Sunday, March 31, 2019

Books Read - Q1 2019

  • The Road (1/5) This was an unbelievably bad novel, and an inauspicious start to the year's reading, but there is one useful side effect. The site Goodreads has a repository of reader's ratings (out of five) and reviews. Positive reviews of books are generally not very useful. Most people read so few books that they have not developed any taste, plus they like to give themselves a pat on the back for the time they've invested. So, the book was "pretty good". And sometimes they are just rubes. The value of Goodreads is in the negative reviews. This brutal one-star review of The Road captures the problems with it. (That guy has given low reviews to a bunch of other overrated books.) So does this two-star review in the form of a parody. Bad writers are easy to parody - like this parody of Taleb, who officially jumped the shark this Christmas with his breakdown over IQ psychometrics. And here's someone who submitted The Road's two clunky opening sentences at a writer's workshop and got an unenthusiastic reception. Anyway, with fiction you really have to stick to classics that stand the test of time. On the fiction reading list for 2019, we have Jane Austen, HG Wells, RL Stevenson, Alexandre Dumas, Jack London, Kipling, and Borges. 
  • Norwegian Wood (4/5) "Trees that are of modest size and easy to handle can provide a surprising amount of energy in return for the amount of work involved... A birch 50 feet high with a diameter of size inches at chest level gives a volume of 0.12 cubic meters, which is equivalent to 150 pounds of normally dry wood. Burned in an oven that is 75% efficient, this tree will produce 225 kilowatt-hours." Key topics are splitting axes and efficient wood stoves. This is one way to think about the value of timberland owners like KEWL and PDER. Let's say that you can harvest 800 trees per acre and the energy is worth a penny per kwh. (It stands to reason that the energy from wood fuel is worth less, maybe an order of magnitude less, than current delivered to your outlet because there's so much less that can be done with it.) If those assumptions are true, the energy value of the timber stand is $1,800 per acre. The enterprise value of KEWL is $111 million and it owns 185k acres of timber in northern Michigan. That's $600 per acre. In 2018, KEWL entered into an option agreement with the state of Wisconsin to sell a conservation easement on 14,352 acres for $372 per acre. So $600 per acre is starting to seem really cheap. The PDER market cap is down to $116 million and it has an enterprise value of about $120 million. They own 165k acres of timber which means $728 for the timber and then over 300 million tons of coal reserves, 32 million mcfe of gas reserves, and a good $10-20 million of photovoltaic solar for free. If you subtract $15 million for the PV solar and ignore the value of the carbon in the ground, you're down to $636 per acre for the wood. From a timber perspective: the lowest price that random length lumber has traded in the past 20 years is $138 per 1,000 board feet, in February 2009. (Which brought it back down to the 1992 price.) Lumber traded for over $550 last summer. If you assume 5k board feet per acre, the lumber (harvested and sawn into 2x4s which obviously costs money) would be worth $690 at the 20 year low price.
  • God's Secret Agents: Queen Elizabeth's Forbidden Priests and the Hatching of the Gunpowder Plot (3/5) One person said, "if you really want something ruthless done right, call in 16th century Calvinists." The pope called Queen Elizabeth "the pretended Queen of England and the servant of crime" which is a great title. Protestantism in England led to intense conflict for two centuries. The British were brutally slaughtering their fellow countrymen while at the same time allowing north African Muslim pirates to abduct countless sailors and inhabitants of coastal towns. Henry 8th dismantled the Catholic Church in England during the 1530s, fewer than 20 years after the publication of Luther's theses in 1517 - remarkably quickly. It seems apparent that no English monarch during these centuries of religious strife actually believed in Christianity, but rather saw control of the state church as a fulcrum of power, and more importantly saw a Catholic church to which subjects owed a higher duty as an absolutely unacceptable competitor. As far back as 1392, during the reign of Richard II, an act of parliament called the Statute of Praemunire limited the powers of the papacy by making it illegal to appeal an English court case to the pope if the king objected, or for anyone to act in a way that recognized papal authority over the authority of the king.
  • The Great Depression: A Diary (3/5) A diary of an attorney in Youngstown, OH during the 1930s. What if it was the falling prices resulting from the great productivity increase at the turn of the century combined with an asset bubble related to fractional reserve banking that broke the economy? The deflation: "actual money in Youngstown can't be gotten." Response to crop price deflation (which made farm loans unrepayable) was to destroy crops even when people were hungry - a wealth destroying policy like cash for clunkers. People who survived this were very wary of stocks because investments in even the best companies (that survived) fell so much. The post-depression IRR of stocks is based on a best case scenario of moving from extreme caution to extreme in-caution. Prior to 1932 business leaders would predict definite times that things would improve but by that year duration was perceived as indefinite. "Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds were not far-sighted or patient enough to wait almost three years to re-invest." Two Japanese premiers were assassinated during 1932. His bar association