Girls, Girls, Girls

Elena Ferrante: The Story of a New Name

Part 2 of Ferrante's quadrology (as for my review of Part 1)... pure rock'n roll it is. Spoilers ahead.

The story begins at Lila's wedding with Stefano Carraci, right where the first book ended. Already during their honeymoon, Lila and Stefano descend into a cycle of provokation and abuse. After a while, however, Lila learns how to manage her violent husband and seems to be settling (or resigning) into the new circumstances. She gets pregnant but loses the baby.
Elena and her neighborhood boyfriend Antonio Cappucio break up, apparently due to to his upcoming military service but mostly due to Elena's continuing affection for Nino Sarratore. At school, Elena is being intellectually promoted by her teacher, Professor Gailani, whose daughter is dating Nino. Elena and Lila have their first longer term fallout after a party at Professor Gailani's place, where Elena moves elegantly in new intellectual circles, while Lila feels awkwardly left out (and jealous of Elena).
They reconcile and decide to spend summer holidays together in Ischia. The stay proves to be a decisive turning point for the two womens' story. Elena's secret intention behind the holidays is to be close to Nino, who is also in Ischia. In what is one of the most gripping parts of the novel, we see the slow unfolding of an affair between Lila and Nino. Elena, visibly under shock, reacts by spending a night with Nino's father. Another prolonged break ensues between Elena and Lila.
Elena gets accepted into university at Pisa, while Nino and Lila continue their affair. After running away from Stefano for a couple of weeks, Nino breaks up with Lila and she returns, pregnant, to her husband. In the coming years, Lila is all focused on raising her son Gennaro. At the same time, Stefano begins an affair with the sales clerk in his family's grocery.
The story ends with Lila running off with her long-term admirer, Enzo Scanno, and her son Gennaro. In order to make ends meet, Lila takes up work in a meat factory. While Lila and Enzo are not romantically involved, they seem to form an increasingly deep bond, united in studying together late at night. In the end of the story, Elena gets her first novel published, starting a promising literary career.

"My brilliant friend" was already a great read, but, in retrospect, it was no comparison to the second part of the Naples novels. The story really picks up pace, especially after Lila and Nino begin their affair in Ischia. As said before, Ferrante provides one of the best depictions of friendship and the lives of young adult's in all their complexity. The innocence that was still somehow there in Part 1 is lost. To use a concept introduced by Lila, the margins of the characters are "dissolving" in a microcosm of adultery, rivalry and violence. All this takes place against the contemporary social habits and politics of 1960's Italy which Ferrante so brilliantly depicts ... overall, nothing less than amazing. 

Random movie reference:
Difficult one. The whole dynamic between Elena, Lila and Nino kind of remotely reminded me of Noodles, Max and Deborah in Once Upon a Time in America. 

Favorite quotes: 
"I understood only later that I can be quietly unhappy, because I am incapable of violent reactions. I fear them, I prefer to be still, cultivating resentment. Not Lila." (Elena)

"I got low marks in chemistry, art history, and philosophy, and my nerves were so frayed that right after the last bad grade I burst into tears in front of everyone. It was a horrible moment: I felt the horror and pleasure of losing myself, the fear and the pride in going off the rails." (Elena)

"I started to borrow novels from the circulating library, and read one after the other. But in the long run they didn't help. They presented intense lives, profound conversations, a phantom reality more appealing than my real life." (Elena)

"Even if you are better than me, even if you know more things, don't leave me." (Lina to Elena)

"She had felt the need to humiliate me in order to better endure her own humiliation." (Elena about Lina after the party at Professor Gailani's which led to their fall-out)

"She was born like that, she could have learned the art of engraving merely by studying the gestures of a goldsmith, and then be able to work the gold better than he." (Elena about Lina)

"Neither she nor I would ever have him. But both of us, for the entire time of the vacation, could gain his attention, she as the object of a passion with no future, I as the wise counselor who kept under control both his folly and hers. I consoled myself with that hypothesis of centrality." (Elena about Lila when Lila's affair with Nino is about to begin)

"The more Lina is surrounded by affection and admiration, the crueler she can become. She's always been like that." (Elena to Nino about Lila)

"Naples had been very useful in Pisa, but Pisa was no use in Naples, it was an obstacle. Good manners, cultured voice and appearance, the crush in my head and on my tongue of what I had learned in books were all immediate signs of weakness that made me a secure prey, one of those who don't struggle." (Elena about her return to Naples)

"I understood that ... I had made the whole journey mainly to show her what she had lost and what I had won. But... she was explaining to me that I had won nothing, that in the world there is nothing to win, that her life was full of varied and foolish adventures as much as mine, and that time simply slipped away without any meaning, and it was good just to see each other so often to hear the mad sound of the brain of one echo in the mad sound of the brain of the other." (Elena about her meeting with Lina in the end of the book)

Männer

David Szalay: All That Man Is

Made the Man Booker shortlist this year. A good read. Szalay presents short stories that revolve around men at different stages of their lives:

• Two young Brits travelling through Europe on interrail. While in Prague, one of them ends spending the night with the married owner of the apartment they are staying at.
• A young unemployed Frenchman on holidays in Cyprus where he meets meets a massively obese British mother and daughter couple.
• A Hungarian former soldier who falls in love with the prostitute he protects in London.
• A Belgian professor on a road trip through Germany. His young girlfriend has just discovered she is pregnant.
• A Danish journalist who visits his country's minister of defense on holidays in Spain to confront the latter about an affair he has had.
• A married British real estate developer who, while on a business trip to Switzerland, is being hit on by a younger colleague of his.
• A British pensioner who has emigrated to Croatia and whose life is thrown off balance when his only friend in town begins an affair with a younger woman.
• A Russian oligarch who is at the brink of financial ruin and whose wife is divorcing him. The oligarch heads for his yacht in the Aegean sea to commit suicide.
• A British retired civil servant at his holiday home in Italy who is looking back at his life while recovering from heart surgery and an accident .

