Synopsis: By lowering the transaction costs of group action, the Internet has made possible a new model of production – commons based peer production. Not market driven, not government directed and not organisationally controlled, peer production within online communities of interest represents a qualitatively new form of production. Benkler was the first to identify it.

My Take:

Yochai Benkler, a Law Professor at Yale University, is the grand-daddy of the theoretical analysis of online peer production. While Richard Stallman and Eric Raymond preceded him in making the philosophical/political case that underpinned the F/LOSS movement, Benkler was the first to engage in serious theoretical analysis of internet enabled peer production using established economic approaches.  While others had previously written about the unique economic characteristics of information economics (ie high fixed costs, low marginal costs, non-exhaustion and difficulty of exclusion), Benkler was the first serious academic to identify and describe the way that falling transaction costs of collaborative group action facilitated this kind of peer production. In fact, Benkler’s 2002 article, “Coase’s Penguin, or Linux and the Nature of the Firm” is probably the seminal article on peer-to-peer production in the networked information economy. Benkler’s early work underpinned a slew of more recent and highly influential publications (Clay Shirky’s “Here Comes Everyone”, James Surowiecki’s “Wisdom of Crowds” and Don Tapscott’s “Wikinomics”).

Benkler’s great insight was that the series of internet enabled phenomena like the Open Source Software movement, Wikipedia and a multitude of communities of expertise centred around blogs represented a genuinely new model of information/cultural production; a model he described as Peer Production. Benkler recognised that internet enabled social tools such as email, blogs and social networking sites have dramatically reduced the transaction costs of finding and maintaining contact with likeminded individuals. As a result, communities of interest allowing large scale collaboration outside traditional organisational or market relationships have only proliferated in recent times.

Within the blogosphere (a key example of this phenomenon at the time of the writing of “The Wealth of Networks”, communities of interest form around and between topic oriented blogs. Individuals with an interest in the topic of the blog converge around the site and interact with the blogger and each other through the comments section and other social media tools (eg email, social networking sites). Other interested bloggers also interact with the blog through almost ubiquitous comment ‘trackback’ functions that aggregate incoming links and comments for the blog. As a result, each blog acts as both a platform for, and a participant in, collaboration within communities of interest.

According to Benkler, each blog constitutes a node in the networked public sphere around which a community of interest may form. The contributions of participants in each community of interest are aggregated at the intra-blog level through the comments section and via direct communication with the blogger. The blogger then performs an initial filtering function, exercising discretion as to which contributions are then integrated into the body text of the blog in subsequent posts. The body text of each blog is then subject to filtering at the inter-blog level through a process of peer review within the broader community of bloggers writing on the relevant topic. Benkler theorises that this process of decentralised peer review will result in attention in the blogosphere being distributed according to the quality of each contribution, regardless of its source.

Benkler theorises that this will occur because high quality, salient contributions within the networked public sphere are likely to attract increased attention in the form of favourable coverage at other blogs and resulting links back to the original post. Low attention nodes have an incentive to try to draw attention to their higher quality posts by alerting more prominent bloggers in their immediate communities of interest to their posts via email, comments or trackbacks. These more prominent bloggers will filter these submissions and link back to high quality posts. As a result, high quality content that emerges from a low visibility node will diffuse through the community by moving up the attention distribution to be incorporated in high attention blogs. This attention distribution process is further accelerated by Google’s link-reliant, PageRank search algorithm that provides increased prominence to posts on blogs with more links.

In contrast, according to Benkler, a low quality contribution from a low attention node is likely to be ignored, or at most criticised by other bloggers within the community and is unlikely to attract further attention from within the community of interest. A high attention node that produces a low quality post is likely to attract criticism the community in the comments of the post in the short term and if the node continues to produce low quality information in the longer term, is likely to lose attention within the community. While inaccuracies are not prevented from being published, they are unlikely to be systemic and accuracy is likely to increase in the long term.

Benkler theorises that while not perfect, over time this process will generally result in higher quality, more salient information attracting more attention and low quality, low salience information being rejected or ignored. The implication of this community judged, meritocratic attention distribution process is that the reliability of information aggregated at any node within the networked public sphere will increase with the prominence of that node within a community of interest. In this way, Benkler essentially uses attention within the blogosphere as a proxy for quality and uses the skewed distribution of attention within communities of interest as a heuristic for judging the quality of blog content.

