“Capital in the 21^st Century” explains how the distribution of income and wealth (or capital) evolves according to the laws that govern economic growth, rate of saving, and returns on capital.  Picketty argues quite convincingly the reproduction of capital tends to outpace that of the economic output (GDP).   Once set in motion, therefore, capitalism inevitably concentrates wealth, creating a self-reinforcing spiral that ends with appallingly unequal distribution of wealth.  By Picketty’s estimation, the accumulation of wealth in the developed countries has by 2010s returned to a level that the world has not seen since the eve of the World War I.  As a shocking symptom of this extreme inequality, the bottom 50% of population collectively own close to nothing everywhere, including Sweden!  If this process is to continue indefinitely, he warns, “the past will devour the future” and we will return to a society of “rentiers dominant over those who own nothing but their labor”.

It is tempting to reject out of hand Picketty’s thesis as Marxism dressed in a new costume, and his laser focus on inequality a dangerous rhetoric tacitly inciting class warfare.  Such an interpretation would be unfair, however.  His main argument against capital concentration, I think, is not a moral one.  Rather, the concern is concentrating so much capital in so few hands may be socially destabilizing. Moreover, as the stock of capital continues to grow relative to GDP, the returns on capital may eventually converge to the rate of economic growth, at which point capitalists must reinvest all income from capital in order to merely preserve “their social status relative to the average for the society”. This last point, known as the golden rule, seems to me an ultimate manifestation of involution (内卷).

How do we avoid such apocalypse then?  Picketty’s innovation is a tax directly levied on capital, including all financial assets such as (unsold) stocks and bonds.   As utopian as it might sound, the idea has gained traction in mainstream politics lately.  The Democratic Party in the US, for example, recently proposed a “billionaire tax” to pay for Biden’s ambitious social spending programs.  Conceptually, the billionaire tax is exactly a tax on capital, though it limits the taxation base literally to “billionaires”. While this proposal died quickly, I suspect similar attempts will resurface in the future, if only as a novel revenue source for desperate governments.

Picketty is an articulate and persuasive writer, and “Capital” is absolutely worth reading.  As a side note, I found his open refusal to recognize economics as a science remarkable and laudable.  My jaw almost dropped when I read “the discipline of economics has yet to get over its childish passion for mathematics”. With that kind of candidness, I am sure the book did not win Picketty many friends in his profession; but whether you agree with him or not, you must admit to “tell it as it is” in such a dramatic fashion requires conviction, courage, and integrity.

Mary Beard’s SPQR—which stands for “Senate and People of Rome”—covers the first thousand years of the Roman Empire, running from the legendary founding of the city in 753 BCE to 212 CE, when Caracalla extended citizenship to all free men living within the Empire.  Her narrative anchors at the time of Caesar and Cicero (i.e., the middle of the first century BCE), which not only saw Rome’s transition from a republic to one-man rule, but also produced a significant body of literature, including a huge volume of Cicero’s writing. Coincidentally, this period largely overlaps with the glorious thousand years of Ancient China, between the Spring and Autumn Period, officially commenced in 770 BCE, to the end of the Eastern Han Dynasty (220 CE).

You would be thoroughly disappointed if you look forward to reading the colorful stories of the famed Roman tyrants or the virtuous deeds of the five good emperors.  Beard refused to reconstruct Roman history in terms of the biographies of the rulers.
She is skeptical of the accuracy of their “standard images” passed on to us in historical records. More importantly, she does not believe “the qualities of the man on the throne” would make much difference, because all emperors, from Nero to Marcus Aurelius, ruled according to the same blueprint laid out by Augustus.  Her sentiment reminds me of an Afghan proverb I recently came across,

“Better a strong dog in the yard than a strong king in the capital”.  

Accordingly, Beard’s portrait of Rome focuses on ordinary Romans.  She depicts with vivid details the Roman way of life, from where Romans live, what they eat, to how they commemorate the dead; she describes every facet of the society, from politics, entertainment and personal finance to law enforcement and war.  Beard’s stories are always carefully backed up not only by the writings of contemporary Romans, but also by rich archeological records – many of which I’ve never known exist.    I very much appreciate her deemphasizing royal résumés and court intrigues. However, I’m not sure all emperors are as useless or harmless as she insists. It may be true that emperors had limited influences on the daily life of any ordinary peasant or aristocrat.   However, overly ambitious despots or utterly incompetent idiots could still, without great labor, throw their empires into cataclysm and destroy millions of lives in the wake. This is especially true for many Chinese dynasties, where an ever-present, sophisticated, and layered bureaucratic system could impose laws and extract resources in nearly every corner of the empire.

