Longreads + Open Thread

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Longreads

• Brian Potter of Construction Physics on why skyscrapers all use such similar, boring designs. If your guess was that this aesthetic trend can be explained by economics 101-style reasoning, you're exactly right. If you also guessed that the details of what changed the mix of cost inputs are surprising, and offer lots of anecdotes on what it's like to actually design and build such a thing, you'd be right again.
• In Wired, Bradley Hope profiles Sheikh Tahnoun bin Zayed al Nahyan, a member of the UAE's ruling family who controls both their intelligence service and their extremely ambitious investments in AI. Of all the trophy assets to bid for, new LLMs might be among the most worthy, or at least the one with the largest positive spillover effects to offset the likely negatives of an authoritarian country getting better at detecting faint signals in vast amounts of data. Most kinds of scientific research require a mix of dollars and talent, but AI is fairly unique in how much dollars alone can scale things. So it's an opportunity for catch-up growth, but only among countries that make a lot of money in a low-tech way.
• Zvi Mowshowitz assesses the impact of congestion pricing in New York so far. The NYC pricing model is not perfect, but it's a lot better than the previous model of charging everyone a steep but unpredictable congestion fee denominated in minutes. It's a good piece that considers many of the short-term factors that affect what metrics we're seeing today: the long-term effect of changing how something is priced is not the same as the immediate effect, and it's a bad idea to extrapolate the long-term impact of congestion pricing on businesses during an unusually cold week.
• Tyler Cowen on evaluating The Odyssey from an economic lens, not in the sense of wondering how fast Odysseus depreciated his sword and sandals, but looking at the characters as semi-rational agents pursuing goals subject to constraints. One point Cowen makes is that a running theme in the story is intoxication, which, as he notes, may be one of the only forms of consumption available to most people at that time. Odysseus is, perhaps solely in that respect, abstemious—he'd rather be adventuring or spending time with various princesses and witches than eating lotus leaves.
• From Edward F. McQuarrie, a brief early history of US capital markets. As The Diff has noted before, long-term US equity returns look unusually good because the US is the rare country without a drawdown to nearly zero for financial assets. Yes, we've had periods where stocks underperformed, but the Great Depression was fine for bonds. In many other places, there's a point where a war was lost (Russia, China, Germany, Japan) or won at too great a cost (the UK) that either adds a gap to the time series or at least means that almost everyone with financial assets ended up much poorer. This piece notes that while the US is not quite that extreme, tracking the results of New York-listed companies implicitly adds some survivorship bias; Philadelphia was once a bigger financial center, so long-term New York-centric results also show the upside from New York surpassing other places.
• In Capital Gains: financial markets aren't closed systems, and sometimes things that look like impossible-to-fix inefficiencies get fixed because of which companies choose to list, which choose to go private, and which opportunities activists have.
• And that piece was prompted by an aside from this podcast, in which Andrew Walker and I talked through More Than a Numbers Game. We're thinking of making this finance book club a monthly thing, with a mix of new books, classics, and a few of our obscure favorites.
• And in The Riff, we talked about Mark Zuckerberg's PR, the loneliness economy, and why there's never a good time to fix a company's legal structure. Listen with YouTube/Spotify/Apple.

Books

Slavery and Social Death: if you're ever feeling excessively optimistic about the human condition, this book serves as a good reminder of the ways people treated one another in the distant past, and how recently such things have persisted. This book is a study of the nature of slavery, more as a social than an economic relationship.

Which is good, because asking about it as an economic relationship leads to all sorts of awkward questions. (It's no coincidence that if you go far enough to the left, you'll hear people claim that needing to earn a paycheck is a form of slavery, and if you move to the right, the idea that you or your boss would pay taxes is, you guessed it, slavery!) There's a continuum between being your own boss, having a boss, being an indentured servant with a finite term, and living in a society structured around forcing you to work for one person, in whatever capacity they want, until one of you dies. Somewhere on that continuum, it switches to being unacceptable no matter what. (There have been societies where most slaves sold themselves into that status, like Korea, which at its peak had a similar share of the population enslaved as the US South on the eve of the Civil War.)

The book makes the case that the best way to understand slavery is that it's the social equivalent of death: slaves are people stripped of any connection to ancestry, nuclear family, personal possessions, safety, and dignity. They may have access to some of these, but it's entirely contingent: it's common for them to be renamed, even if they're from the same culture as the people who enslaved them, but they won't forget their real names. They can have kids, but they can never be sure they won't be separated from them. They can have a plot of land on which they grow food, or tools that they use to work—it is, in fact, quite common across slave-holding societies for the most successful slaves to have slaves of their own. But they know that all of this can be taken away.

All of this leads to some fascinating social arrangements that try to make the fact of slavery coexist with some kind of legal and moral framework that makes it acceptable. There are cultures where mistreated slaves will go to the home of someone of a similar social station to their owner, and start breaking furniture, after which their master needs to apologize, make financial amends, and be publicly embarrassed by all the fuss. Various legal systems have tried to work through the concept of someone who isn't allowed to own anything somehow saving up enough money to buy their own freedom—was it their money in the first place?

What this book leaves you with is another uncomfortable set of abstract questions: obviously most modern people react to the idea of slavery with some level of revulsion, but that's a response that would have struck most historical people as nonsensical. And the idea of inflicting some level of social death on someone—denying them some form of family, connection to ancestry, or even the right to own things—is something societies inevitably do by some definition, because there isn't a broad model that encompasses everyone's different definitions of these, and also because ejecting people from society is an incredibly tempting move, at many contexts and at many scales. Which is in one sense a necessity; every society has to decide who’s capable of full participation, who isn’t, and who’s outside of their orbit entirely. But there are better and worse ways to do this.

Open Thread

• Drop in any links or comments of interest to Diff readers.
• Which books should we do for the finance book club next?

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