The Oatmeal: Christopher Columbus was awful (but this other guy was not)
• John Podesta: Deficit anxiety is not the answer. Here’s what America needs to do
• Clay Shirky: Publishing and Reading
• Bo Rothstein and Eric Uslaner: All for One: Equality, Corruption, and Social Trust
• Daniel Davies: A Disquisition on the Nature of Debt
• Barry Eisler: The Heart of the Matter: Franklin Foer: “Stop Amazon, Keep Publishing Exactly As It’s Always Been!”
• Nick Rowe: Helicopters, redemption, and the target
• Brooke Masters: Satya Nadella’s bad karma over remarks on women’s pay

1. Daniel Davies: A Disquisition on the Nature of Debt: “Debt… is a promise to pay back a specific amount of money at a specific time. Why is it so popular–why do people always seem to end up getting into it? Why, for example, don’t people make more equity investments?… Debt has one big advantage… the same advantage that market economies have over command economics–it’s really really efficient in terms of the amount of information that people need to gather about each other. If you’re lending money under a debt contract, all you need to think about is ‘Do I think this guy is good for the money?’, and all the borrower needs to think about is ‘Can I pay this back?’. If you’re trying to make an investment and share the risks, all sorts of other questions come into play: ‘How much could this be worth in a really good outcome? What further projects might grow out of this one? What effect will the sharing of the upside and downside have on the way the thing is managed? Am I selling my shares too cheap?…. David Graeber wrote a whole gigantic book, one of the messages of which was that from an anthropological view, debt contracts denatured exchange relationships and took them out of their context of cultural human interactions, but in my review, I noted that Graeber didn’t seem to appreciate the extent to which this is a collossal time saver…. And this even extends into credit analysis. I once calculated, to win a bet… that… if banks were to carry out a full credit assessment on all of their counterparties every time they incurred a new exposure then this would take up all of the time of every Chartered Financial Analyst ever to have got the qualification, doing nothing other than these credit checks. It’s literally impossible for the system to work without a degree of blind faith that most credits are money-good. The conclusion… is that… from both the banks’ and Greece’s point of view, these weren’t bad loans–they were good loans which went bad…. All of which isn’t to say that the banks deserved to get paid back, quite the opposite… the 70% writedowns that they took should… be regarded as… just punishment…. Everyone made decisions just as bad as the Greeks, but as I say, Greece was less able to deal with the consequences…”

2. Barry Eisler: The Heart of the Matter: Franklin Foer: “Stop Amazon, Keep Publishing Exactly As It’s Always Been!”: “If Foer wants to claim Amazon is a ‘monopoly’, that’s just routine thoughtlessness…. But then he goes on to make a claim that can only be the product of shocking ignorance or brazen deceit: ‘That term [monopoly] doesn’t get tossed around much these days, but it should.’ Holy shit, ‘Amazon is a monopoly’ doesn’t get tossed around much these days?! Did Foer even read the George Packer piece he cites?…Has he read David Streitfeld in the New York Times, or Laura Miller in Salon?… Just Google “Amazon Hachette Monopoly” and see what you come up with. I see three general possible explanations for Foer’s remarkably inaccurate claim: 1.  Foer is embarrassingly ignorant…. 2. Foer is aware of how hoary the ‘Amazon is a monopoly’ meme has become… but doesn’t want to admit he has nothing new to say…. 3.  Foer is aware of how hoary the ‘Amazon is a monopoly’ meme has become, but believes no other activist… has been sufficiently alarmist… is adequately conveying just how terrifying it all is. 4. Foer… also knows you can lend an air of false gravitas to bogus claims and conspiracy theories by implying the mainstream media is too cowed to Speak The Truth…. Really, is it possible to write a 3000-word article–with references to articles that themselves claim Amazon is a monopoly–and genuinely believe ‘the term monopoly doesn’t get tossed around much these days’?… The tendentiousness in Foer’s argument isn’t even what’s most interesting about it. What’s implicit is even more so: that it would actually be bad if more people could afford to buy books by Salman Rushdie and Jennifer Egan. How is this view any different from the arguments that must have been made against the Vulgate Bible, or the Guttenburg printing press? ‘Tsk, isn’t this just going to make reading more accessible to the unwashed masses?’ If you haven’t read it already, I can’t recommend highly enough this article by Clay Shirky about the aristocratic, elitist, narcissistic worldview always inherent in the minds of people like Foer…”