On top of this attention distribution filtering mechanism, the reliability of the content incorporated into the ‘A-list’ blogs within a community is further reinforced by the complimentary effect of “Linus’ Law” of Peer Production on the attention distribution process. Linus’ law provides that “Given enough eyeballs, all bugs are shallow”, that is that the participatory nature of the blogosphere will ensure that if enough people are viewing a piece of information someone will highlight any inaccuracies in this information, allowing it to be corrected. As such, the more people that are reading a blog, the more likely it is that someone will highlight an error in a post. In this way, filtering within the blogosphere occurs post-publication rather than prepublication. Benkler shows that while there are generally no formal editors vetting the content of an individual blogger pre-publication, the skewed distribution of attention within the blogosphere creates points at which an editorial filtering process can occur post-publication.

Sadly, Benkler isn’t the most accessible writer. A lot of the time he can get himself needlessly lost in esoterica and jargon. Further, when he strays from economics and moves into political economy and media studies  in Parts 2 and 3 of “The Wealth of Networks” both his persuasiveness and credibility suffer (in particular, Benkler seems to unquestioningly swallow a lot of the assertions of the Frankfurt School about the nature of traditional mass media and it’s normative inferiority to what he describes as the emergent online ‘networked public sphere’).

Highlight:

“Sometimes, under conditions I specify in some detail, these nonmarket collaborations can be better at motivating effort and can allow creative people to work on information projects more efficiently than would traditional market mechanisms and corporations. The result is a flourishing nonmarket sector of information, knowledge, and cultural production, based in the networked environment, and applied to anything that the many individuals connected to it can imagine.”

My Take: Philip Gourevitch’s account of the collective insanity of late 20^th century Rwanda is a moving account.

Not simply because it tells a horrific story mainly from first hand accounts, but moreso because it is told unashamedly from a position of moral clarity. Gourevitch doesn’t equivocate in this book. He tells the stories he’s heard directly and with clear moral verdicts. His writing isn’t annoyingly hectoring or self-righteous, but it clearly places blame where it belongs (ie the Belgians, the French, the Hutus, the UN, the French, the Americans, the UNHCR, the French). No where is this approach more clear than in the title of the book, which comes from a letter written by several local pastors to their regional superior, Elizaphan Ntakirutimana, a Seventh-Day Adventist Pastor who was later convicted in the International Criminal Tribunal for Rwanda with aiding their killing the following day.

In many ways Gourevitch’s approach reminded me of Hannah Arendt’s writing on the holocaust in this regard – more interested in humanity, and what the genocide said about it, than in providing an objective political history. He delves into some detail into Rwanda’s history and culture, but more for philosophical reflection on the absurdities of human nature than to factually enlighten the reader. One particularly interesting section of the book in this regard was its discussion on the absurdly vague distinction drawn within the country between Hutus and Tutsis.

The very nature of the distinction between Hutus and Tutsis is difficult to articulate. Ethanographers and historians agree that they cannot properly be called distinct ethnic groups. Similarly, the difference does not quite fit the description of classes, castes or ranks. What can be said is that the perceptions of difference probably sprung from historical occupational distinctions between Tutsi as herdsman and Hutu as cultivators. Allegedly, the increased value of cattle gave the numerically inferior Tutsis some social and political cache that was entrenched by entrenched in the 19th century when the Mwami Kigeri Rwabugiri, a Tutsi, ascended the throne, and expanded the state to around its present borders.

All of the above is difficult to verify as a result of the ambiguities of oral history and the substantial distrust that now overlays the area. However, what can be confidently said is that it was the Belgians that entrenched and perpetuated these distinctions in order to administer their colonial rule. As Gourevitch tellingly recounts:

“Colonisation is violence, and there are many ways to carry out that violence. In addition to military and administrative chiefs and a veritable army of churchmen, the Belgians dispatched scientists to Rwanda. The scientists brought scales and measuring tapes and callipers, and they went about weighing Rwandans, measuring Rwandan cranial capacities, and conducting comparative analyses of the relative protuberance of Rwandan noses. Sure enough, the scientists found what they had believed all along.  Tutsis had a ‘nobler’, more ‘naturally’ aristocratic dimensions than the ‘coarse’ and ‘bestial’ Hutus. On the ‘nasal index’ for instance, the median Tutsi nose was found to be about two and a half millimetres longer and nearly five millimetres narrower than the median Hutu nose.”