Overall, definitely nice to read. Szalay's realism and attention to detail in describing the various scenarios is captivating. It is also fascinating to follow the nine men at different stages of their lives. Moreover, Szalay has written a truly European novel, whose settings span the entire continent. Still, while the short stories are really great, the book as whole didn't entirely click with me. One of the reasons may be that it remains unclear whether the book works as a novel or is better read as a loose collection of short stories.

Random movie association:

Still working on that one. But if the book needed a soundtrack, Grönemeyer would have provided it.

Favorite quotes:

"As he had been intent on enacting his own long-standing fantasy, so she had been enacting a fantasy of her own, in no way less elfish. Except that she was nineteen or twenty, and still entitled to selfishness- not having learned yet, how easily and lastingly people are hurt- and he was more than ten years older and ought to have understood that by now."

"That's the thing about fate, the way you only understand what your fate is when it's too late to do anything about it. That's why it is your fate- it's too late to do anything about it."

'Tell me ... have you got a hobby?' 'A hobby? ... No' He has never had a hobby- in his Who's Who entry, he had listed 'interests' as 'wealth' and 'power'.

"Slowly they made their peace with the place, until they felt a kind of love for it. You learn to love what's there, not what's not there. How can you live, otherwise?"

"Amemus eterna et non peritura. Amemus- Let us love. Eterna- that which is eternal. Et non peritura- and not that which is transient." 

Girls just Wanna Have Fun

Elena Ferrante: My Brilliant Friend

This is the first part of Elena Ferrante's "quadrology" about the friendship between two Napolitan girls which spans multiple decades. A great, great read, and one of the best coming off age stories/ "Bildungsromane" I have read in recent years. I understand where the international hype around those books is coming from...

The story begins with the disappearance of Lila Cerullo, who has apparently realized her long-standing desire to escape from her life without leaving a trace. This event inspires her friend Elena Greco to tell "their" story, going back to the Napolitan neighborhood they both grew up in the 1950s.
Both girls come from simple backgrounds. Lila is the daughter of a shoemaker, Elena of a porter at the city hall. They start to bond when attending primary school. Even though Lila is the academically more successful, it is only Elena who gets to continue her education; Lila learns how to make shoes in her father and brother's shop. Lila gets increasingly sucked into the world of shoe-making, hoping to get rich through hand-made shoes designed by her and her brother Rino. At the same time, she keeps on studying with Elena, which, due to the ever-present rivalry between the two girls, pushes the latter to become an increasingly successful student.  
The love lives of the two girls become increasingly important in the later parts of the book. Marcello Solara, whose family owns a bar-pastry shop and maintains ties to organized crime, starts to pursue Lila, much to her disliking. In order to escape from Marcello, Lila turns towards Stefano Carraci, son of the late godfather of the neighborhood, but now seemingly making a decent living in his family's grocery store. Elena, in turn, is in love with the Nino, the son of Donato Sarratore, a railroad worker, poet and womanizer. Elena is especially attracted by Nino's intellectual side and the fact that he seems to have developed beyond the confines of their neighborhood. However, apart from a kiss during a holiday, nothing happens between the two. Ever jealous of Lila and her relationship with Stefano, Elena takes Antonio Cappucio, a local mechanic, as her boyfriend. Without providing too many spoilers, the story finishes with Lila and Stefano's wedding, which turns out to run different than anticipated....

The book provides a colorful depiction of the Napolitan neighborhood the two girls grow up in, to include the various families that live in it. It also offers great insights into the social conventions of the time, with for instance Lila only being able to escape the advances of Marcello Solara by getting married to somebody else. Admittedly, I am no expert on female friendships. Still, Ferrante delivers what is probably one of the most interesting depictions of friendship- in all its complexity- I have ever read. Lila and Elena are not only best friends for each other, but also rivals, role models (especially Lila to Elena) and surrogates allowing one to live the life she herself cannot have (Elena to Lina). Nothing less than impressive.

Random movie reference:
Something from the godfather. Raising the question of whether we can ever get over our heritage..

Favorite quotes:
"The thing was happening to her that she later called dissolving margins. It was- she told me- as if, on the night of a full moon over the sea, the intense black mass of a storm advanced across the sky, swallowing every light, eroding the circumference of the moon's circle and disfiguring the shining disk, reducing it to its true nature of rough insensate material." (Elena about Lila's idea of "dissolving margins")

"I was afraid of what was happening to her, good or bad in my absence. It was an old fear, a fear that has never left me: the fear that, in losing pieces of her life, mine lost intensity and importance." (Elena about Lina not writing during her holidays)

"Out of vanity he would hurt anyone and never feel responsible. Since he is convinced that he makes everybody happy, he thinks that everything is forgiven him." (Nino about her father).