Beard seems to agree with Polybius—a Greek who wrote in the second century BCE a 40-volume book entitled “Histories”—that Rome’s rapid ascent to hegemony should be credited to the idea of checks-and-balances embedded in her political system.  Seeking to maintain a delicate equilibrium between consuls, the senate, and the people, the idea had influenced the United States’ constitution so much that it remains the emblem of her politics to this day.  However, I suspect Polybius had made a common mistake in social science here: extrapolating incomplete patterns into a specious theory. On the other side of Earth, the Kingdom of Qin established the first Chinese empire in 221 BCE, 75 years before Rome became the master of Mediterranean on the ruins of Carthage.  Qin was a highly centralized monarchy founded on legalism, a political philosophy antithetical to the idea of checks-and-balances. Legalists argue the more concentrated the power is into the hands of the sovereign, the better. They advised the emperor that the people are not to be entrusted with liberty or right to participatory governance; instead, they must be ruthlessly exploited for the collective national interest––whatever that means––and to save themselves from falling victim to their own vices (hence the slogan “serving the people”). Cruel as it might sound, legalism had enabled Qin to conquer a vast territory by force and remake China in its own image. To be sure, the mighty Qin dynasty lasted only 15 years.  However, the polity it pioneered had survived for millenniums – some may argue it continues to this day. Thus, checks-and-balances is probably not the secret behind Rome’s unparalleled success.  Nor had it saved Rome from the populist strong men of the first century BCE – the likes of Pompei, Caesar and Octavian.

Beard notes “Roman emperors and their advisors never solved the problem of succession”.  Rather than sticking to primogeniture, Roman rulers often resorted to— sometimes forced by biology, as in the case of Julio-Claudian dynasty—a form of ambiguous meritocracy for choosing their heir. As a result, for the period covered in the book, only three emperors, Vespasian, Marcus Aurelius and Septimius Severus, had passed the throne to their biological sons.  Those who have watched the Hollywood movie “Gladiator” may remember the scene where Marcus Aurelius was murdered by his son, Commodus, who found out the philosopher emperor was about to name an able and wise general as the heir to the throne. I have not seen much evidence supporting this dramatized version of the fateful succession that upended the era of “five-good-emperors”.  In fact, Commodus was named the co-emperor––another strange Roman invention––at the age of 15 by his father.   Nevertheless, the Hollywood story captures the Romans’ ideal succession principle, perhaps best expressed in a speech delivered to the emperor Trajan by Pliny the Younger,

“If he is to rule over all, he must be chosen from all”.

To Pliny’s contemporaries in China––the elites of the Eastern Han Dynasty––the suggestion that an emperor should be chosen from all must sound absurd, if not blasphemous.  While the legend has it that once upon a time Chinese, too, chose their ruler by merit rather than birth, that nostalgic era of Yao-Shun-Yu (尧舜禹) had long gone by the time when Pliny wrote his speech.   The point, of course, was never about which succession principle is better, but rather no principle always works under one-man rule. As Beard points out, transferring the absolute power is an inherently unstable and dangerous business, and the moment when that power was supposedly handed on was “always the moment when the empire was most vulnerable.”  To this truth millions of people can still attest even today.

I am always attracted to “The End of XXX”. “The End of Faith”, “The End of Time”, “The End of Physics”, “The End of History”, and the list goes on.   Thus, ever since a colleague of mine named The End of Everything his favorite book about astrophysics, I knew I must read it.   I was not disappointed.

The book is a layman’s guide to cosmology, with a focus on the death of the universe. Katie Mack explains that our universe could end in five different ways and she expects humanity to survive in none of these scenarios.  Of the five endings, Heat Death seems the most humane to me.  In it, the universe will continue to expand until it reaches a thermodynamic equilibrium, at which nothing, including life in any form as we know it, can ever happen again.  The other four endings, if I understand them correctly, all involve a cataclysm that, according to Mack, you will never want to live long enough to witness.

A book entitled “The end of everything”, of course, is inherently about eschatology.  Contemplating the end of the universe was surprisingly hard and strangely personal. In fact, I found it even harder than thinking of my own death. We humans often come to terms with death using the legacies we might leave behind: passing our genes on to next generations; making the world a better place; or better yet, enshrining our ideas in eternal knowledge.  However, if humanity itself will not survive the destruction of the universe, these justifications sound unconvincing.  “At some point, in a cosmic sense, it will not have mattered that we ever lived.” Mack tells us.  This comment reminds me of the famous quote from the movie Coco, “When there is no one left in the living world who remembers you, you disappear from this world. we call it the Final Death”. The end of universe is the Final Death of Humanity.

Mack then asks the obvious question: “What does that mean for humanity and where does that leave us now?”  In the epilogue, she tried but struggled to offer a satisfactory answer.  I could not come up with an answer either.  In fact, just thinking about it makes me feel sad. Indeed, when a colleague of Mack posed that question at an academic seminar, some people in the audience cried.

