Books - Q3 2026

• Lunch with the FT: A Second Helping (3/5) Followup to the first edition, which we read last quarter. This edition has the best lunch so far, a decade ago with Nigel Farage. It is a reminder that the FT has two types of Lunch interviews: Great men who they think are “scoundrels,” and scoundrels who they think are great men. One Lunch, with Isabelle Huppert, was at Arpège in Paris, a Michelin 3 star. That's rare for the Lunches. (Chef Alain Passard says, "I want to elevate the humble vegetable to a grand cru.") In the appendix is a profound letter to the editor: "I am sure that the poet Homer would have appreciated an invitation to Lunch with the FT. As he showed in the Iliad and the Odyssey, food, wine, laughter, conversation and friendship were essential for a meaningful life. Somewhere in the Elysian Fields, this wondrous poet must be feeling somewhat envious of Murad Ahmed’s lunch with Demis Hassabis and Gillian Tett’s with Ginni Rometty. Artificial intelligence was the central topic of conversation at both meals. This is not a new idea. As Homer wrote of Hephaestus/Vulcan: 'There were golden handmaids also who worked for him, and were like real young women, with sense and reason, voice also and strength, and all the learning of the immortals.' I hope there are copies of Homer in the offices of DeepMind and IBM." Also see, Lunch with the FT, with the FT. You realize reading the Lunches what a strong connection the British still feel to Africa. Lots of Lunches with Nigerians like Aliko Dangote. This year's Lunches have included Dario Amodei, Erik Prince, and Doug Wilson.
• The Powerful and the Damned: Private Diaries in Turbulent Times (3/5) Memoir by the previous editor of the Financial Times, Lionel Barber (b 1955), who compiled the two "Lunch with the FT" books that we read earlier. Confirms that he is a globalist midwit. Sad to have a financial newspaper with really no theory of economics, let alone a sound theory. He wonders why the FT missed the 2008 crisis. Were they going to offend their advertisers and story contacts? (The Guardian describes it: "tension between the need to suck up to the very rich and the imperative to expose their depredations.") Great case study of an "elite" member who is supposed to be paying attention, but exhausts himself by flying all over the world, and never reads anything substantive. (He was invited to Davos, Sun Valley, and state dinners in the UK and US.) Barber quotes a Daily Mail description of himself as a “weapons-grade social climber and name-dropper extraordinaire” and that is absolutely apt. The book makes it very clear that in Europe, nationalism is low status and globalism is high status. Barber brags, "my children were educated overseas." The Brexit discussions support the thesis of The Populist Delusion, that populism will never work because the marginal are too incapable, by definition.
• Now It Can Be Told: The Story Of The Manhattan Project (4/5) Leslie Groves (1896-1970) was a West Point graduate who built the Pentagon office building and then ran the Manhattan Project from 1942-1947, when it was turned over to the Atomic Energy Commission. The current moment with AI/LLM model development is our era's Manhattan Project: it is an arms race with China. I think that the government would do anything to win this arms race, so it is worth looking at what they did to win the original one. Example: "We had always made a determined effort to withhold all information on the atomic bomb project from everyone, including members of the Executive Department, military personnel and members of Congress, except those who definitely needed it and who were authorized to receive it. As a result our methods of obtaining funds had always been rather unorthodox." "[A]rranging for me to be paid by the United States $37,500,000, a sum sufficient to cover the expected obligations. I then deposited this money in a personal account at the U.S. Treasury. From this I made withdrawals as necessary." "It was further agreed that no information would be given to the press on the removal of the silver, and that the Treasury would continue to carry it on their daily balance sheets." Wouldn't surprise us if the Fed buys the hyperscalers' debt if they have any difficulty financing their data centers. Something not mentioned in the book is that Groves had a son (Richard) who was at West Point during WWII and the bomb saved him from going to Japan. Richard (1923-2011) had four children. Groves' other child was a daughter (Gwen) who had three children. So Groves had 7 grandchildren which is respectable but maybe a little light for someone born in 1896. He was a competitive military career man. His son hardly ever saw him.