"Nino has something that's eating him inside, like Lila, and it's a gift and a suffering; they aren't content, they never give in, they fear what is happening around them." (Elena about Nino)

"The beauty of mind that Cerullo had from childhood didn't find an outlet, Greco, and it has all ended up in her face, in her breasts, in her thighs, in her ass, places where it soon fades and it will be as if she had never had it." (Their former teacher about Lila)

"But now I felt good and I wanted to feel even better. When Antonio, guessing that I was in the right mood, asked if I wanted to be his girlfriend, I said yes right away, even though I loved someone else, even if I felt for him nothing but some friendliness." (Elena about her boyfriend Antonio)

"It had been very energizing to win praise from those who seemed to me better ... taking sides against those who seemed to me worse ... and yet to behave toward the adversaries in such a way as not to lose their friendship and respect." (Elena)

"I thought how contradictory she was, without realizing it, with her rages, with those imperious gestures. She hadn't wanted me to go to school, but now that I was going to school she considered me better than the boys I had grown up with, and she understood, as I myself did, that my place was not among them." (Elena about Lina)

"Yes, you're right, I don't know what I am and what I really want, I use you and then I throw you away, but it's not my fault, I feel half and half, forgive me." (Elena about her feelings towards Antonio)

A Few Good Men

Harper Lee: To Kill a Mocking Bird

A “great American novel”. Probably the best of the four US-American classics I have read this summer.

The story takes place over the course of three years in a small town, Maycomb, in 1930’s Alabama. It centers on lawyer Atticus Finch, his son Jem and daughter Jean Louise a.k.a. ”Scout”. A widower, Atticus has mostly been raising his children on his own. He is a soft-spoken man, but tries to set an example for his children through his morally righteous behavior. A coming off age story, there are numerous sub-plots which describe small town life in the American South:

•  In the beginning of the story, Scout is just starting school. Thanks to her family’s black cook, Calpurnia, she already knows how to read and write. This, and Scout's "smarty pants" attempt (I admittedly googled this expression...) to explain Maycomb’s peculiarities to her teacher from out of town creates significant conflict at school. 
• Dill Harris (1), a boy who spends his summers with his aunt in Maycomb, becomes Jem’s and Scout’s best friend and kind of Scout’s first boyfriend. Together, the children aim to lure reclusive Arthur “Boo” Railey, who essentially hasn’t been seen in public since his teenage days, out of his house. It does not become clear whether Boo is staying in his house voluntarily or whether he is being kept from going out by his brother Nathan. Boo seems to be reaching out to the children by leaving them little gifts in a hole in a tree, before Nathan puts an end to this.
• The children are good friends with Miss Maudie Atkinson, their neighbor from across the street who grew up together with Atticus. She feels kind of apart from the “foot-washing Baptists” of Maycomb who condemn the pride Miss Maudie takes in gardening. In the course of the story, Miss Maudie’s house burns down and she is forced to move in with a neighbor, an event to which she reacts stoically.
• In the latter parts of the story, Atticus' sister, Aunt Alexandra, moves in with the Finchens and attempts to turn the rather boyish Scout into more of a Southern lady, which leads the two to clash with each other repeatedly.

The book’s core, however, is the story of Atticus taking over the legal defense of a black man, Tom Robinson. Robinson has been accused of rape by Mayella Ewell. Mayella is one of eight children from a family that very much stems from the social fringe of Maycomb. After Atticus accepts the mandate, parts of Maycomb’s society and even their own extended family ostracize Jem and Scout for racist reasons. During the trial, Atticus succeeds to demonstrate that the injuries that Mayella sustained were likely inflicted by her drinking, violent father Bob. Moreover, Robinson also plausibly argues that Mayella had actually tried to seduce him. In spite of the strong case of the defense, the jury still finds Tom Robinson guilty of rape, a crime for which he is likely to end up on the electric chair. Atticus and his childrens' faith in the judicial system is badly shaken. Moreover, Bob Ewell sees that the trial has damaged his already low credibility in Maycomb. He is out for revenge against anybody involved in the trial. Events take a turn to the worse, but I won’t spoil the ending for anybody who hasn’t read the book, yet.

A fascinating combination: the book is written from a child’s perspective (or retrospective?), but deals with deeply adult topics such as racism and social boundaries. It also provides the perfect description of what I would imagine a childhood in the southern states to be like: porches, kids playing in the nature, families going back generations, Baptism, Southern ladies meeting for tea and cake etc. The court room drama of Atticus mounting a defense for Tom Robinson is gripping. At times, the description is so perfect that the novel almost conveys the feeling of watching a movie. Moreover, the main protagonist, Atticus Finch, is a morally righteous but at the same time three-dimensional figure, not the easiest combination for a writer to achieve. Overall, highly recommended. Comes out ahead of Steinbeck’s “Of Mice and Men” and Salinger’s “Catcher in the Rye”. Well, and I won’t be talking about Kerouac’s “On the Road”. Ever again.
Next on the list of American classics: John Steinbeck's "The Grapes of Wrath".       

Random movie reference:

Boo Radley kind of reminded me of Bart’s Siamese twin brother, Hugo…

Favorite quotes:

“There are just some kind of men who are so busy worrying about the next world they’ve never learned to live in this one, and you can look down the street and see the results.”(Miss Maudie)

“People in their right minds never take pride in their talents.” (Miss Maudie, again, smart woman).

“The one thing that doesn’t abide by majority rule is a person’s conscience” (Atticus)

“Real courage … ‘s when you know you are licked before you begin but you begin anyway and you see it through no matter what.” (Atticus)

“With him, life was routine; without him life was unbearable. I stayed miserable for two days.” (Scout)

“Serving on a jury forces a man to make up his mind and declare himself about something. Men don’t like to do that. Sometimes it’s unpleasant.” (Atticus)

“Atticus, he was really nice” … “Most people are, Scout, when you finally see them.”

Notes:

(1) Interestingly, Dill is based on Truman Capote, a childhood friend of Harper Lee. In this incarnation, Capote seems significantly less annoying than the Philipp Seymour Hoffmann version I had in mind.

Back to the Future

Philip Tetlock& Dan Gardner. Super-Forecasting: The Art and Science of Prediction

Tetlock and Gardner’s book is a popular account of the Good Judgement Project, a tournament on forecasting geopolitical events which ran from 2011 to 2015. Of interest to, well, anybody interested in making forecasts.

