A Critique of Gambling with Borrowed Chips

In The Federal Lawyer, the monthly FBA publication, Jane Gravelle of the Congressional Research Service has written a critique of my recent book on the financial crisis of 2007-08, Gambling with Borrowed Chips.

Here is a link to the book.

Here is a link to the review section of The Federal Lawyer for June. Gravelle’s review begins at p. 3 of that pdf.  If you are reading this after that link has lapsed, try here instead.

As you will see at either site, Gravelle had some kind words about my book as “readable and entertaining.” She enjoyed the historical material, and appreciated my explanations of “a lot of concepts and practices.” So if my book is ever re-issued with a dust jacket, we may be able with judicious editing to mine this review for blurbs.

She spends most of her review arguing with my book though: arguing in particular that my analysis of the cause of the crisis, and my prescriptions for avoiding its like in the future, are thoroughly misguided. Thus, she has my gratitude for giving me a wonderful excuse for discussing that analysis and those prescriptions further, and I will take advantage of the same in a series of posts you’ll be able to read right here next week.

For now, though, I’ll limit myself to an observation about the kind of book this is. Gravelle writes, “Gambling with Borrowed Chips is not a scholarly work, in that it has no references or footnotes.”  

   

 

Yes, it is true that I did not use the usual scholarly apparatus of footnotes and bibliography. This isn’t because I am unfamiliar or disrespectful of that apparatus. I have employed it in earlier books, and may well employ it again if I give this particular argument the fuller work-up I believe it deserves. Still … this book was but a précis for some later complete scholarly study, and a précis that might indeed attract readers who are put off my small-print notes and lengthy lists of references.

The text itself does contain references to the works on which I depend, more-or-less explicit or allusive, it is true. Barney Frank’s great whistling-past-the-graveyard quotation, "There’s no immediate crisis,” may be found in The Washington Post for September 7, 2008, for example, as my book clearly indicates.

As to scholarly works, in my chapter “Sound Money” I allude to the work of economic-historian Robert Higgs on the unusual length of the Great Depression and the economic consequences of the Second World War. I also cite no less of an authority than Ludwig von Mises on the aftermath of the Bretton Woods monetary conference.

My own credentials are not those of an academic economist (or economic historian).  They are those of a reporter whose beat it has been for many years now to cover the world of finance, first at HedgeWorld (2000 to 2008) and more recently at The Hedge Fund Law Report and as the proprietor of Enfield Editorial Service. I believe this has been as valuable a perch whence to observe and learn as any other I could have occupied through the key period.  

That will do for the kind of book, and the kind of author, involved. Next week, we shall get to the substantive issues between Gravelle and your humble servant.

The Broom of the System, concluded

A final few words, if I may, about Wallace's first novel, as I described it last week.

I'm attracted to the sensibility behind it, as regular readers of this blog will probably suspect. The rapid moves from high-brow to low, from Wittgensteinian philosophy to Gilligan references, make for a hybrid of challenge and comfort.

Another strength is dialogue. He has a fine ear for the way people really talk to each other. I'm reminded of the Woody Allen move "Bullets over Broadway," because that is the criticism that the artistically gifted mob soldier directs at the not-so-gifted playwrite, "Nobody in real life talks like your characters. You gotta real problem wid dat."

Anyway, people in real life do talk like Wallace's characters. Or, at least, the stylization of necessity in fictional dialog never draws attention to itself. Here is one character, whose job entails reading a lot of manuscripts submitted to a journal, talking to his lover.

"Do you know where all the really sad stories I'm getting are coming from? They're coming, it turns out, from kids. Kids in college. I'm starting to think something is just deeply wrong with the youth of America."

That's the way people old enough to worry about "kids in college" do talk -- and the sentiment advances the story, while introducing one of the book's stories-within-the-story, because of course this editor proceeds to describe an example of one of these sad submissions.

I was a little disappointed in the ending. I won't describe it, out of deference to any of you who may wish to read it yourself. But a plot this intricate needs a neat tie-up at the end, or the intricacy can feel like a cheat. As, alas, it does.

Still: there was a lot to admire, and finally reading Wallace allows me retrospectively to mourn his passing.

Have I mentioned my recent discovery that Wallace was the target of satire by The Onion?

No Quidditch???

I recently saw the latest Harry Potter movie -- the fifth in the series.

This is the first of the movies not to contain any scenes of quidditch, the broom-flying polo-like game that was a motif running through all its precursors.

The fifth book in the series does involve some quidditch, but most of it doesn't involve Harry. If I recall correctly (it has been some time since I read it) Harry had to quit the team due to his detentions assigned by the despicable Dolores Umbridge. This meant that Ron had to step up and play a bigger role in upholding Griffindor over the playing fields of glory.

That was a subplot that, in the novel, shows Ron's increasing self-confidence.

But there is so much else going on that I can understand how the director found it dispensable.

There was other excisions that I found regrettable, though, some of them worked to diminish the importance of the character Luna Lovegood. One of the major themes in the book is that Luna's father is the publisher of a disreputable supermarket-style tabloid. Not nearly as prestigious as the Daily Prophet. Yet the Daily Prophet is lying about Harry (we get some sense of this in the movie, too) while the rumor-moongering tabloid is telling the truth about him (we get no sense of this in the movie at all.)

Indeed, Luna's father is reduced to a single bit of dialog. Luna tells Harry "my father and I believe you," but that his father might be a person whose credence matters goes right by us.

It turned out to be a perfectly decent movie, but not by any means as good as some of its precursors. As always: read the book.

"Gotcha!" says NYTBR

Brian Doherty, a senior editor at Reason magazine, has written what he calls a "freewheeling history" of the modern libertarian movement, centered on five figures of enormous importance: von Mises, Hayek, Rand, Rothbard, and Milton Friedman.

The New York Times has run a rather mean-spirited review of the book, in which critic Leonhardt plays trivia games of "gotcha."

Here's a sample from the review, "In a single chapter, Milton Friedman is described both as an active writer at Stanford University and, accurately, as deceased."

Well, yes. That kind of thing can happen when one of the crucial figures upon whom a book is based happens to die while the book is in page proofs. Leonhardt doesn't seem very lion-hearted here, more like a jackal.

Another example of this critic's oh-so-substantive contribution to the conversation about serious ideas, about liberty and sovereignty and such, is this gem: "And almost everything about 'Radicals for Capitalism' is too long: the terms ('Popperian falsificationist'), the sentences that sometimes run more than 100 words, and the book itself, at more than 700 pages."

That seems a remarkable expression of anti-intellectual bias. "Why shucks, I can't handle dem big words, Brian. That's why I write book reviews for this down-home cornpone type publicashun." If you aren't interested in the intellectual history of recent political and economic ideas, you won't read the Doherty book at all. If you are interested enough to read the book, you'll probably already know that there's been a lot of debate over whether such ideas can be considered "scientific," what is the demarcation of science, and so forth. You'll be ready for the term "falsificationism," modified by the name of its best known advocate.

The whole Leonhardt review reads like a sad failed effort at a fisking.