Many Happy Returns

The Gist: Money actually can buy happiness – and pretty cheaply – if it is spent on certain non-things.

A review of multiple books, most notably Your Money or Your Life by Vicki Robins.

 

 

How much more money would you have to earn per year to make you happy?

 

If you’re like most people, you’d answer about 50% more than you do now. But therein lies the problem: Most of the people who make 50% more than you do believe their happiness requires yet another 50%.

Bezos

Figure 1. “Maybe if there was a global pandemic forcing people to stay at home and order everything online, I could finally be happy,” he thought before making a substantial donation to the Wuhan Institute of Virology. 

 

Vicki Robin identified this hedonic treadmill in Your Money or Your Life: whatever you make quickly becomes “normal” and you are instilled less with gratitude than renewed inadequacy. Jonathan Clements, the writer of How To Think About Money, notes that, as Americans, “We have twice as much to spend as we had 42 years ago—but our reported level of happiness is no higher and our satisfaction with our financial situation has declined.”

Treadmill

Figure 2. Of course, if you have a treadmill desk, then you at least can get a runner’s high en route to endless under-satisfaction

 

The good news is that most Americans are happy – apparently around 85% on a daily basis. But there’s only so much correlation with that feeling and money. As your household income approaches about $75,000, you can rough out the edges of life. But after that, there’s no gain in happiness. The typical billionaire is about as happy as someone earning in the upper quarter of the five-figures. In fact, Jason Zweig, the author of Your Money and Your Brain, reveals that 19% of those with a net worth of over $500,000 agree with the statement “Having enough money is a constant worry in my life” — and, incredibly, “among those who were worth at least $10 million, 33% felt that way.”

Jet

Figure 3. Apparently, you go from worrying about the price of milk to the price of jet fuel. 

 

To understand how money is misleading, the blogger Mr. Money Mustache asks quite vividly: “would you lock yourself in a dark, silent box forever in exchange for becoming a billionaire?”

Perhaps that offer doesn’t tempt. But Zweig suggests that “While it’s doubtful that money can buy happiness, happiness can buy money.” At its most basic, to chase more dollars, you can work for more hours for more years at jobs you dislike. Robin encourages you instead to radically choose to consider what you have enough.

Choosing enough concedes a personal truth that conservatives are fond of observing about government: we have a spending problem, not an income problem. We tend to stressfully spend too much generally but especially on things that don’t make us happy. There’s a better way: embrace the old-fashioned virtue of thrift. And, ironically, by focusing less on earning more and more on spending less, you increase your chance at creating (and retaining) real wealth.

Robin proposes you undertake two jarring tasks. First, determine just how much money you have earned throughout your life – and then compare it to your present net worth. Note that the typical American with only a high school education brings in over $1.3 million in lifetime earnings, and the number jumps with additional degrees. Robin asks: What have you got to show for all you’ve made?

Horse

Figure 4. When asked how he managed to lose $10 million in lifetime earnings, old Hollywood leading man George Raft replied, “Part of the loot went for gambling, part for horses, and part for women. The rest I spent foolishly.”

 

Second, “keep track of every cent that comes into or goes out of your life.” For every category of spending, what kind of return in personal satisfaction are you getting over time? Personal finance at its most basic is to spend less than you earn and invest the rest (hopefully in index funds). Take a hard look at your spending to determine whether it delivers: Price is what you pay, value is what you get. If you can save over 20 cents of every dollar you make, you are well on the road to wealth – but any percent is better than none. As Thomas Stanley notes in his book, The Millionaire Next Door, “If you make a good income each year and spend it all, you are not getting wealthier.” In his surveys, over 2/3 of millionaires know exactly how much their family spends on food, clothing, and shelter every year – but only about 1/3 of those with high income but no millions have any idea. 

As you try to buy happiness, studies suggest that there are spending categories that tend to have the highest return on investment. Generally, free time and the autonomy to say no is a broad and powerful happiness benefit of having enough money – in other words, just shifting your mindset will already yield rewards. The best specific return is generosity: as Clements reveals, “We get greater happiness if we spend our money on others rather than on ourselves.” Giving to your favorite charity, buying your friend lunch, getting flowers for your wife all have wonderful personal happiness yields. Relatedly, spending money to spend more time with family and friends – whether moving closer, jumping on a flight, or just getting movie tickets – has a great return. When you do spend money on yourself, nutrition and health are practically priceless: large, fresh fruit everyday will make you happier over the long run than the finest cigars. And money spent on delegating or avoiding things you dislike also has a good return – the evidence here is strongest on avoiding long commutes in traffic by moving closer to work.

How much of your current spending is going toward those categories? There’s really not much more that produces consistent reported satisfaction for people. In particular, what folks often reach for but has the least long-term return are physical things. Bryant observes the better alternative that constitutes the final spending that has proven to yield a good return: “Experiences not only offer the chance for eager anticipation, but they can also leave us with fond memories—and those memories often grow fonder over time, as we recall the overall event and forget the incidental annoyances. Meanwhile, we quickly adapt to material improvements in our life, plus we have to care for these possessions and watch them deteriorate.” In other words, you will probably be happier occasionally renting a sports car for a driving spree than actually owning one. In fact, in Stanley’s survey of millionaires, more than half had never paid more than $30,000 for a motor vehicle.

Present

Figure 5. The ultimate source of happiness is the act of regifting to others all the stuff you don’t want! Indeed, the secret to dying happy is quite simple: write a will. 

 

There’s also a controversial aspect to your money and happiness. The same house could be a source of misery or joy, depending on the neighborhood you are in. Conventional financial advice is that you should buy the worst home on the block – but that’s the recipe for agony. H.L. Mencken once joked that a happy man is one who makes more than his wife’s sister’s husband – and there’s an unfortunate amount of truth in that. Our tribal minds are too sensitive to status and comparison – so, ideally, happiness-wise, you delete Instagram, throw out the TV, live in one of the nicer homes of your neighborhood, and volunteer regularly at the local homeless shelter. Note that in Stanley’s survey, “Fully 90 percent of millionaires who live in homes valued at under $300,000 are extremely satisfied with life” and about half of millionaires have been in the same house for more than twenty years. The millionaire mindset – and quite a happy one – is that “financial independence is more important than displaying high social status.”

As you cut down the categories that don’t yield satisfactory returns, Robin reports a variety of approaches:

      • “Personal finance Ninjas love to run the numbers, optimize systems, exploit niches, study personal finance blogs, mess with investments, hack the system to get free flights and hotel stays.” This category includes my best friend, who buys his favorite brands’ gift cards at steep discounts, practically has a doctorate for studying credit card points and benefits, and has set up a variety of quasi-permissible systems to bring his costs to nill. 
      • Robin also tells us of “the Frugalistas, who love bargains, clipping coupons, free-cycling, and deal making,” a category that thankfully includes my fiancee, a devotee of thrift stores, discount hunting, and instantly returning anything less than satisfactory. 
      • Then there are “the Supersavers, who love beating last month’s percentage of salary saved.” Even if you can’t compete in this Frugalympics, there’s a deep satisfaction in watching a chart of your income stabilizing or increasing, your costs decreasing, and the gap in between representing larger and larger savings, i.e. your freedom. 
      • There are the “DIYers,” a category that includes my future father-in-law, a retired metalworker who collects with a discerning eye everything from old tractor engines to abandoned buoys – a large garage full of which his wife threatens to sell to 1-800-GOT-JUNK. But he can fix virtually anything and, as Robin describes, he has a blast “Building, farming, tinkering, making, cooking, gardening, designing, creating, painting, or inventing.”
      • And finally, there are the minimalists, a group to which I aspire, for whom “It’s not about the money; it’s about the meaning.” Robin suggests that “minimalism” may be a little bit of a misnomer: “Waste lies not in the number of possessions but in the failure to enjoy them… To be frugal means to have a high joy-to-stuff ratio.”

I should close by noting that the literature about reducing spending overall and redirecting it toward personal satisfaction has become especially popular due to a movement acronymed FIRE: Financial independence, retire early (sometimes as early as their 20s). A tenant of the faith is that if you can live on 4% of your investment portfolio, then you are financially independent. This is based on a study that found if you withdrew 4% a year from a portfolio of 50% stocks, 50% bonds, in 96 out of 100 starting years, you would not exhaust the principal over 30 years (and indeed, in many years, your wealth would grow dramatically). There are quite a few issues with this, including the fact that 25 year old retirees will need more than 30 years of income, but William Bernstein summarizes: “At a 2 percent withdrawal rate, your nest egg will survive all but catastrophic institutional and military collapse; at 3 percent, you are probably safe; at 4 percent, you are taking real chances.” To be safer, “limit annual withdrawals to [the] percent of a three-year moving average of your portfolio.” And Clements advises you can practically extend this by varying spending, lowering your withdrawal in a bear market by keeping your fixed costs as low as possible.

That’s about it: Embrace the magic of enough, enact daily the virtue of thrift, and see the benefit to your happiness and wealth. 

your money your life

Figure 6. Click here to buy Vicki Robin’s Your Money or Your Life (7/10), a book about mindset. Has an especially arresting passage about how “Midlife comes and we discover…we’ve been filling teeth for twenty years because some seventeen-year-old (was that really me?) decided that being a dentist would be the best of all possible worlds.” My principal caveat is to use the radical notion of “enough” to work hard chasing your dreams, not completely exit the world (unless, of course, hermitage is your aspiration).

the millionaire next door

Figure 7. Click here to buy the Millionaire Next Door (6/10), a survey of millionaires whose primary insight is that most live modestly compared to their means. But there are others – such as 4 out of 5 are first-generation affluent. As a descendant of Scots (“Starrett” apparently translates into “Over a bog”), I was especially intrigued that the longer an ancestry group has been in America, “the less likely it will produce a disproportionately large percentage of millionaires. Why is this the case? Because we are a consumption-based society.” But there’s an exception.

The Scottish ancestry group makes up only 1.7 percent of all households. But it accounts for 9.3 percent of the millionaire households in America. Thus, in terms of concentration, the Scottish ancestry group is more than five times (5.47) more likely to contain millionaire households than would be expected from its overall portion (1.7 percent) of American households… more than two-thirds of the millionaires in America have annual household incomes of $100,000 or more. In fact, this correlation exists for all major ancestry groups but one: the Scottish. This group has a much higher number of high–net worth households than can be explained by the presence of high-income-producing households alone… More than 60 percent of Scottish-ancestry millionaires have annual household incomes of less than $100,000. No other ancestry group has such a high concentration of millionaires from such a small concentration of high-income-producing households… A household of Scottish ancestry with an annual income of $100,000 will often consume at a level typical for an American household with an annual income of $85,000.

Your money your brain
How to think about money

Figure 8. Click here to buy Your Money and Your Brain (9/10) or How To Think About Money (6/10), each by a different Wall Street Journal columnist. In Your Money and Your Brain, Jason Zweig presents an excellent practical application of the work of Daniel Kahneman about how your mind’s shortcuts can interfere with the best investment decisions. And he cites an array of revealing data points, such as “Among American workers who say they are ‘very confident’ that they will have enough money to live comfortably in retirement, 22% are currently saving nothing for that goal, and 39% have saved less than $50,000. Another 37% have never even estimated how much money they will need to retire comfortably.” Which brings to mind a joke told by the Bogleheads from Jonathan Pond: You really don’t need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you’ll be able to retire comfortably at 70.” Jonathan Clements’ How To Think About Money opens up with an especially good chapter about the relationship between spending and happiness – and advances the interesting notion that we find pursuing goals more satisfying than achieving them.

Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend: know anyone who wants to be happy? How about somebody who wants to better control their spending? Or do you know a billionaire who needs advice for how to give it all away? (I am available for personal consultation on the last).

I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

    Get Rich Slow

    The Gist: An exploration of an investor’s most important decision – how much to put where.

    A review of multiple books, most notably William Bernstein’s Four Pillars of Investing

    For a prerequisite tribute to index funds, check out my review Who Wants to Be a Millionaire?

     

    In our last correspondence, we explored the dismal and costly track record of both individual and professional investors compared to the lazier but more classically profitable strategy of slowly and continuously buying, holding, and balancing a diverse combination of low-cost index funds that return the historically generous market average. 

    So why doesn’t everyone just invest in indexes? The answer is an ironic combination of boredom and terror.

    little league

    Figure 1. It’s basically playing right field in Little League and somehow as a result getting more ice cream on average than your fellow players.

     

    When people normally put money toward investments, investing in a broad-based index just seems dull compared to the excitement of improbably picking a winner. Why buy small parts of 500 companies if your uncle was just telling you about a great article describing the sure-thing prospects of Whizbang Tectonics? William Bernstein playfully created “‘investment entertainment pricing theory’ (INEPT), which describes this phenomenon. For each bit of excitement you derive from an investment, you lose a compensatory amount of return. For example, a theater ticket may be thought of as a security with a high entertainment value and a zero investment return.” Of course, the theater can be pretty humdrum, too. Keep your asset allocation boringly profitable and get your excitement from swimming with sharks, joining a biker gang, and going over Niagara in a barrel to mimic the trajectory of your hand-chosen portfolio. 

    On the flipside, during a crisis, people lose their nerve as they watch their portfolio lose 20% of its value overnight. Why not sell before it gets worse and you’re wiped out? Historically, millions of investors who thought they could withstand risk sold at precisely the time that they should have been holding – if not buying. Still, if such a prospect freaks you out, the good news is that you can still structure your index investments to reduce risk – but understand that there is a fundamental relationship between risk and return. As Ben Graham intoned, “The investor’s chief problem – and even his worst enemy – is likely to be himself.” Bernstein relates a specific example:

    Myopic risk aversion—our tendency to focus on short-term losses—is one of the most corrosive psychological phenomena experienced by the investor. It is best demonstrated by this apocryphal story: An investor places $10,000 in a mutual fund in the mid-1970s and then forgets about it. Shocked by the October 19, 1987, market crash, she panics and calls the fund company to inquire about the state of her account. “I’m sorry madam, but the value of your fund holdings has fallen to $179,623.”

    william wallace

    Figure 2. To quote William Wallace: “Hoooooooold….. Hooooooold…. ”

     

    But what if we’re not talking a 20% loss, but 80%? Let’s look at 1929. Before getting to the misery, Bernstein notes that the stock market ‘bubble’ wasn’t entirely unreasonable: “Between 1920 and 1929, real GDP rose almost 50%… by today’s standards, stocks were positively cheap. Until 1928, they sold at approximately ten times earnings and yielded about 5% in dividends. Even at the peak, in the summer of 1929, stocks fetched just 20 times earnings, and dividends fell only to 3%. Again, tame by today’s standards.” Malkiel suggests that the principal problems were people borrowing to buy and the Fed’s ineptitude in first attempting to punish those borrowers, then in mishandling the consequences. Bernstein surveys the subsequent agony: “from the market peak in September 1929 to the bottom in July 1932, the market lost an astonishing 83% of its value. The loss was mitigated, however, by the approximate 20% fall in consumer prices that occurred during the period. The market recovered strongly after 1932, but in 1937, another drop of about 50% occurred.” Collins brutally notes that “should you have been unlucky enough to have invested at the peak, your portfolio wouldn’t have fully recovered until the mid-1950s, 26 years later.” 

    By now, your instinct for loss aversion is up and you’re ready to split your assets between cash and collectible knick knacks that you can at least enjoy looking at. But Collins points out that you would have had to have been incredibly unlucky to invest everything at the peak. If, instead, you had been investing steadily from your paycheck, your investments from 1926 and 1927 – midway up the stock market rise – would have been positive within 10 years. Indeed, the Bogleheads reveal that “Over the 85-year period from 1929 through 2013, we can clearly see that an investor who picked the worst one-year period to invest in large domestic stocks would have lost 43 percent. However, the same investment over any 10-year period would have lost only 1 percent.”

    10 years! Who has a decade to spare for a measly return? In some ways, riding out a crash is easier than long periods of slow growth. Bernstein reveals that “an examination of historical stock returns shows that the market can perform miserably for periods as long as 15 to 20 years. For example, during the 17 years from 1966 to 1982, stock returns just barely kept up with inflation.” Retirees with too much stock exposure certainly suffered. But this long era of malaise was absolutely stupendous for anyone working throughout, diligently investing a portion of their paycheck. Warren Buffett asks a couple of questions to get at the principle: “If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef?…  If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?” Malkiel analyzes: “Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying. This reaction makes no sense.”

    bernie sanders

    Figure 3. Thus explains the youth appeal of Bernie Sanders?

     

    Continuously investing in a bear market takes a lot of grit – how certain can you be that the market eventually will recover? You can’t. That’s why so many people stop buying or sell. Again, there is a fundamental relationship between risk and return. As a historical matter, we can observe that this has been the right strategy in the United States again and again as the long term trajectory of our markets has been a glorious up. But this is subject to hindsight and survivor bias. Every great nation of history had a good run until they didn’t. Turn on a TV and you can start worrying that our screwing up our historic ingredients for success is unfortunately quite plausible. Bernstein worries: “Until World War I shut down the St. Petersburg exchange in 1914, the Russian stock and bond markets were among the world’s most respected and active. They never reopened. During the twentieth century alone, military and political upheaval rendered not just St. Petersburg’s bourse, but also many other once-vigorous securities markets, defunct, or at least moribund: Cairo, Bombay, Buenos Aires, and Shanghai, to name a few.” Malkiel lucidly talks through the incredible speculative run-up of the Japanese stock market, where “stock prices increased 100-fold from 1955 to 1990.” At one point, the grounds of the Tokyo Imperial Palace – sitting on only half of a square mile – were valued greater than all of the real estate in California. Japanese investors at the height of the bubble have still not recovered 30 years later. 

    All of which brings us to your single most important decision as an investor: how you will allocate your capital among different asset classes. To get a sense of how important this is, the Bogleheads point to a major study of 91 pension funds’ investing over a decade that found that the differences in what percentage they put into each asset class accounted for 93.6% of the difference in performance between them. The final 6.4% was split between the time they bought and sold, the individual securities they selected, and the costs they were charged. To reinforce an earlier point, the same study also found that attempts to actively manage the fund – as opposed to leaving things in relevant indexes – cost pensions 1.1% in performance. 

    As you make your decisions, keep in mind a few things. First, invest only in things you understand well enough to explain to a 12 year old. Your money is at stake and good returns don’t require complexity – in fact, they may be better correlated with simplicity. Second, make sure your asset allocation reflects your desired risk. In chasing better returns, realize you are inherently going to be in riskier investments that could have, at the very least, more volatility. If your blood pressure can’t handle big swings, go for a safer, simpler allocation. If ultimately this gets too complicated and you want to set it and forget it, you can invest in low cost funds that diversify for you, either based on your target retirement age or your target risk. Third, for proper diversification, the Bogleheads advise “You want some investments that zig while others zag.” To protect yourself at various times, you are going to want asset classes whose performance is not directly correlated with each other. That might mean that certain aspects of your portfolio lag for a long time – and that’s not really a bad thing if you’re confident in their fundamentals. Focus on total portfolio performance. Fourth, be hyper-vigilant about fees and taxes so that you can capture most of the benefit of your returns. The further you drift from a broad market index, the more certain fees you may end up paying for uncertain performance. At the same time, some asset classes or indexes are inherently more or less tax efficient than others. Your tax inefficient holdings are ideally placed in a 401(k) or Roth IRA. I don’t have space to get into all the details, but you absolutely should research your eligibility for them (and precisely what costs and fees are involved).

    fortnite

    Figure 4. For the typical 12 year old, you’ll have to properly analogize. Like Fortnite, the winner of investing is the one who manages to hold on while everyone is dropping out. Of course, given the preteen popularity of TikTok, you might have trouble explaining the riskiness of Emerging Market indexes.

     

    The biggest asset allocation question you have to answer is what percentage of your investments to own in bonds versus stocks. In case these terms require demystification: when you buy a bond, you are loaning money to a company or government that they promise to pay back with regular interest. It’s nice to be owed by these guys for a change – and, generally, bonds are considered safer than stocks, especially over a short term, but, predictably, they bring less return. When you buy a stock, you are literally buying a small percentage of a company. Congratulations – you are a business owner!