• The Takeover Game (3/5) Written by New Yorker contributor and financial journalist John Brooks (1920-1993) and published in 1987. He wrote other books including Once in Golconda, about the 1929 crash, and The Go-Go Years, about the 1960s. This one is about takeovers and buyouts, and while there was a crash in October 1987, he was wrong to try to foment a moral panic about them. With 40 years of hindsight, nothing in here is as imperative as Brooks was trying to make it seem. The 1980s takeovers - at big premia to market prices - were a sign that stocks were cheap. What is surprising is that corporate managers were willing to let their companies get taken over, and lose their own jobs, rather than return capital to shareholders! A company is a lot less inviting as a takeover target if it does a leveraged recapitalization to buy back stock or pay a dividend. How about that instead of the dubious takeover defenses, like the "poison pill"?  Moran v. Household International, Inc. (1985) is the Delaware Supreme Court case that upheld a poison pill. A board of directors may adopt a shareholder rights plan (a "poison pill") under the business judgment rule, provided it meets initial standards of reasonableness. Note that Martin Lipton is still around, age 95, and so is Herbert Wachtell, age 94. This was written before Barbarians at the Gate, about the RJR Nabisco MBO/LBO, which is the better book about the time period. Still, there are some good bits. "The old investment-banking prejudice against securities trading, as opposed to underwriting, was not all arbitrary snobbery. It is true enough that, in general, underwriters were and are more gently bred, well educated, gentlemanly of demeanor, and soft of speech, traders more brash, overly competitive, and loud. But the prejudice has a firm basis in social utility." Another observation is that the antitrust movement in the earlier 20th century caused the conglomerate mess of the middle part, because the more logical and efficient horizontal and vertical mergers were essentially banned. (Until Reagan dismantled antitrust enforcement.) George Stigler used the terms "merging for monopoly" and "merging for oligopoly" to contrast the structural drivers and goals of the first two great U.S. corporate merger waves. The first wave sought direct dominant control, while the second wave aimed for shared industry leadership under stricter antitrust laws. Some other interesting parts were about the Martin Marietta / Bendix and St Regis Paper Company battles and transactions. (He is a little lazy in not reporting details like valuation and company performance, which are now extremely difficult to figure out.)
• Temples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Business (3/5) This is an anti-gambling polemic written at the beginning of an upward inflection in gambling. Casinos seem positively quaint now that we have smartphone sports betting, cryptocurrencies, and zero day options. It is distasteful but seems like a durable trend because in a cornucopian world, status is one of the things that is really scarce, and a certain proportion of people are psychologically wired to risk it all to try to be on top. Quite a bit of the book is about Donald Trump's casino investments in Atlantic City. When Trump was opening the Taj Mahal casino, a sell side analyst said that "it would break every record in the book. And that strong business would continue during May, June and July, but when the cold winds of October came, it wasn't going to make it." Trump threatened to sue Janney Montgomery Scott and demanded an apology. But when the cold winds of October came, the casino missed its first debt payment.
• Empire of Pain: The Secret History of the Sackler Dynasty (4/5) The Sackler family fought an opium war against the United States - and won! That's how weak the state was twenty years ago, so we shouldn't be surprised that it is now losing a war to Iran. They were so arrogant and careless that they did lose the company (Purdue) and had to pay billions of dollars out of pocket (in installments), but the family members were never charged with crimes and had enough left over that they still have significant family offices. The founder of the family, Arthur Sackler (1913-1987), basically invented pharmaceutical advertising and was an early and aggressive practitioner of direct sales to physicians using reps. He took over a medical advertising agency (William Douglas McAdams), he organized his brothers' purchase of a pharmaceutical manufacturer (Purdue), and he also became a publisher and started a weekly medical newspaper in 1960, the Medical Tribune. He was also a silent owner of the other competing medical ad agency (L. W. Frolich) and other medical publications. The family was very secretive about what they owned, but at the same time they liked having their name slathered all over art museums and educational institutions. They were very frank about how philanthropy is different than charity - it was an investment in status and power. (And buying protection against criticism.) Of course, the publications shilled the products that his pharma company and ad agency clients were selling. The family was very good at regulatory capture. Purdue hired the FDA reviewer who approved OxyContin right after he "retired." Arthur Sackler was married three times, unceremoniously abandoning his first two wives when he spotted something better. His younger brother Mortimer was married three times and had children with all three. The other brother Raymond only had one wife, but his son Richard (b 1945) is the main villain in the story. Richard is the boomer who took over from his father and got the family into opiates. Highlights: Arthur's daughter asking him to play with her. "I'm going to wait until you're an adult. Then I'll have a conversation with you." "[T]he commercial life span of a branded drug is the short interval between when you start marketing it and the point when you lose patent exclusivity. Roche and Arthur didn't need to fight off regulation forever; they just needed to hold it off until the patents had run out." "The Sackler empire is a completely integrated operation. They could develop a drug, have it clinically tested, secure favorable reports from the doctors and hospitals with which they had connections, devise an advertising campaign in their agency, publish the clinical articles and the advertisements in their own medical journals, and use their public relations muscle to place articles in