The Great Reversal: How America Gave Up On Free Markets by Thomas Philippon

Why do Americans pay more than Europeans or Asians for cellphone service that isn’t even as good as theirs? That’s a question Thomas Philippon, a professor of finance at New York University and an adviser to the Federal Reserve Bank of New York, asked himself one day. He attempts to answer the question in this book. His answers aren’t encouraging.

Philippon says he will offer three main arguments:

One: Competition has declined in most sectors of the US economy. Measuring competition is easier said than done, for we can find only imperfect proxies. We will look at prices, profit rates, and market shares. None is perfect, but together they can form a convincing picture.

Two: The lack of competition is explained largely by policy choices, influenced by lobbying and campaign fiance contributions. We will look at the dollars spent by every US corporation over the past twenty years to lobby their regulators, their senators, their congressmen, and members of key committees, as well as to finance federal and state elections. We will show how these efforts distort free markets: … corporate lobbying and campaign finance contributions lead to barriers to entry and regulations that protect large incumbents, weaker antitrust enforcement, and weaker growth of small and medium-sized firms.

Three: The consequences of a lack of competition are lower wages, lower investment, lower productivity, lower growth, and more inequality. We will examine how the decline in competition across industries has effects that reach into the wallets and bank accounts of everyday Americans. We will also demonstrate why lower competition leads to less of the sort of thing that we traditionally associate with growing economies: investment, technological advancement, and rising wages [9].

The author explains that economists look at three main variables “to assess the degree of competition in an industry”:

…the degree of concentration (that is, whether there are lots of small firms or whether the industry is dominated by a few large firms); the profits that these firms are making, and the prices that customers pay….The bad kind [of concentration] occurs when incumbents in an industry are allowed to block the entry of competitors, to collude, or to merge for the primary purpose of increasing their power over market-wide pricing…[25].

In most US industries, market shares have become more concentrated and more persistent. Industry leaders are less likely to be challenged and replaced than they were twenty years ago. At the same tine, their profit margins have increased [60].

The Great Reversal is filled with data and references to journal articles, but the material is presented in digestible form (the more technical explanations are marked off from the main text). One result of all the data and all the related concepts is that the book is a kind of introduction to economics. I came away with a much better understanding of the work economists do when they look for patterns in all the buying and selling a society does.

I also came away convinced that things will only get worse — there will be less competition and more inequality — unless we reform our political culture. I already knew that American political campaigns are incredibly expensive compared to campaigns in Europe. But on average 50 times as expensive? I didn’t realize that the European Union now does a better job insuring competition than we do. As Sen. Elizabeth Warren emphasizes, we need big, structural change if we’re going to increase competition, reduce inequality and deal with the major challenge of global warming.

The book’s title, The Great Reversal, refers to the fact that the US economy used to work better for society as a whole. The data shows that it was mainly in the last twenty years that competition seriously declined. Can the reversal be reversed in the next twenty?

However, after spending “hundreds of hours researching and writing this book”, the author was surprised to realize “how fragile free markets really are”:

We take them for granted, but history demonstrates that they are more the exception than the rule. Free markets are supposed to discipline private companies, but today, many private companies have grown so dominant that the can get away with bad service, high prices, and deficient privacy safeguards. Only two decades ago, the United States was effectively the land of free markets and a leader in … antitrust policy. If America wants to lead once more in this realm, it must remember its own history and relearn the lessons it successfully taught the rest of the world [287-288].

The American Pragmatists by Cheryl Misak

At least the internet doesn’t forget. I finished this book and had a question about the exact title. Right there on the first page of the search results appeared an entry from this very blog. It turns out I read this book in 2018. Who knew?

Let’s see if I agree with myself. (I see I left out a word. Now corrected.)

Well, I was concerned about trying to summarize this book today. I must have felt the same two years ago, since that earlier summary includes a lot of quotation. But I stand by every word (including the one I just added)!

I’ll simply add one thing.

Part of the author’s purpose was to counter the popular understanding among philosophers that pragmatism as a philosophical movement faded away in the 20th century under intense criticism, especially after the death of John Dewey in 1952. Misak shows it’s more accurate to say pragmatism was absorbed rather than replaced. Many of the leading philosophers in the last half of the 20th century (including former members of the Vienna Circle, as well as W. V. Quine, Wilfrid Sellars, Nelson Goodman, Hilary Putnam and Donald Davidson) argued for positions quite compatible with the early pragmatists, especially the views of Charles Sanders Pierce, even though these later philosophers rarely called themselves “pragmatists”. The same holds true for philosophers in this century. It’s the label that has mostly disappeared.

