Book List - May 2021

OPM, China vs. the U.S. and a History of Cancer

I hope everyone had a great month! Here’s the book list for May.

Other People’s Money by John Kay: He argues that the fundamental role of finance - connecting people with capital to people who need capital - has become distorted over the last 30 years. He criticizes financial innovations like secondary markets, algorithmic trading and derivatives, and says the ‘financialisation’ of the world economy has had little, if any, positive effects on the real economy. Far from positive, these “innovations” have increased the systematic risk of the whole system. These inherent problems are exacerbated by the fact that bankers and investors are almost exclusively playing with other people’s money, which introduces moral hazard and managerial hubris into the equation. And the world is riddled with the consequences of financialisation: LTCM, Enron and AIG are just a few known examples. The solution, he says, is to reduce the complexity and scope of finance. As he puts it: “we do need some of the things that Citigroup and Goldman Sachs do, but we do not need Citigroup and Goldman to do them. And many of the things done by Citigroup and Goldman do not need to be done at all.”

The Emperor of All Maladies by Siddhartha Mukherjee: People call this book the “Biography of Cancer” but cancer doesn’t really have a “biography”. The book is really a history of our understanding of cancer and how we’ve combatted it over time. Cancer is notoriously sinister because the very function key to our sustenance - cell division - turns against us. And because it’s difficult to isolate cancerous cells, cancer treatment is paradoxically controlled poisoning. But Siddhartha doesn’t just explore the history of cancer treatment, but also the politics of cancer research. Specifically, it was the work of a few obsessed doctors and scientists that convinced the medical community to move from palliative care to curative care for cancer patients. Also, even though cancer research today is enormously well-funded, this wasn’t always the case, so the “War on Cancer” wasn’t just fought by doctors and scientists but lobbyists and politicians as well.

Unrivaled, Why America Will Remain the World’s Sole Superpower by Michael Beckley: My friends know that I spend A LOT of time thinking about the U.S./China rivalry. This book offered an interesting variant perspective to what we typically see in the media. Far from the boogeyman, Michael says China is more of a paper dragon. While the media loves to use GDP and military spending statistics to measure Chinese “power”, he thinks these numbers are extremely misleading because they fail to take into account the costs of managing such a big country. For example, China spends a lot on infrastructure which boosts GDP, but the U.S. gets more bang for buck per dollar of infrastructure spend (i.e., a more efficient grid, less highways/bridges per capita, etc.) Moreover, China has a significant military force, but it’s dependent on manpower, which results in bloated welfare costs, and it’s fighting numerous battles (the Sino-Japanese East China Sea dispute, conflicts with India at the Souther Border, the Taiwanese conflict, internal insurgencies, etc.), whereas the U.S. is relatively insulated from other Great Powers and has a more mechanized defense. While the U.S. does show signs of weakness (mass incarceration, political gridlock, racial divisions, etc.), Michael argues that its role as the world superpower is unlikely to be challenged in the coming decades. Assuming current trends continue, we’re likely to live through a “Unipolar Era” with the U.S. on top, a Pax Americana if you will.

Until next time,

Shehryar