Thales and the olive presses

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pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alvin Roth, bank run, banking crisis, barriers to entry, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, income inequality, information asymmetry, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, Steven Pinker, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

According to Aristotle’s story, the value of olives in fact went up as Thales had predicted. Hence “he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like.”2 Aristotle’s intent in telling this story appears to have been merely to show that scholars can be e ective in the real world. The story does not convince us that options markets in and of themselves are a good thing. Indeed it sounds rather like a story of a smart operator taking advantage of the broader public. But we learn from this story that olive press owners were open to the sale of options. Presumably they had made such trades before.

The Origins of Derivatives Derivatives go back a long, long way. One of the earliest mentions of derivatives, by Aristotle (384–322 BCE) in his Politics, describes the successful trading of the noted Greek philosopher Thales (mid-620s to mid-540s BCE), the man who is sometimes described as the world’s rst real mathematician for having conceived of mathematics as the practice of formal deduction from stated assumptions with rigorous proofs. Apparently mathematicians were interested in finance from the very beginning! Aristotle describes Thales as giving earnest money, arrabon , for the use of olive presses at an agreed rental rate for a later harvest. Earnest money and option premium are really the same thing. The word arrabon has taken on a di erent meaning (that of an engagement to marry) in modern Greek, but in ancient Greek we can say that it referred to a sort of option.

Until they are exhausted or destroyed, there is an option to exhaust or destroy them, or to choose not to exhaust or destroy them. The choice itself has option value, before the decision is finalized—something that one must consider before making the choice.1 The exact nature of the contract between Thales and the farmers who owned the olive presses is not known. Perhaps the contract gave the presser the right to a fraction of the oil produced in compensation for the costs he incurred in pressing the olives. Thales was buying what we now call options on olives because he could later choose not to buy, and sacri ce his earnest money, if the value of olives fell instead of rising. His contract di ers from a typical derivative today in that it appears to be based on total value rather than price, but that distinction is not essential to a discussion of options theory.


pages: 425 words: 122,223

Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein

"Robert Solow", Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black-Scholes formula, Bonfire of the Vanities, Brownian motion, business cycle, buy and hold, buy low sell high, capital asset pricing model, corporate raider, debt deflation, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, financial intermediation, fixed income, full employment, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, Kenneth Arrow, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, money market fund, Myron Scholes, new economy, New Journalism, Paul Samuelson, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk/return, Robert Shiller, Robert Shiller, Ronald Reagan, stochastic process, Thales and the olive presses, the market place, The Predators' Ball, the scientific method, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, transfer pricing, zero-coupon bond, zero-sum game

Aristotle goes on to tell the story of the philosopher Thales the Milesian, who developed a “financial device which involves a principle of universal application.” People had chided Thales because he was a poor man, taking his poverty as proof that philosophy is of no practical use. Thales knew what he was about, however, and set out to demonstrate the foolishness of this reproach. Thales had exceptional skill in reading the stars. One winter he foresaw that the autumn olive harvest would be much larger than normal. He took the little money he had saved up and paid quiet visits to all the owners of olive presses in the area, placing small deposits with each of them to guarantee him first claim on the use of their presses when fall arrived. He was able to negotiate low prices, for the harvest was still nine months off, and, anyway, who could know whether the harvest would be large or small.

But there was one more item to be plugged into the formula. No investor will buy or sell an option on a stock without some expectation about what the future action of the stock will be. Will the stock be volatile, like Apple Computer, or sleepy, like Consolidated Edison? In valuing options, volatility matters a lot. The option-holder has a claim on which he can lose relatively little: Thales made only small deposits on the olive presses. But the option-holder can gain a great deal: Thales made a killing when the olive crop turned out to be unexpectedly large. This means that options are more interesting to their owners in cases where something big is likely to happen than when nothing is likely to happen. If conditions promise to be stable, why spend money for an opportunity that will be profitable only when conditions change? More is involved here than just beta—that is, a stock’s volatility relative to the market as a whole.

He was able to negotiate low prices, for the harvest was still nine months off, and, anyway, who could know whether the harvest would be large or small. The story ends as you may have guessed: “When the harvest-time came, and many [presses] were wanted all at once and of a sudden, he let them out at any rate he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.” Aristotle’s anecdote about Thales and his financial device is the first recorded mention of the instrument that has come to be known as an option. An option is essentially a contract that gives the owner the right to take a stipulated action under conditions specified and agreed to in advance. Option contracts do not oblige the owner to act unless he wishes to do so. If the olive crop had turned out to be disappointing, Thales would have let his options lapse; he would have exercised them only if the crop had turned out to be great enough to overwhelm the olive-pressing capacity of the community.


pages: 239 words: 69,496

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, assortative mating, Benoit Mandelbrot, Brownian motion, capital asset pricing model, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial innovation, follow your passion, George Akerlof, Gordon Gekko, greed is good, housing crisis, income inequality, information asymmetry, Isaac Newton, Jony Ive, Kenneth Rogoff, longitudinal study, Louis Bachelier, moral hazard, Myron Scholes, new economy, out of africa, Paul Samuelson, Pierre-Simon Laplace, principal–agent problem, Ralph Waldo Emerson, random walk, risk/return, Robert Shiller, Robert Shiller, Ronald Coase, Silicon Valley, Steve Jobs, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, transaction costs, zero-sum game

“He raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up; and when the season arrived, there was a sudden demand for a number of presses at the same time, and by letting them out on what terms he liked he realized a large sum of money.” Aristotle’s lesson from this story reflects the smug sentiments of philosophers and academics everywhere—Thales demonstrated that “it is easy for philosophers to be rich if they choose, but this is not what they care about.” How does Thales’s transaction reflect the nature of options? The “deposit” that Thales first paid secured the right, but not the obligation, to rent the presses. This transaction is the essence of an options transaction—relatively small premia are paid to secure the rights to enter into transactions rather than obligating someone to do something, thereby enabling them to access resources they might need but don’t know if they will need.

Violet’s appreciation of self-knowledge as a prerequisite to the thoughtful use of options has deep historical resonance. Thales of Miletus, acknowledged as the father of Greek philosophy by no one less than Aristotle himself, is often credited both with the phrase “know thyself” and with originating the first options transaction. Thales earned his position as the only philosopher in the Seven Sages of Greece by pioneering the use of natural, instead of supernatural, explanations for phenomena, advocating hypothesis-driven thinking, and even managing to predict solar eclipses with the crudest of instruments. Despite these remarkable accomplishments, Thales still had something left to prove. According to Aristotle, Thales’s poverty led him to be “taunted with the uselessness of philosophy.” Seeking to redress this impression, Thales decided to capitalize on his ability to forecast a good olive harvest. “He raised a small sum of money and paid round deposits for the whole of the olive-presses in Miletus and Chios, which he hired at a low rent as nobody was running him up; and when the season arrived, there was a sudden demand for a number of presses at the same time, and by letting them out on what terms he liked he realized a large sum of money.”

Finance to the rescue! Anxious to seize the opportunity and buy a large lot of land, Pakhom borrows large amounts to finance his purchase, providing a vivid example of the power of leverage. The transaction proceeds with Pakhom paying a deposit to secure the right to purchase the land while he secures financing, just as Thales did more than two millennia ago when he pioneered the use of options to create choices and enable risk-taking. Pakhom borrows more to buy seeds and, after a successful harvest, succeeds in paying back all his creditors, making him into a “landowner, in the full sense of the word.” Pakhom is “filled with joy . . . Before, when he had ridden over that land, it had seemed the same as any other. But now it was something special.” The remainder of the story is filled with even more finance.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

Air France Flight 447, Andrei Shleifer, banking crisis, Benoit Mandelbrot, Berlin Wall, Black Swan, business cycle, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, financial independence, Flash crash, Gary Taubes, George Santayana, Gini coefficient, Henri Poincaré, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, meta analysis, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, principal–agent problem, purchasing power parity, quantitative trading / quantitative finance, Ralph Nader, random walk, Ray Kurzweil, rent control, Republic of Letters, Ronald Reagan, Rory Sutherland, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, Thales and the olive presses, Thales of Miletus, The Great Moderation, the new new thing, The Wealth of Nations by Adam Smith, Thomas Bayes, Thomas Malthus, too big to fail, transaction costs, urban planning, Vilfredo Pareto, Yogi Berra, Zipf's Law

I am not saying this to denigrate the great Aristotle, but to show that intelligence makes you discount antifragility and ignore the power of optionality. Thales was a philosopher, a Greek-speaking Ionian of Phoenician stock from the coastal town of Miletus in Asia Minor, and like some philosophers, he enjoyed what he was doing. Miletus was a trading post and had the mercantile spirit usually attributed to Phoenician settlements. But Thales, as a philosopher, was characteristically impecunious. He got tired of his buddies with more transactional lives hinting at him that “those who can, do, and others philosophize.” He performed the following prowess: he put a down payment on the seasonal use of every olive press in the vicinity of Miletus and Chios, which he got at low rent. The harvest turned out to be extremely bountiful and there was demand for olive presses, so he released the owners of olive presses on his own terms, building a substantial fortune in the process.

Simply, he had a contract that is the archetype of what an asymmetry is, perhaps the only explicit asymmetry you can find in its purest form. It is an option, “the right but not the obligation” for the buyer and, of course, “the obligation but not the right” for the other party, called the seller. Thales had the right—but not the obligation—to use the olive presses in case there would be a surge in demand; the other party had the obligation, not the right. Thales paid a small price for that privilege, with a limited loss and large possible outcome. That was the very first option on record. The option is an agent of antifragility. OPTION AND ASYMMETRY The olive press episode took place about six hundred years before Seneca’s writings on his tables with ivory legs, and three hundred years before Aristotle. The formula in Chapter 10 was: antifragility equals more to gain than to lose equals more upside than downside equals asymmetry (unfavorable) equals likes volatility.

The worst side effect of wealth is the social associations it forces on its victims, as people with big houses tend to end up socializing with other people with big houses. Beyond a certain level of opulence and independence, gents tend to be less and less personable and their conversation less and less interesting. The story of Thales has many morals, all of them linked to asymmetry (and the construction of an antifragile payoff). The central one is related to the following account by Aristotle: “But from his knowledge of astronomy he had observed while it was still winter that there was going to be a large crop of olives …” So for Aristotle, clearly, the stated reason was Thales’ superior knowledge. Superior knowledge? Thales put himself in a position to take advantage of his lack of knowledge—and the secret property of the asymmetry. The key to our message about this upside-downside asymmetry is that he did not need to understand too much the messages from the stars.


pages: 404 words: 131,034

Cosmos by Carl Sagan

Albert Einstein, Alfred Russel Wallace, Arthur Eddington, clockwork universe, dematerialisation, double helix, Drosophila, Edmond Halley, Eratosthenes, Ernest Rutherford, germ theory of disease, global pandemic, invention of movable type, invention of the telescope, Isaac Newton, Johannes Kepler, Lao Tzu, Louis Pasteur, Magellanic Cloud, Mars Rover, Menlo Park, music of the spheres, pattern recognition, planetary scale, Search for Extraterrestrial Intelligence, spice trade, Thales and the olive presses, Thales of Miletus, Tunguska event

Whether Thales’ conclusion was correct is not as important as his approach: The world was not made by the gods, but instead was the work of material forces interacting in Nature. Thales brought back from Babylon and Egypt the seeds of the new sciences of astronomy and geometry, sciences that would sprout and grow in the fertile soil of Ionia. Very little is known about the personal life of Thales, but one revealing anecdote is told by Aristotle in his Politics: [Thales] was reproached for his poverty, which was supposed to show that philosophy is of no use. According to the story, he knew by his skill [in interpreting the heavens] while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest time came, and many were wanted all at once, he let them out at any rate which he pleased and made a quantity of money.