Mack is a great writer and communicator.  Her infectious passion for science and sharp wit makes reading the book a joy that I look forward to everyday. For the first time, I feel that I actually understand what dark energy or cosmic background radiation is.  Of course, I still have no idea about the Higgs Field or Vacuum Decay, but that’s probably on me.

Richard Posner is said to be the most cited legal scholar of the twentieth century.  A Failure of Capitalism, a book published toward the end of his distinguished career, is not among the most cited of his scholarly works – not even close – but probably the most read, judged by the number of ratings on Goodreads.  “The failure” of capitalism concerned herein is the financial crisis of 2008, which triggered the Great Recession, the worst recession the world had ever seen since the legendary depression of 1929.  The book attempts to explain the causes of that crisis, who should bear the blames and what lessons we may collectively draw from the event.

Posner believes the main cause of Great Recession is the confluence of lower interest rates in 2000s and the over-deregulation of financial industry that began much earlier.  On the one hand, cheap credit encouraged the expansion of homeownership, which pushed up home price because the supply in real estate market is usually slow to catch up with demand.  Rising price convinced people that houses are good investment, thereby inducing more to dive in with money borrowed beyond their means to pay back unless home price continued to rise.  On the other hand, deregulation made it harder for traditional commercial banks to raise equity capital from demand deposit accounts, owing to the competition from investment banks and hedge funds alike. To stay in the game, therefore, banks had to rely more on borrowed short-term credit, increase their leverage (the ratio of debt to equity) and make longer term (hence riskier) loans. With the huge demand for credit fueled by the low interests of 2000s, this business model was pushed to the limit, exposing the entire industry to the risk of default in the housing market should the price begin to fall.  To mitigate these risks, banks invented complex debt securitization devices, including the infamous credit-default swaps.   In hindsight, however, these tools were not so much about reducing the risks as hiding them, unconsciously or otherwise.

Given this analysis, it is hardly surprising Posner argues the leaders at Federal Reserve and other economic agencies – Alan Greenspan and, to lesser extent, Ben Bernanke, among others – are culpable for a misconceived monetary policy and the lack of foresight for the impending crisis.  He also points fingers at the US government for its deregulation of the financial industry – driven largely by market fundamentalism – and the failure to prepare a contingence plan that would have avoided the “bumbling improvisations” in the initial response.   Posner is also dismayed at the “failure of the economics profession to have grasped the dangers”.  Many, including Robert Lucas – the most distinguished macroeconomist at the time – seemed to have been completely blindsided by the disaster.    Lucas had gone so far as to downplay the imminence of a recession as late as September 19, 2008, four days after the collapse of Lehman Brothers.     However, Posner argues his fellow academics deserve lenience for missing the warning signs that they were supposedly best poised to spot.  For one thing, they were not well equipped to “empirically test rival theories of depression” and were increasingly isolated in their own silos by ever-greater specialization. More importantly, doomsaying is a tricky and unpopular craft. As Posner points out, “Cassandras rarely receive a fair hearing”, because “it is very difficult to receive praise, and indeed to avoid criticism, for preventing a bad thing from happening unless the probability of its happening is known”.

Posner pushes back forcefully against the claim that the crisis had much to do with the stupidity or greed of bank executives and hedge fund managers.  Nor does he believe they should be held responsible for not heeding the warning signs of a gigantic bubble while taking seemingly undue risks to “ride it”.     “Riding a bubble can be rational”, Posner explains, especially when money is cheap.  More importantly, nobody really knows when a bubble, unattainably large as it might seem, will burst, and until it does one could still be making much money riding it than climbing off.   Indeed, being rational could be a losing proposition when the majority is irrational, as summarized in Keynes’ famous aphorism,

“the market can stay irrational longer than you can stay solvent”.

Posner believes the duty of mitigating systematic risks resides elsewhere (i.e., government), because

“it would make no more sense for an individual businessman to worry that because of the instability of the banking industry his decisions and those of his competitors might trigger a depression than for a lion to spare a zebra out of concern that lions are eating zebras faster than the zebras can reproduce.”

Posner writes beautifully, with a combination of clarity, precision, and elegance that few authors could match.  If one wants to learn how to explain complex concepts to a layman in an accessible but still sophisticated manner, the book will make a great tutorial. I don’t know enough about macroeconomics or finance to comment on many an opinion expressed in the book.   Truth told, the book taught me a lot about those subjects – the difference between equity and security being a memorable example. However, I do question the wisdom of writing a book about an event that had not even run its course at the writing (early 2009).   If Posner had waited a few more years, perhaps he would not insist to label the crisis as a “depression”.  He might also reconsider his derision of Feds’ low-interest policy because that policy, in a much more aggressive form, had not only survived Great Recession, but also thrived for more than a decade since.