The American Pragmatists is worth reading, but repetitious at times. There are only so many points you can make about a concept like “truth”. But I want to learn more about two philosophers Misak thinks highly of: Clarence Irving Lewis and Hilary Putnam. I’ve got some of their books. I should open them — that’s what a pragmatist would do.

Beyond Good and Evil: Prelude to a Philosophy of the Future by Friedrich Nietzsche, translated by R. J. Hollingdale

After reading Sue Prideaux’s biography of Nietzsche, I Am Dynamite!, I wanted to read something from the philosopher himself. I hadn’t read anything of his since On the Genealogy of Morality — or Moralsseven years ago. I wanted to understand better what was bothering the poor man. And how he thought people should live.

Beyond Good and Evil has nine parts. Each part is composed of aphorisms or sections, sometimes a page or two, sometimes a single paragraph. Overall, it was rough going. I often had no idea what he was complaining about (he mostly complains). There were also passages like this, the meaning of which seems clear at first:

Today, … when the herd animal alone obtains and bestows honours in Europe, when “equality of rights” could all too easily change into equality of wrongdoing: I mean into a general war on everything rare, strange, privileged, the higher man, the higher soul, the higher duty, the higher responsibility, creative fullness of power and mastery — today, being noble, wanting to be by oneself, the ability to be different, independence and the need for self-responsibility pertains to the concept “greatness”; and the philosopher will betray something of his ideal when he asserts: “He shall be the greatest who can be the most solitary, the most concealed, the most divergent, the man beyond good and evil, the master of his virtues, the superabundant of will; this shall be called greatness…. [sec. 212].

Nietzsche’s fundamental idea is that the most important fact about human beings is their will to power — their desire to control and create. He was convinced that Christian morality, the morality of “the herd”, with its ideas like “turning the other cheek” and “the meek shall inherit the Earth”, interferes with humanity’s will to power. In particular, it interferes with the will to power of those blessed with genius, the greatest among us. He was well aware of Goethe, Beethoven, Napoleon and Wagner, all towering figures in his opinion, but he apparently believed there would be more such tremendously accomplished figures if only everyday morality didn’t hold them back. In order to achieve greatness, a person must go beyond the standard ideas of good and evil. If one is to achieve greatness, the transvaluation (or reconsideration) of all values is necessary.

But what values should a genius live by? Is it necessary to ignore the Golden Rule? Sacrifice everything else to one’s art or projects? Ignore common courtesy? Trample other people however and whenever it feels right? After reading Nietzsche’s biography, two of his books and several summaries of his ideas, I still don’t know. I also don’t understand why he was so bothered by everyday morality. He seems to have taken the existence of common beliefs about good and evil as a personal affront.

He offers a clue when discussing what “a born, unavoidable psychologist and reader of souls” is confronted by:

The corruption, the ruination of higher human beings, of more strangely constituted souls is the rule: it is dreadful to always have such a rule before one’s eyes [sec. 269].

If anyone has ever been one, Nietzsche was a born psychologist. Perhaps he was speaking for himself in this passage. He must have viewed himself as “strangely constituted”. After he lost his mind, he suffered from extraordinary delusions of grandeur, describing his frequent contacts with the leading statesmen of Europe and sometimes referring to himself as God.

Scholars have determined that Nietzsche was not a German nationalist or an anti-semite. Some say the notion of the Übermensch was not central to his philosophy. So it was surprising to read some of his strongly-worded views. For example:

… that what is right for one cannot … by any means be right for another, that the demand for one morality for all is detrimental to precisely the higher men, in short that there exists an order of rank between man and man, consequently also between morality and morality [sec. 228].

Every elevation of the type man has hitherto been the work of an aristocratic society — and so it will always be: a society which believes in … orders of rank and differences of worth between man and man and needs slavery in some sense or other [257].

The noble caste was always in the beginning the barbarian caste: … they were more complete human beings (which, on every level, also means … “more complete beasts”) [257].

The essential thing in a good and healthy aristocracy is [that it] accepts with a good conscience the sacrifice of innumerable men who for its sake have to be suppressed and reduced to imperfect men, to slaves and instruments. Its fundamental faith must be that society should not exist for the sake of society but only as a foundation and scaffolding upon which a select species of being is able to raise itself .. to a higher existence [258].