met with the judges in June 1932 "to devise means to keep the courts open in view of failure of tax collections." One thing I’d never heard of before is a secondary market for bank savings account deposits ("passbooks") selling for 60 cents on the dollar. In 1932, "almost all personal injury cases are worthless because no insurance is carried and defendants are judgment proof." "The farmers are the best organized and most militant group in the country." Also, after the inauguration of FDR: "the U.S. takes action against gold hoarders by demanding from each Federal Reserve Bank the names of persons who withdrew gold after Feb 1." He mentioned that in 1936 there was 1 lawyer in Youngstown for every 600 people. Note that 1932 was the nominal bottom but Dow/gold didn't bottom until 1933, and didn't recover to the 1929 high until 1959! I still think that Roosevelt (the low IQ, underclass man's candidate) made things vastly worse. The Trump crash will lead to a similar socialist disaster.
  • On Trails (3/5) "A path is a way of making sense of the world... The function of a path is to reduce this teeming chaos into an intelligible line. The ancient prophets and sages - most of whom lived in an era when footpaths provided the primary mode of transport - understood this fact intimately, which is why the foundational texts of nearly every major religion invoke the metaphor of the path." "A skillful herder with a willing flock can radically transform the ground they walk on... over the course of forty years, he and his sheep converted a tract of land covered in bracken, bush, and flax into a bucolic, grassy sheep ranch." "It was possible, I gathered, to spend one's life doing little else but walking. Life on the trail being exceedingly cheap, a handful of full-time hikers have managed to live for years or even decades off meager savings and seasonal work. These wanderers reminded me of mendicant monks, slipping free of the gravitational pull of society to live plainly, outdoors." At REI, I saw this cool map of the Pacific Crest Trail and a set of three maps for the Triple Crown of Hiking. It would be cool to hike those, although there are some downsides to consider. Being gone (and semi-inaccessible) for five months is not compatible with business or family concerns. Also, very long distance hiking does not seem to be physical fitness maximizing. You can lift weights, build muscle, and do occasional trail runs of the Grand Canyon. But the through-hikers report that they lose a lot of weight (including some muscle) on these long hikes.
  • Panic (5/5) Reread this - I previously reviewed back in 2015. It's now out of print and only available used. Back then, I said: "If you synthesize the best parts of Falkenstein and Redleaf, you predict that the next crisis is going to come in the investment that is currently perceived as riskless enough for highly leveraged institutions like banks to buy. In the 2000s that was mortgages, at other times it has been other investments like railroads. Right now, government bonds are accorded zero risk in calculating bank capital ratios. The idea that government bonds are riskless when governments are planning to flood the market and when the expenditures are consumed (building no collateral) may prove to be the latest delusion." Some highlights this time: "Modern financial theory amounts to the belief that hard work, superior insight, and good judgment - the keys to success in the real economy - are ineffectual for the investor in public financial markets. It tells the investor: hard work and clear thinking doesn't help here..." We are active investors, so we think in terms of sleuthing. Speaking of good judgment, he says that men who make good decisions tend to make them consistently. "Careful, diligent, and well-prepared men tend to have 'good luck'..." This fits with our high agency mindset from last year. Also, something which is relevant to indexation and the passive bubble: "Public securities markets surrender all the characteristics of strong ownership, including depth of knowledge and power to execute judgments. In exchange, public markets gain liquidity, breadth of participation, and low transaction costs."
  • Cracking the Aging Code: The New Science of Growing Old - And What It Means for Staying Young (3/5) Mitteldorf believes in group selection, and believes that aging is a group-selected adaptation that serves to "stabilize ecosystems, to level the death rate in good times and hard times." Aging is a puzzle: "despite the fact that aging is a disaster for the individual, evolution seems to have guarded and preserved the genes for aging as though they were the crown jewels. This is a dead giveaway that aging must have an essential biological function." He considers and rejects three hypotheses for aging: mutation accumulation, antagonistic pleiotropy, and disposable soma. One big problem with the MA theory for aging is that you would expect less-related organisms to age (at the genetic level) increasingly differently. Yet, "the homology of aging genes across such different species can only mean that aging has been around a long, long time, has been subject to natural selection, and has not been weeded out." The problem with AP theory is that in experiments (e.g. fruit flies), there is a positive correlation between longevity and fertility, not a negative correlation! And the biggest problem with DS theory is that caloric restriction universally results in longer lived organisms. Mitteldorf sees evidence for hormesis in these various research efforts: "If the body is able to prolong life under stress, despite the burden of the stress, then this can only mean that when the body is not stressed, it is holding something in reserve and not doing its best to prolong life. In this sense, the body is purposefully