newspaper and magazines." The Republican presidential administrations - Reagan, George W. Bush, and Trump - were particularly malleable when Sacklers needed forbearance. Also, the Republican state attorneys general were more interested in quickly settling the Purdue lawsuits. There were also Republicans like Rudolph Giuliani who took money to intervene for Purdue at key moments and keep the racket going. "A doctor who wrote a lot of painkiller prescriptions was a priceless commodity. Like casino employees talking about an especially profligate gambler, the sales reps referred to these doctors as 'whales.'" Another Sackler family strategy was to fund advocacy groups for pain patients. "On the very day that the patent for the original formulation [of OxyContin] was set to expire, the FDA, ever obliging, declared that the benefits of the old version of OxyContin 'no longer outweigh' the risks," which meant that no one could produce a generic version! "The Sacklers' impulse to slap their name on any bequest, no matter how large or small, might have found its surreal culmination at the Tate Modern... in which a silver plaque informs visitors that they happen to be riding on the Sackler Escalator." "One unadvertised hazard in the life of a plutocrat is that the people around you can be prone to yes-man sycophancy. In theory, you should be able to avail yourself of state-of-the-art counsel. But instead, you often get lousy advice, because your courtiers are careful to tell you only what they think you want to hear." 
• The Puzzle Palace: Inside the National Security Agency, America's Most Secret Intelligence Organization (3/5) Published in 1982, this is seriously out of date. One interesting thing, though, is that even back then the NSA spoke of computers in terms of acres. The agency was established in 1952 by a secretive presidential directive - not by legislation! They've had continual problems with employees defecting to foreign countries. Intelligence agencies are really in the business of maintaining state power domestically and not in competition with foreign intelligence agencies, who are their friends and colleagues, regardless of whether the foreign countries are friends or not. (Remember our observation about Tinker, Tailor, Soldier, Spy: the real enemy is within.)
• Prediction Machines, Updated and Expanded: The Simple Economics of Artificial Intelligence (2/5) Thesis is that what AIs/LLMs do is predict, and they are going to decrease the cost of prediction, which increases the value of anything that complements prediction. Highlights: "The rise of the internet was a drop in the cost of distribution, communication, and search." "From an economist’s perspective, Google made search cheap. When search became cheap, companies that made money selling search through other means (e.g., the Yellow Pages, travel agents, classifieds) found themselves in a competitive crisis. At the same time, companies that relied on people finding them (for example, self-publishing authors, sellers of obscure collectibles, homegrown moviemakers) prospered." "A pioneer of this field, Frederick Jelinek (1932-2010) remarked, 'Every time I fire a linguist, the performance of the speech recognizer goes up.'" "In 1993, Michael Hammer and James Champy, in their book Reengineering the Corporation, argued that to use the new general-purpose technology—computers—businesses needed to step back from their processes and outline the objective they wanted to achieve." "Like classical computing, AI is a general-purpose technology. It has the potential to affect every decision because prediction is a key input to decision-making."
• Unruly Americans and the Origins of the Constitution (3/5) Similar perspective to The Framers’ Coup by Michael J. Klarman (see 2020 notes). The Constitution was a conservative counter-revolution to protect creditors against irresponsible populist economic measures enacted by a majority of state legislatures in the mid-1780s. The irresponsible economic measures were a response to a post-Revolutionary economic depression: "per capita gross national product plummeted nearly 50 percent in the fifteen years after Americans declared their independence." Charles Beard's economic interpretation of the founding was that the supporters of ratification who were creditors "determined to suppress state debtor relief laws and inflationary monetary schemes, as well as speculators in government securities who stood to make a fortune from the creation of a powerful national government possessed of sufficient taxing power to pay off its debt at face value. Antifederalists, according to Beard, were mostly debtor farmers." What is most striking is that the post-revolutionary rich were absolutely determined to protect their wealth from a currency devaluation, but it was not long at all before the elite were generating schemes for currency devaluation that they could control. As usual with a historian, the book is weak on data and prices. It seems like the big problem was a deflationary recession in the wake of independence, and as usual the debt contracts did not account for this, leading to a conflict between creditors on one side and taxpayers and debtors on the other. (A good political lesson is that both sides were perpetually unhappy, the creditors always thinking that state legislatures were too populist and the debtors thinking they weren't populist enough, until the constitution settled the issue.) The surprising thing about the 1787 constitution is that the creditors won, decisively! The rich really liked the Article 1 Section 10 Clause 1 prohibition on state laws "impairing the Obligation of Contracts," which really meant any type of debtor relief. Something we never knew was that Abigail Adams was buying states' war debt for 15 cents on the dollar. One big thing has changed since the 1780s: then the poor wanted inflation and the rich wanted deflation (because they were net creditors). Now, the rich want inflation. ("The optimal capital structure in America is have just enough liquidity to survive until the bailouts.") In 1769, George Washington supported the idea of a boycott of British goods: "The extravagant & expensive man has the same good plea to retrench his Expenses. He is thereby furnished with a pretext to live within bounds, and embraces it." Which reminds us of our interpretation of 20th Century threadbare WASP frugality as really a mutual sumptuariness limitation treaty as a response to confiscatory income and estate taxes, and inflation.