….

“In 1933-34, the Belgians conducted a census in order to issue ‘ethnic’ identity cards, which labelled every Rwandan as either Hutu (85%) of Tutsi (14%) or Twa (1%). The identity cards made it virtually impossible for Hutus to become Tutsis, and permitted the Belgians to perfect the administration of an apartheid system rooted in the myth of Tutsi superiority… Whatever Hutu and Tutsi identity may have stood for in the pre-colonial state no longer mattered; the Belgians had made ‘ethnicity’ the defining feature of Rwandan existence.”

Combine this institutionalised societal division with the brutality and repression of the Belgian colonial administration and the die was well and truly set. But again, Gourevitch does not recount this history to offer lessons, but more so to muse on the nature of humanity. It’s an approach that works in literature, if not in conflict studies. No doubt the causes of the genocide were more nuanced and ambiguous than Gourevitch recounts. No doubt it’s also important for subject matter scholars to study and analyse these reasons. But for the broader mass of humanity, the rights and wrongs of genocide are patently clear. Gourevitch’s moral clarity in the face of the victims he has encountered seems appropriate and his reflection on the nature of humanity seems the best thing that anyone from outside of Rwanda can take from the tragedy.

Highlight:

“Like Leontius, the young Athenian in Plato, I presume that you are reading this because you desire a closer look, and that you, too, are properly disturbed by your curiosity. Perhaps, in examining this extremity with me, you hope for some understanding, some insight, some flicker of self-knowledge – a moral, or a lesson, or a clue about how to behave in this world: some such information. I don’t discount the possibility, but when it comes to genocide, you already know right from wrong. The best reason I have come up with for looking closely into Rwanda’s stories is that ignoring them makes me even more uncomfortable about existence and my place in it. The horror, the horror, interests me only insofar as a precise memory of the offense is necessary to understand its legacy.”

Synopsis

My Take: Should be seen as one of the most influential books written in recent years. Neatly identifies and summarises the paradigm change in the economics of culture and commerce that has been brought on by the Web 2.0 world. I’d read the original article this book was based on a while back so I thought I was across the concept and I wasn’t in any hurry to read the extended version, but now I’m kicking myself for not having read it earlier. There are insights on every page.

Highlight: Some stunning facts about the history of media consumption including:

In 1954, 74% of houses with TVs tuned in to watch “I Love Lucy” (compared with only around 19% who watch the highest rating show on TV today – “CSI“).

When the VCR was introduced in that late 1980s, early 1990s, movie distributors tried to sell videos at retail for $70-$80 a pop! Unsurprisingly, high market power content providers have struggled to deal with all historic changes to their market.

Finally, the most amusing description of the skills of a DJ I’ve ever read “Clubgoers vote instantly with their feet, relaying their decentralised expectation and preference info to the DJ in aggregate”. ie they leave the dance floor if they don’t like the music! (To be fair, this sentence is in no way reflective of what is an extremely accessible book).

My Take: Should be required reading for all high-school students. Clearly articulated, widely accessible and practically illustrated explanations of the fundamentals of economics.

Highlight: A great chapter highlighting the benefits of sweatshops as a transitional industry in countries like South Korea and India. They might be unappealing to Western minds, but in the short-term sweatshops are often the best of a bad set of choices in developing countries and in the long run a path out of poverty for those lucky enough to work in them:

Hours are long. Wages are pitiful. But sweatshops are the symptom, not the cause, of shocking global poverty. Workers go there voluntarily, which means—hard as it is to believe—that whatever their alternatives are, they are worse. They stay there, too; turnover rates of multinational-owned factories are low, because conditions and pay, while bad, are better than those in factories run by local firms. And even a local company is likely to pay better than trying to earn money without a job: running an illegal street stall, working as a prostitute, or combing reeking landfills in cities like Manila to find recyclable goods.