    Bonds tend to face three problems: first, inflation endangers the value of your return. Second, many bonds are callable, so that if interest rates decrease, the lendee will simply borrow somewhere else and pay off the expensive bond. Third, the lendee may default. An index of bonds broadens your exposure and thereby limits your risk – but you might consider buying U.S. Treasuries directly because you can do so online without a broker or ongoing expenses. Bernstein cites Jeremy Siegel’s Stocks for the Long Run: “stocks outperformed bonds in only 61% of the years after 1802, but that they bested bonds in 80% of ten-year periods and in 99% of 30-year periods” Further,  Malkiel shares that, most recently, “bonds have produced average returns of 7.1 percent versus stock returns of 11.4 percent over the 50-year period ending in 2016,” but importantly, they zig when stocks zag: “bonds proved to be excellent diversifiers with low or negative correlation with common stocks from 1980 through 2018” Ultimately, Bernstein says “we own stocks to hedge long-term risk and bonds to hedge short-term risk.”

    shark

    Figure 5. As you buy bonds, it’s fun to think of yourself as a corporate loan shark. “Nice car you got there, Tesla. Shame if something happened to it after you defaulted.”

     

    The classic rule of thumb is that the percentage of bonds in your portfolio should be your age – that way, your portfolio becomes less risky as you approach retirement. Several authors believe that this is too conservative for investors with full-time jobs and that their bond percentage should max out at 20% or 25% until they approach retirement. Bogle, bullish on stocks, had an approximately 80% stock/20% bond mix into his 90s, advised young investors to flirt with 100% stocks, and thought retirees would do fine with a 50-50 ratio. Bernstein, on the other hand, suggests that younger investors might want a larger percentage of bonds until they’ve lived through at least one crash and understand how they’ll react. While Bernstein believes a disciplined buy and hold of more stocks would be better over time, a bigger percentage of bonds that made investors feel safe in a crisis would be better than selling off stocks in a panic. Indeed, he notes, a stock crash would generally be a good time to sell bonds and buy stocks. And Bernstein is also skeptical of the size of the recent return premium stocks have had over bonds, so that at least 20% in bonds is always valuable. Similarly, the legendary Ben Graham suggested that you should never have more than 75% in either allocation, and the data over the last 100 years suggest that those are good upper/lower limits for risk/reward ratios. Ultimately, the perfect portfolio is only clear in retrospect – you need to decide this for yourself.

    Once you’ve settled on what percentage of bonds, you’ll have to determine what kind. For simplicity, the indexers tend to prefer a total bond market index for tax-protected accounts and a total municipal bond market index for taxed accounts (the latter is free of taxes, but has predictably lower returns). There’s a richer debate about the duration of your bonds. Longer-term bonds pay more because there’s less certainty about the distant future’s inflation and default rates. Bernstein warns “Long-duration bonds are generally a sucker’s bet – they are quite volatile, extremely vulnerable to the ravages of inflation, and have low long-term returns.” He suggests the average duration of your bond should be less than 5 years – after all, your bonds are the short-term hedge. The Bogleheads, on the other hand, recommend choosing a timeframe that matches your need: if you are going to need the cash in 2 years, go for short term. If you’re investing forever, buy the total index. Relatedly, Malkiel likes zero-coupon bonds – an instrument that you buy at a discount, pays zero interest, but gives you the full amount at a time you specify (i.e. for paying for college). Junk bonds promise high yields because the lendees are of questionable ability to pay – all the indexers avoid them because they prefer safety in bonds and risk in stocks. There’s also some appeal for a particular type of U.S. bond that explicitly promises to pay a return above inflation – that takes care of a significant concern – but this type of bond is considered so safe that it tends to have little return and, worse, it’s taxable.

    trashcan

    Figure 6. Your new nickname for your brother-in-law can be “Junk Bond”

     

    Once you’ve settled on your allocation within bonds, you’ll move to stocks. Here, you’ll want to determine whether you want a simple portfolio that covers the total market in proportion to individual companies’ size – or whether you want to flavor your portfolio with exposure to different elements of the global marketplace, usually at greater cost and risk for certainly more diversification and complication, possibly more return.

    A major question is how much you should invest in the United States versus overseas. Bogle was essentially an investing nationalist: when you invest internationally, you are being exposed to multiple additional risks beyond company performance, including different accounting standards, political trouble, and currency differences. If you simply invest in the S&P 500, those American-based companies already get half their revenue from abroad which could be enough international exposure for you. Finally, investing globally can involve more fees than investing at home. On the other hand, Malkiel reminds us that the United States represents less than half of the global investing economy and Bernstein suggests that the number of differences between the United States and elsewhere mean that international stocks zig while domestic stocks zag – exactly what you may be looking for in a diversified portfolio. And, returning to our Japanese or Russian examples, Bernstein insists the takeaway is not that international markets are scarier, but that markets anywhere, including here in the United States, are subject to unexpected risk, so avoid excess concentration.

    If you do decide to invest internationally, you can simply buy an index that covers the world, as the Bogleheads simply advise, or you can break it down into indexes of particular regions or economic development. There’s always a danger the more specifically you index the closer you are approaching historically-fraught stock-picking. But there are reasons to consider breaking it down: first, owning the equivalent of the S&P 500 for Europe is relatively low cost and tax-efficient and so may be more appropriate for a taxable account. You still get the zig: Malkiel notes that from 1970 to 2017, an index of international developed economies’ stocks has done equivalent to the S&P but have only had a 0.5 correlation. Second, if you own the whole international market, you may be over-exposed to regional bubbles, such as with Japan in the late 1980s dominating the international index. Third, you may want to manage your exposure to faster-growing emerging markets. Malkiel is intrigued by their growth and notes their better performance than developed economies from 2000-2010. Bernstein thinks that there are substantial gains to be made in the very long transition from a riskier, emerging economy to a developed economy – but that those don’t always translate into immediate stock market returns – “China has had one of the world’s highest economic growth rates—at times exceeding 10% per year—yet between 1993 and 2008, its stock market lost 3.31% per year. The same is true, to a lesser extent, for markets in the Asian ‘tigers’ (Korea, Singapore, Malaysia, Indonesia, Taiwan, and Thailand), which since 1988 have all had lower returns than those in the low-growth United States.” Again, ultimately, you’ll need to decide for yourself. Within the books reviewed here, the range of recommendations for how much international stock to own is 0 – 30% of your total portfolio.

    Kings

    Figure 7. Sadly, you’ll have to forgo the most promising foreign investments in emails from Nigerian princes.

     

    Of course, the core of your stocks should be within the United States, where you can easily invest in an index that covers most of the stock market. For simplicity’s sake, once you’ve settled the bond and international questions, you could stop right there. Bogle’s personal portfolio had the beauty of simplicity: 80% S&P 500, 20% total bond market index. And, indeed, all of the indexers covered here tend to recommend putting at least a plurality of your stocks into the S&P 500 or the total US market. As mentioned before, there’s always a danger the more specifically you index the closer you are approaching historically-fraught stock-picking. But if you want to get creative, there are advocates for indexes of two sectors in particular (real estate and precious metals), the smaller companies in the market (small-cap), and companies that are trading at a relatively smaller multiple of their earnings or net worth (value) – but note that practically everything is going to have higher costs than a broad market index.

    Most indexers believe that real estate is a good investment because it has had similar returns to the generous stock market over time while not being exactly correlated. The principal vehicle that people use to invest in real estate is a real estate investment trust (REIT) – and they have some peculiarities, chief among them that they have to distribute 90% of their profits in dividends, which are not ideal in a taxable account. That distribution feature also means that they heavily rely on debt for expansion, which creates its own risk. Publicly traded REITs also, for better or worse, own only a single digit percentage of the total U.S. investable real estate market, so they are not as broad an investment as desirable. There are other opportunities to invest in real estate outside indexes, but whatever you do, do not consider your personal home an investment. The authors reviewed here are otherwise skeptical of sector indexes because they feel too close to stock-picking and they fear being that rational investor in 1900 who, looking for an evergreen industry, invests in a blacksmith index. But at least Bernstein likes a very small exposure to precious metal stocks as one industry that persistently zags. While uncorrelated, the precious metals sector may primarily be an inflation hedge, and there may be better alternatives over a long time.

    cigarettes

    Figure 8. If you’re seeking to design a post-apocalyptic portfolio, conventional securities aren’t going to be that useful – Mad Max isn’t likely to value the printout of your Charles Schwab holdings in gold mining companies. Instead, carefully allocate to bullets, alcohol, and cigarettes – the latter two being all the more valuable if you’re not a personal consumer!

     

    The theoretical appeal of small companies in the bottom 10% or so of the market is that, by their very size, they may have an easier route to greater returns. They also, of course, are closer to going out of business. Bernstein points out that “the small stock advantage is extremely tenuous—it’s less than a percent-and-a-half per year, and there have been periods of more than 30 years when large stocks have bested small stocks.” An index of small cap companies spreads your risk – but anytime a company is too successful, they get bigger, prompting the index to sell the shares in a taxable event. And, naturally, keeping track of these smaller companies means more fees than a broad based index. Malkiel also cautions that small cap companies may now have become too popular (and therefore overpriced) even while there’s relatively little analyst attention to this small part of the market. Malkiel further points to data that “single factor funds have either produced returns that are roughly equivalent to broad-based index funds or their returns have been inferior” – but that may again go to the question of correlation. 

    The theoretical appeal of value companies trading at about the lower third of multiple of book value is that you can buy them cheap and they are less subject to speculative bubbles. In any given decade, investors will get enthusiastic about a particular industry or country or whatever and they’ll feverishly bid up prices to be a gigantic multiple of the earnings and value of a company in anticipation that “some greater fool” will pay them more for it. There may, of course, be a good reason why a company is trading at a lower multiple. Yet Bernstein reports: “There have been a large number of studies of the growth-versus-value question in many nations over long periods of time. They all show the same thing: unglamorous, unsafe value stocks with poor earnings have higher returns than glamorous growth stocks with good earnings.” Nevertheless, like a small cap index, if a company does start to trade at a higher multiple, it will get sold – and create another taxable event. Targeted value indexes have more expensive fees than the broad market index – and they can underperform that broad market index for over a decade. I’ll repeat Malkiel’s warning about single factor funds – but I’ll also note that he’s more intrigued by multiple factor funds, like combining the two we just discussed for a small cap value index (and more fees and taxes!). For what it’s worth, Richard Ferri reports that “According to researchers Gene Fama and Ken French, 95 percent of the return on a widely diversified U.S. stock portfolio can be explained by that portfolio’s market risk (beta), percentage in small stocks (size risk), and percentage in high book-to-market stocks (value risk). Over the long term, U.S. small-cap stocks have achieved a return premium over large-cap stocks, and value stocks have achieved a return premium over growth stocks.”

    bubbles

    Figure 9. Value stocks help you miss getting hosed in the financial bubble bath

     

    Once you’ve determined your ideal allocation, you have one final decision to make: whether, when, and how to balance your account. The different aspects of your portfolio will be growing at different rates and so the perfect allocation you originally conjured will eventually be out of whack, such that your 60% stocks is now 80% due to a bull market. Bogle believed that the unbalanced portfolio was “likely to provide higher long-term returns” because you let your winners ride and just adding more money without selling anything means you will be less likely to dangerously tinker. Bernstein cites lots of academic evidence to argue the opposite, that rebalancing will generally lead to higher returns, though “usually no greater than 1 percent per year.” Bernstein’s argument is premised on reversion to the mean – you want to sell winners because they are probably overperforming relative to their base rate and, relatedly, the losers are cheap underperformers. In this vein, Bernstein insists: “Do not allow the inevitable small pockets of disaster in your portfolio to upset you. In order to obtain the full market return of any asset class, you must be willing to keep it after its price has dramatically fallen. If you cannot hold onto the asset class mutts in your portfolio, you will fail. The portfolio’s the thing; ignore the performance of its components as much as you can.” Of course, if all your investments are in a taxable account, then selling winners will lead to capital events whose taxes will overwhelm the real but limited gains. Nevertheless, Bernstein argues that you would still want to rebalance occasionally in a taxable account to reflect your risk tolerance, either because you are getting older and want more security or, as in the example above, stocks have run up in a big bull market and you want to preserve some of your gains.

    If you decide to rebalance, you need to decide when and how. For when, Bernstein suggests that the best answer may be every few years and, additionally, if there’s a big swing (20%?) in market prices. The Bogleheads, appropriately sensitive to taxes, recommend selling losers before year’s end and winners in the new year to take advantage of something called “tax loss harvesting.” For other tax reasons, they cite a Morningstar study that suggests rebalancing should not be done more frequently than every 18 months. I’ll also remind you that there are low cost funds that rebalance for you, either based on your target retirement age or your target risk. For how, you can obviously sell the over-performers and buy the under-performers. But in an ideal world, you’re putting money in the market every month or quarter and you can use that to try to bring things back into your preferred percentages, such that if stocks are out of whack, your monthly contribution may only go toward bonds. The key here is putting in about the same every time as opposed to waiting for when prices are low: time in the market beats timing the market. Malkiel cites a University of Michigan study that found that “95 percent of the significant market gains over a thirty-year period came on 90 of the roughly 7,500 trading days. If you happened to miss those 90 days, just over 1 percent of the total, the generous long-run stock-market returns of the period would have been wiped out.” And Malkiel piles on by citing Laszlo Birinyi: “a buy-and-hold investor would have seen one dollar invested in the Dow Jones Industrial Average in 1900 grow to $290 by the start of 2013. Had that investor missed the best five days each year, however, that dollar investment would have been worth less than a penny in 2013.”

    If you’ve gotten this far, that’s about it. Invest regularly, and only in things you truly understand. Make sure your asset allocation reflects your desired risk – and remember chasing more returns means risking bigger losses. Diversify within assets with indexes and across assets through allocation and rebalancing. Be hyper-vigilant about fees and taxes so you can capture most of the benefits of your returns. And, as Malkiel advises, be patient and disciplined: “You can only get poor quickly. To get rich, you will have to do it slowly, and you have to start now.”

    Four pillars of investing

    Figure 10. Click here to buy William Bernstein’s Four Pillars of Investing, 9/10. As a reminder, the four pillars that you must understand are the theory of investing, the history of markets, your own psychology, and the adverse interests of the investing business – which includes financial journalism! Bernstein recommends that you avoid the media, filled with English-major journalists currying favor with those they cover, and instead read books like the ones reviewed here. Bernstein best articulates the real risk that comes with investing and why it’s important to diversify. For better or worse, he is an asset-class junkie who suggests an ideal portfolio that is more complicated than others covered here (and he gives more specific advice about investors in different situations). But despite his worries, he still sees a longer trend up for stocks:

    A superb metaphor for the long-term/short-term dichotomy in stock returns comes from Ralph Wanger, the witty and incisive principal of the Acorn Funds. He likens the market to an excitable dog on a very long leash in New York City, darting randomly in every direction. The dog’s owner is walking from Columbus Circle, through Central Park, to the Metropolitan Museum. At any one moment, there is no predicting which way the pooch will lurch. But in the long run, you know he’s heading northeast at an average speed of three miles per hour. What is astonishing is that almost all of the market players, big and small, seem to have their eye on the dog, and not the owner.

    A random walk down wall street

    Figure 11. Click here to buy Burton Malkiel’s classic A Random Walk Down Wall Street, 8/10. Though first published decades ago, Malkiel has continuously and freshly updated it to reflect the latest data and events. Malkiel explicitly addresses one major recent concern about index funds: that they’ve gotten too big and that there will soon not be enough actors in the market to price things correctly. Malkiel essentially responds that the temptation of inefficiency will be too great for some not to take advantage of it. Appreciated his quoting J Kenfield Morley: “In investing money, the amount of interest you want should depend on whether you want to eat well or sleep well”

    bogleheads guide to investing

    Figure 12. Click here to buy the Bogleheads’ Guide to Investing, 9/10. A very practical and simple overview that goes deep into what it means to follow the path laid down by John Bogle. Amusing citation of Gene Brown: “Foolproof systems don’t take into account the ingenuity of fools”

    little book of common sense investing

    Figure 13. Click here to buy American investing hero John Bogle’s Little Book of Common Sense Investing, which lives up to its title and is a stirring call to arms, based on law of averages, for investors to humble themselves by picking the cheap indexes that outperform all the hard work of expensive active managers.  8/10. Has a great quote from Buffett: “The greatest Enemies of the Equity investor are Expenses and Emotions”

    Simple Path to wealth

    Figure 14. Click here to buy JL Collins’ The Simple Path to Wealth, 7/10. The premise of this book was investing advice that the author wanted to pass along to his daughter and it’s an easy read, but probably should be read in conjunction with the Four Pillars to ensure you have a proper sense of risk. Collins does a great job illustrating how the Great Depression was bad, but not as bad as you might think – but overall is perhaps more optimistic than warranted about stocks. Perhaps a better case is made by Jeremy Siegel in Stocks for the Long Run who argues that peak investors before the Great Depression actually recovered faster than Collins suggests (15 years v. 26) and, what’s more, “since World War II, the recovery period for stocks has been even better. Even including the recent financial crisis, which saw the worst bear market since the 1930s, the longest it has ever taken an investor to recover an original investment in the stock market (including reinvested dividends) was the five-year, eight-month period from August 2000 through April 2006.”

    Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend: Know anyone who wants to know more about investing? How about anybody who wants to be rich? Or anyone who would like to avoid becoming poor?

    I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

      Who Wants To Be a Millionaire?

      The Gist: A tribute to the boring, brilliant, passive, and profitable index fund.

      A review of multiple books, most notably index pioneer John Bogle’s The Little Book of Common Sense Investing.

      For more specific commentary on capital allocation, check out my review Get Rich Slow.

      I’ve come across a hot stock tip that could make you rich. I am writing now so you can take advantage of it ASAP.

      It probably comes as close to easy money as you’ll ever come across. But you are going to need courage to see it through. 

      Billionaire Chuck Schwab has already apparently put most of his wealth into it. Legendary investors like Ben Graham and Warren Buffett have strongly endorsed it. Nobel Prize winning economist Paul Samuelson has called its creation the equivalent to the invention of the wheel! And JL Collins, author of the Simple Path to Wealth, even insists that acting on this means that “it is possible for every middle class wage earner to retire a millionaire.”This secret to beating the market? Don’t try. Which is not to say you should put all your money in cash (or even krugerrands) under your mattress. Instead, slowly, continuously buy, hold, and balance a diverse combination of low-cost index funds that return you the market average.

      Hammock

      Figure 1. You’re aspiring to the type of investing that can be done from a hammock. Besides, those krugerrands can make your mattress lumpy.

      But who could be satisfied with merely “average”? We’ll get into why “average” is a misleading term in a moment but let’s first consider how good a return this truly has been. Jack Bogle created the first true index in the 1970s through his firm Vanguard – I’ll be mentioning his excellent Little Book of Common Sense Investing as well as his devoted and grateful followers’ Bogleheads’ Guide to Investing throughout this review. The latter tells the story of Bogle receiving a letter in 2005 from a man who had been investing in Bogle’s first index since the disco era and was enjoying his portfolio of over $1,250,000. But what was truly remarkable was that, in his entire life, the investor had never earned more than $25,000 a year. Still, diligently, every month, he had put $600 – a third of his income – into an index and now reaped the benefit. And just so the comparison is clear: if he had simply saved that $600 a month in cash, he would only have had $216,000, one fifth of his actual total. If he had gone with gold, he might very well have lost money!

      Pants

      Figure 2. Despite the renewed popularity of “vintage” clothing, other “investments” of the 1970s have not turned out as well.

      The true result was a virtuous combination of American capitalism’s long-term success, the investor’s discipline, and what Albert Einstein called the greatest mathematical discovery of all time: compound interest. Over the long run, the American stock market return – captured via index – has delivered generously, an average of over 8% a year from 1975 to 2020. This particular investor had the discipline to buy amidst stagflation and warnings of the death of stocks in the Carter years, and to keep buying (and holding) through recessions, stock market crashes, domestic financial crises, international financial crises, and bubbles bursting. And throughout that entire time, especially if he reinvested the dividends that stocks paid him, his original investment benefitted from the growth on growth – such that his original, first check of $600 gained, say, 10%, and then was $660, earning another 10% on the new total, so that over 30 years of repeating the phenomenon, that original $600 alone was worth over $10,000.

      Apple Pie

      Figure 3. A close second for greatest mathematical discovery would have to be apple pi.

       

      Of course, compound interest works for any return. Why invest in a passive index of nearly everything instead of carefully, studiously picking winners and avoiding losers? Surely, you think, you can do better than the average schmuck. The truth is you can. By investing in an index. The problem is that “average,” as it relates to the index’ returns, is misunderstood. One might think that half of investors do better than the index average. In fact, Collins cites a University of California study that “only about 1% of active traders” – not 50% – “outperform the market and that the more frequently they trade, the worse they do.”  Amusingly, the Bogleheads even report on the investing outcomes of the Mensa Investment Club – “the exclusive society whose membership is restricted to persons scoring in the top 2 percent on IQ tests. During a 15-year period when the S&P 500 had average annual returns of 15.3 percent, the Mensa Investment Club’s performance averaged returns of only 2.5 percent.”

      egg

      Figure 4. The eggheads have egg on their faces.