withholding the repair and maintenance that would help it to live longer." Also: "[Hormesis] is incompatible with the idea that the body is programmed to live as long as possible... It seems that aging is leveling out the death rate, killing more when disease and starvation are killing less." The problem with his ultimate theory - that aging has evolved via group selection - is that it is tough to make the math on group selection work, and most evolutionary biologists reject it. See Cochran's withering dismissals when it comes up on his blog, or his occasional posts: 1,2. One other observation from Mitteldorf: "Most mappings [between genotype and phenotype] could never evolve - not in a billion years, not in a billion times a billion years. It seems the genotype-phenotype map we have is optimized for efficiency of evolution [via hox genes]. This demonstrates that evolution itself is a highly evolved process. Not only has natural selection evolved living beings that are robust, resourceful, and efficient reproducers; natural selection has also created a superbly efficient system for evolving." He concludes the book with ideas for hormetic and calorie restriction mimetic anti-aging interventions. The usual stuff - aspirin, metformin. The most novel idea here is that these hormetic interventions may be tricking the body into living longer.
  • The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility" (Incerto) (3/5) We have previously reviewed Taleb's other works: Fooled by Randomness (4/5) and Antifragile (2/5) and The Bed of Procrustes: Philosophical and Practical Aphorisms (3/5). Some interesting observations in TBS: "Venture capitalists do better than entrepreneurs, publishers do better than writers, dealers do better than artists, and science does better than scientists." Another good thought: "Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think. [...] Many people do not realize that they are getting a lucky break in life when they get it. [...] Collect as many free nonlottery tickets (those with open-ended payoffs) as you can, and, once they start paying off, do not discard them. Work hard, not in grunt work, but in chasing such opportunities and maximizing exposure to them. This makes living in big cities invaluable because you increase the odds of serendipitous encounters..." For a variety of reasons I have shifted away from Taleb and towards Falkenstein (with his devastating critiques of Taleb's bloviation). Falky's book is a 5/5 and nothing by Taleb comes close to that. Most readers have probably seen Taleb's freak-out about IQ (where he's utterly wrong) in early 2019, but if not see some summaries [1,2,3,4]. Taleb's level of humility relative to accomplishment and actual novel ideas discovered is an unfortunate outlier. The reason we took a look at TBS and FBR within the past year is that they go from the review desk into the trash can. Now we are left with zero Taleb works on the premises.
  • The Count of Monte Cristo (4/5) Funny editor's note in this edition: "Nearly everyone has attempted to read it, but few have ever penetrated the labyrinth of the second part! Dumas was paid for quantity and nobly he responded." The famous Dantes observation about the three classes of fortunes: "I make three assortments in fortunes — first-rate, second-rate, and third-rate fortunes. I call those first-rate which are composed of treasures one possesses under one’s hand, such as mines, lands, and funded property, in such states as France, Austria, and England, provided these treasures and property form a total of about a hundred millions; I call those second-rate fortunes, gained by manufacturing enterprises, joint-stock companies, viceroyalties, and principalities, not drawing more than 1,500,000 francs, the whole forming a capital of about fifty millions; finally, I call those third-rate fortunes, composed of a fluctuating capital, dependent upon the will of others, or upon chances which a bankruptcy involves or a false telegraph shakes, such as banks, speculations of the day—in fact, all operations under the influence of greater or less mischances, the whole bringing in a real or fictitious capital of about fifteen millions. I think this is about your position, is it not? [...I]f you indulged in such reflections, you would never risk your principal, which is to the speculator what the skin is to civilised man. We have our clothes, some more splendid than others,— this is our credit; but when a man dies he has only his skin; in the same way, on retiring from business, you have nothing but your real principal of about five or six millions, at the most; for third-rate fortunes are never more than the fourth of what they appear to be, like the locomotive on a railway, the size of which is magnified by the smoke and steam surrounding it."
  • The Tangled Tree: A Radical New History of Life (3/5) Darwin saw three key principles driving evolution: "grandchildren, like, grandfathers" (inheritance), "tendency to small change... especially with physical change" (variation), and "great fertility in proportion to support of parents" (overpopulation). Darwin's evolution ideas are yet another example of simultaneous invention - there is enough overlap with Alfred Russel Wallace that some people feel the idea was stolen. The "Tree of Life," of the descent from the last universal common ancestor, is "tangled," and this book describes the scientific history of that discovery. Like most (all?) scientific discoveries, it took the invention of new measurement tools. In this case, molecular phylogenetic research using primitive sequencing of DNA and RNA segments resulted in big surprises that tangled the tree. For example, eukaryotic cells have mitochondria that are captive prokaryotes. Similarly, chloroplasts are captured cyanobacteria. And horizontal gene transfer makes it even more tangled: "If there had been continued and extensive gene transfer, there would be a complex network with many ancestors, instead of a tree of life with sharply delineated lineages leading back to a LUCA." Takeaway: "the logical conclusion was that genes have their individual lineages of descent, not necessarily matching the lineage of the organism in which they are presently found." "Each gene has its own history."