… [NYC's resolution banning sweatshop-made products] can only harm sweatshop laborers: they’ll be out of a job and—literally, for those in Manila—back on the trash heap. Of course, it will be good news for textile workers in rich countries, who’ll get the business instead….

We need to understand that narrowly focused initiatives on “fair trade coffee” or “sweatshop-free clothes” will never make a substantial improvement to the lives of millions. Some, like the campaign to prevent New York City from buying uniforms from poor countries, will actively cause damage. Others, like the numerous brands of fair trade coffee, are likely to improve the income of a few coffee producers without causing a great deal of harm. But they cannot fix the basic problem: too much coffee is being produced. At the slightest hint that coffee farming will become an attractive profession, it will always be swamped with desperate people who have no alternative. The truth of the matter is that only broad-based development of poor countries will ever lift the living standards of the very poor, increase coffee prices, and improve wages and labor standards in shoe factories.

My Take: “The Tiger That Isn’t” really should be compulsory reading for anyone involved in public policy – advisers, politicians, activists and in particular, journalists. In their capacity as hosts of the BBC Radio 4 series “More or Less” Blastland and Dilnot have applied themselves to debunking statistical misrepresentations in the public debate for many years. This book is a lightweight and accessible distillation of the most common lessons of the show and includes a deceptively useful section on estimation techniques/ball park evaluations that I now use quite frequently (the value of questions as simple as “Is that a big number?” or “What exactly is being counted?” can be quite surprising).

Highlight: From a personal perspective, one of the greatest services that this book carries out is the debunking of the Average Wage myth. Anyone with a rudimentary understanding of statistics know that averages, while a useful summary statistic, can be appallingly misleading if you are trying to measure some form of central tendency in a group. All it takes is a handful of outliers to render the statistic basically useless for finding the ‘middle’ of any population.

One area in which this basic short-coming of the use of averages is routinely, flagrantly disregarded is in the analysis of national wage data. Lazy or ignorant journalists and deceptive politicians frequently cite the ‘Average wage’ or ‘Average Household Income’ as though this is a useful figure in some way. However, as Blastland and Dilnot vigorously point out, the presence of a handful of extreme outliers at the top end of the income scale inevitably skews average wage data dramatically above that of a ‘middle’ earner. As the old joke says, Bill Gates walks into a bar and everyone became a millionaire – on average. As such, as Blastland and Dilnot point out, a much better measure of central tendency for most policy discussions is the population’s median ie the middle value of an ordered set of values (or the average of the middle two in a set with an even number).

In Australia, while the average wage is frequently cited as being around $55,000 for an individual, as Andrew Leigh has pointed out, the median wage is around half this:

As you can see from Andrew’s invaluable chart, someone earning $55,000 would actually be at around the 80^th percentile of income earners ie earning more than 80% of workers. These figures come as a shock to most people when they first hear them – so ingrained is this statistical misconception in the public debate.

This misleading use of average wage data distorts public debate, by leaving punters under the impression that the ‘average Australian’ is doing substantially better than an economically ‘middle class’ Australian actually is. Similarly, it buttresses the provision of (the misleadingly named) middle class welfare by government by creating the impression that the quite well off are amongst the bulk of Australians. It really is a malignant feature of the public debate.

This misrepresentation continues to be perpetuated for a number of reasons. Some journalists are ignorant of basic statistics. Other journalists resort to using average wage data when they discover how difficult it is to locate up to date median income data. Finally, the political elite have little incentive to question the data as inflated average wage figures bring their relatively incomes closer towards the fabled ‘middle class’ to which most Australians aspire to attribute themselves. In this context, ooks like “The Tiger That Isn’t” that swim against the stream and highlight this popular misconception are performing an important service to the public debate.

My Take: Ian Ayres is a great advocate. Perhaps the reason for this is that he divides his time and expertise between the law and economics (He is both the William K. Townsend Professor at Yale Law School and a Professor at Yale’s School of Management). As a result of these divided loyalties, as a writer, Ayres retains the enthusiasm of an amateur as well as a lawyer’s focus in prosecuting a case. This mix can produce some engaging and exciting advocacy, but it can also leave him somewhat blind to the limitations and obstacles to his cause. “Super Crunchers”, is no exception. In this book Ayres makes an enthusiastic and compelling case for the potential of data driven analysis, while completely overlooking the not insubstantial obstacles to realisation of this promise.