       

      You probably also have a full time job, such that your day trading might better be characterized as night trading. And that job probably does not involve constant analysis of securities. (For context, Warren Buffett reads 500 pages a day). When you think you’ve found an under-valued stock, realize that you’re buying from someone who disagrees – and that someone is less likely to be another rando in his pajamas than a major investment group with gobs of money to spend trying to get an angle with the smartest analysts spending all their time using the fastest computers. Or as William Bernstein, author of the Four Pillars of Investing, puts it: you are “going up against the Sixth Fleet in a rowboat.” Bernstein suggests instead: “When you buy the market, you are hiring the aggregate judgement of the most brilliant and well-informed minds in finance.”

      Perhaps you are humble enough to realize that you don’t have the Midas touch and that you as an individual can’t compete with the big guns – but if you can’t beat them, why not join them? Put your money in the Sixth Fleet – hire those best and smartest people to manage your money for you. Alas, the premise is flawed: you can beat them. With an index fund. Bogle cites the SPIVA study that found from 2001 to 2016 “an astonishing 90 percent of actively managed mutual funds underperformed their benchmark indexes.” Better than the record of individual active traders – but still abysmal! Is the secret, though, to just stick with those rare talents – that top 10% – that can beat the market?

      Unfortunately, the top 10% of actively-managed funds are not the same over time. Bernstein reports that “literally dozens of studies” have verified that “past superior performance has almost no predictive value” over more than a year. For just a flavor, we can look at the ratings of Morningstar, the premier evaluator of mutual funds. Funds in the top 10% of performance get a five star rating. Mark Hulbert found in 2004 that “Over the past decade, Morningstar’s five-star equity funds have earned an average 5.7 percent against a 10.3 percent return for the Wilshire 5000.” Somewhat interestingly, since 1987 Morningstar itself has looked at the three most popular and least popular funds from a given year and followed them over the next three years: “Eight out of nine times, the unpopular funds beat the popular funds, and seven out of nine times the unpopular funds beat the average equity fund. Most tellingly, the popular fund categories also lagged the average equity fund seven of nine times.” Bogle reports, “According to a 2014 study by the Wall Street Journal, only 14 percent of five-star funds in 2004 still held that rating a decade later. Approximately 36 percent of those original five-star funds dropped one star, and the remaining 50 percent dropped to three or fewer stars.” The real results are actually even worse: young funds inherently get inflated ratings because they don’t have a long track record of comparison while older funds that failed have disappeared from lists. Bogle summarized the landscape in 2017:

      281 of the equity funds that existed in 1970 are gone, mostly the poor performers. Another 29 remain despite having significantly underperformed the S&P 500 by more than one percentage point per year. Together, then, 310 funds—87 percent of the funds among those original 355—have, one way or another, failed to distinguish themselves. Another 35 funds provided returns within one percentage point, plus or minus, of the return of the S&P 500—market matchers, as it were. That leaves just 10 mutual funds—only one fund out of every 35—that outpaced the market by more than one percentage point per year.

      Ultimately, Burton Malkiel, the author of the classic Random Walk Down Wall Street, observes “The few examples of consistently superior performance occur no more frequently than can be expected by chance.” Are you prepared to buy a lottery ticket that your choice of fund will be run by the next Warren Buffett? Or would you rather, as Bogle folksily advises, stop looking for the needle and buy the haystack?

      Powerball

      Figure 5. Though perhaps that analogy is too tempting: Lottery tickets may be America’s most popular investment security. Time to start a Powerball index!

       

      And yet, as if superior performance was not enough reason to invest in an index, there’s another significant appeal: costs. You cannot control how your investments will perform but you can be certain of what you pay intermediaries in expenses. As in the typical gold rush, the real winners all too often are not the miners but the suppliers. A typical actively-managed fund may have an expense ratio of 1 or 2% to pay for all those eggheads, corporate jets, computers, and pinstripe suits. The management fee may even slowly grow over time – between 1981 and 1997, as the market gained, the average fee jumped 50%.  A total stock market index fund at a place like Vanguard, whose ownership structure is designed to keep fees low, has an expense ratio of 0.04%. So, for you to make money with an actively managed fund, they not only need to beat the market, a difficult enough task as it is, but they have to beat the market plus their fees. The Bogleheads helpfully explain:

      “If you don’t think those miniscule costs matter, consider this: Let’s assume someone puts $10,000 in a mutual fund, leaves it there 20 years, and gets an average annual return of 10 percent. If the fund had an expense ratio of 1.5 percent, the fund is worth $49,725 at the end of 20 years. However if the fund had an expense ratio of 0.5 percent, it would be worth $60,858 at the end of 20 years. Just a 1 percent difference in expenses makes an 18 percent difference in returns when compounded over 20 years.”

      Bogle offers more folksy advice: “In investing, you get what you don’t pay for.” Bernstein more clinically observes “The average investor receives a net return equal to the market’s minus expenses.” Bernstein goes further, however, in noting that the explicitly identified expense ratio does not capture the full costs of an actively managed fund. Because actively-managed funds are looking for vulnerabilities and more frequently trading in the market, they are paying commissions on transactions to brokers and they are paying more than someone sold it for because of spreads that go to market makers. You, as an individual day trader, would experience the same phenomenon. If an actively managed fund gets so popular that they are managing lots and lots of money, they also incur impact costs, where they can’t any longer buy discounted stocks on the cheap because they are so big and the opportunities are relatively small that they move the cost themselves. In contrast, a large index fund has very little turnover. Bogle continues his folksy streak: “Adding a fourth law to Sir Isaac Newton’s three laws of motion, the inimitable Warren Buffett puts the moral of his story this way: For investors as a whole, returns decrease as motion increases.”

      We haven’t mentioned perhaps the biggest cost to your trading activity: Uncle Sam. To get back to Einstein, “Compound interest is the 8th wonder of the world.  He who understands it, earns it; he who doesn’t, pays it.” The Bogleheads note that  “Every time an active fund sells a profitable stock, it creates a taxable event that’s passed on to the investor.” The effect can be dramatic, as retold by Malkiel:

      Taxes are a crucially important financial consideration, as two Stanford University economists, Joel Dickson and John Shoven, have shown. Utilizing a sample of sixty-two mutual funds with long-term records, they found that, pre-tax, $1 invested in 1962 would have grown to $21.89 in 1992. After paying taxes on income dividends and capital gains distributions, however, that same $1 invested in mutual funds by a high-income investor would have grown to only $9.87. 

      But there’s good news. Broad-based index funds are fairly tax efficient. What’s more, you can organize your investments in such a way to reduce the tax burden by funding vehicles like a 401(k) or Roth IRA. Yet that’s not the only organizing that will be useful to you. Hopefully by now you’re convinced of the benefits of index funds – but you are still going to need to make your most important decision: how much of your capital to allocate in which index funds. We’ll discuss your options in our next email.

      little book of common sense investing

      Figure 6. Click here to buy American investing hero John Bogle’s Little Book of Common Sense Investing, which lives up to its title and is a stirring call to arms for investors to humble themselves by picking the indexes that outperform all the hard work of active managers.  8/10. 

      Four pillars of investing

      Figure 7. Click here to buy William Bernstein’s Four Pillars of Investing, 9/10. Incidentally, the four pillars that you must understand are the theory of investing, the history of markets, your own psychology, and the adverse interests of the investing business, which often charges you too much, among other dangers. Interestingly, Bernstein concedes “some evidence that the best securities analysts are able to successfully pick stocks” – but, alas – “in the aggregate, the benefits of stock research do not pay for its cost.” He recommends an annual meditation: “How do you avoid overconfidence? By telling yourself at least a few times per year, ‘The market is much smarter than I will ever be. There are millions of other investors who are much better equipped than I, all searching for the financial Fountain of Youth. My chances of being the first to find it are not that good. If I can’t beat the market, then the very best I can hope to do is to join it as cheaply and efficiently as possible.’”

      bogleheads guide to investing

      Figure 8. Click here to buy the Bogleheads’ Guide to Investing, 9/10. A very practical and simple overview that goes deep into what it means to follow the path laid down by John Bogle.

      A random walk down wall street

      Figure 9. Click here to buy Burton Malkiel’s classic A Random Walk Down Wall Street, 8/10. Though first published decades ago, Malkiel has continuously and freshly updated it to reflect the latest data and events

      Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend:  Think – do you know anyone with a 401K or Roth IRA? Anyone who likes money? Anyone who plans to retire?

      I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

        Say No To The Glow

        The Gist: 7 specific, escalating steps to spend less time with your favorite screen.

        The second of a two-part review of multiple books, most notably Tech-Wise Family.

        Access the first part here: Intervention.

         

        So, you’ve decided to say no to the glow and yes to life. Maybe you want to remember what your family looks like (without Instagram filters). Perhaps you want to actually get some work done (maxing out your skill points in real life). Or you just want to chase that great American birthright: the pursuit of happiness (amazingly, guaranteed before the advent of screens!)

        We are going to go over some digital hacks and tips but Cal Newport, the author of Digital Minimalism and Deep Work, will tell you “what you need instead is a full-fledged philosophy of technology use, rooted in your deep values, that provides clear answers to the questions of what tools you should use and how you should use them and, equally important, enables you to confidently ignore everything else.” 

        The underlying truth of Newport’s warning is that technology is ubiquitous, convenient, and, as we discussed in our last correspondence, designed by the world’s smartest people to keep you using it for as long as profitable (i.e. forever).  You will ignore casually set intentions too easily – so, whether in a moment of frustration or clarity, you need to identify the good, the bad, and the ugly of your relationship with technology.

        Clint Eastwood

        Figure 1. Note that in the original, “Good” was relative. Clint played a corrupt bounty hunter who abandoned his business partner to die in a desert. Up to you whether to move anything analogous in your own life into another category.

         

        Crucially, along the way, focus on what technology is substituting for. You justify social media to keep track of friends – but how often are you having really meaningful conversations? You explain that you always need your phone in case of an emergency – but how often is the real emergency your boredom? You ironically defend television as “unplugging” – but how often have you watched a few too many episodes and find yourself more exhausted than when you started?

        Outlet

        Figure 2. To be clear, if your way of unwinding is to sit on your couch watching a blank, unplugged TV screen, that’s probably ok – though don’t miss the excitement outside of seeing grass grow!

         

        When you are tired, when you are procrastinating, when you are bored, when you are lonely, the digital world has practically limitless offerings. And yet these glittery mind tricks don’t deliver. As you feel the cue, remember that there are more satisfying alternatives. Stanford psychologist Kelly McGonigal reports that the American Psychological Association has found that the least effective strategies for stress relief include playing video games, surfing the Internet, shopping, and watching TV or movies (along with gambling, drinking, smoking, and eating). The most effective stress relief? “Exercising or playing sports, praying or attending a religious service, reading, listening to music, spending time with friends or family, getting a massage, going outside for a walk, meditating or doing yoga, and spending time with a creative hobby.”

        “If there is a secret for greater self-control, the science points to one thing,” McGonigal reveals. “The power of paying attention. It’s training the mind to recognize when you’re making a choice, rather than running on autopilot.” And, as James Clear articulates especially well, your goal is to make the desired choice easy and the undesired choice hard. Embrace a cascade: start at whatever level you think is appropriate and, if you falter, make it harder. Below are suggestions for your phone, your computer, and your television.

        Starting with your phone:

        You want to access apps when you want, not when they want.  

        1. Reorganize and replace your apps. On your home screen, keep only single use tools (like maps, calendars, weather). At first, you can try to bury deep in folders your endless apps (social media, games, news, video). Replace your temptation with a better alternative: Where YouTube once tempted, you now have Spotify. Where you once tapped Candy Crush, you can now tap Kindle to read the last book I reviewed. Where Facebook once sat, you now have a list of people to call (starting with your mom!). If social media is your particular temptation, Newport concedes that “refusing to use social media icons and comments to interact means that some people will inevitably fall out of your social orbit—in particular, those whose relationship with you exists only over social media. Here’s my tough love reassurance: let them go.” For the people you really care about, upgrade your approach: “When your friends and family are able to instigate meandering pseudo-conversations with you over text at any time, it’s easy for them to become complacent about your relationship. These interactions give the appearance of close connection (even though, in reality, they’re far from this standard), providing a disincentive to invest more time in more meaningful engagement… Being less available over text, in other words, has a way of paradoxically strengthening your relationship even while making you (slightly) less available to those you care about. This point is crucial because many people fear that their relationships will suffer if they downgrade this form of lightweight connection. I want to reassure you that it will instead strengthen the relationships you care most about. You can be the one person in their life who actually talks to them on a regular basis, forming a deeper, more nuanced relationship than any number of exclamation points and bitmapped emojis can provide.”
        2. Turn off all notifications. Restart at zero and then extremely sparingly restore the absolute bare minimum. I myself just have notifications for my phone calls and emails. 
        3. Go grayscale. App developers make very intentional color choices to attract your attention – there’s a reason why notifications are in red. Deny them the privilege and take back control.
        4. Place your phone somewhere it will take a few minutes to retrieve from. You may not be able to always do this, especially if your work requires call availability – and, if that’s the case, you can move up the cascade. But the vast majority of people can keep their phone away from arm’s reach for far more time than they do. (Added bonus: limit police searches!) But for your day to day life, Andy Crouch puts it nicely: “We [should] wake up before our devices do, and they [should] ‘go to bed’ before we do.” At the very least, buy a traditional alarm clock and banish your phone from your bedroom. You can also slow yourself down a little bit by disabling Touch ID and requiring a password or putting a rubber band around your phone to remind you not to endlessly scroll. I take a cue from Tristan Harris – the background of my phone says “Do not open without intention.” 
        5. Limit time on your apps. Phones now have powerful built-in tools that can warn you about the time you are spending on applications and can function as speed bump reminders if you try to access apps outside of a designated time (the morning, when you should be working) or if you use apps in excess (only 15 minutes a day or whatever you decide). Exploring the features of Apple’s Screen Time or Google’s Wind Down is well worth the effort – and you can ratchet your process up with apps that block your access altogether. As you contemplate the appropriate time limits, consider the results of Tristan Harris’ study of 200,000 iPhone users about what apps made them feel happy or unhappy after use. The unsurprising bottom line: you’ll tend to be happier after using meditation, fitness, and book apps; you’ll tend to be unhappier after using social media, dating, and game apps. 
        6. Purge your apps and give away your passwords. Cal Newport suggests that, in order to truly understand your temptations and what substitutes look like, you should take a 30 day detox (not just of your phone but of anything digitally tempting). After it’s over, similar to the notification process, only extremely sparingly add back anything you think is truly beneficial. Don’t purge every few weeks in frustration – only to add back temptations a short time later. Determine what you are better off without, change the password to something complicated and impossible to memorize, give the password to a disciplined loved one, and delete the apps. The authors of Make Time go so far as to delete email and web browsers from their phones because they think that those functions are better handled on computers but even that step can be easily reversed by a phone with the functionality. Bizarre to me, some of the digital monks I discuss find texting acceptable (sometimes justified because it’s a social interaction).  Personally, I find the data on how quickly people read and respond to texts alarming in light of the goals of digital restraint. Unfortunately, my phone provider doesn’t have a plan without texts and the app can’t be deleted, so I use the time limits described above to only see them rarely.
        7. Dumb down your phone. If you really, truly want to end your phone’s distractions, then get a dumb phone with few functions (including, alas, texting). I have not made it this far down the cascade – I enjoy too much settling arguments with instant internet access – but going this far, as extreme as it seems today, could be rewarding on net.
        Phone

        Figure 3. Our new Paleotechnology Program allows you to live as your ancestors did! Travel way back to the 1990s when most humans had to contend with landlines! Experience life as it was intended in such cinema classics as Citizen Kane: in black and white! Along the way, enjoy all the mystery and wonder of real human contact!

         

        For your computer:

        you want to be able to focus and work when you need to, and you also want to embrace the benefits of the real world, especially socializing. 

         

        1. Consider alternative relief. Keep a copy of the list of activities above that the American Psychological Association actually deliver on stress relief. Whenever you are tired or bored and tempted by surfing the web, online shopping, or gaming, fight the mind trick and try something else, if only for a half hour. If you’re procrastinating, think about the consequences of NOT doing whatever you’re putting off and just get started with the smallest step you can take toward progress.
        2. Demand quality. This particularly applies to gaming, and it will come up again for TV. There’s a psychological phenomenon where people heavily weight their judgment of an experience based on the final outcome – even if they enjoyed the vast majority of an experience, if it ends badly, the memory is sour. There is data online about how long a game takes – make sure you know what you’re getting into and that it’s worth the opportunity cost. Beware the diminishing marginal utility of 100% completion of anything and embrace refund policies that will give you your money back after a couple of hours – that way, you’ll be incentivized to make a determination relatively quickly whether you’re actually enjoying what you’re doing.
        3. Schedule your digital entertainment in advance. Newport suggests that if you calendar when you are going to be able to take advantage of your vice, you will have an easier time resisting during the non-calendared time. You aren’t giving it up entirely, you’re just postponing it till after you complete this project, until the weekend, or whatever. 
        4. Put away your toys. The Make Time authors suggest that when you are done browsing or gaming, make sure to exit out of everything so that when you come back to your computer, you are starting clear (or, even better, with precisely the work you need opened up).
        5. Apply your skill points to real life. Consider the magical prospect that rather than dispatching your Sim to learn cooking, you could learn to cook for yourself. Or, rather than sniping that Nazi, you could genuinely master a rifle at the local firing range. As you contemplate customizing the character that is you, particularly bear in mind your social needs: join a paintball league for the adrenaline rush, break out the Risk board to think through strategy, or take on improv to flex your creativity.
        6. Enforce your schedule. It’s one thing to say that you won’t check a website until your project is done or that you will stop playing a game at your normal bedtime. It’s another thing to do it. Get creative in how to throw up obstacles: Use an app to block websites. Plug your computer or your Wifi into a cheap timer outlet that will cut off electricity at a certain time. Create a child account on your PC, put all your games on it, and enforce time limits with another complicated password difficult to retrieve. Don’t charge your controller so that the battery runs out. Lock your laptop physically in a cabinet. If you still press forward but at some point hit a speed bump or realize that you’re stretching yourself beyond your intention, hit the brakes, walk outside for a bit, and just think. Ultimately, embrace sunk cost, forgive yourself, and learn from the experience.
        7. Downgrade your computer. If you routinely overcome your obstacles to access the capability of your computer, eliminate the capability. Cancel your home internet. Get rid of your computer speakers. Get a computer with a bad graphics card and basic functionality. My own view is that the internet is an opportunity for such benefit that its harms aren’t worth the cut off – but you have to weigh the trade off in your own life.
        coffin

        Figure 4. The real 100% completion. How you play determines your Epilogue. 

         

        For your television:

        beware the relatively steep cost to benefit ratio.

        1. Consider alternatives to TV’s perceived value. Stress relief is better achieved through the activities described above by the American Psychological Association – where playing a sport is better than watching one (especially if your team is losing) or socializing with your own family is better than watching a family sitcom. Learning is best achieved through reading, itself a stress relief, but I’ve found that podcasts are a perfect substitute for something to have on in the background while you cook or do something else. 
        2. Only watch with family or while exercising. Make the most of your watching by only doing it when you can combine it with something good. TV has perhaps the best capability of any digital offering to be a shared simultaneous experience – I have always loved watching movies with my dad and we still watch old action flicks together over Christmas. Just be careful not to use this as an excuse to endlessly engage in TV at the expense of other shared experiences – or better conversations. Similarly, if you’re seeking to multitask, consider upgrading the background noise to podcasts. 
        3. Disable autoplay and prefer media with quicker ends. Go onto your streaming settings and disable the service from just queuing up your next thing to watch as soon as you finish the previous item. You want to choose when to continue based on your priorities. Similarly, movies outside the Marvel Universe are inherently going to be easier to manage than TV shows, which can easily dwindle in quality over the many hours you spend feeling a need to see how it all works out. Don’t forget the phenomenon discussed with gaming where a bad ending can sour the memory of an otherwise enjoyable experience (see, most recently, Game of Thrones). If you do find yourself engrossed in a deteriorating TV show, embrace sunk cost and quit!
        4. Cut cable, unsubscribe from streaming, and choose quality on demand. Per Make Time, switch your mindset from “What’s on?” to “There’s something specific I want to watch.” Get rid of your opportunity to surf endlessly for options to watch without friction and switch to a model where you purchase or rent each individual item. (I have mentioned before that the Netflix DVD service is still around and serves this purpose nicely.) Given the big benefits of non-screen alternatives, insist on only watching things you have high confidence in being good (such as over an 8 on IMDB, for example). 
        5. Hide the remote and its batteries in separate locations from your TV. Make it a chore to go find everything. Plug the TV into a cheap timer so it goes off before it endangers your sleep. And, if you haven’t already, change the passwords on your apps and delete them from your devices.
        6. Get rid of your TV. When you contemplate the balance between opportunities and harms of your smart phone or your computer, getting rid of them entirely is a hard argument to make – even dumbing them down by dramatically reducing their capabilities has problematic side effects that make the lesser measures more attractive. But when you apply the question to television, the benefits seem considerably more sparse. At the end of the day, most people, despite their protests, would probably be happier without a television. Giving up the gigantic opportunities associated with the internet is a big deal. Giving up TV just eliminates one form of entertainment – and, as we noted, some of the least effective strategies for stress relief. But if you can’t go to a friend’s to catch Stanford football, then the Make Time guys have a solution: replace your TV with a projector and a fold up projection screen. It’s a hassle. And that’s the point.
        Marathon

        Figure 5. Asked afterward the secret to his remarkable endurance, the first-time contender exclaimed, “I was just trying to get to the end of Lost!