3. Nick Rowe: Helicopters, redemption, and the target: “What makes helicopter money truly helicopter money… is the announced increase in the price level target or NGDP level path target that accompanies the helicopter. ‘Helicopter money’ with no change in the target is not like Willem Buiter’s helicopter money, because that extra ‘helicopter money’ will need to be redeemed at some (unknown) time in the future, at the same future price level as before, and so the ‘helicopter’ increases the real value of government liabilities. Furthermore, if the central bank announces an increase in the NGDP level path target, that reduces the real value of government liabilities, and this converts some of the previously existing money into helicopter money ex post facto. You don’t need the helicopter. If the government halves Pm, it converts half the money that already exists into helicopter money…”

4. Brooke Masters: Satya Nadella’s bad karma over remarks on women’s pay: “It is hard to believe he would have said the same thing to a man…. At Facebook, they lean in. At Microsoft, they lean out. This week, when Satya Nadella, chief executive of the Redmond, Washington-based software group, faced a question about what women should do to be paid more, he firmly stuck both feet in his mouth. ‘It’s not really about asking for the raise, but knowing and having faith that the system will give you the right raises as you go along’, he said, adding that such patience was ‘good karma’.”

Should Be Aware of:

• Arthur I. Miller: Imagery in Scientific Thought
• Daniel Davies: “I can work out Greek words phonetically, as long as they stick to using letters that are also the names of important physical constants or option pricing parameters. And once you’ve worked out the transliteration, most of the stuff that’s on billboards or menus is going to sound like either the English word or the French one or the Italian one.”

1. Matt O’Brien: Uh-oh, the credit rating agencies are up to their old tricks again: “As far as financial crisis villains go, the credit rating agencies never get enough, well, credit. But now they’re reminding us that even—or especially—nincompoops can blow up the global economy when you play them off against each other with the promise of a quick buck…. It was dumb enough to create a system that encourages the credit rating agencies to take a Panglossian view of the bonds they’re supposedly rating. It’d be even dumber to leave it in place after we’ve seen what a disaster it is.”

2. Dara Lind: This immigration program drove a state official to suicide. It could give Dems the Senate: “One of the insane and convoluted subplots in South Dakota’s insane and convoluted Senate race — which could be the race that decides which party controls the Senate after Election Day — is a scandal involving the Republican candidate, Mike Rounds, who’s the former governor of the state. The scandal became public last fall, after one of Rounds’s former cabinet officials committed suicide. It turned out that he was facing a likely indictment for “diverting” (i.e., stealing) $550,000 in state funds when he killed himself. Since then, dribs and drabs of information have come out about massive conflicts of interest in the way Rounds’ administration administered its EB-5 visa program, an obscure initiative that is designed to attract foreign capital to the United States but which is often criticized as an open invitation to corruption. Most recently, it came out last week that Rounds had actually been named in a lawsuit that one visa recruiter filed against the state — even though Rounds had been saying he was not involved. The saga involves a failed beef plant, some shady public-private partnerships and millions of dollars pocketed from foreign investors. But at its center is the EB-5 visa — which lets immigrants come to the US and get green cards for putting hundreds of thousands of dollars into US businesses.”

3. Mohamed A. El-Erian: Why Is the Fed Thinking Globally?: “Outside of crisis periods — and we aren’t in one — the U.S. Federal Reserve normally behaves and speaks as if the U.S. is essentially a closed economy. Not so at its last policy meeting. The minutes released this week contain an unusual focus on both the world economy and the value of the dollar; and the drivers are a mix of old and new — at least they should be…”