The core premise of “Super Crunchers” is a good one. The emergence of technologies that allow the collection of extraordinarily large datasets combined with the computer processing power that allows for the easy use of regression and randomisation trials to analyse these data sets does create an enormous opportunity for data driven decision making. And as Ayres demonstrates over and again in “Super Crunchers” the decisions informed by statistical algorithms frequently outperform those made by highly educated, but more intuitive, subject area experts.

The seminal example Ayres gives of how good data and a better algorithm can best the experts in the seemingly most subjective of fields is the story of Princeton economist, Orley Ashenfelter and his Liquid Assets wine newsletter. Armed only with an algorithm informed by time-series regression analysis Ashenfelter was able to predict the quality of Bordeaux vintages using only data on the vintage’s winter rainfall, average growing season temperature and harvest rainfall. While originally the subject of scorn and derision, Ashenfelter’s predictions proved to both gazump and better those of the connoisseurs on a consistent basis. Ashenfelter’s success and the publicity his cause attracted went on to inspire other data geeks to apply their statistical toolkits to other areas, most notably Billy Beane, the general manager of the Oakland Athletics, who applied the tools to the analysis of baseball prospects. Since the release of “Super Crunchers”, statisticians have achieved public success in a range of other fields including Daryl Morey, the General Manager of the Houston Rockets (“the Dork Elvis of the NBA”) in basketball and Nate Silver in politics.

However, while there are plenty of success stories and while the potential is real, the fact is that a utopia of ubiquitous, rational, data-driven decision making is a long way from reality (For a good Australian take on this see Andrew Leigh here). As David Leonhardt pointed out in the New York Times review of the book:

“Evidence-based medical treatment, to take one of his favorite examples, is still far from the norm in this country.”

While Ayres correctly identifies the potential of “Super Crunching”, I’m afraid he vastly under-estimates the social and institutional barriers to its proliferation.

For starters, there is a thicket of government regulation around privacy and data protection that stands in the way of data collection in a number of fields not the least of which, Medicine.

But moreso, the most significant barriers to the adoption of data-driven decision making are social and institutional. The ‘experts’ that Ayres anticipates being usurped by Super Crunching will not go slowly into the night.  These people currently hold positions of significant respect, power and influence by virtue of their ‘intuitive’ expertise. As has been seen in most of the examples that Ayres cites in his book, they will use their privileged and powerful positions to protect their current status whether via formalised professional standards or informal marginalisation of data geeks. While Ayres is cheerily optimistic about the ability for the demonstrably better Super Crunchers to naturally outperform and usurp the experts, I’m not as convinced. For the moment at least, the majority of fields of expertise are not quantitatively measurable. In a lot of areas, it’s not possible to decisively determine a winner and a loser in a contest between a Super Cruncher and a traditional expert. In these situations, the status quo will be a powerful obstacle to the adoption of wide spread data driven decision making.

Highlight:

“We are in a historic moment of horse-versus-locomotive competition, where intuitive and experiential expertise is losing out time and time again to number crunching.”

My Take: Ordinarily I steer clear of political biographies (diaries in particular!) but beore I moved to the UK I thought I needed a bit of a crash course in the who’s who of the Party in the UK so I picked this up at the hot new political book of the time. The fact that I’d be spending a year at the LSE learning from Mr Campbell may also have played a part in the decision

AC has been demonised as being the death knell of liberal democracy personified because of his alleged practice of the dark arts of political ’spin’. Far be it from me to have any public comment on the professionalism of contemporary journalists or their role in a functioning democracy, but AC really lines them up in this book (keep in mind he was a senior journalist for many years before moving into politics):

“For all its faults, our political process is a good one, and the means by which much meaningful change is made. That is not a very fashionable view to hold, but as someone who has operated at senior levels in journalism and politics, around a decade in each, it is my respect for the media that has shrunk, and my respect for politics that has grown.”