         

        That about sums up what I consider some of the best takes on personal digital restraint. But perhaps your worries extend beyond yourself: what about kids?

        I don’t have personal experience as a father, but several parents have recommended Andy Crouch’s book on the Tech-Wise Family. I found it to be an excellent meditation as he explains his family’s approach (and how well they’ve lived up to their own rules, among them: zero screens for kids until they turn 10.) Crouch fears that “We most often give our children screens not to make their lives easier but to make our lives easier” and yet considers this a paradox because “the less we rely on screens to occupy and entertain our children, the more they become capable of occupying and entertaining themselves.” He also powerfully rejects the common defense “that children need to become ‘computer literate,’ as if learning to use computers were somehow as difficult and rewarding as learning to read itself.” After all, “A three-year-old (or a ninety-three-year-old) can intuitively figure out how to use an iPad. There is almost nothing to teach, and certainly nothing that any typical person can’t learn with a few hours of practice.” If you are raising a family, check it out.

        Bill Gates

        Figure 6. Bill Gates often ruefully reflects on a childhood deprived of such essential technology literacy builders as Fortnight and Snapchat.

         

        I’ll close by noting that some of the digital restraint authors I’ve cited believe that the responsibility for digital restraint goes beyond individuals managing their own use. Tristan Harris, for example, has called for vigorous antitrust actions against and taxation of big tech. But fellow Google alum James Williams, the author of Stand Out of Our Light, is interested in a steering wheel, not a brake and calls for the industry to self-regulate through individual tech workers taking  an equivalent of the Hippocratic Oath: 

        “As someone who shapes the lives of others, I promise to: Care genuinely about their success; Understand their intentions, goals, and values as completely as possible; Align my projects and actions with their intentions, goals, and values; Respect their dignity, attention, and freedom, and never use their own weaknesses against them; Measure the full effect of my projects on their lives, and not just those effects that are important to me; Communicate clearly, honestly, and frequently my intentions and methods; and Promote their ability to direct their own lives by encouraging reflection on their own values, goals, and intentions.”

        My advice: don’t wait on Silicon Valley or DC. Embrace the cascade(s) most relevant to your own goals of digital restraint!

        Tech wise family

        Figure 7.  Click here to buy the Tech-Wise Family (9/10), as much a meditation on family as tech, or here to buy Make Time (7/10), a breezy, cheery, practical book with some interesting ideas about how to get things done, especially with respect to digital distraction.

        Figure 8. Click here to buy Deep Work, 10/10 or Digital Minimalism, 7/10, both by Cal Newport.

        Willpower Instinct

        Figure 9. Click here to buy the Willpower Instinct (10/10) or here to buy Atomic Habits (8/10) – both great books I’ve reviewed before that apply generally to doing what you set out to do.  

        Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend:  know anyone who you’d like to spend more time with you than their devices? How about any parents? Or anyone who owns a wireless mobile device?

        I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

          Intervention

          The Gist: Tech is designed to distract you from your priorities.

          The first of a two-part review of multiple books, most notably Stand Out of Out Light by James Williams.

          Access the second part here: Say No To The Glow.

           

          As you self-quarantine amidst corona, beware the dangers of digital life! For me, there is a particular app that I may very well be addicted to. In those small moments of boredom – in line, in an Uber, wherever – I’m drawn to its delights. It’s practically endless as people from around the world constantly post, with the opportunity to see what’s popular but, even better, searchability for interesting tidbits about things I care about – not to mention the beautiful pictures! I refer, of course, to Wikipedia.

          Motorized Bike

          Figure 1. You try to resist reading about inventors killed by their own inventionssexually active Popesthe Russian attempt to seize Hawaiiforest kindergarten, Spanish participation in the Eastern Frontthe Packers sweepthe War of Jenkins’ Earexecution by elephant, or covert operations by Scientologists against the US government.

           

          I have deleted most everything else endless (to the degree I ever had it) and have tried to ensure that my phone is not my constant companion (to the occasional frustration of some friends, perhaps you, trying to get a hold of me). Instead, I prefer my single purpose Kindle. Lately I’ve been reading warnings encouraging digital restraint, often enough from big tech defectors.

          James Williams was a Google advertising strategist who one day looked at his job’s metrics – “Number of Views, Time on Site, Number of Clicks, Total Conversions” – and realized that far too much of his personal life might be boiled down to these “petty and perverse” goals. In his stirring, polemical diagnosis Stand Out of Our Light, he quotes Facebook’s first research scientist: “The best minds of my generation are thinking about how to make people click ads … and it sucks.” 

          Einstein

          Figure 2. In a near parallel universe, Albert Einstein made billions by demonstrating that energy equals man multiplied by Coca-Cola (or as he preferred: E = mc2)

           

          A book also written by Google defectors but of entirely opposite tone – breezy, cheery, practical – ends up making the same case. In Make Time, Jake Knapp and John Zeratsky insist “willpower alone is not enough to protect your focus. We’re not saying this because we don’t have confidence in you or to justify our own weaknesses. We’re saying this because we know exactly what you’re up against. Remember, we helped build two of the stickiest Infinity Pools out there” – for them, years developing YouTube and Gma

          Infinity Pool

          Figure 3. The thing about infinity pools is that you only think they go on forever and then you swim straight into a wall and it hurts.

           

          Yet another Google dissident, Tristan Harris, has not written a book but has argued across media that we are so scared of some sort of robot apocalypse overwhelming human capabilities that we are ignoring the app armageddon already overwhelming human vulnerabilities. He quotes the biologist E.O. Wilson about “the real problem of humanity[:] We have Paleolithic emotions, medieval institutions and godlike technology.” And that was a decade ago, when Facebook had merely a couple hundred million daily users rather than approaching two billion.

          Perhaps the best response comes from Andy Crouch, a Christian thinker and entrepreneur who wrote the Tech-Wise Family, a meditation as much on family as tech: “In countless ways our lives are easier than our grandparents’. But in what really matters—for example, wisdom and courage—it seems very hard to argue that our lives are overall better.” Expanding on the point: “Without a doubt, compared to human beings just one century ago, we are more globally connected, better informed about many aspects of the world, in certain respects more productive, and—thanks to GPS and Google Maps—certainly less lost. But are we more patient, kind, forgiving, fearless, committed, creative than they were? And if we are, how much credit should technology receive?”

          Radio

          Figure 4. Then again, our grandfathers were addicted to the sweet sweet sounds of radio!

           

          We will discuss potential solutions but let’s first nail down the diagnosis. Along with its wonders, digital technology has brought several interconnected problems. Williams observes that “information abundance produces attention scarcity” and “digital technologies privilege our impulses over our intentions, creating new challenges of self regulation.” And, as Cal Newport has persuasively argueddistractions destroy depth. Unfortunately, our world is full of dizzying distractions – genuinely addictive digital slot machines that can end up replacing real, valuable human interaction with poor quality substitutes, envy, resentment, withdrawal, and generally lesser feelings of self-worth.

          Technology, “rather than supporting our intentions, [has] largely sought to grab and keep our attention.” Williams simply asks you to do what he did: compare your big, important goals for how you want to spend your time to the big, profitable goals that your technology has for how you spend your time. Technology’s goals typically include “maximizing the amount of time you spend with their product, keeping you clicking or tapping or scrolling as much as possible, or showing you as many pages or ads as they can.” As Knapp straightforwardly argues: “Tech companies make money when you use their products. They won’t offer you small doses voluntarily; they’ll offer you a fire hose.” The question is: in your ideal world, would you spend more of your finite attention and time with Facebook or your family, with Twitter or books, with Netflix or sleep?

          If you prefer family, books, sleep, or any alternative to the digital, you have to recognize that your goals are in tension with some of the richest companies on earth who are spending and facilitating billions of dollars to acquire more and more of your attention. This isn’t merely theoretical: Netflix’ CEO has identified his principal competition not as other forms of entertainment, but sleep. And, to be clear, sleep is losing: “A systematic review and meta-analysis (of 20 studies) showed strong, consistent evidence of an association between bedtime access to or use of devices and reduced sleep quantity and quality, as well as increased daytime sleepiness.”

          But digital offerings – that latest season of Narcos or the Crown, those provocative insights from Reddit, those beautiful design ideas from Pinterest – are so attractive and some seem like they can be genuinely helpful. Why can’t we just dip in for a moment to get the best, rather than staying until we are idly scrolling, hours into our use, fatigued rather than renewed? As Williams illustrates, why isn’t most tech more like GPS? We plug in a destination and go there – Waze even purports to save you minutes. Instead, most tech you open up with perhaps a single intention, only to find yourself on a much longer journey, miles and hours away from where you wanted to be.

          Nir Eyal tells a revealing story in his book about building successful digital products: ““Are you building a vitamin or painkiller?” is a common, almost clichéd question many investors ask founders eager to cash their first venture capital check. The correct answer, from the perspective of most investors, is the latter: a painkiller.” Furthermore, Eyal notes that “the more effort we put into something, the more likely we are to value it” and rationalize its value “in which we change our attitudes and beliefs to adapt psychologically. Rationalization helps us give reasons for our behaviors, even when those reasons might have been designed by others.”  Building on the implication, Newport notes a simple definition: “Addiction is a condition in which a person engages in use of a substance or in a behavior for which the rewarding effects provide a compelling incentive to repeatedly pursue the behavior despite detrimental consequences.” When “fully one-third of Americans say they would rather give up sex than lose their cell phones,” it seems safe to say that lots of us are addicted to our phones. Are you?

          Pills

          Figure 5. You start on painkillers and end up on heroin. You start on Google Maps and end up on Snapchat. You can stop anytime you want to – but you just need to keep the streak alive!

           

          A common thread in this literature is that these wireless mobile devices (WMDs) and the apps they contain are intentionally designed by the smartest people with the most resources to take advantage of your psychological and cognitive weaknesses. Newport believes that the success of social media is built on two of our brain’s biggest cravings: positive reinforcement and social approval. As Caroline Webb vividly relates, “Whenever our brain’s reward system spots something potentially appealing, it sends us chasing after it like a Labrador retriever after a tennis ball, by releasing neurochemicals (including dopamine and endorphins) that trigger feelings of desire and pleasure in us.” So we’ll gamble with every social media post to see how many likes we can get or we’ll gamble with the reloading of email or a newsfeed to see if anything interesting comes up. The problem is that dopamine is about anticipation, not the reward itself. And endless apps don’t deliver. Perhaps Harris’ most interesting work is reviewing apps based on how a sample of over 200,000 iPhone users feel after they’ve used them. Practically everyone feels good about using MyFitnessPal, Kindle, Spotify. Majorities – sometimes super-majorities – feel worse after using Facebook, Tinder, Candy Crush. Harris notes “In controlled experiments, people who were instructed to use Facebook passively (i.e., scrolling without commenting or posting) for just ten minutes felt 9% worse at the end of the day.”

          General

          Figure 6. Thanks to America, now everyone in Iraq can have a WMD!

           

          There are perhaps deeper reasons for this. Newport warns that social media slowly retrains your brain to fill its need for social interaction with low-quality clicks of a like button rather than calling a friend or sitting down to dinner with full attention on your family – the sort of high-quality social interactions that really make you happier (In this respect, social media has already been putting into practice the CDC’s recommendations about social distancing…)

          Furthermore, social media detaches you from reality: you see only the curated, very best parts of the lives of your friends (or worse, people you don’t even know), and you succumb to envy of superficial lives that don’t really exist. Meanwhile, you are deeply impacted by the tone of what you consume and social media tends to amplify anger. Williams cites a study that “reduced the number of either positive or negative posts that a sample of around 700,000 Facebook users saw in their News Feed. They found that when users saw fewer negative posts, their own posts had a lower percentage of words that were negative. The same was true for positive posts and positive words.” As Williams darkly puts it, do you really want to be part of a “digital Salem”?

          Of course, digital technology can be bad enough if you set aside a specific time for it, but the bigger problem is that it is always around – probably right now in your hands, if not in your pocket. And it doesn’t typically wait for you. The default for your phone is to provide an observable and tactile cacophony as an enticing invitation to check out the latest whatever.  And it works: the average person touches his phone 2,617 times per day. For that matter, even the most theoretically productive aspects of digital technology – things like email – if used constantly are a means of being on top of other people’s priorities, not necessarily yours. Over 90% of texts are read within three minutes and replied to within 15. But isn’t a text from a friend a nice little break?

          Not if you want to focus and do well whatever you’re doing. Distractions destroy depth. A person takes, on average, 23 minutes to regain their focus after they are distracted. Newport writes about research that shows “when you switch from some Task A to another Task B, your attention doesn’t immediately follow—a residue of your attention remains stuck thinking about the original task. This residue gets especially thick if your work on Task A was unbounded and of low intensity before you switched, but even if you finish Task A before moving on, your attention remains divided for a while.” Williams notes that “researchers at the University of Texas found that the mere presence of one’s smartphone can adversely affect available working memory capacity and functional fluid intelligence.” And he cites a Hewlett-Packard study that found that distractions decreased IQ by double digits – twice the decline of smoking marijuana!

          Safari cannot open

          Figure 7. Just say no to the glow and say yes to life. 

           

          “Distractibility might be regarded as the mental equivalent of obesity” says Matthew Crawford. Williams suggests that  “From this perspective, individual functional distractions can be viewed as akin to individual potato chips.” Betcha can’t eat just one. You compose that tweet, check in on how it’s doing multiple times, spot other things in the newsfeed, etc. etc.

          And you’ll notice that none of this gets into the serious questions about your privacy – just the very hard work of fighting your cognitive biases that have been effectively triggered by rich tech companies.

          But there’s hope. And I’ll let Andy Crouch set the path for our next email, which will discuss potential solutions:

          Technology is in its proper place when it helps us bond with the real people we have been given to love. It’s out of its proper place when we end up bonding with people at a distance, like celebrities, whom we will never meet. Technology is in its proper place when it starts great conversations. It’s out of its proper place when it prevents us from talking with and listening to one another. Technology is in its proper place when it helps us take care of the fragile bodies we inhabit. It’s out of its proper place when it promises to help us escape the limits and vulnerabilities of those bodies altogether. Technology is in its proper place when it helps us acquire skill and mastery of domains that are the glory of human culture (sports, music, the arts, cooking, writing, accounting; the list could go on and on). When we let technology replace the development of skill with passive consumption, something has gone wrong. Technology is in its proper place when it helps us cultivate awe for the created world we are part of and responsible for stewarding… It’s out of its proper place when it keeps us from engaging the wild and wonderful natural world with all our senses. Technology is in its proper place only when we use it with intention and care. If there’s one thing I’ve discovered about technology, it’s that it doesn’t stay in its proper place on its own; much like my children’s toys and stuffed creatures and minor treasures, it finds its way underfoot all over the house and all over our lives. If we aren’t intentional and careful, we’ll end up with a quite extraordinary mess.

          stand out of our light

          Figure 8. Click here to buy Stand Out of Our Light, 9/10. A stirring polemical diagnosis that is perhaps overwrought (“the liberation of human attention may be the defining moral and political struggle of our time”) but still worthwhile. Notably assigned for all incoming Princeton students to read. One interesting thing not discussed above, but building on the idea that information abundance produces attention scarcity: the Chinese government has begun strategic distraction, where they  “drown out the offending information with a torrent of other social media content that directs people’s attention away from the objectionable material. The Harvard researchers who carried out a study analyzing these efforts estimate that the Chinese government creates 448 million posts on social media per year as part of this.” Williams quotes the researcher, “the point isn’t to get people to believe or care about the propaganda; it’s to get them to pay less attention to stories the government wants to suppress.”

          Figure 9. Click here to buy Deep Work, 10/10 or Digital Minimalism, 7/10. Deep Work is the better book, but Digital Minimalism is a little more on point. Of all those mentioned, Newport tries to wrestle with both sides of the debate, looking at studies promoted by Facebook that celebrate its use. Like others, he also holds up the Amish as an example that we need to pay more attention to. Though they may not have cars, they’ll have disposable diapers, roller blades, or high-tech farming equipment – “The Amish, it turns out, do something that’s both shockingly radical and simple in our age of impulsive and complicated consumerism: they start with the things they value most, then work backward to ask whether a given new technology performs more harm than good with respect to these values.”

          Tech wise family

          Figure 10. Click here to buy the Tech-Wise Family, 9/10, as much of a meditation on family as tech. 

          Make Time

          Figure 11. Click here to buy Make Time, 7/10. A breezy, cheery, practical book with some interesting ideas about how to get things done, especially with respect to digital distraction.

          Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend:  know anyone who you’d like to spend more time with you than their devices? How about any parents? Or anyone who owns a wireless mobile device?

          I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

            Has Anything Really Changed Since 1970?

            The Gist:  Much less than you’d think.

            A review of The Rise and Fall of American Growth by Robert Gordon.

            “Everything that can be invented has been invented.”

            That’s a quote often apocryphally attributed to the head of the American patent office around 1900. Today, mentioning it is a way to smugly correct the misconceptions of the past as we enjoy the since-invented wonders of the present. 

            But what if it’s kind of true? What if we have invented, innovated, and adopted the relatively easy, big things – and what’s next is really hard? What if stagnancy is normal?

            Segway

            Figure 1. As you already suspected, the Segway represents humanity’s peak.

             

            That’s the provocative argument of Robert J. Gordon in the Rise and Fall of American Growth, a book recommended to me by a friend working for Peter Thiel, the billionaire investor who has quipped that we wanted flying cars and got 140 characters.

            To illustrate the point, let’s compare the average American families in the typical homes of 1820, of 1870, of 1970, of 2020.

            Gordon argues that there really isn’t much of a difference between the average home of 1820 and 1870. Or, in fact, between the ordinary American home in 1820 and its Roman counterpart in 20 AD. “According to the great historian of economic growth, Angus Maddison, the annual rate of growth in the Western world from AD 1 to AD 1820 was a mere 0.06 percent per year, or 6 percent per century.” As Gordon vividly portrays it, “A newborn child in 1820 entered a world that was almost medieval: a dim world lit by candlelight, in which folk remedies treated health problems and in which travel was no faster than that possible by hoof or sail. Or as the economist Steven Landsburg puts it even more starkly: “Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened.”

            Pyramid

            Figure 2. Landsburg first conceived this argument when he failed to do any of the readings for a history course that required class participation. Worried that any slip in his confidence would reveal his decision to spend the semester partying, he proceeded to dismiss the wheel, the Pyramids, the Bible, the aqueduct, Shakespeare until he exhausted his classmates and could slip back to the frat house. 

             

            By 1870, the Industrial Revolution was well under way in the workplace – but it was only just beginning to reach into the American home. Fully adopting its benefits, along with new great inventions, would take the next century. In the meanwhile, “a typical North Carolina housewife had to carry water 8 to 10 times each day. Washing, boiling, and rinsing a single load of laundry used about 50 gallons of water. Over the course of a year she walked 148 miles toting water and carried more than thirty-six tons of water… But that was not all the carrying that needed to be done. In 1870, the gas or electric stove had not been invented, so all cooking involved wood or coal. Fresh wood and/or coal had to be carried into the house—and spent ashes carried out… Keeping a fire burning all day required 50 pounds each day of coal or wood.”

