What I'm Reading

I just finished two books - both recommended by colleagues.   

The first was Funny Money, written by Mark Singer, and first published in 1985.  The book covers the collapse of the Penn Square bank in Oklahoma City, which ultimately contributed to the federal government bailout (I believe it was the largest ever at the time) of Illinois Continental.  Today, one cannot help but read the book with thoughts of the recent financial crises coming to mind.  It is remarkable how similar the Penn Square collapse was to the recent real-estate collapse.  

Optimism future over oil/gas prices led to a rush of money into the sector (there was a belief energy prices could never fall).  Some energetic bankers were happy to make millions in loans based on the rosy projections.  They found that these loans could be repacked and sold "upstream" to larger banks, who had little directly knowledge of the risks of the actual underlying loans.  The loan sales provided more capital to make even more and larger loans to ever more dubious lenders.  It was a classic bubble fueled by debt, re-sold and re-packaged debt bought by people who didn't monitor the actual collateral underlying the loans.  Sound familiar?  

One interesting feature of Singer's book is the lack of moralizing that one would expect to see in this sort of book (indeed it is quite funny in many parts).  Clearly, some of the main actors turned out to make really stupid bets (and at least a couple had to serve jail time) , but Singer does a good job showing how people respond to the incentives they face, and how lack of good institutional rules can let the bad rise to the top.  The book should be required reading for any Okie - and is a prescient source for understanding how the recent financial collapse could happen.

The second book was the Fall of the House of Zeus by Curtis Wilkie.  Wilke documents the rise and fall of one of America's most powerful Trial Lawyers, Dick Scruggs.  Scruggs, a Mississippi lawyer, made his millions in the tobacco lawsuits, and found his way into legal trouble in a judge-bribing case that originated with insurance company law suits associated with Hurricane Katrina.

The book is an eye-opening account of the relationship between money, politics, and the court system.  People from John McCain to Joe Biden to Al Gore to Trent Lott are intertwined with Scruggs's activities.  At times I found myself thinking I was reading a John Grisham novel (the real-life Grisham also shows up in the book), but I had to keep reminding myself that this really happened.  Having lived in Mississippi for three years, I also enjoyed some of the discussion of local politics. 

It is hard to come away from either book with a positive outlook on human nature.  It really brings to life the fact that real-life government is nothing like what we assume in when designing "optimal" economic policies in textbooks, but it also reveals that real-life markets, especially when people can bet with other people's money, can lead to bubbles and spectacular collapse.  Both are cautionary tales to be sure.

Country of Origin Labeling Developments

A recent report from the Congressional Research Service has a nice discussion of the ongoing developments associated with mandatory country of origin labeling for meat: 

Less than one year after the COOL rules took effect, Canada and Mexico challenged them in the World Trade Organization (WTO), arguing that COOL has a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market, thus violating WTO trade commitments agreed to by the United States. In November 2011, the WTO dispute settlement (DS) panel found that (1) COOL treats imported livestock less favorably than like U.S. livestock (particularly in the labeling of beef and pork muscle cuts), and (2) COOL does not meet its objective to provide complete information to consumers on the origin of meat products.

This decade-long timeline of events was particularly helpful:

Assorted Links

UC Davis agricultural economist, Julian Alston, talks about food and farm policy and obesity

No association between cardiovascular disease or cancer death and red meat consumption in Asian countries

An article in the American Journal of Public Health on how to use obesity messages to manipulate the public to support government intervention (o.k., dropping the sarcasm, the author's actual title is: Framing the Consequences of Childhood Obesity to Increase Public Support for Obesity Prevention Policy)

An interesting article on whether people seek information on GMOs, climate change, and other topics that confirm their biases; surprisingly confirmation bias is mainly a problem for know it alls (people who think they know a lot)  

The Honey Launderers: Uncovering the Largest Food Fraud in U.S. History (here's my question: why do we have a tariff on Chinese honey? Food safety concerns are one thing, but these sorts of trade barriers invite this kind of fraud)

Food Police Study Guide

With the fall semester fully underway, I've had several people teaching college or high school classes ask if had a study guide available for my book, The Food Police.  I haven't.  Till now. 

I finally took a few minutes to pull together a few questions for each chapter that could be used to help guide discussion.  You can download the study guide (pdf) by clicking on this link. 

If anyone else out there has been using the book and has done something similar (or perhaps even used questions in a book club), and is willing to share, let me know and I'll disseminate.   

The Food Police: A Well-Fed Manifesto About the Politics of Your Plate

By Jayson Lusk

A Comedian's take on Whole Foods

I laughed out loud several times at this article by Kelly MacLean in the Huffington Post on Whole Foods.  Some of my favorite parts:

Whole Foods is like Vegas. You go there to feel good but you leave broke, disoriented, and with the newfound knowledge that you have a vaginal disease.

and

Next I see the gluten-free section filled with crackers and bread made from various wheat-substitutes such as cardboard and sawdust. I skip this aisle because I'm not rich enough to have dietary restrictions. Ever notice that you don't meet poor people with special diet needs? A gluten intolerant house cleaner? A cab driver with Candida? Candida is what I call a rich, white person problem. You know you've really made it in this world when you get Candida. My personal theory is that Candida is something you get from too much hot yoga. All I'm saying is if I were a yeast, I would want to live in your yoga pants.

and

I grab a couple of loaves of poison, and head to checkout. The fact that I'm at Whole Foods on a Sunday finally sinks in when I join the end of the line...halfway down the dog food aisle. I suddenly realize that I'm dying to get out of this store. Maybe it's the lonely feeling of being a carnivore in a sea of vegans, or the newfound knowledge that some people's dogs eat better than I do, but mostly I think it's the fact that Yanni has been playing literally this entire time. Like sensory deprivation, listening to Yanni seems harmless at first, enjoyable even. But two hours in, you'll chew your own ear off to make it stop.