and

“I have no idea what people will make of this book. I am probably too close to it all, both the events and the process of publishing. I know some newspapers and commentators will come to it with minds made up, and look to find those parts that help confirm their prejudices. It is what is wrong with some of them in the first place, and why I have next to no respect for them, and no real interest in their views. Amid the enormous cuts I have made are many which relate to my dealings with a 24 hour media that has in my view changed for the worse not only political debate but politics itself, as the politicians have to devote so much time and energy to dealing with people who believe their role is not to impart information and fuel healthy debate, but to undermine where possible the actions, decisions and motives of politicians. It is a sad irony that we have more media coverage than ever, but less understanding or real debate.”

Say what you want about him, but AC has a way with words and an ability to zing those who get in his way (currently being perpetuated on his excellent blog). The book itself is a real tome (1000+ pages from memory) so is probably only worthwhile for real political obsessives, but is certainly an engaging account of a fantastically interesting period for UK labour politics.

“Some twat with a Trot poster came up to me on the way in and yelled ‘Butcher!’ Traitor!’ at me. I stopped and mustered as much visual contempt as I could, then assured him that if we win the general election then don’t worry, thanks to wankers like him, there will always be another Tory government along afterwards. These people make me vomit.

And on the left wing of the party in general:

“It is all about how the party sees them as they strut around the conference, and got fuck all to do with whether we ever actually get the power needed to do anything for the country.”

Quite!

My Take: Um, yeah Thomas – where have you been for the past 7 years??

A shallow  (excuse the pun)conceptual analysis stretched into a 500(!) page book. Friedman is sometimes an ok journalist and this book has some enjoyable and enlightening sections (such as the chapter on the Japanese speaking Chinese province of Dalian and the Japanese outsourcing economy that has sprung up there) but when he flicks the switch to theorist/philosopher/grand theorist he’s very very ordinary.

His conclusions are patently obvious and not in the good “Why hasn’t any one thought of that before” way but more in the “It took you 500 pages to say something a half decent journalist could say in a column?!” way. To make matters worse, the way he carries on about his grand idea as being some kind of revelation is really irritating. That being said, I picked this book up in the remainders bin of an English language bookshop in Chengdu for around A$1 so I can’t really complain.

Highlight:

“While the dynamic force of Globalisation 1.0 was countries globalising and the dynamic force in Globalisation 2.0 was companies globalising, the dynamic force in Globalisation 3.0 – the force that gives it its unique character – is the newfound power for individuals to collaborate and compete globally.”

Yep – I think this is a good, brief explanation. If only the rest of the book was as concise and lucid.

Synopsis

My Take: Hmmm. An interesting concept and more power to anyone who sets out to tear down established paradigms. But if you are questioning fundamental concepts you have some pretty high logical and evidentiary hurdles to clear.

NNT doesn’t help his cause in this regard by having produced a really poorly written book. Over long and repetitive, it doesn’t do the reader any favours. Additionally I found the author to be intolerably and blindly egocentric. “Everyone is a fool but me” and “I have nothing but contempt for those I am critiquing” were reoccurring themes that I found pretty distasteful. Given that a major part of his argument is the foolish arrogance of human nature this was amusingly ironic. Despite all of this, given the innovativeness of the book’s premise, I tried to look past this personal dislike and judge his underlying arguments (though it was a real struggle).

At the end of the day I don’t think NNT comes close to making out his major thesis, but he is successful in making a range of useful, but less all encompassing points along the way. I think he establishes that human beings fail to adequately take into account the unexpected and that the unexpected happens much more than we think and has a much greater impact than we think. Well and good. But NNT’s claim that the entire sweep of history has been directed by unexpected events is just reaching too far. The logical conclusion of this premise is that any planning or predicitive analysis of any kind is pointless. Quite simply, NNT just didn’t produce enough evidence to convince me that every business executive, banker, financial analyst and policy maker in the world is spending a large part of their days wasting time. I just don’t buy it. A conclusion along the lines of “You’re not as smart as you think. Keep in mind that it’s better to be generally right rather than specifically wrong” would have been a valuable and a more credible conclusion. Unfortunately the author’s ego wouldn’t permit it.