One has to … resist all sentimental weakness: life itself is essentially appropriation, injury, overpowering of the strange and weaker, suppression, severity, imposition of one’s own forms, incorporation and, at the least and mildest, exploitation… Exploitation … pertains to the essence of the living thing … it is a consequence of the intrinsic will to power [259].

There is master morality and slave morality … The noble type of man feels himself to be the determiner of values, he does not need to be approved of, he judges “what harms me is harmful in itself”, he knows himself to be that which … accords honour to things, he creates values [260].

A morality of the rulers [says] that one has duties only toward one’s equals; that towards beings of a lower rank, towards everything alien, one may act as one wishes or “as the heart dictates” and in any case “beyond good and evil” [260].

The grander, more manifold, more comprehensive life lives beyond the old morality; the “individual” stands there, reduced to his own law-giving, to his own arts and stratagems for self-preservation, self-enhancement, self-redemption [262].

Egoism pertains to the essence of the noble soul, I mean the immovable faith that to a being such as “we are” other beings have to be subordinate by their nature, and sacrifice themselves to us … “it is justice itself” [265].

Nietzsche’s ethical theory might be called “aristocratic egoism” — self-centered behavior for the natural aristocrats among us (not the aristocrats with hereditary titles); a reasonable amount of respect for other aristocrats; and everybody else knowing their place. Who knows how many impressionable readers have taken these ideas seriously enough to have acted on them? The man wasn’t joking when he wrote: “I am dynamite!”

In conclusion, the best thing I can say about Nietzsche’s Beyond Good and Evil is that I no longer feel the need to understand its author.

I Am Dynamite!: A Life of Friedrich Nietzsche by Sue Prideaux

I’m more interested in Nietzsche’s philosophy than his life, but I visited a famous bookstore this summer and wanted to buy a book. I’m glad I bought this one.

It’s an understatement to say that Nietzsche was quite a character. He was an accomplished scholar who left the academy when he was 35, citing his poor health. He had enough income (partly from his academic pension) to travel about Europe, develop various friendships, propose marriage a couple times, spend lots of time with Richard Wagner and his wife Cosima, do a great deal of hiking, compose music nobody cared for and write philosophy books hardly anyone bought when they were published. He suffered terribly from unspecified ailments and wrote short bursts of text in order to protect his eyesight.

Although Nietzsche was a fairly normal, although brilliant, young man, he became more eccentric as the years passed, until he totally lost his mind at the age of 55. He lived another eleven years, being watched over by his horrible sister, Elisabeth, one of the nastiest people I’ve ever read about. Being a great admirer of Hitler (who admired her in return), Elisabeth used her control of Nietzsche’s writings to give him a reputation as a proto-Nazi, when in fact he wasn’t a German nationalist or anti-Semitic at all. He was a cultured, mild-mannered European with interesting, vividly-expressed ideas about how to live in a world without using religion as a crutch. (This is the positive, revisionist view of Nietzsche that’s become widely accepted among scholars in the last 70 years.)

I Am Dynamite! won a prize in Britain as the best book of 2019. From the prize’s announcement:

… this magnificent biography of a very strange and difficult subject is wonderfully well-written, lucid and clear-headed. It is full of sharp and stylish turns of phrase, it gallops along at an energetic pace, and it is often extremely and surprisingly funny, with a great gift for characterisation….

Friedrich Nietzsche’s work rocked the foundation of Western thinking, and continues to permeate our culture, high and low – yet he is one of history’s most misunderstood philosophers. Sue Prideaux’s myth-shattering book brings readers into the world of a brilliant, eccentric and deeply troubled man, illuminating the events and people that shaped his life and work. I Am Dynamite! is the essential biography for anyone seeking to understand Nietzsche: the philosopher who foresaw – and sought solutions to – our own troubled times.

Not everyone has been so enthusiastic. Brian Leiter, a philosophy professor at the University of Chicago, wrote a review in the Times Literary Supplement (which is mostly behind a paywall):

Prideaux is an especially vivid and engaging writer, who covers the facts of Nietzsche’s life well, although sometimes in soap-operatic detail….If Hollywood were to produce a movie of Nietzsche’s life, this book could provide the blueprint. Hollywood ought, however, to consult some philosophers if the movie is to do better than the book in conveying Nietzsche’s ideas.