There is a clear continuity of intellectual effort from Thales to Euclid to Isaac Newton’s purchase of the Elements of Geometry at Stourbridge Fair in 1663 (p. 68), the event that precipitated modern science and technology. Thales attempted to understand the world without invoking the intervention of the gods. Like the Babylonians, he believed the world to have once been water. To explain the dry land, the Babylonians added that Marduk had placed a mat on the face of the waters and piled dirt upon it.* Thales held a similar view, but, as Benjamin Farrington said, “left Marduk out.” Yes, everything was once water, but the Earth formed out of the oceans by a natural process—similar, he thought, to the silting he had observed at the delta of the Nile. Indeed, he thought that water was a common principle underlying all of matter, just as today we might say the same of electrons, protons and neutrons, or of quarks. Whether Thales’ conclusion was correct is not as important as his approach: The world was not made by the gods, but instead was the work of material forces interacting in Nature.

The leading figures in this revolution were men with Greek names, largely unfamiliar to us today, but the truest pioneers in the development of our civilization and our humanity. The first Ionian scientist was Thales of Miletus, a city in Asia across a narrow channel of water from the island of Samos. He had traveled in Egypt and was conversant with the knowledge of Babylon. It is said that he predicted a solar eclipse. He learned how to measure the height of a pyramid from the length of its shadow and the angle of the Sun above the horizon, a method employed today to determine the heights of the mountains of the Moon. He was the first to prove geometric theorems of the sort codified by Euclid three centuries later—for example, the proposition that the angles at the base of an isosceles triangle are equal. There is a clear continuity of intellectual effort from Thales to Euclid to Isaac Newton’s purchase of the Elements of Geometry at Stourbridge Fair in 1663 (p. 68), the event that precipitated modern science and technology.


pages: 162 words: 50,108

The Little Book of Hedge Funds by Anthony Scaramucci

Andrei Shleifer, asset allocation, Bernie Madoff, business process, carried interest, corporate raider, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, fixed income, follow your passion, Gordon Gekko, high net worth, index fund, John Meriwether, Long Term Capital Management, mail merge, margin call, mass immigration, merger arbitrage, money market fund, Myron Scholes, NetJets, Ponzi scheme, profit motive, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, Silicon Valley, Thales and the olive presses, Thales of Miletus, the new new thing, too big to fail, transaction costs, Vanguard fund, Y2K, Yogi Berra, zero-sum game

Inside the Olive Pit Like any other history lesson, our story begins in ancient Greece with renowned philosopher Aristotle preaching to his disciplines about the mathematician, philosopher, and daydreamer Thales of Miletus. Having predicted an abundant olive crop for the coming season, Thales struck up a deal with all of the local olive refiners in the region. In exchange for a large sum of money, he asked these unknowing farmers “for the right but not the obligation” to rent the entire olive pressing facility for a set fee for the duration of the year’s harvest.1 As luck would have it, Thales’ prediction proved to be true as the olive crop experienced a record-breaking harvest. But, alas, luck can take you only so far. Having strategically negotiated a deal with the farmer for the right to rent the olive press at a set fee, he was able to keep his costs steady and then turn around and charge a high premium for the use of the press—pocketing the difference.

Louis Cardinals outfielder who became the first free agent in the history of baseball, ushered in the dawn of unimaginable salaries for top-notch and in-demand talent. All-stars after Flood got paid, and paid like Croesus. As salaries began to grow to astronomic levels in sports, suddenly they were warranted in corporate America and the world of hedge fund investing. The Secret Is in the Sauce While the Thales tale is quite enjoyable to read (and was somewhat retold here for some humorous relief), it is generally agreed that the first hedge fund was created by A.W. Jones in 1949. After writing an article on financial forecasting trends for Fortune magazine, the former sociologist and journalist decided to launch the entity A.W. Jones & Co. with four friends. At the ripe age of 48, he and his pals invested $100,000 ($40,000 from Jones) in U.S. stocks by taking long and short positions that were augmented with a healthy amount of debt.


pages: 807 words: 154,435

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

"Robert Solow", Airbus A320, Albert Einstein, Albert Michelson, algorithmic trading, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Benoit Mandelbrot, bitcoin, Black Swan, Bonfire of the Vanities, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, easy for humans, difficult for computers, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Hans Rosling, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, Moneyball by Michael Lewis explains big data, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, oil shock, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Pierre-Simon Laplace, popular electronics, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, World Values Survey, Yom Kippur War, zero-sum game

The world is inherently uncertain and to pretend otherwise is to create risk, not to minimise it. Taleb describes ‘anti-fragility’ – positioning oneself to benefit from radical uncertainty and the unknowable future. The value of an option is increased by volatility. The details of Thales of Miletus’s transaction with the olive presses remain obscure – if indeed any such transaction actually occurred. Perhaps he made a futures contract with the owners of the olive presses, perhaps he bought what we would now describe as a call option: the right, but not the obligation, to rent the presses at a price agreed in advance – a price which would seem low if the harvest was as good as Thales anticipated. In either case, he engaged in the first reported transaction in financial derivatives. Derivative markets exist because of volatility in securities prices. And the greater the volatility, the greater the value of an option – whether that option is a call option (the right to buy) or a put option (the right to sell).

Part IV Economics and Uncertainty 17 THE WORLD OF FINANCE Things can be said in equations, impressively, even arrogantly, which are so nonsensical that they would embarrass even the author if spelled out in words. —J. HOOVER MACKIN 1 T hales of Miletus, a Greek philosopher, made important discoveries in geometry and careful observations of the frequency of natural events. His prediction of the solar eclipse in 585 BC was described by Isaac Asimov as ‘the birth of science’. 2 Thales also used his scientific knowledge to anticipate an especially plentiful olive harvest. He bought options on all the olive presses in Miletus, and when demand soared he rented them out at a substantial profit. According to Aristotle, Thales’ motive was not primarily pecuniary; he aimed to provide an answer to the question so often thrown at philosophers and economists: ‘If you’re so smart, why aren’t you rich?’ 3 It is unlikely that much of this story is true but it is instructive, nonetheless. Careful use of small models, well-structured narratives, and rationality based on reason and logic can be the source of worldly success as well as academic kudos.

Simons, formerly a mathematics professor, employs brilliant (maths and physics) PhDs to devise algorithmic trading strategies to take very short-term positions in securities. But there is more in common in the approaches of these men than appears at first sight. Their exceptional intelligence is one; they have responded to the challenge of ‘if you’re so smart why aren’t you rich?’ It is evident from Soros’s writings that he has much in common with Thales of Miletus, and would prefer to be remembered for his ideas than his wealth. Buffett’s letters – and all-day stage performances at the Berkshire Hathaway AGM in Omaha, Nebraska – dispense genuine insights in the guise of homespun country wisdom. Simons has published papers in top mathematical journals. Another common characteristic is a certain humility. Buffett and Soros repeatedly emphasise the limits of their knowledge.


pages: 1,402 words: 369,528

A History of Western Philosophy by Aaron Finkel

British Empire, Eratosthenes, Georg Cantor, George Santayana, invention of agriculture, liberation theology, Mahatma Gandhi, plutocrats, Plutocrats, source of truth, Thales and the olive presses, Thales of Miletus, the market place, William of Occam

According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.” Anaximander, the second philosopher of the Milesian school, is much more interesting than Thales. His dates are uncertain, but he was said to have been sixty-four years old in 546 B.C., and there is reason to suppose that this is somewhere near the truth. He held that all things come from a single primal substance, but that it is not water, as Thales held, or any other of the substances that we know.

We are told that children should be conceived in winter, when the wind is in the north; that there must be a careful avoidance of indecency, because “shameful words lead to shameful acts,” and that obscenity is never to be tolerated except in temples, where the law permits even ribaldry. People should not marry too young, because, if they do, the children will be weak and female, the wives will become wanton, and the husbands stunted in their growth. The right age for marriage is thirty-seven in men, eighteen in women. We learn how Thales, being taunted with his poverty, bought up all the olive-presses on the instalment plan, and was then able to charge monopoly rates for their use. This he did to show that philosophers can make money, and, if they remain poor, it is because they have something more important than wealth to think about. All this, however, is by the way; it is time to come to more serious matters. The book begins by pointing out the importance of the State; it is the highest kind of community, and aims at the highest good.

The Greeks were rash in their hypotheses, but the Milesian school, at least, was prepared to test them empirically. Too little is known of Thales to make it possible to reconstruct him at all satisfactorily, but of his successors in Miletus much more is known, and it is reasonable to suppose that something of their outlook came from him. His science and his philosophy were both crude, but they were such as to stimulate both thought and observation. There are many legends about him, but I do not think more is known than the few facts I have mentioned. Some of the stories are pleasant, for instance, the one told by Aristotle in his Politics (1259a): “He was reproached for his poverty, which was supposed to show that philosophy is of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him.


pages: 206 words: 70,924

The Rise of the Quants: Marschak, Sharpe, Black, Scholes and Merton by Colin Read

"Robert Solow", Albert Einstein, Bayesian statistics, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, capital asset pricing model, collateralized debt obligation, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, discovery of penicillin, discrete time, Emanuel Derman, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial innovation, fixed income, floating exchange rates, full employment, Henri Poincaré, implied volatility, index fund, Isaac Newton, John Meriwether, John von Neumann, Joseph Schumpeter, Kenneth Arrow, Long Term Capital Management, Louis Bachelier, margin call, market clearing, martingale, means of production, moral hazard, Myron Scholes, Paul Samuelson, price stability, principal–agent problem, quantitative trading / quantitative finance, RAND corporation, random walk, risk tolerance, risk/return, Ronald Reagan, shareholder value, Sharpe ratio, short selling, stochastic process, Thales and the olive presses, Thales of Miletus, The Chicago School, the scientific method, too big to fail, transaction costs, tulip mania, Works Progress Administration, yield curve

In the beginning In fact, the art of options has been with humankind since ancient history. The Greeks used options to secure prices for olive oil at a later harvest. A Greek mathematician and philosopher was even purported to have purchased at low cost in the off-season the option to use oil press machinery capacity for the fall harvest. His strategy was to exercise his options when the olive presses were in great demand in the spring, once the high-demand period arrived. He could then exercise his option and rent out the machines for a handsome profit. Aristotle referenced: There is, for example, the story which is told of Thales of Miletus. It is a story about a scheme for making money, which is fathered on Thales owing to his reputation for wisdom; but it involves a principle of general application. He was reproached for his poverty which was supposed to show the usefulness of philosophy; but observing from his knowledge of meteorology (so the story goes) that there was likely to be a heavy crop of olives [next summer], and having a small sum at his command, he paid down earnest-money, early in the year, for the hire of all the olive-presses in Miletus and Chios; and he managed, in the absence of any higher offer, to secure them at a low rate.

He was reproached for his poverty which was supposed to show the usefulness of philosophy; but observing from his knowledge of meteorology (so the story goes) that there was likely to be a heavy crop of olives [next summer], and having a small sum at his command, he paid down earnest-money, early in the year, for the hire of all the olive-presses in Miletus and Chios; and he managed, in the absence of any higher offer, to secure them at a low rate. When the season came, and there was a sudden and simultaneous demand for a number of presses, he let out the stock he had collected at any rate he chose to fix; and making a considerable fortune he succeeded in proving that it is easy for philosophers to become rich if they so desire, though it is not the business which they are really about.2 Thales’ anecdote is interesting. Even millennia ago, there was the same lament we hear today over the separation of production from those that would make money through betting on the production of others.

