Pun Salad

This book, by Byrne Hobart and Tobias Huber, was one of the recent nominees for the Manhattan Institute's annual Hayek Book Prize. Its Amazon page has blurbs from Peter Thiel and Marc Andreessen. So I did the University Near Here's Interlibrary Loan service, and—whoa, this is not really what I expected.

It's about bubbles. I had a superficial understanding (and my impression was that it was the standard understanding): bubbles are "irrational exuberance", where investments in a certain good/service skyrocket. Early investors, if they're adroit, get out near the peak and make out like (sometimes literal) bandits. Everyone else sees their positions become worthless, and need to start wearing those barrels held up by suspender straps. Bubbles richly deserve their bad reputation.

Hobart and Huber have a broader concept: bubbles aren't necessarily bad. Sometimes they are world-changers, innovative remedies for stagnation. And we desperately need to break out of our post-1970 stagnation. They note the changeover from a gold standard to fiat money as the prime mover of that, introducing the era of excessive risk aversion, artificially-set interest rates, endless bailouts, etc.

They consider a number of examples of the kind of thing they're talking about: the Manhattan Project; Apollo; Moore's Law; Corporate R&D; fracking; and, finally, Bitcoin. (As in: "Gee, if I'd bought Bitcoins when I first heard about it…") Notable: the co-dependence of various bits of a boom. For example, continuing improvement in computer/networking hardware makes possible to newly-practical applications. Those new applications then drive further hardware innovation. And…

The authors make some dubious historical analysis. Was the "main purpose" of the Manhattan Project (and the bombing of Hiroshima and Nagasaki) to "subdue the Russians" (page 105)? I'm far from an expert, but what I've read suggests that's a fringe view; we mainly wanted to avoid a bloody invasion of Japan by American troops.

Do ICBMs deliver their payloads "halfway across the globe in fifteen minutes" (page 117)? No, it's more like 45. (That's pretty fast, of course, but it's also pretty easy to get this right.)

Do "doped" semiconductors have "a surplus or deficit of electrons" (page 141)? Not exactly; that would give them a net electric charge. The doping atoms introduced into the semiconductor crystal have a "surplus or deficit" of valence electrons, which allows electrons (or "holes") to meander through the lattice easily and controllably.

Things get kinda weird at the end, with explicit religious allegory. Page 236: "In sum, markets collectivize contagious mimetic desires and suppress their violent discharge. The market achieves a quasi-sacred status in our desacralized culture; it represents a transcendent absolute, irreducible and beyond human understanding and control." Uh, yeah, maybe.

And don't miss the explanation (page 257) how "Bitcoin's founding narrative manages to nod toward every major branch of religion."