  • The 50,000 Watt Broadcast Barnum: A Book Noir of Stanley E. Hubbard, his life and times (3/5) We need more books about how rich families got started. This one is about the founder of St Paul's Hubbard Broadcasting, Stanley E Hubbard, whose son Stanley S Hubbard is now on the Forbes billionaire list. The early days of radio overlap with the Great Depression and the crime boom in the Midwest. St Paul was a haven for Chicago criminals who needed to get out of town to escape the heat. This was when corrupt socialist Floyd Olson was governor of Minnesota. This author says that underworld figures fed information (indirectly) about competitors they wanted to get rid of to Hubbard, who would broadcast the details. There's nothing to say that Hubbard was funded by or involved with organized crime, just that he used his broadcasting power to get favors and information, and information to get favors and power. "Cross Hubbard and you'll get 50,000 watts of unpleasant news about you shot up your ass on the [10:00 news] and see how you like that. On the other hand, if you're willing to do a few favors he wants you'll receive 50,000 watts of favorable comment..." Also regarding St Paul: "[It] will never be a 'night' town. The guys that own the town want it that way. They want it nice and quiet and peaceful. Get to bed early, get up early, and get to the job and make money. You don't want noise disturbing your peace like downtown Minneapolis where on Hennepin Avenue every night there is a representative of every misfit, goofball, transvestite, doper, kook making all kinds of noise and levitating amid the glitzy, gooky crowd of disconnected or unconnected insanity. Like a big outdoor Zoo."
  • The Goal: A Process of Ongoing Improvement (3/5) Wiki: "The protagonist is a manager in charge of a troubled manufacturing operation. At any point in time, one particular constraint (such as inadequate capacity at a machine tool) limits total system throughput, and when the constraint is resolved, another constraint becomes the critical one. The plot of Goldratt's stories revolve around identifying the current limiting constraint and raising it, which is followed by finding out which is the next limiting constraint. Another common theme is that the system being analyzed has excess capacity at a number of non-critical points, which, contrary to conventional wisdom, is absolutely essential to ensure constant operation of the constrained resource." Also: "Alex and his team struggle to generalize a process that Alex can use when he begins his new job based what the whole team has learned as they turned the plant around. The process they find is: Find the bottleneck in the flow of work. Decide how to 'exploit' the bottleneck (make sure you maximize the flow through the bottleneck). Subordinate every other step to the bottleneck (only do the work the bottleneck can accommodate). Elevate the bottleneck (increase the capacity of the bottleneck). If the bottleneck has been broken repeat the process (a bottleneck is broken when the step has excess capacity). As chapter 36 concludes the team reflects that the word bottleneck should be replaced with the slightly broader concept of constraint."
  • Founders at Work (4/5) Interviews with 32 startup founders (mostly 1990s or very early 2000s) by Jessica Livingston, who started Y Combinator with Paul Graham. This interview project was obviously part of their process of training their startup founder identification algorithm. One of the interviewees is Phil Greenspun who often appears in our links: "Each class of company has one class of stars... If it's a good hospital, the doctors will be good, and it's very easy for them to hire good doctors. But it's hard for them to hire any other kind of person." Also: "People don't like to write. It's hard. The people who were really good software engineers were usually great writers; they had tremendous ability to organize their thoughts and communicate." Another interview was with the founder of Adobe who said something interesting - before desktop publishing, when people saw printed material that was printed in something besides Courier (the typewriter typeface) they thought it was old news because it would've had to be typeset and printed. Could be worth reading the other "X at Work" series: Venture Capitalists at Work and Coders at Work.
  • Structures: Or Why Things Don't Fall Down (4/5) "A society which was more creative and self-confident would not feel quite so strong a nostalgia for its great-grandfathers' buildings and household goods." Stress = load / area; how much force is pulling something apart. Strain is how far atoms in a solid are being pulled apart (increase in length/original length). Plotting these against each other for a given material results in stress-strain diagram. Hookean materials have linear relationship, but the slopes vary for different materials. The slope is the Young's modulus of elasticity; the stress that would double the length of the material (in theory). Wood has 30x higher strength along the grain than across the grain. In 19th C, metal structural collapses were blamed on "defective material," but these variances should not have been sufficient to overwhelm the factor of safety. Rather, at some unknown place in the structure the real stress must have been much higher than the calculated stress ("factor of ignorance"). Stress