About 2800 forecasters were asked to provide predictions for more than 500 questions. The forecasters had to assign probabilities to whether specific outcomes (e.g. the number of Syrian refugees crossing a certain threshold) would occur within a defined time frame (e.g. the next three months). While it is impossible to evaluate a single probabilistic forecast, a series of forecasts can be evaluated according to two criteria: calibration- when forecasters assign 20%, 30%, or 40% probabilities, these events should happen 20%, 30%, or 40% of times, and resolution- forecasters should assign high probabilities to events that eventually do happen and low probabilities to events that don’t.

Superforecasting is a successor to Expert PoliticalJudgement (EPJ), a book based on a forecasting tournament Tetlock ran in the 1980s and 1990s. EPJ presented two major findings: the average forecaster did no better than randomly guessing outcomes would have done, and experts who based their judgment on many different analytical approaches (whom Tetlock labelled “foxes”) were more accurate than experts whose thinking was based on one big idea or ideology (“hedgehogs”).  Tetlock’s current book takes this investigation into the sources of variation in forecasting skill one step further. He and his co-author Gardner focus on “superforecasters”, the best participants in the tournament who did significantly better than chance or other forecasters. Superforecasters scored consistently well over the course of the tournament, with roughly 70% of forecasters in one year keeping this status in the next year as well.

Tetlock demonstrates that superforecasters have a couple of intellectual characteristics in common: higher scores on intelligence and knowledge tests, numerical literacy, and active open mindedness. What is most striking about superforecasters, however, is that they also share a certain approach to forecasting: 

• they first unpack every question into its components, separating between components that can be known and those that cannot (e.g. which scenarios are imaginable for the U.S. to intervene in Syria?);
• they then start by taking an outside view, i.e. establish a baseline probability for the event to be forecast as part of a larger class of events (e.g. what is the baseline probability for the U.S. to militarily intervene in a civil war in the Middle East?);
• they then take an inside view i.e. take into account the particularities of the case in question as well as the various causal factors at play (e.g. which specific attributes of the Syrian crisis might drive the U.S. to intervene?); 
• they make sure to compare their view to other views;
• and, finally, they synthesize all the information into a probability judgement.

Superforecasters also react to news in line with Bayes’ theorem, i.e. they neither under- nor over-react to new evidence, but instead update their assessments based on their prior beliefs as well as the diagnostic value of new information. Finally, superforecasters were even better when put together in teams. Teams of superforecasters were good at avoiding both extremes that may affect teamwork- internal wars and group think- and managed to outperform prediction markets.

Tetlock also compares his results with the black swan approach to forecasting popularized by Nassim Taleb. Black swans are extreme and improbable, but highly consequential events (e.g. World War I). According to Taleb, historical probabilities (possible ways in which history could unfold) have a fat-tailed, not a normal distribution, meaning that black swans are vastly more likely to occur than is often assumed. Against this objection, Tetlock puts forward that most of history proceeds incrementally rather than in the form of a constant stream of extreme events. Moreover, the consequences of black swan events take time to develop and can be broken down into distinct questions that can be forecast. While it would for instance have been impossible to predict the storming of the Bastille, some of the events that followed would at least have been partially predictable.

Overall, a great project and a fascinating read. Tetlock and Gardner do a good job creating an accessible account of what may easily be one of this decade’s most important social science projects. However, while the book has been compared to Daniel Kahneman’s “Thinking. Fast and Slowly”, it does not entirely live up to the comparison. First, there is of course a huge difference in terms of the scope and wealth of material covered. Kahneman covered multiple decades of research in cognitive psychology, while Tetlock focuses on one research project. Moreover, while Kahneman also aimed to reach a broader audience, he seemed to have more confidence in his readers grasping complex issues than Tetlock and Gardner. Some chapters, for instance on the book’s implications for executive leadership style, are nice to read, but remain quite superficial and do not add much to the book’s central message. In spite of these minor quibbles, this is still an important and informative book. Hoping that there will be a follow-up more geared towards an academic audience, though…
Next on my social science reading list is Fukuyama's "Political Order and Political Decay", possibly to be followed by McAdam, Tarrow and Tilly's "Dynamics of Contention" and Della Porta's "Clandestine Political Violence"....

Random movie association:

Back to the Future about 2015…

Hit the Road, Jack

Jack Kerouac: On the Road

The next American classic on this summer’s reading list. Well, read it, been there, done that. The novel had a few moments, but, all in all quite a struggle to get through it.

Kerouac tells the story of four road trips writer Sal Paradise takes between 1947 and 1950. Freshly divorced and recovering from an illness, Sal meets the free-spirited Dean Moriarty, an ex-convict, aspiring writer and man living on the road. Sal then decides to hit the road as well. On a first trip, Sal links up with Dean and other friends in Denver, before heading on for San Francisco. A French friend of his, Remi Boncoeur, gets him a job as a watchman at a camp for sailors. After falling out with Remi, Sal leaves San Francisco and meets a Mexican girl, Terry. Together with Terry and her son he takes up work in the cotton fields. While Sal enjoys the simple life, he finally decides to leave Terry and head back for New York.

The second trip begins in New York and includes, among others Dean Moriarty and his mistress Marylou. From then on, the entire story is increasingly centered around Moriarty. The journey first takes the group to New Orleans where they stay with morphine-addicted Old Bull Lee. The group then heads on to San Francisco and Dean leaves Marylou to be with his wife Camille again. A third trip takes Sal from New York to San Francisco and back again. A fourth trip takes him, Dean Moriarty and others to Mexico, where Moriarty leaves Sal, who has fallen sick with dysentery, behind. The novel finishes with Sal back in New York, finding a girlfriend and meeting both Remi Boncoeur and Dean Moriarty.