Each of these regions specialized in the trade of certain goods, and the traders of these goods both tried to profit and to create predictable delivery of goods traded on long supply chains by engaging in options and futures. For instance, the great tulip trade of Holland created wild speculation and the desire by tulip dealers of securing a steady future supply at a price negotiated early on. Call options used by tulip buyers ensured a good price on delivery, and puts could be used to provide sellers with a predictable price for their product upon harvest. While these mechanisms acted at first as a way to ensure predictability for buyers and sellers of tulips, it soon became obvious to speculators that profits could be had. As speculators wrote puts and calls, it would not be long before gyrations in tulip mania caused mismatches in options and delivered prices and quantities that those speculators on the losing end could not cover. Such breakdowns in market-making also created breakdowns in trust in options and in financial markets in general.


pages: 287 words: 80,050

The Wisdom of Frugality: Why Less Is More - More or Less by Emrys Westacott

Airbnb, back-to-the-land, Bertrand Russell: In Praise of Idleness, Bonfire of the Vanities, carbon footprint, clean water, Community Supported Agriculture, corporate raider, Daniel Kahneman / Amos Tversky, dark matter, Diane Coyle, discovery of DNA, Downton Abbey, dumpster diving, financial independence, full employment, greed is good, happiness index / gross national happiness, haute cuisine, hedonic treadmill, income inequality, invisible hand, Isaac Newton, loss aversion, McMansion, means of production, move fast and break things, move fast and break things, negative equity, New Urbanism, paradox of thrift, Ralph Waldo Emerson, Thales and the olive presses, Thales of Miletus, the market place, The Spirit Level, Thorstein Veblen, Upton Sinclair, Veblen good, Zipcar

Naturally, those who have made their millions are likely to see this as just sour grapes on the part of the philosophers, who, they will point out, have rarely found a lucrative market for their ideas or their services. To this snide observation philosophers have traditionally responded by pointing to the example of Thales of Miletus, who flourished around 600 BCE and is commonly identified as the first Western philosopher. Thales, so the story goes, realized from his meteorological observations that there would be a bumper crop of olives later in the year. So he shrewdly bought up all the olive presses in the region where he lived, and when harvesting season arrived, he rented them out at a great profit. The moral of the story, of course, is that if we philosophers chose to apply our mighty intellects to moneymaking, we could do as well as anyone, but we prefer to keep our minds focused on higher things.

See Sparta Specter, Michael, 262 Spinoza, Baruch, 32, 64 stagnation, 145–47 Stiglitz, Joseph, 151, 220 Stoicism, 284. See also Stoics Stoics, 8, 23–24, 50–51, 55, 60, 67, 73, 75, 88, 89, 98, 101, 105, 107, 108, 128, 141, 148, 154, 171, 272 sunk cost fallacy, 144–45 Taoism, 128 technological change, 17–18, 206, 228, 280–83 technology, 254; as solution to environmental problems, 269–71; and simplicity, 22–23, 34; and work, 80 Thales of Miletus, 48 Thoreau, Henry David, 7, 19, 21, 24–27, 29, 34, 79, 88, 117, 120, 131, 137, 166, 248, 253 thrift, 2, 13; etymology of “thrift,” 10. See also frugality; living cheaply; simple living The Tightwad Gazette, 2 Tolstoy, Leo, 32, 64, 124 toughness: reasons for praising, 42–43. See also hardiness tourism, 179 tranquillity, 50; Faustian critique of, 184–85. See also peace of mind Trollope, Anthony, 13 truth, 60–62 Tubman, Harriet, 94 Tusculum College, 46 Tversky, Amos, 144 unemployment, 226–27, 231–36, 242 ungenerosity, 145.

On the contrary, it’s hard not to admire it. In fact older people typically like to boast of Faustian moments in their youth when they threw caution to the winds and through their imprudence enriched their experience. So it is really quite remarkable that so few philosophers in the Western canon defend this outlook. One of the few who come readily to mind is Nietzsche, who gives this advice in The Gay Science: The secret for harvesting from existence the greatest fruitfulness and the greatest enjoyment is—to live dangerously! Build your cities on the slopes of Vesuvius! Send your ships into uncharted seas! Live at war with your peers and yourselves! Inspiring words. Yet even in Nietzsche’s case, this is (as so often with him) all metaphor. Read in context, he is talking here primarily about living dangerously and displaying heroism in the realm of the spirit—that is, in philosophy, science, literature, music, and art.


pages: 463 words: 105,197

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, Plutocrats, pre–internet, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Coase, Rory Sutherland, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, trickle-down economics, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, women in the workforce, Zipcar

We will also see that the solution to restore competition is surprising: it actually involves giving institutional investors more control over companies—but over individual companies rather than over industries. The Monopolist with a Thousand Faces The word “monopoly” was coined by Aristotle in a discussion of the mathematician and philosopher Thales of Miletus, who showed the value of philosophy in practical affairs by cornering the market on olive presses ahead of a harvest.1 Yet during the early modern era, the major source of monopoly was not this type of individual initiative, but the state, which authorized well-connected individuals or groups to dominate various lines of business. Adam Smith and his contemporaries saw these legal arrangements as the primary source of monopoly. The movement for American Independence was partly a struggle against the monopolistic control of the British East India Company over the trade in tea.

What determines how many firms exist in a market—or, in other words, the degree of “market concentration”? In some cases, a firm might grow large and beat out competition just by being the most efficient competitor. In such a case, the law tolerates or even encourages market concentration. The firm should be rewarded for its efficiency. Antitrust law is generally skeptical when market concentration intensifies because of a single firm buying up competitors, as Thales bought up olive presses from competing olive oil producers. But in the real world, matters can be more complicated. Imagine again that dozens of car manufacturers exist, and two of them—Ford and GM—decide to merge. Here, the effect of the merger on competition is likely to be small—because so many competitors exist. Moreover, the merger might create a more efficient company by allowing Ford and GM to avoid duplicative manufacturing facilities.

European systems of, 143–44 Taylor, Fred, 280 Tea Party, 3 “Technique for the Measurement of Attitudes” (Likert), 111 technofeudalism, 230–33 technology, 2; artificial intelligence (AI), 202, 208–9, 213, 219–24, 226, 228, 230, 234, 236, 241, 246, 248, 254, 257, 287, 292; automated video editing and, 208; biotechnology, 254; capitalism and, 34, 203, 316n4; climate treaties and, 265; common ownership self-assessed tax (COST) and, 71–72, 257–59; computers, 21 (see also computers); consumers and, 287; cybersquatters and, 72; data and, 210–13, 219, 222–23, 236–41, 244; diminishing returns and, 226, 229–30; distribution of complexity and, 228; facial recognition and, 208, 216–19; growth and, 255; human capital and, 293; hyperlinks and, 210; Hyperloop and, 30–33; immigrants and, 256–57; income distribution of companies in, 223; information, 139, 210; innovation and, 30–32, 34, 71, 172, 187, 189, 202, 258; intellectual property and, 26, 38, 48, 72, 210, 212, 239; Internet and, 21, 27, 51, 71, 210–12, 224, 232, 235, 238–39, 242, 246–48; job displacement and, 222, 253, 316n4; labor and, 210–13, 219, 222–23, 236–41, 244, 251, 253–59, 265, 274, 293, 316n4; machine learning (ML) and, 208–9, 213–14, 217–21, 226–31, 234–35, 238, 247, 289, 291, 315n48; marginal value and, 224–28, 247; markets and, 203, 286–87, 292; medical, 291; Moore’s Law and, 286–87; network effects and, 211, 236, 238, 243; neural nets and, 214–19; overfitting and, 217–18; pencils and, 278–79; programmers and, 163, 208–9, 214, 217, 219, 224; property and, 34, 66, 70–71; Quadratic Voting (QV) and, 264; Radical Markets and, 277, 285–86; rapid advances in, 4, 173; recommendation systems and, 289–90; robots and, 222, 248, 251, 254, 287; sea power and, 131; self-driving cars and, 230; server farms and, 217; siren servers and, 220–24, 230–41, 243; social media and, 231, 236, 251; spam and, 210, 245; surveillance and, 237, 293; thinking machines and, 213–20; wealth and, 254; websites, 151, 155, 221; World Wide Web and, 210 techno-optimists, 254–55, 316n1 techno-pessimists, 254–55, 316n2 TEDz talk, 169 tenant farmers, 37–38, 41 Thaler, Richard, 67 Thales of Miletus, 172 Theory of Price, The (Stigler), 49 Theory of the Leisure Class (Veblen), 78 Three Principles of the People (Sun), 46 Through the Looking-Glass (Carroll), 176 Tirole, Jean, 236–37 Tom Sawyer (Twain), 233, 237 trade barriers, 14 tragedy of the commons, 44 transportation, 136, 139, 141, 174, 207, 288, 291 trickle down theories, 9, 12 Trump, Donald, 12–14, 120, 169, 296n20 Turkey, 15 turnover rate, 58–61, 64, 76 Twain, Mark, 233, 237 Twitter, 117, 221 Uber, xxi, 70, 77, 117, 288 unemployment, 9–11, 190, 200, 209, 223, 239, 255–56 unions, 23, 94, 118, 200, 240–45, 316n4 United Airlines, 171, 191 United Arab Emirates (UAE), 151–52, 158–59 United Kingdom: British East India Company and, 21, 173; Corbyn and, 12, 13; democracy and, 95–96; House of Commons and, 84–85; House of Lords and, 85; labor and, 133, 139, 144; Labor Party and, 45; national health system of, 290–91; Philosophical Radicals and, 95; rationing in, 20; voting and, 96 United States: American Constitution and, 86–87; American Independence and, 95; Articles of Confederation and, 88; checks and balances system of, 87; Civil War and, 88; Cold War and, xix, 25, 288; common ownership self-assessed tax (COST) and, 71–76; democracy and, 86–90, 93, 95; Gilded Age and, 174, 262; gun rights and, 15, 90; H1–B program and, 149, 154, 162–63; income distribution in, 4–6; Jackson and, 14; labor and, 9–10, 130, 135–54, 157–61, 164–65, 210, 222; liberalism and, 24 (see also liberalism); lobbyists and, 262; Long Depression of, 36; markets and, 272, 288, 290; monopolies and, 21; New Deal and, 176, 200; Nixon and, 288; Occupy Wall Street and, 3; political campaign contributions and, 15; political corruption and, 27; populist tradition of, 12; primary system and, 93; Progressive movement in, 45; property and, 36, 38, 45, 47–48, 51, 71–76; Radical Markets and, 177, 182–83, 196, 201; religious liberty and, 15; Revolutionary War and, 88; stop-and-frisk law and, 89; technology and, 71–72; Trump and, 12–14, 120, 169, 296n20 United States v.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"Robert Solow", 23andMe, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon footprint, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Edward Glaeser, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, Flynn Effect, food miles, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Hernando de Soto, income inequality, income per capita, Indoor air pollution, informal economy, Intergovernmental Panel on Climate Change (IPCC), invention of agriculture, invisible hand, James Hargreaves, James Watt: steam engine, Jane Jacobs, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Mark Zuckerberg, meta analysis, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Plutocrats, Ponzi scheme, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Silicon Valley, spice trade, spinning jenny, stem cell, Steve Jobs, Steven Pinker, Stewart Brand, supervolcano, technological singularity, Thales and the olive presses, Thales of Miletus, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, Y2K, Yogi Berra, zero-sum game

The Greek world depended crucially on finding gains from trade: grain from the Crimea, saffron from Libya and metals from Sicily swapped for olive oil from the Aegean itself. Modern philosophers who aspire to rise above the sordid economic reality of the world would do well to recall that this trade made possible the cross-fertilisation of ideas that led to great discoveries. Pythagoras probably got his theorem from a student of Thales the Milesian who learnt geometry on trade excursions to Egypt. We would never have heard of Pericles, Socrates or Aeschylus had there not been tens of thousands of slaves toiling underground at Laurion and tens of thousands of customers for Athenian goods all over the Mediterranean. Yet as soon as Greece was unified into an empire by a thug – Philip of Macedon in 338 BC – it lost its edge. Had his son Alexander’s empire lasted, it would undoubtedly have become as commercially and intellectually inert as its Persian predecessor.