concentrations can come from adding or removing material: "partial strength produces general weakness." Work of fracture and tensile strength are inversely related, so almost all steel made is "mild". The key to improving steam engines was developing pipes and boilers (pressure vessels) that could handle higher pressures, so that the engines could operate at higher pressures and work more efficiently. Compression vs tension structures: "The whole business of making tension structures is set about with difficulties, complications, and treacherous traps for the unwary. This is especially the case when we want to make a structure from more than one piece of material, so that we are faced with the problem of preventing it from coming apart at the joints. For these reasons, our ancestors generally avoided tension structures as far as they could and tried to use structures where everything was in compression." Behavior of masonry structures could be predicted using scale models despite square-cube problem because they don't fail due to the materials breaking in compression. Arches are compression structures; arch bridges last a very long time. With modern arch bridges, using a suspended roadway (e.g.) means there need be no limit to rise of arch. English railways ran straight and level - "lavish use of cuttings and embankments" thanks to being rich in labor and capital. American railways used lots of bridges - timber trestle. Relative weights of tension and compression structures. In something like a tent or a sailing ship, "it pays to collect the compression loads into a small number of masts or poles, contrived to be as short as possible. The tension loads are better diffused into as many strings and membranes as may be." Overall: the topic of structures could be thought of as the economics of holding up weight. "A structure is a device which exists in order to delay some event which is energetically favored." Also, thinking about how to build stuff, and why stuff is built the way it is, continues the high agency and dimensional analysis themes from last year. I'm paying more attention to the design of bridges that I see now (suspension, arch, etc.).
  • On Growth and Form (3/5). Abridged version. This was mentioned in previous book (Structures), and I had it on my unread shelf anyway. About how a budget and a purpose interact to produce a form or a confined set of possibilities. This is dimensional analysis before it was cool. "It often happens that of the forces in action in a system some vary as one power and some as another, of the masses, distances, or other magnitudes involved... the strength of an iron girder obviously varies with the cross-section of its members, and each cross-section varies as the square of a linear dimension; but the weight of the whole structure varies as the cube of its linear dimensions. It follows at once that, if we build two bridges geometrically similar, the larger is the weaker of the two, and is so in the ratio of their linear dimensions."
  • Village in the Vaucluse (4/5) Twitter classicist Wrath of Gnon mentioned this book by an American French professor (Wylie) who moved to rural France (Roussillon) for a year in 1950: "the lifestyle of his family changed after they moved from an American home with central heating to a farm house in Provence: it brought his family together". "Accustomed to our American house where a movement of the finger regulates the heat of the whole house... our family life, which at home was distributed throughout the entire house and which we tried to distribute throughout the Roussillon house, withdrew from all other rooms and was concentrated in the salle.""The fire of oak logs which burned day and night for siz months became the focal point of our family life."The homes were very rustic, many without plumbing or modern kitchens, far behind American houses of the time. "The absence of conveniences in the houses of some of the wealthiest people indicates that money is not the only factor involved... The teachers and the Doctor, who are the principal propaganda agents for modern hygiene, complain that whenever a family gets enough money to improve its sanitary facilities the money is invested in some other way that will increase the family's capital without drawing attention to its prosperity. If prosperity is publicized, it means a rise in taxes... For most families investments must increase income." When the industrial revolution hit France in the late 19th century, rural inhabitants fled to the cities: "by 1886, 79 of 349 houses stood empty." Real estate prices would have been crushed. (Previously.) Wylie also studied the history of the town. The generation of men born between 1785 and 1795 was "bled white" by Napoleon. More losses in WWI and WWII. He said that the demographic pyramid of 1951, compared with 1851, was "only a ragged ghost." Some economics highlights: food was expensive, the largest part of people's budgets, even though they were doing things like raising vegetables, keeping chickens, or making their own wine. Rent was the least expensive! Fuel and electricity were quite expensive. The villagers thought it was extravagant for Wylie to try to keep his house at 65 degrees during the winter. An interesting observation about farming: "One could never establish from a farmer's records exactly what his real income is... to discover his real income Pascal would have to be shadowed for three hundred sixty-five days of the year so that each of his many little transactions could be recorded..." When civilization had less division of labor, less specialization, and more self-help, people's economic concerns were less legible to the state and harder to tax. A French observation: "No one can become sérieux until he has tasted excess to the point of preferring moderation."
n = 16