The book is widely regarded as a classic and it has its moments. I liked the depiction of the first journey. Here, Kerouac conveys a good impression of the feeling of being on the road, while not spoiling it with Dean Moriarty’s endless monologues (yet). The historical background of the novel is also interesting, as the characters are based on Kerouac and his circle of beat-generation friends. The main character, writer Sal Paradise, is based on Kerouac himself, Neal Cassady is the real-life Dean Moriarty. 

Still, both writing style and content make this novel hard to read. Especially after the first journey, with Dean Moriarty taking a more prominent role, the whole thing becomes a seemingly endless repetition of fast driving, petty crime, parties, girls and senseless psychobabble of characters who are evidently taking too many drugs. The narrative style, a seemingly furious, but also endless enumeration of the characters’ activities, doesn’t help much neither. Moreover, most characters do not come over as very likable, right on the contrary. Dean Moriarty and others instead seem simply like idolized drug wrecks who take themselves way too seriously.
After reading the book, I realized I could just have watched the movie instead... that would have saved me two weeks of struggling with "On the Road".

Random movie reference:

The first association I had with Dean Moriarty... the lizard queen.

Favorite quotes:

“He is the prettiest child I have ever seen. Look at those eyes …I want you par-ti-cu-larly to see the eyes of this little Mexican boy … and notice how he will come to manhood with his own particular soul be-speaking itself through the windows which are his eyes, and such lovely eyes surely do prophesy and indicate the loveliest of souls.” Dean Moriarty. Kind of says it all regarding the book’s dia-/ monologues.

“… the only people for me are the mad ones, the ones who are mad to live, mad to talk, mad to be saved, desirous of everything at the same time, the ones who never yawn or say a commonplace thing but burn, burn, burn.”

“I was so lonely, so sad, so tired, so quivering, so broken, so beat, that I got up my courage, the courage necessary to approach a strange girl, and acted.”

“It was always manana. For the next week, that was all I heard, manana, a lovely word and one that probably means heaven.”

“I was going home in October. Everybody goes home in October.”

“I want to marry a girl. … This can’t go on all the time- all this franticness and jumping around.”

“It was a sullen moment. We were thinking we’d never see one another again and we didn’t care.”

Twenty Dollars in my Pocket...

Barry Eichengreen: ExorbitantPrivilege- The Rise and Fall of the Dollar and the Future of the InternationalMonetary System 

First non-fiction book finished during my summer holidays. Great read.

Eichengreen offers a comprehensive account of how the USD came to be the world reserve currency, i.e. the currency in which the largest share of the world's trade is being done and, relatedly, which makes up the biggest chunk of central banks' reserves.

A first chapter covers the time period from the USD's creation in the 18th century up to the great depression that began in 1929. In the second half of the 19th century, the British pound had increasingly become the world's reserve currency. Trade acceptances- papers showing that an exporter would receive payment for goods that he had already shipped and which banks would buy from the exporter- were mainly denominated in pounds. The reasons behind this were a well-developed, liquid market for trade acceptances in the UK, a central bank which would buy securities if British banks needed cash, and a stable currency tied to gold. The market-making efforts of the newly created US Federal Reserve Bank and the shock of World War I to European economies then lead to an increasing role of USD-denominated trade acceptances in 1920s. However, the great depression’s severe effects on trade and foreign borrowing brought this first rise to prominence of the USD to a halt.

Chapter 3 describes the USD’s rise to dominance after World War II under the Bretton Woods System. Major driving factors were the US's international economic dominance, the need for USD to finance European and Asian reconstruction, as well as the US’s financial stability and its open financial markets. At the same time, there was also a lack of alternatives to the USD. Gold supplies were limited and two rather unsavory regimes, the Soviet Union and South Africa, were the main producers. Due to political or economic instability, the Franc and the UK sterling also failed to offer a credible alternative. 
However, by the end of the 1950s, a new imbalance arose in the international monetary system: The USD shortage from the immediate after war period had transformed into a situation where foreign-held USD exceeded US gold holdings, all while the US maintained its commitment to exchange USD into gold at a fixed value. This in turn gave rise to the so-called Triffin Dilemma: The US could either reduce the USD supply, which would threaten world trade and economic growth; or it could continue to provide an unlimited supply of USD, ultimately resulting in a run of foreign investors on US gold reserves. After years of negotiations, the Nixon administration gave up on the USD’s peg to gold, resulting in a system of flexible exchange rates. It still took some years for the USD’s share of the world’s reserve currencies to fall, mostly as a result over inflationary policies under the Carter administration. However, this fall reflected the devaluation of dollar assets rather than central banks actually selling USDs. The USD was weakened, but remained the world’s dominant reserve currency.

Chapter 4 traces the evolution of European monetary arrangements. The establishment of the common market very much depended on exchange rate stability between participating states. Until the late 1960s, this stability was mostly provided by pegging European currencies against the USD, which stabilized European currencies against each other. The influx of capital in the 1970s as a result of the USD's weakness began to threaten this equilibrium. In regular intervals, the question arose whether Germany would let its currency appreciate against other European currencies, or other countries such as France would devalue their currencies. There were several attempts to create a more stable exchange rate regime within Europe, based on more or less narrow exchange rate bands. Because the German Central bank refused any kind of intervention obligations or pooling of reserves, these systems were, however, prone to chronic crisis and instability, especially in the late 1970s and again in 1990. It took German reunification and a bargain of France supporting it in exchange for monetary union to bring about the Euro (1).