Kung people 44, 135, 136–7 Kuznets curve 106 Kwakiutl people 92 Lagos 322 Lagrange Point 346 lakes, acidification of 305–6 Lamalera people 87 Lancashire 214, 217, 232, 263 Landes, David 223, 406 Lang, Tim 392 language: and exchange 58; genes for 55; Indo-European 129; and isolationism 73; Neanderthals 4, 55; numbers of languages 73; as unique human development 4 Laos 209 lapis lazuli 162, 164 Lascaux caves, France 6 lasers 272 Lassa fever 307 Laurion, Attica 171 Law, John 29, 259 Lawson, Nigel, Baron 331 Lay, Ken 29, 385 Layard, Richard 25 lead 167, 174, 177, 213 Leadbetter, Charles 290 Leahy, Michael 92 leather 70, 122, 167, 176 Lebanon 167 LeBlanc, Steven 137 LEDs (light-emitting diodes) 21–2 lentils 129 Leonardo da Vinci 196, 251 Levy, Stephen 355 Liang Ying (farm worker) 220 liberalism 108, 109–110, 290 Liberia 14, 316 libertarianism 106 Libya 171 lice 68 lichen 75 life expectancy: in Africa 14, 316, 422; in Britain 13, 15, 284; improvements in 12, 14, 15, 17–18, 205, 284, 287, 298, 316; in United States 298; world averages 47 Life (magazine) 304 light, artificial 13, 16, 17, 20–22, 37, 233, 234, 240, 245, 272, 368 light-emitting diodes (LEDs) 21–2 Limits to Growth (report) 303–4, 420 Lindsey, Brink 102, 109 linen 216, 218 lions 43, 87 literacy 106, 201, 290, 353, 396 Liverpool 62, 283 local sourcing (of goods) 35, 41–2, 149, 392; see also food miles Locke, John 96 Lodygin, Alexander 272 Lombardy 178, 196 Lomborg, Björn 280 London 12, 116, 186, 199, 218, 222, 282; as financial centre 259 longitude, measurement of 261 Longshan culture 397 Los Angeles 17, 142 Lothal, Indus valley 162, 164 Louis XI, King of France 184 Louis XIV, King of France 36, 37, 38, 184, 259 Lowell, Francis Cabot 263 Lübeck 180 Lucca 178, 179 Lunar Society 256 Luther, Martin 102 Luxembourg 331 Lyon 184 Macao 183 MacArthur, General Douglas 141 Macaulay, Thomas Babington, 1st Baron 11, 285–7, 359 McCloskey, Deirdre 109, 366–7 Mace, Ruth 73 McEwan, Ian 47 Machiguenga people 87 MacKay, David 342 McKendrick, Neil 224 McKibben, Bill 293 Macmillan, Harold, 1st Earl of Stockton 16 McNamara, Robert 203 mad-cow disease (vCJD) 280, 308 Madagascar 70, 299 Maddison, Angus 180 Maddox, John 207 Madoff, Bernard 28–9 Maghribis 178, 180 magnesium 213 maize 126, 146–7, 153, 155, 156, 163; for biofuel 240, 241 malaria 135, 157, 275, 299, 310, 318, 319, 331, 336, 353, 428, 429 Malawi 40–41, 132, 316, 318 Malawi, Lake 54 Malay Peninsula 66 Malaysia 35, 89, 242, 332 Mali 316, 326 Malinowski, Bronislaw 134 malnutrition 154, 156, 337 Maltese Falcon, The (film) 86 Malthus, Robert 139, 140, 146, 191, 249, 303 Malthusianism 141, 193, 196, 200, 202, 401 mammoths 68, 69, 71, 73, 302 Manchester 214, 218, 283 Mandell, Lewis 254 manganese 150, 213 mangoes 156, 327, 392 Manhattan 83 manure 147, 150, 198, 200, 282 Mao Zedong 16, 187, 262, 296, 311 Marchetti, Cesare 345–6 Marcuse, Herbert 291 Marie-Antoinette, Queen of France 199 markets (in capital and assets) 9, 258–60 markets (in goods and services): and collective betterment 9–10, 36–9, 103–110, 115–16, 281; disdain for 102–3, 104, 291–2, 358; etiquette and ritual of 133–4; and generosity 86–7; global interdependence 42–3; market failure 182, 250; ‘perfect markets’ 249–50; and population control 210–211; and preindustrial economies 133–4; and trust 98–100, 103; and virtue 100–104, 105; see also bartering; exchange; trade Marne, River 234 Martu aborigines 62 Marx, Karl 102, 104, 107–8, 291, 406 Marxism 101, 217–18, 319, 356 Maskelyne, Nevil 221 Maudslay, Henry 221 Mauritius 187, 316 Mauryan empire 172–3, 201, 357 Maxwell, James Clerk 412 measles 14, 135, 310 meat eating 51, 60, 62, 68–9, 126, 147, 156, 241, 376 Mecca 177 Mediterranean Sea: prehistoric settlements 56, 68–9, 159; trade 89, 164, 167–8, 169, 171, 176, 178 meerkats 87 Mehrgarh, Baluchistan 162 Mehta, Suketa 189 Meissen 185 memes 5 Menes, Pharaoh of Egypt 161 mercury 183, 213, 237 Mersey, River 62 Merzbach valley, Germany 138 Mesopotamia 38, 115, 158–61, 163, 177, 193, 251, 357; see also Assyrian empire; Iraq metal prices, reductions in 213 Metaxas, Ioannis 186 methane 140, 329, 345 Mexico: agriculture 14, 123, 126, 142, 387; emigration to United States 117; hurricanes 335; life expectancy 15; nature conservation 324; swine flu 309 Mexico City 190 Meyer, Warren 281 Mezherich, Ukraine 71 mice 55, 125 Michelangelo 115 Microsoft (corporation) 24, 260, 268, 273 migrations: early human 66–70, 82; rural to urban 158, 188–9, 210, 219–20, 226–7, 231, 406; see also emigration Milan 178, 184 Miletus 170–71 milk 22, 55, 97, 135 Mill, John Stuart 34, 103–4, 108, 249, 274, 276, 279 Millennium Development goals 316 Miller, Geoffrey 44, 274 millet 126 Mills, Mark 244 Ming empire 117, 181–4, 260, 311 Minoan civilisation 166 Mississippi Company 29 Mittal, Lakshmi 268 mobile phones 37, 252, 257, 261, 265, 267, 297, 326–7 Mohamed (prophet) 176 Mohawk Indians 138–9 Mohenjo-Daro, Indus valley 161–2 Mojave Desert 69 Mokyr, Joel 197, 252, 257, 411, 412 monarchies 118, 162, 172, 222 monasteries 176, 194, 215, 252 Monbiot, George 291, 311, 426 money: development of 71, 132, 392; ‘trust inscribed’ 85 Mongolia 230 Mongols 161, 181, 182 monkeys 3, 57, 59, 88; capuchins 96–7, 375 monopolies 107, 111, 166, 172, 182 monsoon 174 Montesquieu, Charles, Baron de 103 moon landing 268–9, 275 Moore, Gordon 221, 405 Moore, Michael 291 Morgan, J.P. 100 Mormonism 205 Morocco 53, 209 Morse, Samuel 272 mortgages 25, 29, 30, 323; sub-prime 296 Moses 138 mosquito nets 318 ‘most favoured nation’ principle 186 Moyo, Dambisa 318 Mozambique 132, 316 Mozart, Wolfgang Amadeus 267 Mugabe, Robert 262 Mumbai 189, 190 murder 14, 20, 85, 88, 106, 118, 201 Murrays’ Mills, Manchester 214 music 70, 115, 266–7, 326 Myceneans 166 Nairobi 322 Namibia 209, 324 Napoleon I 184 NASA 269 Nashville 326 Nassarius shells 53, 56, 65 National Food Service 268 National Health Service 111, 261 nationalisation (of industry) 166, 182 nationalism 357 native Americans 62, 92–3, 138–9 Natufians 125 natural selection 5–6, 27, 49–50, 350 nature conservation 324, 339; see also wilderness land, expansion of Neanderthals 3, 4, 53, 55, 64, 65, 68, 71, 79, 373, 378 Nebuchadnezzar 169 needles 43, 70 Nehru, Jawaharlal 187 Nelson, Richard 5 Nepal 15, 209 Netscape (corporation) 259 New Deal 109 New Guinea: agriculture 123, 126, 387; languages 73; malaria 336; prehistoric 66, 123, 126; tribes 87, 92, 138 New York 12, 16, 83, 169, 190 New York Times 23, 295, 305 New Zealand 17, 35, 42, 70 Newcomen, Thomas 244, 256 newspapers 270, 295; licensing copyrights 267 Newsweek (magazine) 329 Newton, Sir Isaac 116, 256 nickel 34, 213 Niger 208–9, 210, 324 Nigeria 15, 31, 99, 117, 210, 236, 316 Nike (corporation) 115, 188 Nile, River 161, 164, 167, 171 nitrogen fertlisers 140, 146, 147, 149–50, 155, 305 nitrous oxide 155 Nobel Peace Prize 143, 280 ‘noble savage’ 43–4, 135–8 Norberg, Johann 187 Nordau, Max 288 Nordhaus, William 331 Norte Chico civilisation 162–3 North, Douglass 324, 397 North Carolina 219–20 North Korea 15, 116–17, 187, 333 North Sea 180, 185 North Sentinel islanders 67 Northern Rock (bank) 9 Northumberland 407 Norton, Seth 211 Norway 97–8, 332, 344 Norwich 225 nostalgia 12–13, 44, 135, 189, 284–5, 292 Novgorod 180 Noyce, Robert 221, 405 nuclear accidents 283, 293–4, 308, 345, 421 nuclear power 37, 236, 238, 239, 245, 246, 343, 344, 345 nuclear war, threat of 280, 290, 299–300, 333 Obama, Barack 203 obesity 8, 156, 296, 337 obsidian 53, 92, 127 occupational safety 106–7 ocean acidification 280, 340–41 ochre 52, 53, 54, 92 octopi 3 Oersted, Hans Christian 272 Oetzi (mummified ‘iceman’) 122–3, 132–3, 137 Ofek, Haim 131 Ohalo II (archaeological site) 124 oil: and ‘curse of resources’ 31, 320; drilling and refining 242, 343; and generation of electricity 239; manufacture of plastics and synthetics 237, 240; pollution 293–4, 385; prices 23, 238; supplies 149, 237–8, 280, 281, 282, 296, 302–3 old age, quality of life in 18 olive oil 167, 169, 171 Olson, Ken 282 Omidyar, Pierre 99 onchoceriasis 310 open-source software 99, 272–3, 356 Orang Asli people 66 orang-utans 60, 239, 339 organic farming 147, 149–52, 393 Orinoco tar shales, Venezuela 238 Orma people 87 ornament, personal 43, 52, 53, 54, 70, 71, 73 O’Rourke, P.J. 157 Orwell, George 253, 290, 354 Ostia 174 otters 297, 299 Otto I, Holy Roman emperor 178 Ottoman empire 161 Oued Djebanna, Algeria 53 oxen 130, 136, 195, 197, 214–15 oxytocin (hormone) 94–5, 97–8 ozone layer 280, 296 Paarlberg, Robert 154 Pacific islanders 134 Pacific Ocean 184 Paddock, William and Paul 301 Padgett, John 103 Page, Larry 114 Pagel, Mark 73 Pakistan 142–3, 204, 300 palm oil 57–8, 239, 240, 242, 339 Pan Am (airline) 24 paper 282, 304 Papin, Denis 256 papyrus 171, 175 Paraguay 61 Pareto, Vilfredo 249 Paris 215, 358; electric lighting 233; restaurants 264 parrots 3 Parsons, Sir Charles 234 Parthian empire 161 Pasadena 17 Pataliputra 173 patents 223, 263, 264–6, 269, 271, 413–14 patriarchy 136 Paul, St 102 PayPal (e-commerce business) 262 peacocks 174 peanuts 126 peat 215–16 Peel, Sir Robert 185 Pemberton, John 263 pencils 38 penicillin 258 Pennington, Hugh 308 pensions 29, 40, 106 Periplus of the Erythrean Sea, The 174 Persia 89, 161, 171, 177 Persian Gulf 66, 164, 340, 429 Peru 97–8, 126, 162–3, 320, 387; silver 31, 132, 183–4 pessimism: and belief in turning points in history 287–9, 301, 311; natural pessimism of human nature 294–5; in nineteenth century 283–8; in twentieth century 281, 282, 288–91, 292–4, 296–308, 328–9; in twenty-first century 8–9, 17, 28, 281–2, 291–2, 308–311, 314–15; ubiquity of 280–85, 291–2, 294–7, 341, 352 pesticides 151–2, 154, 155, 336; DDT 297–8, 299; natural 298–9 Peto, Richard 298 Petty, Sir William 185, 199, 254, 256 pharmaceutical industry 260, 266 philanthropy 92, 105, 106, 295, 318–19, 356 Philip II, King of Spain 30–31 Philip II of Macedon 171 Philippines 61–2, 89, 234 Philistines 166, 170, 396 Phillips, Adam 103, 292 Phoenicians 166–70, 177 photography 114, 283, 386 physiocrats 42 pi, calculation of 173 pig farming 135, 145, 148, 197 Pinnacle Point, South Africa 52, 83 Pisa 115, 178 plagues 135, 176, 195–6, 197; forecasts of 280, 284, 307–310; see also Black Death plastics 237, 240, 270 Plate, River 186 platinum 213 Plato 292 Plautus 44 ploughing 129–30, 136, 145, 150, 195, 197, 198, 215 pneumonia 13, 353 Polanyi, Karl 164–5 polar bears 338–9 polio 261, 275, 310 political fragmentation 170–73, 180–81, 184, 185 pollution: effects on wildlife 17, 297, 299, 339; and industrialisation 218; pessimism about 293–4, 304–6; reduction in 17, 106, 148, 279, 293–4, 297, 299 polygamy 136 Pomeranz, Kenneth 201–2 Ponzi, Charles 29 Ponzi schemes 28–9 population control policies 202–4, 210–211 population growth: and food supply 139, 141, 143–4, 146–7, 192, 206, 208–9; global population totals 3, 12, 14, 191, 206, 332; and industrialisation 201–2; and innovation 252; pessimism about 190, 193, 202–3, 281, 290, 293, 300–302, 314; population explosions 8, 139, 141, 202, 206, 281; and specialisation 192–3, 351; see also birth rates; demographic transition; infant mortality; life expectancy porcelain 181, 183, 184–5, 225, 251 Porritt, Jonathan 314 Portugal 75, 183, 184, 317, 331 Post-it notes 261 Postrel, Virginia 290–91 potatoes 199 Potrykus, Ingo 154 pottery 77, 158, 159, 163, 168, 177, 225, 251 Pound, Ezra 289 poverty: and charitable giving 106; current levels 12, 15, 16–17, 41, 316, 353–4; and industrialisation 217–20; pessimism about 280, 290, 314–15; reduction in 12, 15, 16–17, 290; and self-sufficiency 42, 132, 200, 202, 226–7; solutions to 8, 187–8, 316–17, 322, 326–8, 353–4 Prebisch, Raul 187 preservatives (in food) 145 Presley, Elvis 110 Priestley, Joseph 256 printing: on paper 181, 251, 252, 253, 272; on textiles 225, 232 prisoner’s dilemma game 96 property rights 130, 223, 226, 320, 321, 323–5 protectionism 186–7, 226 Ptolemy III 171 Pusu-Ken (Assyrian merchant) 165–6 putting out system 226, 227, 230 pygmy people 54, 67 Pythagoras 171 Quarterly Review 284 quasars 275 Quesnay, François 42 racial segregation 108 racism 104, 415 radioactivity 293–4, 345 radios 264–5, 271 railways 252; and agriculture 139, 140–41; opposition to 283–4; speed of 283, 286; travel costs 23 rainforests 144, 149, 150, 240, 243, 250–51, 338 Rajan, Raghuram 317 Rajasthan 162, 164 Ramsay, Gordon 392 rape seed 240 Ratnagar, Shereen 162 ravens 69 Rawls, John 96 Read, Leonard 38 recession, economic 10, 28, 113, 311 reciprocity 57–9, 87, 95, 133 Red Sea 66, 82, 127, 170, 174, 177 Rees, Martin 294 Reformation 253 refrigeration 139 regress, technological 78–84, 125, 181–2, 197–200, 351, 380 Reiter, Paul 336, 428 religion 4, 104, 106, 170, 357, 358, 396; and population control 205, 207–8, 211; see also Buddhism; Christianity; Islam Rembrandt 116 Renaissance 196 research and development budgets, corporate 260, 262, 269 Research in Motion (company) 265 respiratory disease 18, 307, 310 restaurants 17, 37, 61, 254, 264 Rhine, River 265–6 rhinoceroses 2, 43, 51, 68, 73 Rhodes, Cecil 322 Ricardo, David 75, 169, 187, 193, 196, 249, 274 rice 32, 126, 143, 146–7, 153, 154, 156, 198 Rifkin, Jeremy 306 Riis, Jacob 16 Rio de Janeiro, UN conference (1992) 290 risk aversion 294–5 Rivers, W.H.R. 81 Rivoli, Pietra 220, 228 ‘robber-barons’ 23–4, 100, 265–6 Rockefeller, John D. 23, 281 Rocky Mountains 238 Rogers, Alex 340 Roman empire 