            Gildedfit

            Figure 3. Forget the Paleo diet. If you really want to get in shape, time to try GildedFit™!  For just six easy payments of $99.99, you can get our hand-crafted American-made water buckets – and save thousands of dollars by getting rid of central heat and plumbing in your home! It pays for itself – and is endorsed by Lady Antebellum! (Basically all ladies antebellum, in fact)

             

            And yet carrying was hardly the end of her efforts! She had to make her family’s clothes because there was little shopping, not even by mail, which was not delivered to 75% of American homes. She had to diligently prepare her family’s meals, the components of which were inherently limited in variety: “fresh meat was unsafe, so the diet was a monotonous succession of salted pork and starchy foods. Unless home-grown, fruit was all but unavailable except during the summer months, and vegetables available in the winter were limited to a few root vegetables that could be stored.” She had to help with the hard labor of the farm she probably lived on. She had little source of entertainment, not even politics, which denied her the right to vote. And she had to not only suffer from an array of common deadly diseases but had to watch her many children suffer, and often die, of the same. In fact, she might not have lived as long as her grandmother: “there was no improvement in either mortality rates or life expectancy before 1870, and in most data series, there was no improvement before 1890. In 1870–79, male life expectancy at age 20 was identical to that in 1750–79, and that for females was actually lower.”

            Over the next hundred years, American lives would be transformed as they were freed “from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation, and early death.” Only a few homes in 1870 had running water, sewage, or central heating – or could afford to pay people to take care of their basic human needs. No home in 1870 could have acquired electricity, a phone, a washing machine, a dryer, a vacuum cleaner, a refrigerator, a radio, or a television. By 1970, virtually every home that wanted everything above could get them. We went from traveling mostly by horse (which had a record travel speed of 9 MPH over a long distance using multiple rides and riders of low weight), occasionally by rail (then 25 MPH between cities, only 3 MPH in city public transport) to mostly by car (80 MPH on the open road), regularly by jet (575 MPH cruising). In the transition, our streets were cleared of manure, we built a national highway system along with other major infrastructure, and we also adopted an underappreciated form of transportation that transformed the shape of cities: the elevator. Dense, vertical buildings accommodated the massive shift from rural to urban living and from labor-intensive, often dangerous work to alternatives that were relatively cognitive and practically safe. Our food variety and quality, delivered from around the world in new supply chains, increased dramatically. We could enjoy, at the flip of a switch, the world’s most accomplished entertainers. And the list goes on and on, touching every element of how we spend our lives.

            So, perhaps the change between the Roman of 20 AD and the American of 1870 is understated – paper and the printing press certainly opened up lots of opportunities, such that about 90% of white Americans then were literate. The compass and other improvements helped global navigation that helped the transport of goods and people. Gunpowder changed hunting and security in profound ways. But whatever improvements you might list, they pale in comparison to the single century change between 1870 and 1970. Those wonders, along with some subsequent ones, lead to a reasonable argument that to be middle class in America today is to be better off than the richest man in the world 100 years ago. 

            But now we get to Gordon’s most controversial claim: “There was virtually no economic growth for millennia until 1770, only slow growth in the transition century before 1870, remarkably rapid growth in the century ending in 1970, and slower growth since then…the economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.” The freeing of hours associated with household chores could only happen once. The value of instant communication, not just for friendly human connection but for price information and other gigantic economic and scientific benefits, could only happen once. The urbanization of America could only happen once. After all the change, what was and is left?

            Nuclear cloud

            Figure 4. Gordon is wrong, of course. After a nuclear apocalypse, we can repeat lots of these improvements!

             

            Let’s return to our core comparison: how is the typical home different today than in 1970? The obvious answer, of course, features the internet. There are bigger and better televisions that play a greater variety of entertainment. Less obvious might be the microwave and air conditioning – both invented before 1970 but universally adopted in homes thereafter. And beyond that… Gordon argues not much. There have been some increases in fuel efficiency (and associated costs) but basically a light, a refrigerator, a washing machine, a vacuum, a faucet, a toilet basically does the same thing as it did in 1970. Food and clothing might be delivered more conveniently but are apparently not leaps ahead in quality. In some ways, we are actually getting worse. To fly from Los Angeles to New York got faster and faster every year from 1934 until 1958. Since then, every year it has gotten slower.

            toilet

            Figure 5. Unless you have one of those self-cleaning Japanese toilets with warmed seats, automatic flushing, self-opening lids with proximity sensors, water sprays, dryer, glow-in-the-dark armrests, deodorization, stool analysis, massage features, and Wifi and speakers for Spotify syncing or Netflix. Forget the Segway. Here is peak humanity.

             

            You’re skeptical because the internet is gigantic. I get it and I agree. The most compelling response is that, as big as the internet and computing are, they’re not close to being as big as the difference between carrying water and fuel to your home for hours a day to cook and clean versus our modern conveniences, or the difference between traveling cross country by horse versus plane, or the difference between traveling many miles to mail your handwritten letter and waiting months for a response versus instant vocal connection. Gordon goes further. He concedes that electronic entertainment, communications, and information technology have seen big improvements since 1970 that no other sector has but says that total related business and household spending “amounted in 2014 to only about 7 percent of gross domestic product.” And he quotes Nobel Prize-winning economist Robert Solow’s quip that “You can see the computer age everywhere but in the productivity statistics.” Gordon’s explanation is that the improvements gained may actually be covering for slowdowns elsewhere and/or the mass availability of the internet (and therefore cat videos, social media, online shopping) has done as much to impede work as aid it. And Gordon also points to data that, even within this vaunted space, improvements are slowing down. Google’s chief economist “explained that technological change in desktop and laptop computers has come to a halt ‘because no one needs a superfast chip on their desktop,’ so research has shifted into trying to improve larger computers in data centers as well as battery life of portable devices.” In sum, “advances since 1970 have tended to be channeled into a narrow sphere of human activity having to do with entertainment, communications, and the collection and processing of information. For the rest of what humans care about—food, clothing, shelter, transportation, health, and working conditions both inside and outside the home—progress slowed down after 1970, both qualitatively and quantitatively.”

            One item on that list we haven’t mentioned yet but you may be wondering about: health. Don’t we live longer, healthier lives? There’s a lot of misconception about life expectancy statistics of earlier ages because the numbers are driven down so much by child, and particularly infant, mortality. So, for context, more than 1 in 5 white infants died in 1890. Today, 1 in 200 do. The vast majority of that gain occurred before 1970. In fact, “the annual rate of improvement in life expectancy was twice as fast in the first half of the twentieth century as in the last half.” Some of the developments we’ve already discussed were perhaps the biggest contributors: running water, sewage, food variety, lack of universal horse manure. The development of germ theory, vaccines, and antibiotics like penicillin did much of the rest of the work: “more than 37 percent of deaths in 1900 were caused by infectious diseases, but by 1955, this had declined to less than 5 percent and to only 2 percent by 2009.” Once common terrors like polio had been virtually wiped out! Other big improvements – the x-ray, radiation, chemotherapy, birth control – were all invented before and in widespread use in or shortly after 1970. Since then, Gordon argues our progress in extending life has significantly slowed. For whatever reason, between 1960 and 2010, the FDA approved half as many new drugs as between 1940 and 1960. AIDS became a health crisis and got remarkable innovative treatment. Fewer people smoke, but more people overeat. The net is that an infant born in 1970 could expect to live over 25 years longer than an infant born in 1870. A child born today could expect to live an additional 10 years longer. But, at the other end of the spectrum, a 70 year old in 1970 could expect less than 5 years longer than a 70 year old would have in 1870. And a 70 year old today can expect to live an additional couple years. The main gains have been made in early life, not at the end, and they’ve been slowing down. Or, in other words, data suggests that you won’t live much longer than your grandfather, who survived childhood to sire your parent – but your kids have a much better chance of reaching adulthood than your grand uncles. 

            All of which comes down to a classic question: Do you think your children will be better off than you? For most of human history, the correct answer for most people would have been not really. From 1870 until 1970, the answer for most Americans was a resounding yes. “Historical research has shown that real output per person in Britain between 1300 and 1700 barely doubled in four centuries, in contrast to the experience of Americans in the twentieth century who enjoyed a doubling every 32 years.” In other words, “children had the expectation that on average they would be twice as well off at any given age as their parents had been at that age.” Gordon illustrates the slowdown: “In 2014, real GDP per person was $50,600. If productivity growth between 1970 and 2014 had been as rapid as between 1920 and 1970, real GDP per person for 2014 would instead have been $97,300, almost double the actual level.” Driving his book, Gordon says, is the fact that the most recent growth in output per person, measured at the time in 2014, was less than a quarter of the 20th century average – and had been on a decline, with the exception of the late 1990s, since 1970.

            Ultimately, Gordon makes a strong argument that big, unprecedented improvements in American quality of life occurred between 1870 and 1970 and a provocative argument that growth has since slowed and may not recover. He doesn’t believe there’s any spur available to reinvigorate growth because he thinks that the major gains could only happen once – but is his a failure of imagination? As Henry Ford quipped, if he had asked what customers wanted, they would have said a faster horse.

            rise and fall of american growth

            Figure 6. Click here to acquire Robert Gordon’s Rise and Fall of American Growth (7/10). The heart of the book is deeply interesting but it is badly organized. Despite his explicit claim of the unique century of 1870-1970, he devotes half the book to the period between 1870 and 1940 and the other half to the time between 1940 and today. He also gets bogged down in telling stories behind inventions and other material less relevant to his central thesis, all of which probably inflates the number of pages by 2/3. Atop all that, his policy proposals call for a redistribution of wealth because the pie isn’t getting bigger faster and he has some questionable analysis of earlier government policy. But it does have notable statistics (nearly 90% of men over 65 and over 30% of boys 10-15 in 1870 were in the labor force) and interesting arguments (growth elsewhere in the world has been fueled by attempts to catch up to American standard of living). I’ll leave you with this analysis of fast food:

            “Go into the kitchen of a Taco Bell today, and you’ll find a strong counterargument to any notion that the U.S. has lost its manufacturing edge. Every Taco Bell, McDonald’s, Wendy’s and Burger King is a little factory, with a manager who oversees three dozen workers, devises schedules and shifts, keeps track of inventory and the supply chain, supervises an assembly line churning out a quality-controlled, high-volume product and takes in revenue of $1 million to $3 million per year, all with customers who show up at the front end of the factory at all hours of the day to buy the product…. The big brands spend hundreds of millions and devote as much time to finding ways to shave seconds in the kitchen and drive-through as they do coming up with new menu items.”

            Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below and forward it to a friend:  know anyone interested in technology or history? How about any inventors who need to get angry about the lack of progress so they can fix it? Or anyone who was alive any time between 1970 and today?

            I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

              The Price Was Right

              The Gist: America was founded by free trade radicals in a costly revolution.

              A review of Clashing over Commerce by Douglas A. Irwin.

              Have you ever wondered what was the price of American freedom in 1776?

              Bob Barker

              Figure 1. “Here is the first item up for bids today: it’s an exciting trip to liberty! You and guests will ride one-way for a multiple century luxury stay courtesy of the Continental Army! And that trip goes to the one of you who bids nearest to the retail price without going over…”

               

              Over the 8 years of the Revolutionary War, the new citizens suffered a “sharp decline in real per capita income, nearly as severe as the reduction during the Great Depression of the early 1930s.”’

              The Revolution, in short, was an economic disaster. And independence from our now bitter largest trading partner only further complicated matters. Today we review the first part of Douglas Irwin’s magisterial history of American trade relations, Clashing over Commerce, and discover how our relationship with Britain dominated the economics of the early United States as well as how the Founders set up the first of three eras of American tariff policy.

              Sugar Cube

              Figure 2. Actually, we might have been more bitter: after the Revolution, our sugar trade was much curtailed.

               

              From an economic point of view, life in America before the Revolution was pretty darn good. Incredibly, “real per capita income in the colonies was at least 50 percent higher than in England between 1700 and 1774.” The colonies had long been dependent on trade to provide things difficult to acquire on the frontier and Great Britain actively subsidized key products like gunpowder and silk “that lowered their price to American consumers.” Irwin quotes other economic historians: “Whatever the costs of membership in the British Empire, they were largely offset by the benefits: naval protection; access to a large free-trading area; easy credit and cheap manufactures; and restricted foreign competition.” Furthermore, in the years leading up to the Revolution, Great Britain had financed the French and Indian War, which did little long term about the Indians but practically eliminated from North America the principal European security threat. As a result, Britain’s debt increased over 2/3 and servicing it required over half of the British annual budget while maintaining a standing army in North America “amounted to [an additional] nearly 4 percent.” Which made America’s taxation relevant: Grover Norquist concludes that Americans were paying a fraction of what Brits were and “by 1775, the British government was consuming one-fifth of its citizens’ GDP, while New Englanders were only paying between 1 and 2 percent of their income in taxes.

              revolutionary soldier

              Figure 3. That’s what America is all about: if we ever have to pay more than 2% of our income in taxes, we revolt! 

               

              Inauspiciously for Great Britain, there were two powerful (though relatively small) groups that felt adversely affected by British trade policies: Virginia tobacco farmers (like George Washington and Thomas Jefferson) and Boston merchants (like John Hancock and the clients of John Adams). Their principal initial objection was to a costly, inefficient, mercantilist British law that required about 20% of imports and 75% of exports to first stop in Britain (or in some cases, the West Indies) before proceeding to their final destination. The merchants were upset that “this artificial routing through Britain involved extra fees, commissions, warehouse rents, and transportation costs and is estimated to have raised the costs of imports of European and Asian goods by about 20 percent.” The Virginians understood that “if tobacco… could be sold directly to European customers, the income of tobacco planters would have been anywhere from 15 to 35 percent higher.

              British leaders thought it perfectly reasonable for the rich colonies to help pay for their defense and tried to impose new taxes that were common at home and would have paid for less than half of the expense of maintaining the standing army in North America. But those taxes – the infamous Stamp Act on printed materials, more trade duties – were especially borne by the commercial class that was already upset at the increasingly mercantilist policies of Britain. Tellingly, the legendary Boston Tea Party was not a reaction to taxes on tea – which were actually being lowered – but to the fact that Britain was setting up a state monopoly in the lucrative trade. Local merchants like Hancock, who were already living out their free trade principles as accomplished smugglers, felt compelled to resort to the extraordinary countermeasures that would spark the Revolution. Concurrently, a 1773 financial crisis in Britain prompted a collapse in the price of tobacco (by half!) and the reduction of credit available to farmers, “leading to a wave of foreclosures and imprisonment” – not to mention increased bitterness about their expensive, impeded access to non-British markets.

              TV

              Figure 4. Today may require a Boston Comcast Party. But, speaking of imprisoning debtors, my favorite Balanced Budget Amendment to a state constitution is Alabama’s, which threatens state officials with both personal fines and jail time if they incur any excess debt not used to “repel invasion or suppress insurrection.” Now that’s commitment.

               

               

               

              Without a voice in Parliament (“no taxation without representation!”), Americans had tried to use their economic power by boycotting British goods, which prompted a pattern: “when new British taxes were imposed, a non-importation movement would begin, and British policymakers would retreat.” But “non-importation only had a significant impact when it coincided with an economic downturn in Britain; the colonies could have only a modest influence on the country, because just 15 percent of British exports were destined for America in 1765.” From a position of strength and irritation, Britain eventually banned all foreign trade with the colonies in 1775. “On April 6, 1776, in defiance of Britain, Congress declared that the colonies were no longer bound by British mercantile regulations and that American ports were open to trade with all countries except Britain.” John Adams believed that the April proclamation was America’s true declaration of independence.”

              Walmart

              Figure 5. Millions of Americans celebrate the holiday by buying goods of foreign origin.

               

              Ultimately, the vast majority of Americans did not participate in the Revolutionary War. Of those who did, the majority fought on the side of the British. Relatedly, the vast majority of Americans worked in agriculture that did not export anywhere and, as noted at the beginning, may have enjoyed more economic benefits than detriments of British rule. Irwin concludes: “Only a minority of the colonial population is believed to have actively supported independence in 1776, and this vocal and politically powerful minority may have been precisely those most affected by Britain’s trade policies.”

              As might therefore be expected, the Founders were trade radicals who “favored free and open commerce among nations and the abolition of all restraints and preferences that inhibited trade.” John Adams went so far as to draft a “template commercial treaty” in which “the United States would seek ‘national treatment’ from other nations, meaning that US merchants and ships (if not goods) would receive the same standing in foreign countries as their own domestic merchants and ships” which “was far more demanding than the standard most-favored-nation (MFN) treatment” under which “US goods and ships would be treated the same as the most-favored foreign nation in the country’s market.” Irwin quotes another historian: “the United States was demanding special consideration, privileges such as no European country had ever granted to another.” No one agreed. Ben Franklin, who insisted “it is best for every country to leave its trade entirely free from all encumbrances,” even went so far as to ask, when negotiating peace with Britain, for America to retain its privileged access to British markets. Amazingly, the British government initially was interested and even introduced legislation to that effect, but aghast nationalists killed it in Parliament.

              So America was now on its own after suffering a near equivalent of the Great Depression. Our great dreams of open trade were dashed by the requirement that other people had to agree. Even worse, because we had 13 different (though relatively open) trade regimes and a weak federal government under the Articles of Confederation, we were in a terrible negotiating position: we couldn’t threaten access to our markets in exchange for other countries dropping their barriers. In the lead up to the Constitutional Convention, Madison wrote to Jefferson, “Most of our political evils may be traced to our commercial ones.”

              The Constitution that emerged was a brilliant response to the contemporary political crises and set America up for centuries of success. For this newsletter, let’s focus on the trade-related outcomes: first, the federal government would derive their revenue from tariffs, i.e. taxes on imports. Though the Founders favored the elimination of trade barriers, they viewed tariffs as a necessary evil – something easily collectible at ports, crucial to government operations, and permissible so long as they were evenly imposed and non-discriminatory. Until the introduction of the income tax in the 20th century, this would be the primary source of government revenue (over alcohol taxes and land sales). Second, the federal government would have the power to regulate foreign trade but be forbidden from taxing exports. Most students of American history are familiar with the bargains struck by the South to protect slavery, but Southerners had a broader goal to protect their main source of income: agricultural exports. This will become extremely relevant in our next edition but, for now, I’ll just note that George Washington and James Madison were the only Southerners who opposed this provision, believing that America was such a central player in the global tobacco marketplace that they could effectively raise revenue without diminishing output by passing along the costs to eager (addicted?) foreigners. Third, and relatedly, treaties with foreign governments would require the approval of 2/3 of the Senate, another attempt by the South to secure regional interests. 

              The first years of the Republic would be a vigorous battle between the Founding generation over the nature of trade. The Federalists – George Washington and Alexander Hamilton – saw the United States as a burgeoning economic powerhouse – “Hercules in a cradle” –  that would balance manufacturing and agriculture and benefit immensely from close commercial ties with our former master, the leading Navy of the world, a familiar and complementary economy with easy credit who happened to share a language: Great Britain. The Democrats – Thomas Jefferson and James Madison – yearned for a nation of yeoman farmers, grounded in rural and revolutionary values, and saw kinship in the blood-soaked regicidal ideals of America’s first ally but legally distinct, commercially inferior, and reluctant creditor with more limited global power projection: France.  

              The Federalists came to power first and, as Secretary of the Treasury, Hamilton was especially and understandably obsessed with our credit worthiness:In 1792, the interest alone on US debt soaked up 87 percent of total revenue.” As a result, he was desperate to avoid another war: costs would skyrocket while tariff revenues would plummet. If with Britain, we would not only lose our best trading partner but they could also effectively blockade our coast, limiting trade with others. Irwin’s interpretation of Hamilton is a welcome revision to the conventional portrayal of our first Treasury Secretary as an unbridled protectionist: “Hamilton was skeptical of high protective tariffs because they sheltered both inefficient and efficient producers, led to higher prices for consumers, and gave rise to smuggling, which cut into government revenue.” Instead, in order to pay off our debt, Hamilton insisted on “modest tariffs” – in 1790, they were about 20% and, again, the primary tax the federal government imposed. By assuming debts incurred by the states during the Revolution, Hamilton also “enabled states to reduce [their own] direct taxes by as much as 75 percent.”

              Still, Hamilton did support some government intervention in the marketplace to support manufacturing. He conceded that “if the system of perfect liberty to industry and commerce were the prevailing system of nations,” then the United States could pursue whatever was its comparative advantage. But he felt that other countries unfairly helped their industry and perverted American incentives. Hamilton’s preferred remedy was a direct government subsidy to nascent industries, which “unlike import tariffs, did not create scarcity and artificially raise domestic prices.” But, importantly, he thought it only “justifiable” when the industry was new and thought continuous subsidy “questionable.” Of course, the Democrats believed, not unreasonably, that direct subsidies by the federal government to businesses were unconstitutional and, relatedly, were keen to preserve the agricultural character of the American economy.