Chapter 5 delivers a concise and at the same time comprehensive run-down of the factors which drove the 2008 financial crisis. Eichengreen essentially identifies three clusters of explantory variables:   

• On the private sector side, banks were taking inordinate risks. At the core of the crisis were complex financial products such as collateralized debt obligations- essentially ways of repackaging often highly risky mortgage-based securities while simultaneously hiding the enormous default risk many of those mortgages carried. The growth of the wholesale money market on which banks could borrow also encouraged them to increasingly leverage themselves. Banks were increasingly confident that more complex mathematical models allowed them to monitor and control the risks in their portfolios. Finally, competition, both due to globalization and deregulation, led commercial and investment banks to take on substantial risks to make profits.
• On the governmental side, regulators largely viewed derivatives markets as efficient mechanisms to manage risks. Risk-taking by banks was also encouraged as the US Fed had created the impression that it would not allow asset prizes to collapse. The Fed also kept its interest rates low after the 2001 economic crisis, which further encouraged risk-taking by financial investors. Finally, there was general confidence in the Fed having mastered the business cycle and having reduced the volatility of financial markets.
• Internationally, foreign government purchases of US treasury and agency securities also contributed to low interest rates, resulting in even more risk-taking by banks.

In a sixth chapter, Eichengreen discusses why the USD remained the world’s reserve currency even after the financial crisis of 2008.

• A first reason is the USD’s incumbency advantage. Exporters want to invoice transactions in the same currency as other exporters do, as this limits price fluctuations in comparison to their competitors. This continues to cement the USD’s dominance in the foreign exchange market. Central banks also want to maintain reserves in the currency in which most foreign trade is being invoiced. Morever, more countries have their currency pegged to the USD than to any other currency; pegging to the USD also helps those countries maintain stable exchange rates to each other.
• Second, central banks also prefer to have liquidity in their reserve instruments: they prefer US treasury bonds which can be easily bought and sold without their price level being affected. The depth and liquidity of the markets for U.S. securities remains unmatched.
• Third, there continues to be a lack of alternatives to the USD as a reserve asset. The Euro, the closest competitor, continues to suffer from the absence of a Euro area government. The Renmimbi is not fully convertible. It is mostly of use for buying goods from China, but not for central banks that want to intervene in foreign exchange markets or countries that want to finance imports from other countries. Special Drawing Rights are currently not traded in private markets, which limits their usefulness for central banks wanting to intervene in foreign exchange markets (3). Finally, gold, timber etc. must also first be converted into currency to be used for interventions in financial markets or to finance imports.

In a final chapter, Eichengreen discusses possible scenarios that may lead to the demise of the USD as the world’s reserve currency. He first debunks a scenario in which China would attack the USD by dumping the enormous amount of U.S. securities it has accumulated onto the market. Under such a scenario, China would, first of all, have to accept that the largest share of its own reserve assets loses its value and, second, that the competitiveness of its exports is endangered by a significant appreciation of the Renmimbi (4). A more realistic scenario would see an investor run on the USD due to burgeoning budget deficits. Overall, however, Eichengreen assesses as most likely a future in which the USD will, due to the US’s relative economic decline, lose importance in comparison to the EUR and the renmimbi, but still remain the world’s dominant reserve currency.

Overall, a great, informative, and accessible book, well-suited both for the beach and an advanced undergrad or postgraduate class on political economy. Must read for anybody interested in an informed discussion of the future of the world’s financial order. The chapter on the financial crisis of 2008 seems one of the most accessible and comprehensive accounts I have read. And no, before some smartass brings this up again, SDRs won’t be replacing the USD any time soon, just like Esperanto won't be replacing English....

Eichengreen also does a great job in bringing economic history to life, by giving descriptions of the key players involved. Not sure whether I really needed to know that Helmut Kohl sent more than 2000 love letters to his first wife, but these kind of details add to the pleasure of reading the book.

Perhaps the best book on economic history and political economy I have read during the last years, with my other favorite, Thomas Oatley’s International Political Economy, being an academic textbook . I also found Reinhart and Rogoff book on financial crises over the last eight centuries fascinating, but it is a much, much drier read than Eichengreen offers.

Random movie reference:

The advantages and disadvantages of being the reserve currency... the trillion dollar note. 

(1): Eichengreen also reflects on the discussion in the 1990s on whether the Eurozone should be inclusive of Southern European states or whether it should be limited to Germany and its stability-minded neighbors. In the end, the inclusive solution was chosen due to the desire to include Luxemburg into the Euro. While itself fiscally healthy, Luxemburg was in a currency union with Belgium, whose debt profile was much closer to the average Southern European state than to Germany. Including Belgium meant there was no excuse to exclude the PIGS from the Euro.

(2): SDRs were first introduced in 1969. They are not a currency by themselves, but represent a claim to currency held by IMF members. SDR arebased on a basket of key international currencies determined by the IMF everyfive years.

(3): Setting up a market for private or government-issued SDR would also not be easy. Any first-moving seller would have to be compensate potential buyers for not being able to trade SDR denominated products in deep markets (given that these markets do not exist, yet).

(4): Daniel Drezner makes a related argument in a 2009 piece in International Security.

Life's a Bitch

Hanya Yanagihara’s A Little Life

My first “summer read” of this year. Man Booker finalist and one of the most discussed novels of 2015. 700 pages long, and, every page worth the read.