161, 166, 172, 173–5, 184, 214, 215, 259–60, 357 Rome 158, 175 Romer, Paul 269, 276–7, 328, 354 Roosevelt, Franklin D. 109 Roosevelt, Theodore 288 Rosling, Hans 368 Rothschild, Nathan 89 Rousseau, Jean-Jacques 43, 96, 104, 137 Royal Institution 221 rubber 220 rule of law 116–18, 325 Rumford, Benjamin Thompson, Count 221 rural to urban migration 158, 188–9, 210, 219–20, 226–7, 231, 406 Ruskin, John 104 Russia, post-Soviet 14; oil and gas production 31, 37; population decline 205 Russia, prehistoric 71, 73 Russia, Tsarist 216, 229, 324 Rwanda 14, 316 rye 124, 125, 199, 224, 286 Sachs, Jeffrey 208 Saddam Hussein 161 Sahel region 123, 334 Sahlins, Marshall 133, 135 Sahul (landmass) 66, 67 Salisbury, Wiltshire 194 Salk, Jonas 38, 261 salmon 297 Salmon, Cecil 142 saltpetre 140 Sanger, Frederick 412 Sanskrit 129 São Paulo 190, 315 Sargon of Akkad 164 SARS virus 307, 310 satellites 252, 253 satnav (satellite navigation systems) 268 Saudi Arabia 238 Saunders, Peter 102 Schumpeter, Joseph 113–14, 227, 260, 276, 302 science, and innovation 255–8, 412 Scientific American 280 Scotland 103, 199–200, 227, 263, 315 scrub jays 87 scurvy 14, 258 sea level, changes in 128, 314, 333–4 Seabright, Paul 93, 138 seals (for denoting property) 130 search engines 245, 256, 267 Second World War 289 segregation, racial 108 Seine, River 215 self-sufficiency 8, 33–5, 39, 82, 90, 133, 192, 193, 351; and poverty 41–2, 132, 200, 202, 226–7 selfishness 86, 87, 93–4, 96, 102, 103, 104, 106, 292 Sematech (non-profit consortium) 267–8 Sentinelese people 67 serendipity 257, 346 serfs 181–2, 222 serotonin 156, 294 sexism 104, 136 sexual division of labour 61–5, 136, 376 sexual reproduction 2, 6, 7, 45, 56, 271; of ideas 6–7, 270–72 Sforza, house of 184 Shady, Ruth 162 Shakespeare, William 2; The Merchant of Venice 101, 102 Shang dynasty 166 Shapiro, Carl 265 sheep 97, 176, 194, 197 Shell (corporation) 111 shellfish 52, 53, 62, 64, 79, 92, 93, 127, 163, 167 Shennan, Stephen 83, 133 Shermer, Michael 101, 106, 118 ship-building 185, 229; see also boat-building shipping, container 113, 253, 386 Shirky, Clay 356 Shiva, Vandana 156 Siberia 145 Sicily 171, 173, 178 Sidon 167, 170 Siemens, William 234 Sierra Leone 14, 316 Silesia 222 silicon chips 245, 263, 267–8 Silicon Valley 221–2, 224, 257, 258, 259, 268 silk 37, 46, 172, 175, 178, 179, 184, 187, 225 Silk Road 182 silver 31, 132, 164, 165, 167, 168, 169, 171, 177, 183–4, 213 Silver, Lee 122–3 Simon, Julian 83, 280, 303 Singapore 31, 160, 187 Skhul, Israel 53 slash-and-burn farming 87, 130 slave trade 167, 170, 177, 229, 319, 380; abolition 214, 221 slavery 34, 214–15, 216, 407; ancient Greece 171; hunter-gatherer societies 45, 92; Mesopotamia 160; Roman empire 174, 176, 214; United States 216, 228–9, 415; see also anti-slavery sleeping sickness 310, 319 Slovakia 136 smallpox 13, 14, 135, 310; vaccine 221 smelting 131–2, 160, 230 smiling 2, 94 Smith, Adam 8, 80, 96, 101, 104, 199, 249, 272, 350; Das Adam Smith Problem 93–4; Theory of Moral Sentiments 93; The Wealth of Nations vii, 37–8, 39, 56, 57, 93, 123, 236, 283 Smith, Vernon 9, 90, 192 smoke, indoor 13, 338, 342, 353, 429 smoking 297, 298 Smoot-Hawley Tariff Act 186 soap 176, 215 social networking websites 262, 268, 356 socialism 106, 115, 357, 406 software, computer 99, 257, 272–3, 304, 356 solar energy 216, 243, 244 solar power 234–5, 238, 239, 245–6, 343, 344–5, 408 solar wind 346 solid-state electronics 257 Solomon, Robert 94 Solow, Robert 276 Somalia 14, 316, 337, 353 songbirds 55 Sony (corporation) 261 sorghum 126, 156 South Africa: agriculture 154; economy 316, 322; life expectancy 316; pre-historic 52, 53, 54, 83 South Korea 15, 31, 116–17, 187, 212, 322 South Sea Company 29 Southey, Robert 284–5 Soviet Union 16, 107, 109, 289, 299, 318, 324 soybeans 147, 148, 155, 156, 242 space travel 268–9, 275, 282 Spain: agriculture 129; climate 334; Franco regime 186, 289; Peruvian silver 30–31, 183–4; tariffs 222 spears 6, 43, 48, 50, 52, 70, 80, 81, 91 specialisation: by sex 61–5, 136, 376; and division of labour 7, 33, 38, 46, 61–5, 175; and exchange 7, 10, 33, 35, 37–8, 46, 56, 58, 75, 90, 132–3, 350–52, 355, 358–9; and innovation 56, 71–2, 73–4, 76–7, 119, 251; and population growth 192–3, 351; and rule of law 116, 117–18 speech 2, 55; see also language Spencer, Herbert 108 Spengler, Oswald 289 sperm counts 280, 293, 329 spice trade 167, 175, 176, 177, 179, 185 Spinoza, Baruch de 116 Sputnik 282 squashes (vegetables) 126, 163 Sri Lanka 35, 38, 66, 205, 208, 299 Stalin, Joseph 16, 262 stamp seals 130 Stangler, Dane 294 steam engines 126, 214, 221, 228, 231–2, 244, 256, 258, 270, 271, 413–14 steamships 139, 253, 283 Stein, Gil 159 Stein, Herb 281 stem-cell research 358 Stephenson, George 256, 412 Steptoe, Patrick 306 sterilisation, coerced 203–4 Stern (magazine) 304 Stern, Nicholas, Baron 330–31, 332, 425 Stiner, Mary 64, 69 storms 314, 333, 335 Strabo 174 string 70 strokes (cerebral accidents) 18 Strong, Maurice 311 Subramanian, Arvind 317 subsidies: farming 188, 328; renewable energy supplies 344 subsistence farming 87, 138, 175–6, 189, 192, 199–200 substantivism 164–5 suburbia 108, 110, 190 Sudan 316 suffrage, universal 107 sugar 179, 202, 215 sugar beet 243 sugar cane 240, 241, 242 Sun Microsystems (corporation) 259 Sunda (landmass) 66 sunflowers 126 Sungir, Russia 71, 73 superconductivity, high-temperature 257 Superior, Lake 131 supermarkets 36, 112, 148, 268, 292, 297 surfboards 273 Sussex 285 Swan, Sir Joseph 234, 272 Swaziland 14 Sweden 17, 184, 229, 305, 340, 344 Swift, Jonathan 121, 240 Switzerland 264 swords, Japanese 198–9 Sybaris 170–71 symbiosis 75, 351 synergy 6, 101 Syria 124, 130, 164, 174 Szilard, Leo 412 Tahiti 169 Taiwan 31, 187, 219, 322 Talheim, Germany 138 Tanzania 316, 325, 327–8; Hadza people 61, 63, 87 Tapscott, Don 262 Tarde, Gabriel 5 tariffs 185–7, 188, 222–3 taro (vegetable plant) 126 Tartessians 169 Tasman, Abel 80 Tasmania 78–81, 83–4 Tattersall, Ian 73 Taverne, Dick, Baron 103 taxation: carbon taxes 346; and charitable giving 319; and consumption 27; and declining birth rates 211; early development of 160; and housing 25; and innovation 255; and intergenerational transfer 30; Mauryan empire 172; Roman empire 184; United States 25 Taylor, Barbara 103 tea 181, 182, 183, 202, 327, 392 telegraph 252–3, 257, 272, 412 telephones 252, 261; charges 22–3, 253; mobile 37, 252, 257, 261, 265, 267, 297, 326–7 television 38, 234, 252, 268 Telford, Thomas 221 Tennessee Valley Authority 326 termites 75–6 terrorism 8, 28, 296, 358 Tesco (retail corporation) 112 Tesla, Nikola 234 text messaging 292, 356 Thailand 320, 322 Thales of Miletus 171 Thames, River 17 thermodynamics 3, 244, 256 Thiel, Peter 262 Thiele, Bob 349 Thoreau, Henry David 33, 190 3M (corporation) 261, 263 threshing 124, 125, 130, 153, 198; machines 139, 283 thumbs, opposable 4, 51–2 Thwaites, Thomas 34–5 Tiberius, Roman emperor 174, 259 tidal and wave power 246, 343, 344 Tierra del Fuego 45, 62, 81–2, 91–2, 137 tigers 146, 240 timber 167, 216, 229; trade 158, 159, 180, 202 time saving 7, 22–4, 34–5, 123 Timurid empire 161 tin 132, 165, 167, 168, 213, 223, 303 ‘tipping points’ 287–9, 290, 291, 293, 301–2, 311, 329 Tiwi people 81 Tokyo 190, 198 Tol, Richard 331 Tooby, John 57 tool making: early Homo sapiens 53, 70, 71; machine tools 211, 221; Mesopotamian 159, 160; Neanderthals 55, 71, 378; Palaeolithic hominids 2, 4, 7, 48–51; technological regress 80 Torres Strait islanders 63–4, 81 tortoises 64, 68, 69, 376 totalitarianism 104, 109, 181–2, 290 toucans 146 Toulouse 222 Townes, Charles 272 ‘toy trade’ 223 Toynbee, Arnold 102–3 tractors 140, 153, 242 trade: and agriculture 123, 126, 127–33, 159, 163–4; early human development of 70–75, 89–93, 133–4, 159–60, 165; female-centred 88–9; and industrialisation 224–6; and innovation 168, 171; and property rights 324–5; and trust 98–100, 103; and urbanisation 158–61, 163–4, 167; see also bartering; exchange; markets trade unions and guilds 113, 115, 223, 226 trademarks 264 traffic congestion 296 tragedy of the commons 203, 324 Trajan, Roman Emperor 161 transistors 271 transport costs 22, 23, 24, 37, 229, 230, 253, 297, 408 transport speeds 22, 252, 253, 270, 283–4, 286, 287, 296 trebuchets 275 Tressell, Robert 288 Trevithick, Richard 221, 256 Trippe, Juan 24 Trobriand islands 58 trust: between strangers 88–9, 93, 94–8, 104; and trade 98–100, 103, 104; within families 87–8, 89, 91 Tswana people 321, 322 tungsten 213 Turchin, Peter 182 Turkey 69, 130, 137 Turnbull, William (farm worker) 219 Turner, Adair, Baron 411 turning points in history, belief in 287–9, 290, 291, 293, 301–2, 311, 329 Tuscany 178 Tyneside 231 typhoid 14, 157, 310 typhus 14, 299, 310 Tyre 167, 168–9, 170, 328 Ubaid period 158–9, 160 Uganda 154, 187, 316 Ukraine 71, 129 Ulrich, Bernd 304 Ultimatum Game 86–7 unemployment 8, 28, 114, 186, 289, 296 United Nations (UN) 15, 40, 205, 206, 290, 402, 429 United States: affluence 12, 16–17, 113, 117; agriculture 139, 140–41, 142, 219–20; biofuel production 240, 241, 242; birth rates 211, 212; civil rights movement 108, 109; copyright and patent systems 265, 266; credit crunch (2008) 9, 28–9; energy use 239, 245; GDP, per capita 23, 31; Great Depression (1930s) 31, 109, 192; happiness 26–7; immigration 108, 199–200, 202, 259; income equality 18–19; industrialisation 219; life expectancy 298; New Deal 109; oil supplies 237–8; pollution levels 17, 279, 304–5; poverty 16–17, 315, 326; productivity 112–13, 117; property rights 323; rural to urban migration 219; slavery 216, 228–9, 415; tax system 25, 111, 241; trade 186, 201, 228 Upper Palaeolithic Revolution 73, 83, 235 urbanisation: and development of agriculture 128, 158–9, 163–4; global urban population totals 158, 189, 190; and population growth 209–210; and trade 158–61, 163–4, 167, 189–90; see also rural to urban migration Uruguay 186 Uruk, Mesopotamia 159–61, 216 vaccines 17, 287, 310; polio 261, 275; smallpox 221 Vandals 175 Vanderbilt, Cornelius 17, 23, 24 vCJD (mad-cow disease) 280, 308 Veblen, Thorstein 102 Veenhoven, Ruut 28 vegetarianism 83, 126, 147, 376 Venezuela 31, 61, 238 Venice 115, 178–9 venture capitalists 223, 258, 259 Veron, Charlie 339–40 Victoria, Lake 250 Victoria, Queen 322 Vienna exhibition (1873) 233–4 Vietnam 15, 183, 188 Vikings 176 violence: decline in 14, 106, 201; homicide 14, 20, 85, 88, 106, 118, 201; in pre-industrial societies 44–5, 136, 137–9; random 104 Visby, Gotland 180 vitamin A 353 vitamin C 258 vitamin D 129 Vivaldi, Antonio 115 Vladimir, Russia 71 Vogel, Orville 142 Vogelherd, Germany 70 voles 97 Voltaire 96, 103, 104, 256 Wagner, Charles 288 Wal-Mart (retail corporation) 21, 112–14, 263 Wales 132 Wall Street (film) 101 Walton, Sam 112–13, 263 Wambugu, Florence 154 war: in Africa 316; in hunter-gatherer societies 44–5; threat of nuclear war 280, 290, 299–300; twentieth-century world wars 289, 309; unilateral declarations of 104 water: contaminated 338, 353, 429; pricing of 148; supplies 147, 280, 281, 324, 334–5; see also droughts; irrigation water snakes 17 watermills 176, 194, 198, 215, 216–17, 234 Watson, Thomas 282 Watt, James 221, 244, 256, 271, 411, 413–14 wave and tidal power 246, 343, 344 weather forecasting 3, 4, 335 weather-related death rates 335–6 Wedgwood, Josiah 105, 114, 225, 256 Wedgwood, Sarah 105 weed control 145, 152 Weiss, George David 349 Weitzman, Martin 332–3 Welch, Jack 261 welfare benefits 16, 106 Wellington, Arthur Wellesley, 1st Duke of 89 Wells, H.G. 65, 313, 352, 354 West Germany 289–90 West Indies 202, 216, 310 Western Union (company) 261 Westinghouse, George 234 whales 6, 281, 302 whaling 87, 185, 281 wheat 42, 71, 124, 125, 129, 139, 140, 146–7, 149, 153, 156, 158, 161, 167, 300–301; new varieties 141–3 Wheeler, Sir Mortimer 162 wheels, invention of 176, 274 Whitehead, Alfred North 255 Wikipedia (online encyclopedia) 99, 115, 273, 356 Wilberforce, William 105, 214 Wilder, Thornton 359 wilderness land, expansion of 144, 147, 148, 239, 337–8, 347, 359 wildlife conservation 324, 329 William III, King 223 Williams, Anthony 262 Williams, Joseph 254 Williams, Rowan, Archbishop of Canterbury 102 Wilson, Bart 90, 324 Wilson, E.O. 243, 293 Wiltshire 194 wind power 239, 246, 343–4, 346, 408 wolves 87, 137 women’s liberation 108–9 wool 37, 149, 158, 167, 178, 179, 194, 224 working conditions, improvements in 106–7, 114, 115, 188, 219–20, 227, 285 World Bank 117, 203, 317 World Health Organisation 336–7, 421 World Wide Web 273, 356 World3 (computer model) 302–3 Wrangham, Richard 59, 60 Wright brothers 261, 264 Wright, Robert 101, 175 Wrigley, Tony 231 Y2K computer bug 280, 290, 341 Yahgan Indians 62 Yahoo (corporation) 268 Yangtze river 181, 199, 230 Yeats, W.B. 289 yellow fever 310 Yellow river 161, 167 Yemen 207, 209 Yir Yoront aborigines 90–91 Yong-Le, Chinese emperor 183, 184, 185 Yorkshire 285 Young, Allyn 276 young people, pessimism about 292 Young, Thomas 221 Younger Dryas (climatic period) 125 Yucatan 335 Zak, Paul 94–5, 97 Zambia 28, 154, 316, 317, 318, 331 zero, invention of 173, 251 zero-sum thinking 101 Zimbabwe 14, 28, 117, 302, 316 zinc 213, 303 Zuckerberg, Mark 262 Acknowledgements It is one of the central arguments of this book that the special feature of human intelligence is that it is collective, not individual – thanks to the invention of exchange and specialisation.