Leiter argues briefly that Nietzsche wasn’t skeptical about science — he merely doubted science could teach us how to live. He says Prideaux gives too much importance to Nietzsche’s concept of the Übermensch and too little to his opinion that “human excellence, and the aesthetic pleasure it provided (think Beethoven or Goethe), made life worth living”. Leiter criticizes Prideaux for implying Nietzsche believed the universe has purpose, when he clearly didn’t, and that he was in pursuit of a “universal morality”, which is more debatable. The professor concludes:

Prideaux has the correct sense that Nietzsche is profound; but it is not clear she has much idea why.

I very much enjoyed this biography, but it is not for those wanting to learn something about the philosophy. Prideaux’s discussions of his ideas are at best superficial, at worst wrong.

I think the professor is a bit harsh in his assessment (as professors often are when a non-specialist writes about one of their particular specialties). I Am Dynamite! explains what it was like to be Friedrich Nietzsche and provides an introduction to his distinctive philosophy. If you want to understand more of what he thought, there are plenty of other books and articles to read, many of which feature opinions from experts who don’t always agree with Professor Leiter. As Nietzsche himself would say, his philosophy, as with most everything else in the world, is open to interpretation.

Einstein’s Unfinished Revolution: The Search for What Lies Beyond the Quantum by Lee Smolin

Lee Smolin is a theoretical physicist who is dissatisfied with the state of theoretical physics. He is not alone in being dissatisfied. Physicists have two wonderful theories —  quantum mechanics (which deals with the very small) and general relativity (which deals with the very large) — that don’t fit together. Some of them have been trying for decades to reconcile the two theories. In addition, there is a lot about quantum mechanics that seems crazy or at least paradoxical. It’s been argued, therefore, that the theory is incomplete.

Smolin believes that there is a fundamental reality separate from our perceptions that underlies both quantum mechanics and general relativity. He would like to figure out what that reality is. He says this makes him a “realist”.

The first part of the book discusses what Smolin calls “anti-realist” views, primarily the so-called Copenhagen interpretation of quantum mechanics (sometimes referred to as the “shut up and calculate” view). He then outlines some competing views, such as Einstein’s, according to which quantum mechanics is incomplete.

In the final chapters, he offers the beginnings of his own theory. I won’t try to explain it, but he begins with an idea proposed by the brilliant German philosopher Gottfried Willhelm Leibniz (who died 300 years ago). Leibniz suggested that the universe is composed of an infinite number of simple substances called”monads”. The Wikipedia article on Leibniz says “each monad is like a little mirror of the universe”, i.e. a mirror reflecting all the other monads.

Near the end of the book, Smolin offers a one-sentence summary of his theory:

The universe consists of nothing but views of itself, each [view being from the perspective of] an event in [the universe’s] history, and the [universe’s] laws act to make these views as diverse as possible [271].

For Smolin, time is a fundamental feature of the universe. Space isn’t. Space emerges from events. Furthermore, the fact that space isn’t fundamental helps explain how two particles that are millions of miles away from each other can be “entangled”, so that an effect on one can immediately affect the other. That’s the idea of “non-locality” that Einstein called “spooky action at a distance”.

Smolin is sure that he doesn’t have all the answers, but he believes it’s worth trying to find them. If you’d like to know more, you’ll have to read the book or find someone else to explain it. There are diagrams and no math!

Touching a Nerve: Our Brains, Our Selves by Patricia S. Churchland

Patricia Churchland is a well-known professor of philosophy. She is married to another well-known professor of philosophy, Paul Churchland. The Churchlands were profiled in The New Yorker in 2014 in an article called “Two Heads: A Marriage Devoted to the Mind-Body Problem”. They are both associated with a philosophical view known as “eliminative materialism”. Very briefly, it’s the idea that we are mammals, but with especially complex mammalian brains. and that understanding the brain is all we need in order to understand the mind. In fact, once we understand the brain sufficiently well, we (or scientists anyway) will be able to stop using (eliminate) common mental terms like “belief” and “desire” and “intention”, since those terms won’t correspond very well to what actually goes on in the brain.