A coming of age story that spans several decades. It starts with four college friends who have just come to New York to begin their professional lives. Jude, a litigator, Malcolm, an architect, Willem, an actor, and J.B., an artist. Two colored (J.B. and Malcolm), two white (Willem and Jude). Two from a well-off family background (J.B. and Malcolm), one from a poor family (Willem), one with no family at all (Jude).  One is openly gay (J.B.), one ambiguous in his orientation (Malcolm), one apparently very much a women’s’ man (Willem) and one not associated with any kind of relation (Jude). In the coming years, all four become fabulously successful, travel the world, attend glamorous parties, move into beautiful apartments etc.

This is the outer setting against which Yanagihara tells the story of the central character, Jude St. Francis. Step by step, the novel reveals the dark tale of the physical and sexual abuse Jude endured during his childhood and teenage days. An orphan, he was at first abused in the monastery that took him in, then ran off with a monk who prostituted him, landed in a state institution where the abuse continued, worked as a male prostitute along highways, before ending up in the captivity of a sadistic psychiatrist who almost kills him and leaves his legs permanently disabled. When entering college, Jude leaves behind this old life, assuming an almost impenetrable, controlled outer self. While close to his friends, Jude doesn’t give away much about his past to them and, as a kind of coping mechanism, cuts himself on a regular, sometimes excessive, basis. Throughout the novel, Jude witnesses recurrent episodes of intense pain, with his legs finally being amputated. He enters a violent relationship with another man, ultimately leading Jude to attempt to commit suicide. There are, however, also bright spots throughout the story. Andy, his doctor, takes loving care of Jude’s fragile physical condition. Jude’s friendship with Willem is ever deepening and becomes the dominant theme in the second half of the novel. Jude finds a family after he is adopted by Harold, his old Harvard Law professor.

I won’t give away anything about the book's last third or the ending, given how powerful it is. It virtually smacks the reader in the face. This is a very dark, but at the same time beautiful tale of friendship and love. The story has a kind of fairy tale like feel. It for instance does not give any references to real world events. It is set in New York over several decades, but it is never mentioned who is president; there is no discernable change in societal attitudes towards gay people etc. The glamorous setting contrasts nicely with the dark story of Jude. The book touches on eternal themes, such as friendship, love, self-loathing, and the attempt to conceal one’s own weaknesses. The most moving parts are probably about Jude’s almost super-human attempts at self-control, his shame for what happened him in the past, his friends attempting to save him by attempting getting through to him. Overall, probably one of the most powerful novel I have read since Murakami’s Norwegian Wood. Yes, the drama in it and the almost complete lack of irony may sometimes feel borderline kitsch and there is perhaps a bit too much "lifestyle porn". Fuck it, this book remains simply a heart-warming piece. Best read of the year (and perhaps even the last years) up to now.

Next up on the list of modern day (potential) classics: Elena Ferrante's "My brilliant friend" and Jonathan Franzen's "Freedom".

Random movie/ music reference:

I could have gone for Hey Jude, but there was a guy playing Radiohead when I read this book in a riverside bar in central Portugal…

Favorite quotes:

"You understood that proof of your friendship lay in keeping your distance, in accepting what was told you, in turning and walking away when the door was shut in your face instead of trying to force it open again."

"Friendship, companionship: it so often defied logic, so often eluded the deserving, so often settled itself on the odd, the bad, the peculiar, the damaged."

"They were his first friends, and he understood that friendship was a series of exchanges: of affections, of time, sometimes of money, always of information."

"Was couplehood truly the only evolutionary option? … Thousands of years of evolutionary and social development and this is our only choice?"

"By his age, you had met all the friends you would probably ever have. You had met your friends’ friends. Life got smaller and smaller."

"Everyone had feelings that they knew better than to act upon because they knew that doing so would make life so much more complicated."

"It was something he had never been able to explain to his friends, who marveled at and pitied him for how much he had to work; he could never tell them that it was at that office, surrounded by work and people he knew they found almost stultifyingly dull, that he felt at his most human, his most dignified and invulnerable."

"Relationships never provide you with everything. … You take all the things you want from a person- sexual chemistry, let’s say, or good conversation, or financial support, or sexual compatibility, or niceness, or loyalty- and you get to pick three of those things. … the rest you have to look for elsewhere."

"You don’t visit the lost, you visit the people who search for the lost."

"If you act like you don’t belong, if you act like you’re apologetic for your own self, the people will start to treat you that way, too."

No plan survives

James C. Scott: Seeing Like a State- How Certain Schemes to Improve the Human Condition Have Failed

Scott’s book deals with the failure of large-scale state-initiated schemes of social engineering. Based on various experiences in the 19th and 20th century, such schemes seem possible when four conditions are given:

• Socities that are administratively ordered; they have to be “legible” for the state to be able to intervene.
• Decision-makers believing in the possibility of designing the social and natural order (“high modernist ideology”).
• An authoritarian state willing to use its coercive power to bring high modernist schemes to life.
• A civil society unable to resist the state imposing high modernist schemes.

Scott shows how European state-building has been based on the harmonization and standardization of units of measurement and land tenure rights (including the introduction of the necessary documents and statistics). While harmonization and standardization constituted a great simplification of local realities, they made society "legible" for state administrators. Originally artificial inventions such as land titles also became important elements in peoples’ daily lives.

The first high-modernist scheme Scott examines is 20th century urban planning, particularly the work of Le Corbusier and Oscar Niemeyer’s Brasilia. These schemes focused on creating “modern” cities with single purpose districts (separating shopping, workplace, residences) and were organized for motorized traffic. Scott argues that modernist urban planning failed to create cities where people actually want to live. The lack of informal, unplanned public spaces (sidewalks, cafés) prevents the emergence of the networks of relations that are central to an attractive and functional urban life.