It is no coincidence that the growth of technology industries took off after the mid-1970s when Congress freed pension funds and non-profits to invest some of their assets in venture funds. California is not the birthplace of entrepreneurs; it is the place they go to do their enterprising; fully one-third of successful start-ups in California between 1980 and 2000 had Indian- or Chinese-born founders. In imperial Rome, no doubt scores of unknown slaves knew how to make better olive presses, better watermills and better wool looms, while scores of plutocrats knew how to save, invest and consume. But the two lived miles apart, separated by venal middlemen who had no desire to bring them together. A telling anecdote about glass repeated by several Roman authors rather drives home the point. A man demonstrates to the emperor Tiberius his invention of an unbreakable form of glass, hoping for a reward.


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Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier by Edward L. Glaeser

affirmative action, Andrei Shleifer, Berlin Wall, British Empire, Broken windows theory, carbon footprint, Celebration, Florida, clean water, congestion charging, declining real wages, desegregation, different worldview, diversified portfolio, Edward Glaeser, endowment effect, European colonialism, financial innovation, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, Mahatma Gandhi, McMansion, megacity, mortgage debt, mortgage tax deduction, New Urbanism, place-making, Ponzi scheme, Potemkin village, Ralph Waldo Emerson, rent control, RFID, Richard Florida, Rosa Parks, school vouchers, Seaside, Florida, Silicon Valley, Skype, smart cities, Steven Pinker, strikebreaker, Thales and the olive presses, the built environment, The Death and Life of Great American Cities, the new new thing, The Wealth of Nations by Adam Smith, trade route, transatlantic slave trade, upwardly mobile, urban planning, urban renewal, urban sprawl, William Shockley: the traitorous eight, Works Progress Administration, young professional

The great dance of civilizations, in which knowledge moved from East to West and back again, has unfolded largely in cities. Bangalore is simply the latest venue for that age-old dance. In the sixth century B.C., Athens was hardly the intellectual center of the world. The most exciting Greek thinkers lived on the edges of the Greek diaspora in Asia Minor, where they learned from the older civilizations of the Near East. Miletus, a wool-making port in western Turkey, produced the first philosopher, Thales, and the father of European urban planning, Hippodamus, whose gridlike plans provided a model for the Romans and countless cities since then. Athens grew by trading wine, olive oil, spices, and papyrus. The city cemented its power by leading the Greek resistance to the Persian invasions that had already ravaged places like Miletus. Just as rich, ebullient post-World War II New York attracted writers and painters from battle-scarred Europe, fifth-century-B.C.