              But the bigger debate was always about how to deal with Britain. Democrats “believed that the nation’s political independence could not be fully realized unless the country had its economic independence as well. Madison complained that Britain ‘has bound us in commercial manacles, and very nearly defeated the object of our independence.’” In order to achieve economic independence, they wanted to impose strict economic boycotts of British trade in order to jolt Britain into allowing further market access. While Hamilton and the Federalists certainly desired better market access, they considered this move to be insane brinkmanship with severe tax, credit, economic, and military implications. “Madison contended that the country was in a position ‘to wage a commercial warfare,’ because it exported foodstuffs and raw materials that were essential to Britain, while it imported manufactured goods and other trifles that it could do without.” Irwin counters: “In terms of economic leverage, the figures on bilateral trade seem to confirm Hamilton’s view. While Britain sent nearly 20 percent of its exports to the United States, only 6 percent of its imports came from the United States [and it had other alternatives for the same goods]. On the other hand, about 90 percent of US imports and 25 percent of exports were with Britain.” 

              Still, an important takeaway is that the conventional view of the Federalists as pro-tariff and Democrats as anti-tariff is too simplistic: instead, the Federalists saw the tariff as necessary to maintaining the good credit of the United States and Democrats saw the tariff as a bludgeon to get free trade. 

              All around this time, France and Britain were in near continuous war with each other. Reflecting America’s radical belief in the rights of commerce, our ships tried to trade with both sides. The Federalists tried their best to appease British concerns, even blocking trade with France, managed to avert war, but ended up sparking a domestic political firestorm that helped sweep the Democrats into office in 1800. As trade resumed with France, the British began to seize hundreds of American vessels while “ships suspected of aiding France were detained and sent to Halifax, Nova Scotia, to face prosecution under British law. Even if a ship’s goods were not confiscated, the resulting delays could be very costly.” Most outrageous, the British conscripted thousands upon thousands of American sailors into their Navy. 

              Seizing the righteous anger about American dishonor, hellbent on punishing the British, President Jefferson rejected any compromise and self-imposed a total prohibition on American ships sailing to foreign ports as well as foreign ships taking on cargo in the United States. “The embargo was the most dramatic, self-imposed shock to US trade in its history [and] brought America’s foreign commerce to a grinding halt” for 15 months. Unsurprisingly, this prompted a depression – according to one estimate, a dramatic 5% decline in American GDP. It also led to a steep decline in revenue, leading to America’s first fiscal deficit. Why did Jefferson ban ALL trade, as opposed to just with Britain? Because, sounding more like an Albanian isolationist than the man who once wrote “all the world would gain by setting commerce at perfect liberty,” Jefferson insisted that it would be too easy for ships to claim alternative destinations but still trade with Britain. The same types of merchants who had been motivated to join the Revolution were appalled and tried their best to undo the policy. Bewildered, Jefferson “concluded that merchants were simply treasonous and therefore even stricter enforcement was required,” including a new bill with “provisions [that] may have violated the search-and-seizure provisions of the Fourth Amendment.)” Irwin concludes: “The embargo must be considered a failure: it imposed large costs on the economy but failed to achieve any of its objectives” – the British continued to prey on our ships while denying America full and free market access. Similar to the calculations leading to the Revolution, the problem was that Jefferson had imposed his embargo at a time when Britain was enjoying the height of their business cycle and easily shifted its imports to alternative providers of American goods. Irwin warns that “had the administration persisted with the embargo, its enforcement would have led to a national crisis” but Jefferson insisted he needed only a few more weeks.

              Apple

              Figure 6. Just try to imagine life for more than a year without any international trade. Or, to give some modern sense of the size of the economic decline, imagine the total annihilation of Apple – no more stores, no more computers, no more phones, no more apps – which is worth about 5% of America’s GDP. Add into the scenario that the government relied nearly totally on Apple for its budget and you have some sense of the situation.

               

              Unfortunately, the stumbles would continue into the Madison administration. As Congress ended the embargo, they dangled a carrot for France and Britain: whoever stopped harassing American shipping would get the benefit of America stopping imports from the other country. France, whose harassment was relatively limited to privateers, was the obvious potential beneficiary and they hinted they would accept the bargain. But Madison jumped too soon, restricting imports from Britain before France had even decided. Importantly, the law still allowed exports to Britain. Politically, this made sense: it hurt Madison’s political opponents (the northeastern shippers and merchants) while helping his base (Southern farmers) and doing something bad about Britain fit into the party ethos. But it was strategically stupid: at this moment, Britain desperately needed American food to supply its army in Spain fighting Napoleon. So the tensions continued, and American sailors continued to be shanghaied into the British Navy, until Madison decided that the only way to protect our honor was to fight Britain again in a war. Maybe we could also liberate Canada along the way.

              Terribly inconveniently, our declaration of the War of 1812 was being sent over the Atlantic at precisely the same time that Britain sent over a new policy suspending harassment of American shipping. Irwin explains: “Already suffering under heavy taxes due to the war against France, Britain did not welcome the prospect of another war in North America. The weak economy and pressure from labor and industry helped persuade the British government to relax its policy toward neutral shipping.” Madison conceded that he would not have declared war if he had known but the fight was on. Weakened Federalists “were incredulous that the country would take the side of a French despot bent on military conquest (Napoleon) against a country with constitutional government that happened to be an important customer for American goods.” Irwin details the devastation: “The combination of war, non-importation, and blockade squeezed US trade to the lowest levels in recorded history… exports dropped almost 90 percent, while imports shrank more than 80 percent between 1811 and 1814… and the federal debt tripled between 1812 and 1816.” With Napoleon headed for defeat, Britain redeployed forces to the United States that blockaded the east coast (initially excluding New England) and, most embarrassingly, burned down the White House. We concluded the war in 1814 in a peace treaty that offered zero assurances about the impressment of sailors and Canada remained under British rule. But at least we got a cool national anthem – and an American hero in the victor of the Battle of New Orleans: Andrew Jackson, who will be a star of our next segment.

              email

              Figure 7. You think missed communications might have declined with technology but the crucial decision of George W. Bush not to check his spam folder missed an email from HotBaathParty1937@hotmail.com about giving up WMDs through a Nigerian intermediary if he could get out of debt, work from home with an online degree, and secure a lifetime supply of Viagra and Xanax.  

               

              Ironically, all of the self-inflicted disruption in foreign trade led to a transformation of the American economy. Despite the Democrat dream of a rural paradise, their policies had led to dramatic increases in the prices of manufactured goods which unintentionally invited Americans to create industry to produce substitutes. While export-oriented industries were devastated, domestic manufacturing became a new and important political constituency that was able to push the first major tariffs really designed to protect producers rather than simply generate revenue. The South, caught up in the patriotic fervor of the war, initially provided crucial support but would soon realize that they had to pay the costs. This regional divide, whether the tariff should be for revenue only or also protection, enhanced dramatically by the debate over slavery, would dominate American politics until the Civil War. In the meanwhile, British tensions would fade as they embraced a radical global free trade model the Founders had desired so fervently. We’ll conclude with a quote from Madison that defines this book:

              “Shall domestic manufactures be encouraged, and in what degree, by restrictions on foreign manufactures? are questions which would be differently decided by the landed and the manufacturing classes, and probably by neither with a sole regard to justice and the public good…It is in vain to say that enlightened statesmen will be able to adjust these clashing interests, and render them all subservient to the public good.”

              Clashing over Commerce

              Figure 8. Click here to acquire Clashing over Commerce 10/10 – a magisterial retelling of American history through the important lens of trade, filled with insight into the events that defined the country over its three eras of tariffs: for revenue only (through Civil War), for protection (through World War II), and for reciprocity (through today). One more interesting item: the Founders were deeply influenced by the father of capitalism, Adam Smith, but underappreciated is that Smith, for all his endorsement of free trade, believed in three exceptions: first, for revenue, as discussed; second, to encourage reciprocity, as the Democrats desired and America would eventually adopt (in a far milder form); and third, to protect industries vital to national security.

               

              Thanks for reading!  If you enjoyed this review, please sign up for my email in the box below. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you on board!

                Check Your Texts

                The Gist:  Scalia argues that judges should interpret what the Constitution said, not what they want today.

                A review of A Matter of Interpretation by Antonin Scalia.

                In November of 2012, I made my annual trip to Washington D.C. to participate in the national convention of the Federalist Society. Once the leader of Vanderbilt law school’s student chapter, now the leader of Nashville’s lawyer chapter, always a supporter, my name tag is usually delightfully outfitted with enough ribbons to impress a Russian general – or at least a grand poobah of the local Moose Lodge.

                But with the re-election of President Obama earlier that month, this was not a happy time for a group of conservative and libertarian attorneys “founded on the principles that the state exists to preserve freedom, that the separation of governmental powers is central to our Constitution, and that it is emphatically the province and duty of the judiciary to say what the law is, not what it should be.” 

                Now this is a big conference – though the vast right-wing conspiracy is not quite as vast, right-wing, nor conspiratorial as ideal. But at one point I found myself in conversation with a small group that included the Federalist Society’s original faculty sponsor and the man most responsible for elevating its ideas to national significance: Antonin Scalia. Gloomier than anyone else, but always possessing his trademark humor, the legendary Supreme Court justice joked that the Constitution would survive, though his own retirement was delayed.

                Scalia

                Figure 1. Rest in peace, Nino.

                 

                Scalia never got the chance to retire, but his legacy endures. In his book A Matter of Interpretation, Scalia does something striking: the Justice lays out his case for how our republic can best live up to its values – and then invites four prominent experts to challenge him. To anyone who has read one of Scalia’s amusing and cutting judicial opinions, this should come as no surprise: the man loved a good debate. But to anyone who has not and never will, this book offers both a clear introduction to Scalia’s philosophy – and to some of its criticisms. 

                Scalia believes that every law must be interpreted based only on what the text says, not what a judge wants. You are probably shocked that this is a controversial proposition, but it is. But how do you determine what a text says?  The most important concept, alluded to in the term “originalism,” is that the text must be interpreted according to the original public meaning of the words. In a republic, power is centered in the people who delegate legislators to make laws on their behalf. Those legislators only agreed to what the words meant at the time, not to whatever those words may mean in the future – so the only power laws have is in their original meaning. So judges must write opinions armed with contemporary dictionaries, not the latest op-eds and policy briefs. Without this constraint, if laws can be interpreted by anyone to mean anything, what is the point of having laws in the first place?

                Humpty Dumpty

                Figure 2. “When I use a word, it means just what I choose it to mean. Neither more or less.” – Humpty Dumpty, the most strident advocate of Living Constitutionalism in Wonderland, and a preferred legal authority for certain Americans looking abroad for standards.

                 

                Importantly, Scalia is NOT saying laws should never change – they should! But they must be changed through the democratic process – the regularly elected legislature rather than the unaccountable judiciary. Scalia insists on judicial restraint: “Congress can enact foolish statutes as well as wise ones, and it is not for the courts to decide which is which and rewrite the former.” No, the obligation of the courts is to determine whether the law is followed, not what the law should be. “To be a textualist in good standing, one need not be too dull to perceive the broader social purposes that a statute is designed, or could be designed, to serve; or too hidebound to realize that new times require new laws. One need only hold the belief that judges have no authority to pursue those broader purposes or write those new laws.” Scalia goes further in his observation that if he could change one thing about the Constitution, he would make it easier to change – so that people could litigate their ideas in elections rather than before the courts. Still, this is a relatively recent phenomenon: Scalia points out that we felt obligated to pass a constitutional amendment to give women the right to vote even though modern courts probably would have just ordered it to happen.

                So you’re sold on original meaning, but why original public meaning? This is most relevant to the Constitution, which derives its authority from the consent freely given by Americans in 1787 when it was submitted to state conventions for ratification. But it also applies to modern statutes: Scalia stridently challenges the attempt to discover meaning by trying to divine what legislators intended to do, as opposed to what they actually wrote into the text and voted upon. To Scalia, this is an impossible task of soothsaying: How can one possibly know the intentions of 535 legislators and a president in crafting legislation? Is a speech – or worse, a private comment – by a single legislator perhaps listened to by no one really the indicator of anyone else’s intent – or even that legislator’s intent? Does a committee report drafted by unelected staff and never read, amended, or voted upon by Senators really reveal their intentions? Scalia maintains that the United States is “a government of laws, not of men. Men may intend what they will; but it is only the laws that they enact which bind us.” Furthermore, Scalia fervently believes in the separation of powers – and that the Constitution grants “all legislative powers” to the Congress as a whole, not to any committee, nor any individual legislator, and certainly not to the judiciary. The search for legislative intent, Scalia reveals, is really a “handy cover for judicial intent.” The more material that judges can draw upon to make a decision, the easier it is for them to justify a decision that comports with their policy preferences rather than a balanced, neutral perspective on what the law really means.

                Ouija

                Figure 3. Amazingly, whenever Living Constitutionalist judges consult the spirits of past legislators about whether what they really meant to say is that judges should just do whatever they think is right, the Ouija board always says “YES.”

                 

                Hogwash, replies Lawrence Tribe, a Harvard law professor and co-founder of a liberal counterpart to the Federalist Society. Tribe alleges that it is difficult, if not impossible, to “discover” the meaning of the Constitution or any law and that judges should “replace such pretense with a forthright account” of whatever they find most plausible and best, though he says “in light of the Constitution as a whole and the history of its interpretation” – a minor concession given how far the Constitution’s original meaning has been bent and bruised. But Tribe goes further and says “There is certainly nothing in the text itself that proclaims the Constitution’s text to be the sole or ultimate point of reference.” But what then should America’s 1000+ judges (and in particular, 5+ Supreme Court Justices) review? That, Scalia responds, is the fundamental weakness of Tribe’s position: 

                Perhaps the most glaring defect of Living Constitutionalism… is that there is no agreement, and no chance of agreement, upon what is to be the guiding principle of the evolution. What is it that the judge must consult to determine when, and in what direction, evolution has occurred? Is it the will of the majority, discerned from newspapers, radio talk shows, public opinion polls, and chats at the country club? Is it the philosophy of Hume, or of John Rawls, or of John Stuart Mill, or of Aristotle? As soon as the discussion goes beyond the issue of whether the Constitution is static, the evolutionists divide into as many camps as there are individual views of the good, the true, and the beautiful.

                Tribe concedes that he has no overall perspective because he is “doubtful that any defensible set of ultimate ‘rules’ exists.” If that’s the case, why not trust the democratic process? Scalia explains that’s the point: Living Constitutionalists want to subvert the system. First, they are frustrated with the fact that the Constitution was designed to limit evolution. That’s why we wrote something down, as opposed to allowing the law to just develop on its own as it does in the United Kingdom. And it’s why we created three branches, each with unique responsibilities, inside one of which are two distinctly elected houses of Congress, all designed to achieve ambition clashing against ambition – and limit big jumps in policy. Second, they are frustrated by voters and eager to restrict democracy: courts have taken away power from voters and ordered that God cannot be invoked at public school graduations, that welfare can’t be terminated (or public employees fired) without a hearing, or, perhaps sometime soon, that the right to bear arms will be gutted. But Scalia warns:

                We value the right to bear arms less than did the Founders (who thought the right of self-defense to be absolutely fundamental), and there will be few tears shed if and when the Second Amendment is held to guarantee nothing more than the state National Guard. But this just shows that the Founders were right when they feared that some (in their view misguided) future generation might wish to abandon liberties that they considered essential, and so sought to protect those liberties in a Bill of Rights. We may like the abridgment of property rights and like the elimination of the right to bear arms; but let us not pretend that these are not reductions of rights… As things now stand, the state and federal governments may either apply capital punishment or abolish it, permit suicide or forbid it—all as the changing times and the changing sentiments of society may demand. But when capital punishment is held to violate the Eighth Amendment, and suicide is held to be protected by the Fourteenth Amendment, all flexibility with regard to those matters will be gone.

                Gordon Wood, Pulitzer Prize-winning historian of early America, agrees with Scalia’s indictment of what happens when judges make law – but insists that it’s nothing new. The patriots of 1776 were outraged at “the extraordinary degree of discretion exercised by royal judges” and “sought to severely limit this judicial discretion” in favor of legislatures producing clean and comprehensive codes that would address any situation. Thomas Jefferson demanded an end to “‘the eccentric impulses of whimsical, capricious designing man’ and to make the judge a ‘mere machine.’” But it turns out that legislatures are full of eccentric, impulsive, whimsical, capricious, designing men and they proved incapable of the task, passing a muddle of conflicting laws driven by interests both partisan and corrupt. After fighting a revolution for freedom and to limit laws, James Madison complained “there were more laws enacted in the decade following the Declaration of Independence than had been enacted in the entire previous century of colonial history.” By the time of the Constitution’s framing, “more Americans began looking to the once-feared judiciary as a principal means of restraining these wild and rampaging popular legislatures.”

                Vending Machine

                Figure 4. Lifetime tenure will take on a whole new meaning when we can appoint Justice vending machines pre-programmed with the Constitution. A lot cheaper than conventional human judges, but they do require crisp bills of only those denominations that depict the Founding Fathers.

                 

                Wood notes that the judiciary has only historically recently become its own branch of government (having been in either legislative and executive before – including Tennessee’s original Constitution) and that early American judges were often not lawyers at all and “involved in politics and governing to an extent that we today find astonishing” – including simultaneously serving in executive positions like lieutenant governor, Secretary of State, or other diplomatic positions. In the 19th century, courts attempted to withdraw from the “most explosive and partisan political issues” but insisted on retaining power to define rights. Wood concludes that what Scalia indicts is not a modern phenomenon but “one deeply rooted in our history” and may only be “a change in degree, not one in kind.”  And Wood fears that Scalia’s remedy is “scarcely commensurate with the severity of the problem and may be no solution at all” – both because judges can abuse textualism but also because we must either only appoint textualists or convince judges to be textualists.

                Scalia indicates that this is part of the give and take of the separation of powers, and that “there have always been, as there undoubtedly always will be, willful judges who bend the law to their wishes. But acknowledging evil is one thing, and embracing it is something else… There has been a change in kind, I think, not just in degree, when the willful judge no longer has to go about his business in the dark—when it is publicly proclaimed, and taught in the law schools, that judges ought to make the statutes and the Constitution say what they think best.” Indeed, when you go to law school, you don’t actually study the Constitution’s text, the Federalist Papers, dictionaries from 1789 – you read the opinions of judges, lots of opinions, and your professors engage you in Socratic dialogue, asking you how the judge reasoned her way to the result. Part of this is so the law student can see what happens when the Constitution meets a situation – but the bigger part is that opinions become the law by virtue of a doctrine called stare decisis, where the court is supposed to defer to what it has said in the past unless it can distinguish the current case. Scalia approvingly quotes the 19th century codifier Robert Rantoul: “The judge makes law, by extorting from precedents something which they do not contain. He extends his precedents, which were themselves the extension of others, till, by this accommodating principle, a whole system of law is built up without the authority or interference of the legislator” or, as Scalia points out, the people. But when is it okay to get rid of stare decisis in favor of the Constitution’s original meaning?

                American Gothic

                Figure 5. Thanks to judicial discretion, stare decisis, and what one Living Constitution advocate called the “non-textual amendments” to the Constitution, we get to build our case law upon Wickard v. Filburn, where the Supreme Court determined that the Constitution granting power to “regulate Commerce…among the several States” meant that Congress could fine a small farmer thousands of dollars for growing more wheat than the federal government mandated – even when he only consumed it himself, within a single state.

                 

                Mary Ann Glendon, conservative Harvard law professor and expert in continental European law where stare decisis doesn’t really exist, worries that without stare decisis, the court will be “lurching along in irrational and unpredictable fashion, like the monster in the old version of Frankenstein.” She echoes the concerns of the early Americans: if legislation is not “comprehensive, coherent, self-contained,” then you cannot expect judges to be constrained by it. Glendon doesn’t agree with particular decisions and warns that “as judicial lawmaking expands, the democratic elements in our republican experiment atrophy. American men and women not only are deprived of having a say on how we order our lives together, but we lose the skills of self-government.” But if the Justices don’t defer to previous decisions, Glendon fears, the court loses credibility and deteriorates to a legislature of majority votes. 

                Here Scalia essentially retreats into his famous self-identification as a “faint-hearted originalist” and unfortunately empowers lesser originalists of even fainter heart, if they be originalists at all. But before we get to Scalia’s perspective, we might channel his colleague Clarence Thomas, who would ask: if we’re looking for predictability, why isn’t the rule that everyone just stick to the original meaning of the Constitution? If you choose to be extremely faithful to precedent, then you are obligated to respect every time the other side, in a majority vote, betrays the original meaning (and, incidentally, often stare decisis itself). What is this extreme fidelity but a slow bleed to pirates who don’t respect the system at all but are happy to take advantage of you?