Tyler Cowan at Marginal Revolution sums it up well:

Oddly, Taleb’s argument is weakest in the area he knows best, namely finance. Only on Wall Street do people seem to give proper credence—not too much, not too little—to very unlikely events. It is easy enough to use hindsight to identify the black swans Wall Street has missed, such as stock-price crashes. But it is harder to argue that the market undervalues surprise more generally. Stock and bond markets offer simple ways to bet on black swans. In financial terminology, you can purchase an option that is “deeply out of the money”; for instance, you
can bet that Google shares will rise or fall in value an enormous amount over the next three months. These investments pay off precisely when the rest of the market does not anticipate the scope for surprise.

Yet “long-shot” strategies are well-studied, and they do not yield extra profit. In other words, organized securities markets track rare and unpredictable events as well as the current state of knowledge will allow. If you don’t believe me, it is easy enough to bet on the Los Angeles Clippers to win the 2008 NBA title, or to bet on the longest odds at the racetrack. Such actions are hardly the path to either happiness or riches.

Finally, I have a habit of dog earing the bottom corner of pages in books where interesting points I might want to refer to in the future or consider more are made. I should note that I made more of these dog ears in this book than probably any other I’ve read. Admittedly many of these were dog ears made in contemptuous disagreement, but at the very least I think this is an indicator that this book got me thinking.

Worth a read as a bit of a thought exercise.

My Take: I love the concept of this book – the first in a series on “Books That Changed the World” read and paraphrased by prominent authors “so you don’t have to.” Just the kind of lightweight self-improvement that appeals to me. An enjoyable way to get a slightly more in depth look at Smith’s work than you do from assigned readings of condensed extracts.

Given that Wealth runs to over 900 pages, it’s a tome that is uniquely suited to this format – one of those books that O’Rourke notes are more ‘read in’ than ‘read through’ . In fact, this book is s double value as O’Rourke also goes through Smith’s ‘Theory of Moral Sentiments’, a book so long and turgid that nobody other than Nick Gruen ever reads it.

However, while the concept is great, this is not O’Rourke’s strongest work. It doesn’t have the zest of Republican Party Reptile or the zing of Parliament of Whores. Ultimately, however, O’Rourke is not the star of this book – his wit and barbs fade in comparison to Smith’s brilliant thinking. As a result, while this isn’t as amusing as your average O’Rourke book, it’s still an engaging read.

The Smith that O’Rourke draws out is far from the caricature of lazziefaire economics that many make him out to be. At the most basic level, Smith’s basic insight was two-fold:

1. productivity is increased through self-interest, the division of labour (specialisation) and trade. Where government intervention is needed to safeguard this, it ought to act.
2. However, the economy is so complex that government intervention is extremely difficult without unintended (and often counter productive) consequences.

Smith wasn’t saying that government should pack up and go home, he was saying it should know its (very basic) limits. It’s a prescription for common sense humility in governance not the end of governance itself.

Echoing this theme of intellectual modesty, O’Rourke highlights a paragraph from Smith that would warm the heart of  a certain comrade friend of mine who once professed his ideology to be ‘pragmatism’:

“From a certain spirit of system… we sometimes seem to value the means more than the end, and to be eager to promote the happiness of our fellow-creatures, rather than from a view to perfect and improve a certain beautiful and orderly system, than from any immediate sense or feeling of what they either suffer or enjoy.”

Further, according to Smith, theorisers become:

“Intoxicated with the imaginary beauty of this ideal system.. (until).. that public spirit which is founded upon the love of humanity…(is corrupted by a spirit of a system that).. inflames it even to the madness of fanaticism”

When you consider that this was written long before the emergence of communism, or even democractic capitalism as an ideological system, Smith’s prescience is impressive.

However, this is really the ultimate shortcoming this book. While Smith’s insights are consistently impressive, they aren’t matched by O’Rourke’s writing.  Given the quality of some of O’Rourke’s previous work, I was left wanting more.

Highlights:

On why ‘The Wealth of Nations’ is so long:

“When Adam Smith was being incomprehensible, he didn’t have the luxury of brief, snappy technical terms as a shorthand for incoherence.”