92. 18 sold it to MIH Holdings: See, for example, Ranjan, “Bixee, Pixrat Acquired.” 18 One ranking agency . . . 2010: Real Website Worth, “bixee.com,” realwebsiteworth.com, http://208.87.241.248/traffic_report/bixee.com. 18 He has since left MIH: The Web site is Educrest.com, though the site is currently under construction. Jacob, “Now, Social Networking Gets a Voice.” 19 Athens was hardly the intellectual center: Hall, Cities in Civilization, 26. 19 The most exciting Greek thinkers . . . older civilizations of the Near East: Ibid. 19 Miletus . . . Thales: McNeill, Western Civilization, 58. 19 Hippodamus, whose gridlike plans: Cartledge, Ancient Greece, 54. 19 Athens grew by trading wine, olive oil, spices, and papyrus: Hall, Cities in Civilization, 49-50. 19 The city cemented its power . . . places like Miletus: Cartledge, Ancient Greece, 98. 19 Just as rich, ebullient . . . battle-scarred Asia Minor: Ibid., 104. 19 Hippodamus came from Miletus to plan the city’s harbor: Ibid., 54, 91. 19 This remarkable period . . . freedom to share their ideas: Ibid., 104. 20 Theodoric, saw the advantage of cities like Ravenna: “Theodoric (King of Italy)” Encyclopædia Britannica. 20 But while the Goths and Huns . . . deliver food and water: McNeill, Western Civilization, 207. 20 Charlemagne . . . sophisticated civilization: Pagden, Worlds at War. 20 A thousand years ago . . .

Census Bureau, United States—States, Geographical Comparison Tables, GCT-T1-R, Population Estimates, generated using American FactFinder. 265 But that doesn’t make . . . as of December 2009: Bureau of Labor Statistics, Regional and State Employment and Unemployment—December 2009, www.bls.gov/news.release/archives/laus_01222010.htm. 266 last twenty years . . . ten least dense states: Glaeser and Gottlieb, “Place-Making Policies.” 266 “funding is not based on need or performance”: White House Office of Management and Budget, Program Assessment: Highway Infrastructure, www.whitehouse.gov/omb/expectmore/summary/10000412.2007.html. 267 U.S. gas taxes are too low: Parry et al., “Automobile Externalities and Policies.” 269 “set the stage for the evolution of humanlike intelligence”: Pinker, How the Mind Works, 192. BIBLIOGRAPHY Aaseng, Nathan. Business Builders in Real Estate. Minneapolis: Oliver Press, 2002. Acemoğlu, Daron. “Why Do New Technologies Complement Skills? Directed Technological Change and Wage Inequality.” Quarterly Journal of Economics 113, no. 4 (Nov. 1998): 1055-89. Achenbach, Joel. The Grand Idea: George Washington’s Potomac and the Race to the West. New York: Simon & Schuster, 2004. Adams, Russell B., Jr. The Boston Money Tree. New York: Crowell, 1977. Ades, Alberto F., and Edward L.


pages: 733 words: 179,391

Adaptive Markets: Financial Evolution at the Speed of Thought by Andrew W. Lo

"Robert Solow", Albert Einstein, Alfred Russel Wallace, algorithmic trading, Andrei Shleifer, Arthur Eddington, Asian financial crisis, asset allocation, asset-backed security, backtesting, bank run, barriers to entry, Berlin Wall, Bernie Madoff, bitcoin, Bonfire of the Vanities, bonus culture, break the buck, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, Diane Coyle, diversification, diversified portfolio, double helix, easy for humans, difficult for computers, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, interest rate derivative, invention of the telegraph, Isaac Newton, James Watt: steam engine, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, merger arbitrage, meta analysis, meta-analysis, Milgram experiment, money market fund, moral hazard, Myron Scholes, Nick Leeson, old-boy network, out of africa, p-value, paper trading, passive investing, Paul Lévy, Paul Samuelson, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, quantitative hedge fund, quantitative trading / quantitative finance, RAND corporation, random walk, randomized controlled trial, Renaissance Technologies, Richard Feynman, Richard Feynman: Challenger O-ring, risk tolerance, Robert Shiller, Robert Shiller, Sam Peltzman, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, survivorship bias, Thales and the olive presses, The Great Moderation, the scientific method, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, Tobin tax, too big to fail, transaction costs, Triangle Shirtwaist Factory, ultimatum game, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

People have been trying to understand the behavior of markets for hundreds if not thousands of years. Our first records of money are at least four thousand years old, and although it’s impossible to say, schemes to beat the market were probably invented shortly thereafter. One ancient example, from around 600 BC, has come down to us. The ancient Greek philosopher Thales is said to have cornered the market on olive presses on the island of Chios in anticipation of a large olive harvest. When his prediction came true, he made a large profit selling the use of the oil presses to the local olive growers, proving—according to Aristotle—that Are We All Homo economicus Now? • 17 “it is easy for philosophers to be rich if they choose, but this is not what they care about.”9 Money is a numerical concept. When we want to see how much money we have, we count it.

., 100 Sobel, Russell, 206 social Darwinism, 215 social exclusion, 85–86 social media, 55, 270, 405 Société Générale, 60–61 Society of Mind, The (Minsky), 132–133 sociobiology, 170–174, 216–217 Sociobiology (Wilson), 170–171 Solow, Herbert, 395 Soros, George, 6, 219, 222–223, 224, 227, 234, 244, 277 sovereign wealth funds, 230, 299, 409–410 Soviet Union, 411 Space Shut tle Challenger, 12–16, 24, 38 specialization, 217 speech synthesis, 132 Sperry, Roger, 113–114 “spoofi ng,” 360 Springer, James, 159 SR-52 programmable calculator, 357 stagflation, 37 Standard Portfolio Analysis of Risk (SPAN), 369–370 Stanton, Angela, 338 starfish, 192, 242 Star Trek, 395–397, 411, 414 stationarity, 253–255, 279, 282 statistical arbitrage (“statarb”), 284, 286, 288–291, 292–293, 362 statistical tests, 47 Steenbarger, Brett, 94 Stein, Carolyn, 69 sterilization, 171, 174 Stiglitz, Joseph, 224, 278, 310 Stocks for the Long Run (Siegel), 253 stock splits, 24, 47 Stone, Oliver, 346 Stone Age, 150, 163, 165 stone tools, 150–151, 153 stop-loss orders, 359 Strasberg, Lee, 105 stress, 3, 75, 93, 101, 122, 160–161, 346, 413–415 strong connectedness, 374 Strong Story Hypothesis, 133 Strumpf, Koleman, 39 “stub quotes,” 360 subjective value, 100 sublenticular extended amygdala, 89 subprime mortgages, 290, 292, 293, 297, 321, 327, 376, 377, 410 482 • Index Sugihara, George, 366 suicide, 160 Sullenberger, Chesley, 381 Summers, Lawrence (Larry), 50, 315–316, 319–320, 379 sunlight, 108 SuperDot (trading system), 236 supply and demand curves, 29, 30, 31–33, 34 Surowiecki, James, 5, 16 survey research, 40 Sussman, Donald, 237–238 swaps, 243, 298, 300 Swedish Twin Registry, 161 systematic bias, 56 systematic risk, 194, 199–203, 204, 205, 250–251, 348, 389 systemic risk, 319; Bank of England’s measurement of, 366–367; government as source of, 361; in hedge fund industry, 291, 317; of large vs. small shocks, 315; managing, 370–371, 376–378, 387; transparency of, 384–385; trust linked to, 344 Takahashi, Hidehiko, 86 Tanner, Carmen, 353 Tanzania, 150 Tartaglia, Nunzio, 236 Tattersall, Ian, 150, 154 Tech Bubble, 40 telegraphy, 356 Tennyson, Alfred, Baron, 144 testosterone, 108, 337–338 Texas hold ’em, 59–60 Texas Instruments, 357, 384 Thackray, John, 234 Thales, 16 Théorie de la Spéculation (Bachelier), 19 theory of mind, 109–111 thermal homeostasis, 367–368, 370 This Time Is Different (Reinhart and Rogoff ), 310 Thompson, Robert, 1, 81–82, 83, 103–104 three-body problem, 214 ticker tape machine, 356 tight coupling, 321, 322, 361, 372Tiger Fund, 234 Tinker, Grant, 395 Tobin tax, 245 Tokugawa era, 17 Tooby, John, 173, 174 tool use, 150–151, 153, 162, 165 “toxic assets,” 299 trade execution, 257, 356 trade secrets, 284–285, 384 trading volume, 257, 359 transactions tax, 245 Treynor, Jack, 263 trial and error, 133, 141, 142, 182, 183, 188, 198, 265 Triangle Shirtwaist Fire, 378–379 tribbles, 190–205, 216 Trivers, Robert, 172 trolley dilemma, 339 Trusty, Jessica, 120 Tversky, Amos, 55, 58, 66–67, 68–69, 70–71, 90, 106, 113, 388 TWA Flight 800, 84–85 twins, 159, 161, 348 “two-legged goat effect,” 155 UBS, 61 Ultimatum Game, 336–338 uncertainty, 212, 218; risk vs., 53–55, 415 unemployment, 36–37 unintended consequences, 7, 248, 269, 330, 358, 375 United Kingdom, 222–223, 242, 377 University of Chicago, 22 uptick rule, 233 Urbach-Wiethe disease, 82–83 U.S.

Samuelson turned his research focus to finance in the early 1960s, referring to Bachelier often in his various classes, seminars, and public lectures.18 But if Bachelier explained the how of the Random Walk Model, Samuelson set out to explain why market prices moved as though they were random. Samuelson hit on the answer through his interest in a very practical problem in the Chicago futures market. Every commodities trader on the Chicago floor knew there were patterns in the price of wheat. Spot prices in wheat tended to rise from the fall harvest to the following spring due to storage costs, and then dropped immediately before the next harvest, when the market anticipated a future glut. Changes in the weather also affected the price of wheat from day to day. However, in 1953 the economist Maurice Kendall showed that wheat prices appeared to move randomly, according to his statistical tests.19 Are We All Homo economicus Now? • 21 Samuelson spotted a paradox: if the weather influenced the price of grain, how could the price of grain follow a random walk?


Gods and Robots: Myths, Machines, and Ancient Dreams of Technology by Adrienne Mayor

Any sufficiently advanced technology is indistinguishable from magic, Asilomar, autonomous vehicles, Elon Musk, industrial robot, Islamic Golden Age, Jacquard loom, life extension, Menlo Park, Panopticon Jeremy Bentham, popular electronics, self-driving car, Silicon Valley, Stephen Hawking, Thales and the olive presses, Thales of Miletus, theory of mind, Turing test

On artistic phantasias, Pollitt 1990, 222 and n2. 28. Plaster casts and clay and wax models of living people, Pliny 35.2.6, 35.43.151, and 35.44.153 (incorrectly cited as Pliny 36.44.153 by Konstam and Hoffmann 2004). Parrhasius, Seneca Controversies 10.5. Cf. earlier discussion of the “virtuosity” of the Riace sculptor, Steiner 2001. Kris and Kurz 1979. 29. Blakely 2006, 141–44, 157. Magnetic lodestone’s properties were known to Thales of Miletus (sixth century BC); magnetism was described in Chinese chronicles, such as Guiguzi (fourth century BC) and Lushi Chunqiu (second century BC). 30. Lowe 2016, 249, 267. Heron of Alexandria devised a continuously hovering hollow sphere over a funnel opening of a closed vessel of boiling water, but the design is nonfeasible for a large statue; James and Thorpe 1994, 134; re-created by Kotsanas 2014, 61.

See also Poulsen 1945, 182–84; Donohue 1988; Cohen 1966, 26 n26; Felton 2001; Van Wees 2013. 20. For contradictions in the artistic arguments, see Morris 1992, 240–56. Felton 2001, 79–80. 21. Berryman 2009, 27–28, original italics; it seems “very unlikely” that “mechanistic conceptions” could have developed “prior to the existence of mechanics as a discipline,” 22. Some real devices invented before the time of Aristotle, such as catapults, voting machines, and wine and olive presses, could have inspired machine analogies. Cf. Francis 2009, 6–7. 22. On ancient Greeks’ innovation and imagination, D’Angour 2011, 139–42. Rogers and Stevens 2015. “At the origin of any creation or invention lie the imagination and the ability to dream,” notes Forte 1988, 50; inventions require the “effort of imagination.” 23. Simons 1992, 40. Francis 2009. “Where science fiction leads,” paraphrasing “The Next Frontier: When Thoughts Control Machines” 2018, 11. 24.

