Skin in the Game

The subtitle is Hidden Asymmetries in Daily Life and the author is Nassim Nicholas Taleb (2018).

Taleb is a really smart guy who is libertarian and unapologetically anti-academic and anti-political correctness.  What he focuses on in this book is how he is bothered by the growing reality that people with control these days often have the least skin in the game.  Accordingly, they can casually dismiss and ultimately lack the ability to understand how their decisions can have terrible interactions and second- and third-order effects.  And while a theory can sound great and gets them points in their echo chamber, they do not bear the burden of the problems that follow.

By contrast, he admires those who risk, who try and fail as part of learning what has sustainability and real value.  As he puts it: “evolution can only happen if the risk of extinction is present”.  And what that can often mean is bucking convention and going against consensus.  It is scary and uncomfortable, but where the upside lies.  Competence comes from taking risks, and it is far more important to do than to talk.

The Hard Thing About Hard Things

The subtitle is Building a Business When There Are No Easy Answers and the author is Ben Horowitz (2014).

From a super successful Silicon Valley venture capitalist, the book has a lot of similar insights to Peter Thiel's Zero to One.  And the title captures best the point of the book and the essence of being an entrepreneur -- it is a struggle to fulfill your dreams.  In dialing in on a particular idea (and inspiration) that resonated, it is in the allegorical distinction that he draws between statistics and calculus.  That is to say, in an indeterminate world, statistics can help you to measure the odds and conclude that something is not possible.  Whereas, if you want to calculate specific things precisely, then calculus is the answer.  Horowitz's equates that contrast to how you must approach the inevitable and regular catastrophes that will be confronted in starting a business: "When you are building a company, you must believe there is an answer and you cannot pay attention to your odds of finding it.  You just have to find it."  That idea dovetails well with another of his pointed insights (a saying similar to one that I make use of in my own dealings): "There is always a move."  Lastly, as a simple comment on how markets can behave, his take down of efficient market theory is both elegant and brutal: "No, markets weren't 'efficient' at finding the truth; they were just very efficient at converging on a conclusion -- often the wrong conclusion."

Highly recommended.

The Future Is History

The subtitle is How Totalitarianism Reclaimed Russia and the author is Masha Gessen (2017).

Told through the stories of seven people, the author explores Russian history since the 1980s.  And how a country that moved past the Soviet Union still reverted to a rough approximation of totalitarianism under Putin.  The notion that encapsulates it is homo sovieticus, which is the representative Russian who ultimately preferred the authority of Communism in the face of the uncertainty and possible failure that came with the end of the Cold War.  Thus, as national tragedies, wars in Chechnya, and economic difficulties compound the situation, the archaic tribalism of Putin and his mafia is able to take hold.  The overarching conclusion of many of the characters is that Russia has no future.  To that end, an interesting data point is that the life expectancy of Russians continues to trend in the wrong direction -- the only exceptions were during Khrushchev's thaw and Gorbachev's perestroika, when hope for the future existed.

The author repeatedly draws on sociologists, political scientists and other theorists to demonstrate how Russia has reclaimed a totalitarian state, as evidenced by state terror, domination by a single party, and centralized economy.  The missing link is an overarching ideology.  It is on that basis that one could surmise that the current power structure is not sustainable if the economic situation does not improve.  And why Putin has made so many efforts to increase Russia's status on an international basis, as if to distract from the problems at home.

Rent Control

The article is from 2000, but turns out that there are certain topics where Mr. Krugman and I have no disagreement.

Am I Being Too Subtle?

The subtitle is Straight Talk from a Business Rebel and the author is Sam Zell (2017).

The writer's name should ring a bell because I have mentioned him more than once as one of the guys in the investing universe who I hold a deep respect for.  This book tells his story and encapsulates many of his notions of living and investing that have made him so successful.

At heart, he is an entrepreneur and an opportunist.  He is not contrarian for contrarian's sake, but someone who has always bucked convention in seeing the opportunities.  He is creative, inventive, optimistic and willing to take risks, ultimately believing that where there is a problem that he can find a solution.  As someone in the midst of building something, his story resonated deeply.

The Arctic

An interesting article from Geopolitical Futures on the Arctic and the factors to consider when determining its relevance in geopolitics.  From an economics standpoint, this region presents two opportunities: (1) new trade routes that will expedite transportation of goods between various points on the globe; and (2) potentially vast untapped oil & gas reserves.  But both such benefits come with important caveats.  For the time being, unless significantly greater amounts of ice melt, it is a very expensive route to take, nor one that can currently be used year round.  And, as oil prices have swooned, the reserves are not economical since the typical project has a breakeven price of $100 per barrel.  Lastly, where we have previously discussed choke points in the South China Sea, the Arctic Ocean is even more vulnerable, and any powerful navy (wink, wink) really can dominate sea activity at will.

Overall, a good primer on the metrics to think in terms of this area.

Revisionism?

George Friedman:

"In making the decision to use a nuclear weapon, the U.S. faced some tough choices. It had to balance its moral responsibility to American troops and those who were still being slaughtered by the Japanese against the lives of those who would be killed in a nuclear attack. But the idea that Japan was ready to surrender is a myth. It was ready to negotiation a peace deal; it wouldn’t accept unconditional surrender. This could have opened the door to another war, allowing the slaughter of Americans who had already fought and survived a long war."