• Departures and Arrivals (3/5) Collection of travel essays by Eric Newby (1919-2006, previously). The first half were really good, especially the ones about his childhood in England, which remind me of Paul Johnson (who was born nine years later). Newby spent a lot his post-war life traveling in exotic, far-flung places like India, Afghanistan, South America. I wonder whether he thought that England in mid-20th century was "boring"? If so, he did not know how good he had it. That England is gone, never to return, and now it looks like all the "global south" countries he was busy exploring. There would be no place in the world that you could travel to today that would be like early 20th century England. Eric and Wanda Newby had two children and two grandchildren. (Eric was an only child but Wanda was one of 11!) Eric seemed to define himself as a "traveler" and I think that preoccupation is a low-TFR trait.
• Something Wholesale (4/5) Autobiographical Eric Newby, this one about his post-war career as a traveling salesman at his father's garment firm ("the rag trade"). Newby's father was unusually old (45) when he was born, so you get a great depiction of what an Englishman born in 1874 was like. His father loved to row a skiff on the Thames, which must have looked something like this. The firm couldn't keep up with changing fashions in the 1950s and so dissolved. His father's half century owning an independent business did not seem to leave much of a surplus for one child to inherit. This is what ultimately pushed Newby into writing, and into far-flung adventures so that he would have something to write about.
• The Unanchored Central Banker: Demography, Fiscal Instability, and an Erosion of the Central Bank's Inflation-Fighting Ability (3/5) This is a sequel to The Great Demographic Reversal (review), by economists Charles Goodhart and Manon Pradhan. The thesis is that central banks in advanced economies won't be able to fight the inflation that is a consequence of societies aging. Too much discussion of China, which is not a factor in the key question, the provision of health care to older generations in the U.S. Some highlights: "Basel regulations tended to incentivise banks to hold public sector debt, for example, by treating public sector bonds as risk-free and ignoring interest rate risk, relative to credit risk. This is financial repression, plain and simple, and it has encouraged banks to hold more public sector bonds than they would have done under a more even handed system." They come up with the idea of taxing land, because it is an immobile factor of production. (Georgist!) Most interesting thing was a pointer to John H. Cochrane's work on the fiscal theory of the price level. Theory: "the price level adjusts so that the real value of government debt (including money) equals the present value of the primary fiscal surpluses that will repay the debt." Cochrane just published a new paper in August: Inflation and Debt. (His theory is that debts and deficits per se are not inflationary. They are inflationary when they are not credibly backed by future repayment. Higher rates and fiscal tightening can reduce inflation, but higher rates + unchanged fiscal policy need not reduce inflation and can ultimately increase it. Ultimately, the U.S. will need to either increase the present value of future primary surpluses—through growth, spending restraint, or revenue—or reduce the real value of the claims against those surpluses, through inflation or default.) This Goodhart and Pradhan book is pretty slapped together, Cochrane's paper is more interesting.
• A Traveller’s Life: A Witty and Inspirational Memoir of a Lifetime Spent Exploring the Globe (3/5) Something emerges from our Eric Newby reading program, which is that travel is boring. His writing is best when he is writing about his life in England, or during WWII, or sailing on the clipper ship to Australia. The travelogue writing is not as good. Funny highlight: "the truth is that babies do not like travel, and I was no exception. Babies are unadventurous. Babies act as grapnels to prevent 'the family' dragging its  ground. That is why they were invented. Perversely, their desire for fresh horizons comes much later when they have already begun to 'attract' fares, and can no longer travel free; by which time they are no longer babies at all."