Phaedrus said...

Thanks for this list. I always enjoy your book reviews.

One comment...I don’t think most people doing thru-hikes are looking to maximize fitness, so I don’t think that’s really a downside. I do recall reading one book where a guy mentioned running a 100 mile race immediately after completing the AT. He felt the hiking had given him a good enough base. I’d like to do both (hike & race) someday. I enjoyed the On Trails book, fwiw.

CP said...

Glad you like them. What are you reading now? Post your current stack!

Mike said...

I always enjoy these. One minor suggestion: post the Goodreads links instead of Amazon. There is a direct Amazon link right within the Goodreads landing page.

My recently read stack:
The Army at Dawn: The War in Africa 1942-1943 - 5/5
The Age of Faith (Story of Civilization Volume IV) - 4/5
The Myth of Capitalism - 3/5
Factfullness - 4/5

CP said...

What was so great about The Army at Dawn: The War in Africa??

CP said...

Are you anti-AMZN or do you think the Goodreads reviews are better?

Mike said...

Its not about the reviews on either. I buy from Kindle so not anti-Amazon, its just easier to organize a to read pile via Goodreads and there is an Amazon link on each Goodreads page for those who keep a wish list on Amazon (not vice versa). Amazon owns both either way.

I'm afraid I don't have the talent for writing reviews that you do:
Army at Dawn: Its really entertaining. I liked the background on logistics, planning, graft, etc. economic history that you don't normally get in military histories. It also does a nice job with people profiles from guys who are well profiled (Churchill, Eisenhower, Bradley) down to lesser figures (Roosevelt Jr, Alexander, Clark, random junior officers). Africa was a very flawed campaign with a lot of mistakes and it is interesting to read about all that went so wrong. All three of the trilogy are worth reading but I thought the first volume was the best.