                Car

                Figure 6. Imagine a family of three – mom, dad, and son –  that has a tradition of making a spring road trip from Nashville, Tennessee to Hilton Head, South Carolina – a family beach destination. Dad takes the wheel for the first leg and drives southeast from Nashville to Atlanta, Georgia before handing it off to his son. The son, however, really wants to check out the casinos in Biloxi, Mississippi, so he unilaterally drives west to Montgomery, Alabama. Now mom takes the wheel. Does she honor the direction of the car and proceed to Biloxi? Does she try to slightly correct and split the difference, perhaps winding up in Panama City Beach, the “spring break capital of the world”? Or does she turn the car around and head to the original destination of Hilton Head?

                 

                Tribe reports that,

                “During his confirmation hearings, Justice Scalia revealed that his decision whether to overrule precedent he viewed as wrong would be based in part on how woven the ‘mistake’ was into the fabric of the law. A key factor in making this determination would be how long the precedent has existed. For example, he noted that almost no revelation could induce him to overrule Marbury v. Madison, but he would be more willing to overrule a less established case, such as Roe v. Wade” 

                This is a pretty sensible attempt by Scalia to reconcile his philosophy with the operation of the court – but Tribe understandably attacks him for an ambiguous set of rules for when to overturn precedent, totally untied to anything actually present in the text of the Constitution which is supposed to be Scalia’s lodestar. Scalia accepts the critique, saying, regarding the First Amendment for example, “the Court has developed long-standing and well-accepted principles (not out of accord with the general practices of our people, whether or not they were constitutionally required as an original matter) that are effectively irreversible” and admits that choosing when to respect stare decisis leaves plenty of opportunity for judicial discretion. Scalia says following originalism totally would be “so disruptive of the established state of things that it will be useful only as an academic exercise and not as a workable prescription for judicial governance.” Ultimately, Scalia admits “stare decisis is not part of [his] originalist philosophy; it is a pragmatic exception to it.” To which Yale law professor Akhil Amar responds, “If pragmatism ultimately determines when we do originalism, this is in the end pragmatism not originalism.”

                Scalia’s final challenger is Ronald Dworkin, the second-most cited American legal scholar of the 20th century. Dworkin accepts Scalia’s plea that we look to the text of the Constitution – but suggests that the Founders gave us abstract principles to aspire to that were specifically intended to be redefined with each new generation as opposed to be frozen at the time of enactment. It is through this reading that the historian Wood fears the abuse of originalism or that Obama’s Supreme Court nominee Elena Kagan could claim “We are all originalists now.” When the Founders’ forbade “cruel and unusual punishment,” Dworkin asks, did they not mean for the definition to shift? When the post-Civil War Congress insisted that citizens’ “privileges or immunities” could not be abridged, Dworkin queries, were those supposed only to be as then-imagined? Tribe piles on: why would the Founders only codify those limited liberties enjoyed by the British, where it was a crime to imagine the King’s death? Dworkin notes that the limits of the First Amendment were vigorously debated by the Founding Fathers shortly after its passage – so how can we know what it protected then? Tribe goes further: is there not a subtext – a penumbra, if you will – in the Constitution that says “the right not to have the government put its regiments in one’s home might make little sense without some presupposed right not to have the government regiment every detail of what one does in one’s home.”

                Sunshine

                Figure 7. It will be easier to enforce the Court’s finding that the 8 hour workday is cruel and unusual than its determination that sunshine is a protected Constitutional privilege and cancer immunity must be enjoyed by all Americans. 

                 

                Scalia powerfully responds that abstraction is not aspiration:

                “To guarantee that the freedom of speech will be no less than it is today is to guarantee something permanent; to guarantee that it will be no less than the aspirations of the future is to guarantee nothing in particular at all…. It makes a lot of sense to guarantee to a society that ‘the freedom of speech you now enjoy (whatever that consists of) will never be diminished by the federal government’; it makes very little sense to guarantee that ‘the federal government will respect the moral principle of freedom of speech, which may entitle you to more, or less, freedom of speech than you now legally enjoy.’

                Scalia returns to his core principles: where do you stop the madness? What other hidden, unstated rights exist in the Constitution heretofore undiscovered but now convenient? If you can’t rely on the original public meaning of what these things meant, then where do you draw the line? More importantly: how do you draw the line? And why is it that certain areas of the Constitution get this expansive treatment – cruel and unusual can mean only cruel, but not unusual, in the guesstimation of a judge that only ever evolves in one direction  – but others, like the right to bear arms is “limited to musketry in the National Guard.”

                Magnfying Glass

                Figure 8. Not very well known, but if you put on night vision goggles and take a magnifying glass and look closely between the Third and Fourth Amendments of the original document the Constitution is written on, you find nothing.

                 

                If the Constitution is aspirational, “Judges are not… naturally appropriate expositors of the aspirations of a particular age; that task can be better done by legislature or by plebiscite.” Dworkin et al simply want a philosophy of “if it is good, it is so. Never mind the text that we are supposedly construing; we will smuggle these new rights in, if all else fails, under the Due Process Clause (which…  is textually incapable of containing them” because “it guarantees only process. Property can be taken by the state; liberty can be taken; even life can be taken; but not without the process that our traditions require — notably, a validly enacted law and a fair trial.”) Scalia concludes: “There is no such philosophizing in our Constitution, which, unlike the Declaration of Independence and the Declaration of the Rights of Man, is a practical and pragmatic charter of government.”

                Ultimately, this is a terrific book, with each challenge elucidating more of Scalia’s view. But the one challenge that is missing, already implied, is from a dedicated textualist unconcerned with stare decisis. When Scalia was challenged about his inconsistencies or asked about this alternative view, he would reply that he was “an originalist, not a nut.” But even if his explanations seem reasonable, did he go far enough in living out his philosophy? Scalia says that “A text should not be construed strictly, and it should not be construed leniently; it should be construed reasonably, to contain all that it fairly means” – but is that enough practical guidance for judges to come to the same conclusion? We may like how he winds up on certain issues (though he often said he ruled against his own policy interests when the Constitution required), but when he says –  “In this constitutional context, speech and press, the two most common forms of communication, stand as a sort of synecdoche for the whole. That is not strict construction, but it is reasonable construction” – does “synecdoche” seem a little too close to “penumbra” to to you? While Scalia lambasts anyone who brings in legislative intent, Scalia disciple Steven Calabresi says, 

                “In constitutional cases, Justice Scalia gave weight to “original expected applications,” which he never did in deciding statutory cases. The reason for this difference is that the people’s representatives can always repeal or amend a misinterpreted statute, but they cannot do so with an erroneous opinion on a question of constitutional law. As a result, and believing that the Constitution gave all three branches coequal power to enforce the Constitution, Justice Scalia generally decided constitutional cases in a way that presumed the political branches had acted constitutionally.”

                Astronaut

                Figure 9. The Constitution has a series of age requirements – Congressmen must be 25, Senators 30, Presidents 35. But when we colonize Mars, which has a 687 Earth-day year, will Americans of that distant colony be required to be 50% older?

                Regardless of how true Scalia was to originalism, he deserves immense credit for bringing it to the forefront- and allowing judges to credibly pursue his ideas further than he did. Scalia is the giant of conservative judicial philosophy – and one of the most significant conservatives of any field in modern American history.

                A matter of interpretation

                Figure 10. Click here to buy A Matter of Interpretation (8/10), an excellent introduction to Scalia’s philosophy and its critics. You can also get a good dosage of originalist interpretation itself, such as this look at the Second Amendment:

                [The alternative] reading of the text has several flaws: It assumes that “Militia” refers to “a select group of citizen-soldiers,” … rather than, as the Virginia Bill of Rights of June 1776 defined it, “the body of the people, trained to arms,” … (This was also the conception of “militia” entertained by James Madison, who, in arguing that it would provide a ready defense of liberty against the standing army that the proposed Constitution allowed, described the militia as “amounting to near half a million of citizens with arms in their hands.” The Federalist No. 46… The latter meaning makes the prologue of the Second Amendment commensurate with the categorical guarantee that follows (“the right of the people to keep and bear Arms, shall not be infringed”); the former produces a guarantee that goes far beyond its stated purpose—rather like saying “police officers being necessary to law and order, the right of the people to carry handguns shall not be infringed.” It would also be strange to find in the midst of a catalog of the rights of individuals a provision securing to the states the right to maintain a designated “Militia.”

                Thanks for reading! If you’ve enjoyed this article, share it with a friend: know any law students or lawyers who should would be interested in this dominant Supreme Court Justice? How about any Americans concerned about keeping their Republic? Or do you know any Supreme Court Justices who should be more textualist?

                Also, feel free to sign up with the box below to receive my email. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you aboard.

                Santa

                Figure 11. One final comment on the meaning of words. You’re of course familiar with Santa’s search for who is naughty or nice. Well, the original meaning of “naughty” was “needy,” which, when you think about it, unfortunately better reflects Santa’s gift-giving practices.

                  You Can’t Choose Your Family

                  The Gist:  Nearly all dictators’ children take advantage of their status, often in defiance of the stated motivating ideology of the regime, sometimes in defiance of basic human decency.

                  A review of Children of Monsters by Jay Nordlinger.

                  Winston Churchill was no fan of his son-in-law, Vic Oliver. Oliver had fought for Britain’s enemy Austria in World War I, was a mediocre entertainer, and had already been divorced (maybe twice) before becoming secretly engaged to Churchill’s daughter. At one point, “trying to make innocent conversation, Oliver asked [Churchill] what figure [of World War II] he admired most. Churchill answered, ‘Mussolini.’ Astonished, Oliver asked why. Said Churchill… ‘Because he had the courage to have his son-in-law shot.’”

                  You, like Churchill, may have fantasized about exercising certain powers in your family beyond those permitted in a democracy. Jay Nordlinger writes for the National Review where he often finds just the right anecdotes to illustrate both points and people in stories both of national and human interest. In his book Children of Monsters, Nordlinger relates inhuman interest stories as he sketches the fates of the sons and daughters of dictators, the “more drenched in blood” the more interesting how their progeny might have turned out. How far does the apple fall from the rotten tree? What if what father knows best – what your family values – is evil? The result is entertaining, ironic, and strange. But mostly chilling.

                  Luke

                  Figure 1. “Children of Monsters” was an alternative working title for the Star Wars saga which, given the latest sequels, works even for the revisionists who properly understand the series.

                   

                  One immediate example: Hideki Tojo was the strident nationalist leader of Japan during World War II and perhaps the primary advocate for the preemptive attack on Pearl Harbor: his daughter married an American and lived most of her life in Honolulu!

                  Though Nordlinger provides some background on each gruesome father, some are more notorious than others, so you might want to consult Wikipedia for a fuller account of their crimes. Albania, for example, was disastrously led for over 40 years by Elver Hoxha, a totalitarian Communist so extreme that he broke with the Soviet Union when it condemned Stalin and the People’s Republic of China when it abandoned Mao. Without mass-murdering allies, Hoxha insisted on total self-reliance (i.e. total isolation) and, with the very limited national resources of the poorest country in Europe, amidst housing shortages and any number of other pressing policy problems, he directed the construction of over 750,000 concrete bunkers. For context, Albania is a little smaller than the state of Maryland and never had more than 3,000,000 people. So Hoxha built more than 60 bunkers per square mile, 1 bunker for every four people, all costing more than three times as much concrete as France’s Maginot Line. Nordlinger reports on this as well as his principal subject: Hoxha’s son, despite his father’s ban on private cars, generously permitted himself a Mercedes, and, as the Cold War came to a conclusion (and with it, Hoxha’s slave labor camps, murders, and all-around repression), the Hoxha heir insisted, “The worst evils of the capitalist society are coming to Albania: unemployment, prostitution, corruption, high prices, and inflation.”

                  No Inflation

                  Figure 2. “Oh no,” he thought. “Not inflation!”

                   

                  You may wonder how many scions chose to honor their father. Practically, if a child had the opportunity – that is to say, that they were not, as so many were, abandoned by their father – every child took advantage of the privileges of being the dictator’s offspring. At the very least, that meant enjoying a standard of living well above the normal citizen. Francisco Franco ruled Spain for four decades after winning its civil war: his only child married into Spanish royalty which, given the incestuousness of European monarchies means that Franco’s great-grandson, Louis de Bourbon, is considered by Legitimists (but not Bonapartists) to be France’s rightful king. 

                  Sometimes the dictator doesn’t even have to be in power anymore: A Mussolini son became a jazz pianist, first playing after World War II under an assumed name before “discover[ing] his real name was a draw, not a repellent… He played with many of the greats of the day, including Ella Fitzgerald, Duke Ellington, and Dizzy Gillespie. He married Maria Scicolone, the sister of Sophia Loren.” Their daughter became a Playboy covergirl – and then a neo-fascist Italian legislator, though Nordlinger notes “it’s sometimes hard to tell the ‘neo’ from the old-fashioned variety.”

                  Of course, the very act of better living often defies the stated motivating ideology of the regime. The first two children of the Romanian Communist dictator Ceaucescu chose careers in science over politics (though no doubt helped by selective state patronage). When the regime collapsed, Ceaucescu daughter Zoia was arrested in a house filled with jewels, cash, and art – and infamously asked “Do you have room in the police truck for my poodles?” In a similar vein, a granddaughter of Chairman Mao was listed in 2013 as one of the richest women in China and had three children – in violation of the one-child policy.

                  Poodle

                  Figure 3. “All animals are equal, but some animals are more equal than others.” – George Orwell

                   

                  Libya’s Muammar Gaddafi was an Arab Islamic socialist who deported Jews, introduced sharia law (whose Libyan version featured flogging as a punishment for homosexuality), and financed a murderous campaign of terrorism against Western “imperialists” and Israeli Zionists. Almost predictably, all of his sons spent significant time in the West. One was a drug addict who pursued a multitude of bisexual affairs. Another told his Playboy model girlfriend that he spent about $2 million a month, including arranging for private concerts for him and his friends by American pop stars. A third son partied across Europe, including a high speed police chase through Paris. Constantly feuding with police, he always claimed diplomatic immunity until he was finally arrested in Switzerland for physically assaulting servants. Libya retaliated by arresting innocent Swiss businessmen and banning Swiss companies. A fourth son, Saif al-Islam (“Sword of Islam”), got a PhD from the London School of Economics (global imperialism headquarters?), claimed a friendship with (imperialist?) British Prime Minister Tony Blair, had a long-time (Zionist?) Israeli girlfriend, and insisted, repeatedly, that he would not serve in his father’s regime “until Libya had a constitution and a ‘more democratic and transparent’ environment.” Which, understandably, made him the great Western hope for Libya as his life clashed with practically all of his father’s regime’s stated principles. And yet when his father’s regime was finally threatened by a rebellion, Saif returned home and vowed, “We will fight until the last man, until the last woman, until the last bullet.” The International Criminal Court has an outstanding warrant for his arrest for crimes against humanity during the Libyan Civil War. But today he’s a free man – and running for President of Libya.

                  Flag2

                  Figure 4. Sadly, many children of democratic leaders defy the motivating ideology of liberty by becoming Communists. Meanwhile, pop stars play their hearts out for the cash of dictators while boycotting American states whose democratically elected leaders express mild disagreements.

                   

                  Some children became strident proponents of tyranny much faster, almost always as part of a plan to take over after dad. Papa Doc changed the constitution of Haiti to make sure his son Baby Doc could become the youngest leader in the world at 19 (and continue the family business of corruption). Syria’s Bashar Assad was practicing medicine in the West when he had to come home after his brother’s death to take over as heir apparent. But no totalitarian dynasty has been as successful (in terms of sustaining familial power) as the Kims of North Korea.

                  Kim K

                  Figure 5. Even Kim Kardashian would be a better alternative for North Koreans – and Dennis Rodman could still visit anytime he wanted.

                   

                  As often as not, dictators don’t really care about their kids. While Mussolini had some cause to execute his son-in-law, who had launched a coup and put Mussolini under house arrest, he had no cause to confine his first son to an asylum and then murder him. Mao appears to have not really cared for his 10+ children, needlessly abandoning a couple to die in the Chinese Civil War, offering others as hostages. Which is to say, he cared about as much about his own kids as he did the Chinese people. Ultimately, dictators care most for their own power: Iran’s ayatollah Khomeini forbade his son from becoming Prime Minister so his family could appear to be above the fray of politics – and responsibility – while maintaining power. 

                  The child who is an outright dissident is extremely rare. Zoia Ceaucescu, who had mouthed off when she was younger, and Saif al-Islam Gaddafi were considered some of the most vocal critics until their ignoble exposures. A daughter of Fidel Castro became a dissident – but she only met her father a couple of times. Perhaps the most interesting example is a grandson of ayatollah Khomeini who made numerous comments endorsing not only democracy but America’s invasion of Iraq. Predictably, as of the book’s publication, he is under house arrest.

                  Teenager

                  Figure 6. That children of dictators are not generally dissidents will shock parents of teenagers 

                   

                  All of which leads us to Stalin, whose offspring Nordlinger spends the most time with. He begins with a deadly insightful line about the Soviet regime: “It is said that Lenin liked children… There must have been limits to his liking, however: He sent children to concentration camps.”

                  Stalin’s first couple children were illegitimate, one the product of his rape of a teenage girl when he was in his late 30s. He denied them, along with his third child Yakov who was legitimate, the honor of using his adopted name – “Stalin” means “Man of Steel.” Yakov was so distressed over his father’s disapproval that he attempted to kill himself with a gun but only suffered a non-fatal wound. “His father snorted, ‘He can’t even shoot straight.’” Yakov recovered and joined the Red Army to please his dad. He was promptly captured by the Germans, who hoped to trade the heir for a captured General. Stalin not only denied that he had such a son but also that “there was really such a thing as a Russian POW.” Insisting that anyone captured by the Germans was a traitor, he arrested his daughter-in-law. Eventually, Yakov’s second attempt at suicide succeeded: “he threw himself on an electric fence, in April 1943.” The tragedy of Stalin’s kids would not end there.

                  Super Stalin

                  Figure 7. If only that Man of Steel had thrown himself in front of a locomotive… 

                   

                  Stalin’s final two children were from his last wife who “was the Bolshevik type: devoted to Party and work, not to ‘bourgeois’ interests such as family. Svetlana could not remember that her mother had ever hugged, praised, or kissed her… We might pause to imagine a household in which Stalin is the more loving parent.” She apparently committed suicide while her kids were pre-teens, though Nordlinger says that she may have been murdered, and “serious people take this suspicion seriously.” As a result, “Svetlana was raised by a nanny and other generally civilized women; Vasily was given over to brutish bodyguards.” 

                  Svetlana initially had the better bargain. Her father treated her tenderly, nicknaming her “the boss,” and inisting senior Politburo members address her as such. But,

                  “With some regularity, her schoolmates would simply disappear. They would be there one day, and not the next. Their fathers had fallen from favor, being arrested, imprisoned, or killed. Sometimes, a schoolmate would give Svetlana a note to pass to her father. It had been written by the schoolmate’s desperate mother, whose husband had been dragged away in the night. Could Comrade Stalin do something? The dictator got sick of these notes, telling his daughter not to serve as a ‘post-office box.’” 

                  When she was 16, two seminal events occurred that irrevocably changed her relationship with her dad: She fell in love with a married 40-year old playboy – and she discovered the fate of her mother through her special access to Western media. Stalin dispatched his daughter’s paramour to the Gulag for a decade and would hardly ever speak to her again. After failing to get with another married man, she accepted a proposal from a fellow student. Seeking permission from her father to marry, Stalin was silent for some time before saying “‘To hell with you. Do as you like.’ He set one condition on the marriage: that the groom and husband never set foot in his house. Indeed, Stalin never met his son-in-law.” They were divorced within two years, and then she was set up for another two short-lived marriages with Kremlin-approved husbands.

