Book Bits: 16 September 2023

The Missing Billionaires: A Guide to Better Financial Decisions
Victor Haghani and James White
Summary via publisher (Wiley)
Over the past century, if the wealthiest families had spent a reasonable fraction of their wealth, paid taxes, invested in the stock market, and passed their wealth down to the next generation, there would be tens of thousands of billionaire heirs to generations-old fortunes today. The puzzle of The Missing Billionaires is why you cannot find one such billionaire on any current rich list. There are a number of explanations, but this book is focused on one mistake which is of profound importance to all investors: poor risk decisions, both in investing and spending. Many of these families didn’t choose bad investments– they sized them incorrectly– and allowed their spending decisions to amplify this mistake.

Underground Empire: How America Weaponized the World Economy
Henry Farrell and Abraham Newman
Review via Los Angeles Review of Books
Letting private merchants chart the path to future spoils suits the world’s sovereigns just fine. Ledgers seem less threatening than scepters, which is what makes them such effective tools of empire. In Underground Empire: How America Weaponized the World Economy (2023), political scientists Henry Farrell and Abraham L. Newman’s novel account of our digital economy, merchants once more function as handmaidens to government power. The beaver pelt peddlers and colonial profiteers of yore are now early telecoms like MCI WorldCom, which laid the fiber-optic cables that the original internet ran on, and banks like J.P. Morgan & Co. and Citibank, which dreamed of a borderless global payments system.

Taming the Street: The Old Guard, the New Deal, and FDR’s Fight to Regulate American Capitalism
Diana B. Henriques
Review via The Financial Times
The US Securities and Exchange Commission is very much in the news. Chair Gary Gensler recently made waves with an aggressive regulatory agenda that seeks to put a wide range of investment firms, from cryptocurrency exchanges to private equity funds, under much tighter supervision.
The financial industry is fighting back, claiming the SEC has overstepped and exceeded its statutory authority in ways that will ultimately harm investors. That makes Taming the Street, a new book by Diana B Henriques about the founding years of America’s primary securities regulator, particularly timely.

Fear: An Alternative History of the World
Robert Peckham
Review via The Economist
Fear is a primal, necessary emotion. Mr Peckham calls it “a neurobiological process to keep us alive”. If our ancestors had not feared cliff-edges or sabre-toothed tigers, we might not be here today. The flipside is that, since humans are a communicative, imaginative species, fear can be conjured out of whispers. His book does not quite live up to its ambitious subtitle, but it illuminates the many ways in which fear has shaped human behaviour over the past 700 years, from which readers can draw lessons for the present.
The main one is: “Power depends on fear.” Mr Peckham argues that the turmoil of the Reformation and Counter-Reformation stemmed partly from the Catholic church’s loss of its “monopoly on fear” in western Europe.

Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall
Zeke Faux
Review via Fortune
Books about crypto tend to fall into one of two categories: rah-rah accounts of how blockchain can better humanity or sneering takedowns that pronounce the whole thing a scam. After a recent bubble marked by staggering swindles and the arrest of leading crypto figures, you can guess which genre is hitting the shelves right now.
The newest offering is Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall by Bloomberg journalist Zeke Faux. Released today by Penguin Random House, the book features crypto Ponzi-schemer extraordinaire Sam Bankman-Fried on the cover and takes the reader on a sometimes laugh-out-loud tour of the crypto industry’s most despicable practices and people. And God, there is no shortage of those.

Optimal Illusions: The False Promise of Optimization
Coco Krumme
Review via Publishers Weekly
“By embracing efficiency above all, we’ve crowded out what can’t be measured and optimized and allowed the metaphor of optimization to cannibalize other worldviews,” according to this muddled debut. Krumme, a mathematician and scientific consultant, aims to outline the shortcomings of the modern preoccupation with optimization but stumbles early in neglecting to define what she means by the term. This creates confusion later on when she traces the rise of optimization by lumping together thinly connected accounts of Isaac Newton’s efforts to break down natural forces into their constituent parts, mathematician Stanley Ulam’s innovations in computational methods while working on the Manhattan Project, and Marie Kondo’s gospel of decluttering.

Elon Musk
Walter Isaacson
Review via CNN
As Isaacson writes in the closing sentences of his 600-page tome, “Sometimes great innovators are risk-seeking man-children who resist potty training. They can be reckless, cringeworthy, sometimes even toxic. They can also be crazy. Crazy enough to think they can change the world.” Crazy, cruel, immature: these aren’t failings; they’re features of creative genius.
That is Isaacson’s thesis, anyway. But it relies on a narrow understanding of genius. Genius for Isaacson can be measured in patents and profits. Musk runs several companies and is the richest man in the world. His genius is a given. All the rest, no matter how harmful, must be understood as an essential ingredient of that genius.

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