So when I began reading Touching a Nerve, I expected to learn more about their distinctive philosophical position. Instead, Prof. Churchland describes the latest results in neuroscience and explains what scientists believe goes on in the brain when we live our daily lives, i.e. when we walk around, look at things, think about things, go to sleep, dream or suffer from illnesses like epilepsy and somnambulism. She admits that we still don’t understand a lot about the brain, but points out that neuroscience is a relatively new discipline and that it’s made a great deal of progress. I especially enjoyed her discussion of what happens in the brain that apparently allows us to be conscious in general (not asleep and not in a coma) vs. what happens when we are conscious of something in particular (like a particular sound), and her reflections on reductionism and scientism, two terms often used as pejoratives but that sound very sensible coming from her.

The closest she comes to mentioning eliminative materialism is in the following passage, when she seems to agree (contrary to my expectations given what I knew about the Churchlands) that common mental terms won’t ever wither away:

If, as seems increasingly likely, dreaming, learning, remembering, and being consciously aware are activities of the physical brain, it does not follow that they are not real. Rather, the point is that their reality depends on a neural reality… Nervous systems have many levels of organization, from molecules to the whole brain, and research on all levels contributes to our wider and deeper understanding [263].

I should also mention that the professor shares a number of stories from her childhood, growing up on a farm in Canada, that relate to the subject of the book. She also has an enjoyable style, mixing in expressions you might not expect in a book like this. For example, she says that reporting scientific discoveries “in a way that is both accurate and understandable” in the news media “takes a highly knowledgeable journalist who has the writing talent to put the hay down where the goats can get it” [256].

Here is how the book ends [266]:

Bertrand Russell, philosopher and mathematician, has the last word:

“Even if the open windows of science at first make us shiver after the cozy indoor warmth of traditional humanizing myths, in the end the fresh air brings vigor, and the great spaces have a splendor of their own.”

Rock on, Bertie.

American Cosmic: UFOs, Religion, Technology by D. W. Pasulka

I don’t know what to make of this book. The author is a professor in the Philosophy and Religion Department at the University of North Carolina, Wilmington. The book was published by Oxford University Press. It’s received positive reviews in a number of reputable publications.

For the most part, Professor Pasulka treats the subject of UFOs or “unidentified aerial phenomena” from a scholarly perspective. She says the book is “about contemporary religion, using as a case study the phenomenon known as the UFO. It is also about technology” [1], in particular, how technology can affect the development of religion. A well-known example is how the printing press allowed the the mass production of Bibles in languages other than Latin. Widespread use of that powerful new technology contributed greatly to the Protestant Reformation. Based on her research, she believes there is a “widespread and growing religiosity focused on UFOs”, not only because of evidence or testimony regarding UFOs, but because the mass media (especially TV shows and movies) have convinced millions of people that UFOs represent highly-advanced technology, possibly of extraterrestrial origin.

To further her argument, she points out that religious references to supernatural events and entities often sound just like contemporary reports of strange phenomena in the skies and visitations from otherworldly beings. She argues that people who report contact with extraterrestrials are often greatly affected, in the same way that figures from religious history who reported visions (of the Virgin Mary, for example) were said to be affected.

I’m not sure there really is “widespread and growing religiosity focused on UFOs”. Maybe there will be one day. But I don’t think it’s going to happen unless more evidence is provided. One of the problems with American Cosmic is that the scientists and technologists who speak to the author about their beliefs aren’t identified. She says there is a significant group of well-known, extremely successful individuals who are convinced we are being visited by beings from other worlds or other dimensions. Some of them believe these beings are helping us make technological progress, rather like the mysterious black monoliths did in 2001: A Space Odyssey.

Unfortunately, these respected researchers apparently insist on remaining anonymous out of fear that their professional reputations will suffer. So when Professor Pasulka tells us how she visited a secret location in the New Mexico desert in the company of one of these world-famous researchers, and that they found an artifact there, which other scientists later determined was “so anomalous as to be incomprehensible”, which “could not have been generated or created on Earth”, which “could not have been made in this universe”, we  are asked to take her word for it [240].

I didn’t find the parts of the book dealing with the relationship between religion and technology, or the detailed biographies of various researchers, very interesting. The descriptions of UFO sightings and bizarre visitations, however, were interesting in the way that good science fiction can be interesting. I didn’t come away convinced that all of the incredible stories are true. On the other hand, when you read stories in the New York Times or see something like this on CNN, who knows? (Note: the CNN story features the dangerous clown who lives in the White House for a few seconds at the end. Just a warning.)