The second high modernist scheme examined is Lenin’s concept of the revolutionary mass party, which is contrasted with Rosa Luxembourg and Aleksandra Kollontay’s views. Lenin takes a top down view of revolution, with party cadres having to guide “unconscious masses”. Luxembourg and Kollontay, on the other hand, take a much more bottom-up approach. In their vision, revolutionary parties should take advantage of the lessons learned and creative energies of the working class.

Two more chapters are devoted to land reforms in the Soviet Union and Tanzania. Soviet collectivization put an emphasis on mechanization, mono-cultures, centralized procurement and planning. Inefficient from a pure production perspective, collectivization still greatly enhanced the Soviet Union political stability. Specifically, it made rural society “legible” for the state, destroyed potentially dissident peasant communes, and made peasants dependent on the state.

Finally, Scott delivers a fierce critique of “high-modernist agriculture”. Modernist agriculture is marked by monocultures rather than polycultures, permanent fields rather than shifting cultivation, the indiscriminate employment of fertilizer, and an emphasis on short-term outputs. Scott argues that high-modernist agriculture is based on a version of agricultural science that aims to isolate central variables in experiments rather than taking into account the complex localized interactions of soil, temperature, climate etc..

In two concluding chapters, Scott makes the argument for “metis”, the ancient Greek term for practical knowledge. “Metis” is acquired through experience in a constantly changing and complex environment. „Metis“ is based on local and customary knowledge and mainly concerned with the application of rules of thumb in local environments rather than the deduction of universal principles. Scott also provides four pieces of advice for planners: take small steps; favor reversibility; plan on surprises; and plan on human inventiveness.

Overall a nice read, making a sensible argument. The amount of historical material covered is nothing less than impressive. Planning for public policy of any kind of should take  Scott’s insights on the pitfalls’s of large-scale social engineering into account. Some thinking on military planning continues for instance to be coined by an overly mechanistic understanding of how military actions can achieve desired effects in complex war settings. A similar reproach can be made against overly simplistic understandings of nation-building in the aftermath of military interventions.

Still, Scott’s argument didn’t fully convince me. First, Scotts fails to develop counterfactuals that would demonstrate the pernicious effects of some of the high-modernist schemes he presents. How much better would the developing world be off on average without the introduction of high-modernist agriculture? Has modern urban planning made city inhabitants’ life worse on average? Would a communist revolution inspired by the ideas of Rosa Luxemburg really have taken a more human face? In a related vain, the whole book sometimes seems overly long. Scott introduces a tremendous amount of details on the failed modernization schemes he presents, but not all of it seems necessary to the case he is trying to build. Finally, some of the implications are also not too new given that the book was written in the 1990s. Scott’s book could have profited from engaging with say Herbert Simon’s work on bounded rationality, Charles Lindblom’s work on incrementalism, and FriedrichHayek’s works (without ever having read the latter).

Random movie/ TV reference:

Planning for War

You can't always get what you want...

John Steinbeck: Of Mice and Men

Another classic of American 20th century' literature on this month's reading list. 

It is a short story, so, well, the story is quickly told. Lennie and George move from farm to farm in California in search of work. Lennie is physically imposing, innocent, and good-natured , but mentally retarded. He likes to pet soft things, but usually inadvertently kills the animals he has. George, the smarter one of the two, takes care of Lennie. Together, they hope to realize their hope of having their own farm. The two had to leave their previous farm after Lennie's love for touching soft object (in this case a girl's skirt) led to him being accused of rape.

At the new farm they meet Candy, an old farm worker whose savings may bring the two closer than ever to realizing their dream of a farm. At the same time, the situation slowly escalates. Their boss's son Curley, a short, easily irritable man, soon gets into a confrontation with George and Lennie. Curley's promiscuous wife (referred to as Curley's wife throughout the novel) flirts with the farm workers. Lennie ends up crashing Curley's hand in a fight. Sometime later, Lennie accidentally kills Curley's wife, after she had asked him to stroke his hair, and runs away. The story ends with George setting out with Curley and the other farm workers to find Lennie... (won't spoil the rest).

Great read. An impressive description of farm life in 1920's California. The novel got the feel of a classic drama, with the hopes of the protagonists being built up, while the foreseeable bad ending is kind of hanging over the story. Also, there are more than enough themes to identify with. Unrealized hopes, friendship, the loneliness of moving people etc. When compared to the previous American classic on my reading list, Salinger's Catcher in the Rye, loneliness seems to be a theme running through both books. However, there is much less depiction of the characters' inner lives in Steinbeck's book. Moreover, having two farm workers in rural California as the main characters also nicely contrasts with private school educated Holden Caulfield. I have the impression that Caulfield's privileged upbringing and the material security afforded by well-off parents allow him to uphold an alienated attitude that characters like George and Lennie can't afford, given they have to survive, get along with people and make their living on a daily basis...

Next on the list of American (to-be) classics: Kerouac's "On the Road", Steinbeck's "Grapes of Wrath", Harper Lee's "To Kill a Mocking Bird", Joan Didion's "Slouching Towards Bethlehem", Tom Wolfe's "A Man in Full", and Yanigihara's "A Life in Full".


Random movie reference:
Apparently, two gremlins called George and Lennie feature in the second Gremlin's movie, but I couldn't find a proper clip. So let's go for the intellectual gremlin in the first part. The way how he deals with the less intellectual gremlin is also kind of remotely reminiscent of the novel...(no spoiler intended)

Favorite quotes:
"Ain't many guys travel around together ... I don't know why. Maybe ever'body in the whole damn world is scared of each other."

"Take a real smart guy and he ain't hardly ever a nice fella."

"I seen the guys that go around on the ranches alone. That ain't no good. They don't have no fun. After a long time, they get mean."

"Books ain't no good. A guy needs somebody- to be near him."