They charge at Jason, flames shooting from their nostrils “as though blasted by bellows from a bronze-smith’s furnace.” Jason braves the searing breath of the oxen and yokes them to the bronze plow. All day he plows the large field and sows the dragon’s teeth.9 It is nearly dusk when the plowed furrows begin to seethe and gleam as the “earthborn” warriors in armor sprout from the field. This is the horrid crop of robot-like soldiers that must be “harvested,” cut down, before nightfall. The scene of skeleton soldiers popping out of the ground is beloved by aficionados of science fiction and classical mythology film, as it was realized in the spectacular Harryhausen sequence in Jason and the Argonauts (1963). In the Argonautica, the “earthborn” warriors are ghostly giants clad in bronze armor, springing up fully armed, ready to attack. Luckily, Medea has instructed Jason how to deal with the multiplying, uncontrollable mob.


pages: 308 words: 99,298

Brexit, No Exit: Why in the End Britain Won't Leave Europe by Denis MacShane

3D printing, banking crisis, battle of ideas, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, British Empire, centre right, Corn Laws, deindustrialization, Doha Development Round, Donald Trump, Etonian, European colonialism, first-past-the-post, fixed income, Gini coefficient, greed is good, illegal immigration, James Dyson, labour mobility, liberal capitalism, low cost airline, low cost carrier, Martin Wolf, mass immigration, Mont Pelerin Society, negative equity, Neil Kinnock, new economy, non-tariff barriers, offshore financial centre, open borders, open economy, price stability, purchasing power parity, quantitative easing, reshoring, road to serfdom, secular stagnation, Silicon Valley, Thales and the olive presses, trade liberalization, transaction costs, women in the workforce

EU nations produce 37 different types of tank or armoured vehicle, 18 different types of warplane and 7 different types of naval frigate. The duplication and refusal to copy Airbus and have a single or just a few military products reveal how backward and protectionist EU nations are. Angela Merkel blocked any efforts to merge German with French tank manufacturers or the proposed merger of the French defence firm, Thales, and the German led EADS consortium. As a result the EU is incoherent on defence, but no less incoherent than the US under President Obama, who all but gave up its global responsibility for the defence of the democratic world – a posture likely to be aggravated by President Trump with his neo-isolationist rhetoric about countries paying more for their defence if they wanted to count on American support and partnership.

British political journalists are superb chroniclers of great political moments, with an eye for detail and a joy in describing the flawed personalities of those who seek endorsement from citizens in the raw contest of political choice. I enjoyed reading them. They answered the ‘who’ and the ‘when’ but not the ‘why’. They are like books on the events of May/June 1940 in France. The details of the defeat of France are fascinating, as are the accounts of the Brexit campaign and its political dramatis personae. The verbatim quotations recorded by Sir Craig Oliver, press secretary to David Cameron, vividly disclose what the principals said about each other. Andrew Gimson, a fine writer on contemporary politics, explains how the Tory anti-European campaign deliberately told lies about the Australian immigration system in order to hoodwink voters. The journalists Tim Shipman and Gary Gibbon produced excellent accounts of the campaign. But the real story is not what happened or how low and mean most of the principal political actors were but why it happened and what the consequences are.

Brits in Spain are not in the first flush of youth, whereas Spanish baristas, bankers and language teachers tend to be still fit and young. A false set of arguments has been advanced by well-intentioned people as to whether existing Europeans living in the UK can maintain the right to remain residents and work. There are 137,000 EU citizens working in the NHS and other health care sectors (along with 73,000 other foreigners). Bars and cafés, fruit picking and harvesting other vegetable crops, as well much public and private transport, would stop functioning if non-British-born labour was barred. This dependence on immigrant labour was not caused by the EU. More than a million Irish citizens came to rebuild the British economy and work as doctors, nurses, carers or in building trades after 1945 because the Irish economy and society were so badly organised the country could not offer jobs to its own people.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

"Robert Solow", accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Andrei Shleifer, anti-communist, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Berlin Wall, Bob Noyce, Branko Milanovic, Bretton Woods, British Empire, business cycle, call centre, capital controls, carbon footprint, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, credit crunch, Credit Default Swap, crony capitalism, currency peg, debt deflation, Deng Xiaoping, discovery of the americas, Donald Trump, Erik Brynjolfsson, European colonialism, eurozone crisis, falling living standards, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, Frederick Winslow Taylor, full employment, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, global supply chain, global value chain, Gordon Gekko, greed is good, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, Ignaz Semmelweis: hand washing, income inequality, income per capita, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, TaskRabbit, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, Yom Kippur War, zero-sum game

For much of human history, there were never really enough coins around to transact everyday business. In quite recent times, in fact, many farm tenants still paid their rent in grain or other produce (for example, the sharecropping system that applied to many former slaves following the US Civil War). Like the Babylonians before them, the Greeks devised a form of options contract. Aristotle tells the tale of Thales of Miletus, who predicted a particularly large olive harvest, and negotiated a deal with olive-press owners that gave him the right to hire all their presses during the following autumn.52 While we may associate the ancient Greeks with highbrow philosophy, their economy depended on the use of slaves of various kinds. Slaves dug up the silver in the mines of Laurion, and built the temples. Those who acted as servants in Greek houses had a less arduous life than the miners, of course.

There may not have been elections but monarchs who failed to keep their populations fed put themselves at risk; a shortage of bread was one factor behind the French Revolution. In a sense, a poor harvest represented the “recession” stage of the economic cycle. Most governments acknowledged, albeit grudgingly, a need to help the disadvantaged in some way. The Abbasid caliphate, which ruled much of the Middle East and North Africa from the mid-eighth century CE to the mid-13th century, levied taxes to help the needy, while charitable giving is one of the five pillars of Islam. In a peasant economy, unemployment tended to be seasonal in nature; there were jobs at harvest time but not in the winter. Families tended to look after their own members and had their own food supplies (a garden, chickens, etc.) that they could share round.

Yuval Noah Harari has described the shift to agriculture as “history’s biggest fraud”.11 Farmers suffered from slipped discs and arthritis, had less varied diets, and were around six inches shorter than hunter-gatherers.12 And they were at risk of famine through crop loss; a problem that mobile hunter-gatherers could avoid. James C. Scott argues that a focus on the growing of cereal crops allowed the emergence of the early states, which taxed the population and created inequality as an elite grabbed a large share of the crop.13 Cereals grew above ground and were harvested at set times of the year and thus were easy targets for the taxman; they could also be stored and doled out to the workforce as a form of wages. Surplus crops could be traded for goods with hunter-gatherers or nomadic pastoralists. Agriculture was adopted independently in various places around the world, and it allowed the formation of the great civilisations in Mesopotamia, Egypt, the Indus valley, China, and eventually Greece, Rome and the Mesoamerican and Andean societies.


Egypt Travel Guide by Lonely Planet

call centre, carbon footprint, Eratosthenes, friendly fire, G4S, haute cuisine, Khartoum Gordon, late fees, low cost airline, low cost carrier, spice trade, sustainable-tourism, Thales and the olive presses, trade route, urban planning, urban sprawl

Ever the fan of pampering himself, he is having his wig fitted, his feet massaged and his fingers manicured (some Egyptologists prefer to interpret this detail as Ptahhotep inspecting an important document, which would be in keeping with his official status). Philosophers’ Circle Nearby is this sad-looking group of Greek statues, which are arranged in a semicircle and sheltered by a spectacularly ugly concrete shelter. This is the remnant of a collection of philosophers and poets set up as a wayside shrine by Ptolemy I (323–283 BC) as part of his patronage of learning. From left to right are Plato, Heraclitus, Thales, Protagoras, Homer, Hesiod, Demetrius of Phalerum and Pindar. Serapeum The Serapeum, which is dedicated to the sacred Apis bull, is one of the highlights of visiting Saqqara. The Apis bulls were by far the most important of the cult animals entombed at Saqqara. The Apis, it was believed, was an incarnation of Ptah, the god of Memphis, and was the calf of a cow struck by lightning from heaven.

Also of interest is the restored House of Abu Nafir. A dramatic pointed arch at the entrance frames a huge studded wooden door. Built of mudbrick, and on a grander scale than the surrounding houses, it incorporates huge blocks from an earlier structure, possibly a Ptolemaic temple, decorated with hieroglyphic reliefs. Other features of the town include the pottery factory, a blacksmith’s forge, a waterwheel, an olive press and a huge old corn mill that has been fully restored to function with Flintstone-like efficiency when its shaft is rotated. Near the entrance is the Ethnographic Museum (admission E£3; 9am-sunset). Occupying Sherif Ahmed’s house, which itself dates back to 1785, the museum’s everyday objects try to give life to the empty buildings around them. Heading back to Mut from Al-Qasr, take the secondary road for a change of scenery.

Nilometer Notable Building Offline map Google map (Sharia al-Malek as-Salih, Roda; admission E£10; 9am-4pm) At the very southern tip of Roda, inside the Monastirli Palace compound, the Nilometer was constructed in AD 861, like others built millennia before (see boxed text Click here), to measure the rise and fall of the river, and thus predict the fortunes of the annual harvest. If the water rose to 16 cubits (a cubit is about the length of a forearm) the harvest was likely to be good, inspiring one of the greatest celebrations of the medieval era. Any higher, though, and the flooding could be disastrous, while lower levels presaged hunger. The Turkish-style pencil-point dome is a Farouk-era reconstruction of an earlier one wrecked by Napoleon’s troops. The measuring device, a graduated column, sits below the level of the Nile at the bottom of a flight of precipitous steps, which the guard will cheerfully let you descend for a little baksheesh.


Egypt by Matthew Firestone

call centre, clean water, credit crunch, friendly fire, haute cuisine, Khartoum Gordon, Right to Buy, spice trade, sustainable-tourism, Thales and the olive presses, trade route, urban sprawl, young professional

Ever the fan of pampering himself, he is having his wig fitted, his feet massaged and his fingers manicured (some Egyptologists prefer to interpret this detail as Ptahhotep inspecting an important document, which would be in keeping with his official status). PHILOSOPHERS’ CIRCLE Nearby is this sad-looking group of Greek statues (Map), which are arranged in a semicircle and sheltered by a spectacularly ugly concrete shelter. This is the remnant of a collection of philosophers and poets set up as a wayside shrine by Ptolemy I (323–283 BC) as part of his patronage of learning. From left to right are Plato, Heraclitus, Thales, Protagoras, Homer, Hesiod, Demetrius of Phalerum and Pindar. SERAPEUM The Serapeum (Map), which is dedicated to the sacred Apis bull, is one of the highlights of visiting Saqqara. The Apis bulls were by far the most important of the cult animals entombed at Saqqara. The Apis, it was believed, was an incarnation of Ptah, the god of Memphis, and was the calf of a cow struck by lightning from heaven.

Also of interest is the restored House of Abu Nafir. A dramatic pointed arch at the entrance frames a huge studded wooden door. Built of mudbrick, and on a grander scale than the surrounding houses, it incorporates huge blocks from an earlier structure, possibly a Ptolemaic temple, decorated with hieroglyphic reliefs. Other features of the town include the pottery factory, a blacksmith’s forge, a waterwheel, an olive press and a huge old corn mill that has been fully restored to function with Flintstone-like efficiency when its shaft is rotated. Near the entrance is the Ethnographic Museum (admission E£3; 9am-sunset). Occupying Sherif Ahmed’s house, which itself dates back to 1785, the museum’s everyday objects try to give life to the empty buildings around them. Heading back to Mut from Al-Qasr, take the secondary road for a change of scenery.

The ancient Egyptians’ secret to a contented life is summed up by the words of one of their poems: ‘it is good to drink beer with happy hearts, when one is clothed in clean robes’. Public Life/At Work The majority of ancient Egyptians were farmers, whose lives were based around the annual cycle of the Nile. This formed the basis of their calendar with its three seasons – akhet (inundation), peret (spring planting) and shemu (summer harvest). As the flood waters covering the valley floor receded by October, farmers planted their crops in the silt left behind, using irrigation canals to distribute the flood waters where needed and to water their crops until harvest time in April. * * * BBC History website www.bbc.co.uk/history/ancient/egyptians has a number of articles covering Egyptian daily life, including a look at what was available for women outside the home. * * * Agriculture was so fundamental to life in both this world and the next that it was one of the main themes in tomb scenes.