                  In 1963, well after her father’s death, Svetlana fell in love with a visiting Indian Communist whom she was not allowed to marry. But when he died 3 years later, she successfully requested permission to scatter his ashes in India. Once there, Sveltana walked into the US embassy and defected (abandoning two kids to remain in the USSR). “Svetlana became a U.S. citizen and registered with the Republican Party. Her favorite magazine was National Review, she said—the conservative, anti-Communist journal founded by William F. Buckley Jr. in 1955. She donated $500 to the magazine.” Svetlana’s strange story would not end there: the widow of the famous American architect Frank Lloyd Wright had had a daughter named Svetlana by another marriage who had died in a car crash. She felt a strange connection to Svetlana and invited her to visit the Wright estate, where she lived with her former son-in-law. Within 3 weeks of visiting, Stalin’s Svetlana was married to Wright’s stepdaughter’s widower. But that marriage would also fail, as her new family drained the finances she earned from writing books and operated, in her words, in ways reminiscent of the Kremlin. Incredibly, in 1984, Svetlana returned to the Soviet Union, stating she wanted to care for her alcoholic son and that she had “never enjoyed ‘one single day’ of freedom in the West.” Her daughter, “a die-hard Communist,” refused to even meet her. Svetlana was only there 18 months, returning to the United States: “‘I had to leave for a while to realize, ‘Oh, my God, how wonderful it is’’—the ‘it’ being America. All the things she had said against the West after her arrival in Moscow? She had been misquoted or mistranslated.” She died in Wisconsin in 2011 and I’ll leave it to you whether she fits the description of a proper dissident.

                  The absolute worst children of dictators, however, were those who used their positions of privilege to wreak rape, torture, and murder without consequence.  As Nordlinger himself relates, “To study the children of dictators is to spend a lot of time with unpleasantness.” Whether by nature or nurture, “Vasily [Stalin] was a classic type of dictator’s son: the little tyrant of a tyrant, the little monster of a monster… Vasily used his privileged position to get everything he wanted: sex, power, riches, thrills. And, as frequently happens, it all ended very badly for him.” Totally unqualified, Vasily was rapidly promoted in the Red Army despite being “drunken, bullying, physically abusive, incompetent, and reckless.” Imprisoned after his father’s death, he died of alcoholism at 40. Similarly, Ceaucescu’s third child “preferred to rape his way through Romania.” After his parents compelled him to marry, he told his new wife “‘Now go live with my mother. She should f*** you because she chose you.’” This was the man Ceaucescu hoped to succeed him – and who the United Nations honored with a medal as chairman of International Youth Year.

                  Nobel Prize

                  Figure 8. Speaking of esteemed international organizations, Nordlinger’s other book is about the Nobel Peace Prize. 

                   

                  The worst of the lot, though, was Saddam Hussein’s son Uday. If you are at all squeamish, skip this paragraph

                  “Uday was worse—probably much worse—than the others. Looking on, Vasily Stalin might have shuddered… About Nicu Ceauşescu, I wrote, ‘I could fill pages with appalling details.’ One could fill more with details about Uday. One obituary described him as ‘Caligula-like’—which may be unfair to Caligula. … He raped constantly. His goons would kidnap girls and women for him. He would simply point them out. He kidnapped and raped the daughters of ordinary men, of course. But he kidnapped and raped the daughters—including the underage daughters—of powerful men, too… One time, a girl had the audacity to complain about being raped and beaten. Uday ‘had her covered with honey and torn apart by hungry dogs,’ in the words of one news report. I mention these things—which maybe I should not—not because they are extraordinary or sensational, but because they were routine.” 

                  And this is only from the public record. Since domestic critics of dictators (and their families) have a nasty habit of disappearing without a trace, researching such a book can be a challenge. But Nordlinger, who sought interviews with as many living and available children as he could, does not intend a comprehensive encyclopedia. Instead, he provides a series of insightful vignettes, opening with a chapter about a Frenchman who claimed to be Hitler’s long lost love-child (and who grew a matching mustache to enhance resemblance). Moreover, Nordlinger offers something rare among writers: a thorough command of the English language that makes his voice recognizably unique, conversational in tone, and a pleasure to read. Though he is personally passionate about human rights, Nordlinger regularly displays a discerning sensibility, acknowledging, for example: “You and I would not have wanted to live under the shah. But we most likely would have been screaming for him to come back, after experiencing Khomeini and his gang.” Which, incidentally, is precisely the experience of one of my teachers of Iranian history in college, who fought the Shah in the streets, served in prison with the ayatollahs, and then had to flee the country when he realized how much worse they were.

                  One final story about a dictator I had never heard of until reading this book: Bokassa the First proclaimed himself, in a $90 million inauguration paid for by the French but the equivalent of a year’s national budget, the Emperor of Central Africa. Which was pretty grand until he bucked for a promotion and self-declared a new title: 13th Apostle of Christ. Which was all the more remarkable because he once converted to Islam in exchange for a bribe from none other than Moammar Gaddafi. Bokassa’s apostledom was hard to reconcile with his polygamy – and his practice simply to refer to each wife by her nationality, i.e. the Belgian, the Korean, etc. All of which would be amusing but for his requirement that all school children wear – and pay for – a uniform bearing his image. His impoverished population rebelled and were put down via massacre.

                  With leaders like these, it’s no wonder that “over the years, the toppled dictator, Ceauşescu, had figured in Romanian advertisements. This was only natural. Free Romanians could hardly help themselves. One of the ads was for condoms. It showed Hitler, Stalin, and Ceauşescu, and suggested that the world would have been better off if their fathers had used condoms.”

                  Children of Monsters

                  Figure 9. Click here to acquire Jay Nordlinger’s Children of Monsters, which tells stories entertaining, ironic, strange, and chilling about the offspring of some of the 20th century’s worst dictators. I should mention, incidentally, that in addition to having a gift for the English language, Nordlinger has a gift for friendship and I am honored not only to have been interviewed on his podcast but to call him friend. 

                   

                  Thanks for reading! If you’ve enjoyed this article, share it with a friend: know any dictators who are concerned about how their kids might turn out? How about expatriates from former tyrannies who might want to know more about their former tyrants’ corruption? Or do you know anyone who would be fascinated by the family dynamics of some of the most notorious leaders of the 20th century?

                  Also, feel free to sign up with the box below to receive my email. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you aboard.

                    Every Trick In The Book

                    The Gist: How to choose a book to read. Steal authors’ time, and be mindful of whose time you’re stealing and how much. Score books to find more like you like, less like you dislike.

                    How do you choose what books to read?

                    Friends, media, algorithms often advise what to read. But we rarely discuss how to choose a book. This email will try to answer that question, at least for non-fiction, and I’d love your input as well (You and I are among the who in this story)

                    Wheel of Fortune

                    Figure 1. Try a spin of the WH_ _ L  _ F MISF_ RT _ N_! Alternatively, why choose at all? Harry Truman claimed that growing up in rural Missouri he read every single one of his library’s 2,000 books.

                     

                    Crucial to the answer of how is why. Knowing your objective for reading is essential to realizing whether you’re achieving it.

                    My principal advice is to steal time. We spend hours reading social media others took seconds to write. We spend minutes reading news that others took (maybe) hours to write. We spend (comparative) seconds reading books others took years to write. Reverse the sequence. As you do, think about whose time you’re stealing and how much of it they spared.

                    Old man

                    Figure 2. The ideal back flap picture, preferably a full-time author of a first-time work. 

                     

                    But that’s not to say that reading books is a time-saver. The best returns, where 1+1=3, come from larger investments. Warren Buffett once advised, “Read 500 pages every day…That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” Tyler Cowen expands, “‘It took me 44 years to read this book’ is not a bad answer to many questions about reading speed.” The question is where this would be most useful: On what do you spend time, money, attention that you want to do better? About what are you curious or passionate and why? You bring your whole life to each book you read, including your past library of readings. As you contemplate your next book, consider the path you’re going down and whether it’ll be a good companion along the way. 

                    So, yes, the best time to start reading was a long time ago. But the second best time is now. And if you’re stressed out by starting so late, great news! According to the American Psychological Association, reading is one of the most effective stress-relieving activities there is.

                    Jack the ripper

                    Figure 3. Yes, nothing more stress relieving than reading about the brutal, unsolved murders of Jack the Ripper.

                     

                    Of course, if you’ve found a valuable why for reading books, you must find the when. People say all the time they don’t have the time to do whatever it is they’re not doing. But until we colonize Mars, we all have the same number of hours in a day. We just make choices about how to spend them. Which gets to the most powerful secular concept I ever learned: opportunity cost. Every dollar spent on cable can’t be spent on a book (but hey, get a library card!). Will you choose to read books? If you need some extra motivation: the average American lives to 78. If you multiply how many books you read last year by the number of years actuarial tables suggest you have left, are you satisfied with the number? If not, track your time for a day to see where it goes and spend more of tomorrow on priorities and less on defaults and distractions. Everywhere you go, bring a book. Or Kindle. Or Kindle app on your phone. Or the Audible app. Or just set aside time like you might for exercise. Though I am only a fraction of Warren Buffett’s daily 500 pages, the past couple of years I’ve found I could get to 100 books a year (about 30,000 pages – or 80 pages a day) on an average of an hour a day. But however often you read a book, it’s worth getting right. So let’s dig into that:

                    From where you source books is our next key question. 

                    The best source for books you like is books you’ve already liked. Far better to execute on ideas you’ve graded A+ than to be on a constant search for novelty. Besides, it’ll probably be new again. Memory is very fallible. You’ve forgotten key insights. Go back and take some notes. And, before you protest, know that you probably underestimate the joy of repeating an experience. So, go read the greats again.

                    Illiterate

                    Figure 4. Never read a book? Skip ahead.

                     

                    The next best source is books like those you’ve already liked. Various websites claim to help you with this but it really comes down to this: what were those absolute favorite books that you’ve just re-read? Have you read other things by the same authors, on the same topics, in the same genres, or from their bibliographies? Those are great places to start. Simultaneously, avoid and discount books like those you’ve already disliked. You don’t need to keep trying to give James Joyce another chance.

                    Finnegans Wake

                    Figure 5. “Sir Tristram, violer d’amores, fr’over the short sea, had passencore rearrived from North Armorica on this side the scraggy isthmus of Europe Minor to wielderfight his penisolate war: nor had topsawyer’s rocks by the stream Oconee exaggerated themselse to Laurens County’s gorgios while they went doublin their mumper all the time: nor avoice from afire bellowsed mishe mishe to tauftauf thuartpeatrick: not yet, though venissoon after, had a kidscad buttended a bland old isaac: not yet, though all’s fair in vanessy, were sosie sesthers wroth with twone nathandjoe.” – a real passage from Finnegans Wake.

                     

                    If you want to explore something new, actively search for the best books on the topic. Confine your search: What are the best books on parenting, pies, pirates, etc.? Consult Google, friends, a librarian. Has an expert curated a list for a college syllabus or a bibliography? Read through the cluster of results, perhaps starting with the most repeated titles. Not all are bound to fit your needs or satisfy your curiosities but the more you read, the more you’ll figure out what’s the best in the field, and you’ll soon get a real education. My friend Ben does this often: he spent one recent summer reading everything he could on the history and meaning of currency. I’ve tended toward more practical items myself – like giving a speech.

                    Hammer and sickle

                    Figure 6. Of course, The Communist Manifesto is literally the 6th most assigned book on college syllabi. Probably even included in your research about how to best parent your kids to bake great pies as pirates.

                     

                    With personal recommendations, tread very carefully. Some of the best and worst books I’ve read have been recommended by friends – sometimes by the same friend! Consider: how enthusiastic was their recommendation? (And how enthusiastic are they, generally? My girlfriend Ashley is a delight because she’s enthusiastic about everything – but that means her book recommendations need to be parsed very carefully). Bearing in mind how they might evaluate a scale, ask them to rate the book out of 10. But beware recency bias: people are almost always more lucid about books they’ve just read or, even worse, haven’t finished reading. If you want a better recommendation, ask your friends what books have stuck with them after many years. Once removed from the conversation itself, consider: has this person recommended any books to you in the past? Were they any good? How much do they read generally? How much do they know about the specific field the book covers?

                    Democracy can be useful – when the voters have read the book. The more friends who spontaneously recommend a book,  the more likely it may be good. My friend Yinon relies on a system that tracks the frequency that books are mentioned on his favorite podcasts. We will dig into public ratings in a moment, but for now, beware bestseller lists, which are really an indicator of effective marketing inducing prospective readers. More useful might be a buyer’s remorse list.

                    we the people

                    Figure 7. Similarly, American democracy can be useful – when the voters have read the Constitution.

                     

                    Published book reviews can be good to the degree that the reviewer/publication shares your perspective. Obviously the best book reviews ever are mine. That’s why you receive and have read this far in the email. But if you must consult other sources, I’ve discovered some great books from the Claremont Review of Books, the Wall Street Journal, Marginal Revolution. Reviewers are going to be subject to recency bias, too, but hopefully they’ve read widely on the subject, critically read this book in particular, and are able to tell you what may be better. The crucial value reviews deliver is context – hopefully enough to guide you whether the book is worth adding to your list.

                    Don’t read a book merely because it won a prize, but an award may be an indicator of quality in a topic you’re already interested in. I once hypothesized that prizes would be a good source of new material – after all, some of my favorite books had won prizes – so perhaps I could outsource selection to some grand poobahs of literature. I read through a series of winners of a few particular prizes… and came away ready to pursue new hypotheses. The truth is I had not read those favorite books because of their winning a prize and the alternative reasons have proved more durable. Prizes have three problems: (1) they tend to give one out every year, regardless of whether 0 or 10 merited the award; (2) unlike book reviews, they rarely provide context for why the awardee is worthy; (3) few prizes are likely to closely match your interests, even in a specialized field. If you’re not trying to research a particular topic but are just looking for a good book, you may be best served by perusing lists of award-winners and only noting down the ones that intrigue you. That’s what I’ve done with military reading lists and I’ve discovered some real gems. But if you’ve read a few from any list and are dissatisfied, discard the list.

                    There are, of course, other avenues for sourcing books but I haven’t found many to be consistent sources of quality. Some argue that translated works are an excellent screening process: most inhabitants of the Earth don’t speak English and yet plenty still write books – if a book has been translated, publishers have made a determination that it’s more worthy. Provocative idea, but it hasn’t really translated to my own experience. And then, of course, there’s browsing whatever the algorithms suggest or what catches your eye among the aisles. Judging a book by its cover is actually not totally useless – it basically tells you whether you’ve been seduced by the publisher. My general rule of thumb is if you’re merely browsing, make no impulse buys. Just add them to your list for further evaluation.

                    Wherever you got your books, you can finally go about choosing how to prioritize. Whenever you come across any book that might be interesting, add it to your list with a raw, emotional score out of 10. If you use Excel or Google Sheets, you can just sort and that may be good enough. For the next level, state a specific objective for reading the book: what do you want to get out of it? To return to our whys: Will it help you optimize your life or satisfy a curiosity? Will this book be a good companion in your life? My friend Stan divides books into a limited group of categories that interest him and then rotates between each. Personally, I’ve found that the books I most enjoy are about aspects of history or policy that I’ve been curious about (especially if they look at things with an economic lens or a unique take); very practical advice about how to do better something I care about; and my faith. Of course, you can go deeper and start adding columns to try to find other factors that correlate with your preferences.

                    A specific evaluation of the author is most useful: whose time do you want to steal and how much time did they give?

                    Regarding whose time you’re stealing, you need to ask: does the author know what the heck s/he is writing about? I gave my assistant Taylor a list of the best and worst books I read last year without scores and asked him to evaluate each author on the basis of whether they spent the majority of their adult life in the field written about and whether they had a good educational background directly related to the field in question. He was able to predict whether the score was good or bad about 2/3 of the time.

                    A related question for credibility: do you share a worldview or approach with the author? You should certainly read books that challenge your assumptions but it’s highly doubtful that you are going to consistently enjoy books best that disagree with you. Even the challenges are worth knowing more about in advance to prepare yourself to engage and to test whether respect the author’s thought process. Ultimately though, as I’ve joked before, the very best books I read confirm my existing biases. 

                    Regarding how much time you can steal, this is a harder thing to assess: how can you figure out how much time an author spent brooding about and researching this specific book? People freely include their (selective) autobiographies but don’t really disclose their specific writing process. But here are some proxies: First, if someone had a full time job while writing their book, be very skeptical they gave it enough time. Second, if someone frequently writes books – say, more than once every few years – be very skeptical. The authors of books I’ve rated 8 or higher have written less than half the number of books in their lifetimes than the authors of books I’ve rated 4 or lower – and very few of the top ones are under 50 (or alive!). Third, extensive footnotes and bibliographies hopefully indicate lots of research – and time. My 8+ books are six times more likely to have a multi-page bibliography than my 4- books.

                     

                    Beyond evaluating the author, you can return to democracy but…

                    Online ratings very likely overstate how good a book is: in this grade-inflated world, people have a serious allergy to low ratings. If you don’t like math, skip ahead. I rate every book I read out of 10. Out of the past 150 books I’ve read, my average rating is about a 6. But for those same books, Amazon’s average rating is the equivalent of 8.6. If you only include books with over 250 reviews, my average actually drops and Amazon’s average jumps to 9! Of the last 60 books I’ve read, not one with over 250 Amazon reviews is rated below an 8.6. At least for me, Amazon’s ratings system is near useless. But Goodreads, even though the average of the last 150 books I’ve read has been 7.8, is a little more instructive. I tend to give one to two points higher (out of a scale of 10) to books with over 250 Goodreads ratings averaging 8.2 or higher than books with 250 ratings below my average of 7.8. Some friends of mine swear by only reading Goodreads scores of 8+ (4+ for Goodreads 5 point scale) but ultimately you’ll have to discover yourself how closely your tastes match the collective.

                    Uber

                    Figure 8. “4/5 stars – ride was okay, though I think the driver might have vomited into the passenger seat right before I got in; anyway seemed like he had been drinking, which was confirmed by the BAC test after we got into that car accident. But I only broke my arm, so you know, it was fine. Of course, we weren’t anywhere near where I needed to be – the driver had gone in the opposite direction. Driver asked for 5 stars but giving 4 because he talked too much.”

                     

                    One friend, skeptical of book democracy, closely examines publishers – essentially asking, what are the reasons a book might be published other than its quality? He reports, “large, popular, mainstream trade presses produce the worst books. Academic publishers have rigorous peer review/high standards. Self-publishers and small/fringe publishers will print niche or controversial books that advance contrarian ideas/views, especially from the right. Mainstream trade presses are the books sourced by very demographically distinct New Yorkers for review in mainstream media to sell to masses.” His general thesis is that the size of an author’s platform to sell books is inversely correlated with the quality of the book.

                    Finally, older books may be better – so long as they’re timeless, not out of date. Literally hundreds of thousands of books are published every year. If a book is still being published or discussed decades (millenia?) after its original publication, it must have some sort of staying power that may be worth looking into. To return to the earliest example, consider the potential seconds of relevance of social media, the potential hours of relevance of articles, and the potential years of relevance of books. I have a strong bias against anything just published, but I will say reading English authors say, after World War II, is a lot easier and, if the book is reliant on data to prove its point, recency matters. 

                    I can’t say how well these metrics work for beyond non-fiction as I don’t read non-truth. You may have alternative metrics that work well for you, but that’s something you’ll have to evaluate yourself. Just remember: though there’s value in the process, evaluation is for context, not predestination. Your interests may change, but if you have a highly rated book, strongly recommended by an expert friend who read it many years ago, similar to a book you already love, written by an author who has spent her life devoted to this field that you want to know more about to improve your life, you should probably read that right away. 

                    And, ultimately, if you want to read a lot, just get started. Capture your interest while it’s still there! If you don’t have a specific project in mind at the moment, read the shortest book with the highest rating on your list and you can get some momentum. Both because of the immediate availability and the option to email myself highlights, that means reading on Kindle – but read on whatever platform works best for you. Highlight and take notes, empathizing with your future self’s attempt to remember the key points. 

                    If you don’t like a book, quit. Pick a number – 100 pages in, 10% in, 30 minutes in – and evaluate whether you want to continue. Higher discard means more books. I don’t do a great job of this – my own trouble is trying to figure out whether a book is simply something I disagree with, whereupon I’d like to at least know their best ideas, or whether it’s badly written. I mentioned the most profound secular idea I’ve come across is opportunity cost. For my dad, it’s sunk cost, and it’s worth applying here.

                    And, crucially, once you’ve finished a book, do two things. First, score the book and compare it to your anticipated score. Try to figure out how you got it right or wrong so you can be better for the future. Second, write a summary or review so you can organize your thoughts today and consult it in the future for when you forget all about it!

                    Thanks for reading! If you’ve enjoyed this article, share it with a friend: know anyone who has ever read a book? Anyone planning on reading a book? Anyone writing a book that should be read?

                    Also, feel free to sign up with the box below to receive my email. I read over 100 non-fiction books a year (history, business, self-management) and share a review (and terrible cartoons) every couple weeks with my friends. Really, it’s all about how to be a better American and how America can be better. Look forward to having you aboard.