Review: The Water Will Come - Rising Seas, Sinking Cities, and the Remaking of the Civilized World

The Water Will Come has a nice long bombastic title. The subject of course, is ocean levels rising and the impact it will have on coastal cities. When I first started the book I expected to hear that the project rise will be something frightening. So when the number came, I was shocked by how inconsequential it would be. The projection is that the sea level will rise by 3' by the end of the century. That's 36 inches. Now, this might have some impact on low lying areas in Florida, but I can't imagine it having any effect in the San Francisco Bay Area, where even Sunnyvale has an elevation of 125'. Indeed, the author doesn't even bother wasting time visiting San Francisco.

We get a ton of lamentation about how Miami would be in trouble, but given how the entire state of Florida keeps voting for climate deniers, it's hard for me to muster up any sympathy for any damage that happens. For instance, various cities in that state and the state itself have successfully lobbied for lower rates in flood insurance for many at-risk properties in the state, which means the rest of us will be the one footing the bill if and when the chickens come home to roost on that one. It's such a pity that there's no way to short at-risk real estate the way you can short stocks. The nice thing about science is that it works whether or not you believe in it, which means that the ability to short real estate would at least let some of us recoup some of  the losses when the socialized costs of relocating or paying for the damages in Florida eventually come.

The author does cover European efforts such as the efforts to protect Venice, Rotterdam, and other European cities where the population generally does understand the effects of climate change. Despite the wealth of these cities, the outlook doesn't look that good, but again, I can't get worked up about 3 feet (the natural sea level rise here on the West Coast of America due to the changing tides can easily be 20 feet or more!). And it seems like Venice does just fine despite being flooded most of the time.

There are a few other references to innovative architectures in Africa that can help deal with sea level house, some of which involve basically floating houses (like boat houses, an ancient technology which might come back into fashion). But again, it looks like most of the problems they have in that area are problems involving the governments of the various countries (i.e., if the police can come and confiscate your property or burn it down, there's no point putting a ton of effort into construction that's meant to last long enough to see signifcant sea level rise).

Somewhere in the book there's a mention of how during the time of the dinosaurs, sea levels were multiples of hundred feet higher. That got my attention but the author never got back to that statement and never talked about whether it was within the realm of possibility.

All in all, climate change is definitely a big problem, but I don't see sea level rise as the one that's going to be a major threat to civilization. (Yes, there will be refugees from people displaced from the coast, but even an estimate of 200 million people in a world of 11 billion people seems like it'll be a workable problem)

I don't feel like the book was entirely a waste of time, but the title of the book was definitely "click-bait", and I don't feel like I can reward that by placing a "recommended" tag on the book itself.

Review: Factfulness

Factfulness is Hans Rosling's legacy: he wrote the book and it was published after he passed away. The book is a great accompaniment and follow up to his various Ted Talks, using statistics, graphs and visualization tools about how the world is a much better place than the gloomy news you might get. The reasons are pretty much the same as in Greg Easterbrook's It's Better Than It Looks: much of the world has moved from the poverty line of having only a dollar a day to spend to 2, 4, 8 or even 16 dollars a day.

This is genuine cause for celebration: 90-95% of kids now finish elementary schooling of one form or another. Most kids are vaccinated against the childhood diseases. Even many developing countries, childbirth rates have plummeted because improve infant survival rates and education of girls meant that family planning is now the rule rather than the exception.

Rosling accompanies each chapter not just with a summary, but a contrarian rule to remind yourself to avoid the simple answers but also to read between the lines as to what's not being reported. A shark attack or polar bear attack might draw the news, but that's because they're unusual. The flip side of it is that something that kills a lot of people (such as the 'flu or traffic crashes or domestic violence) gets ignored because it's not interesting enough to the news media.

The one place where Rosling fails is his depiction of the climate carbonization problem. He claims that the environmental activists tend to exaggerate the problem. From what I can tell, the planet is actually warming faster than projections, so I'd venture to say that the problem is more urgent than what the activists are suggesting.

Nevertheless, this is a fun book to read and well worth your time. Recommended.

Review: Blue Planet II

BBC's Natural History unit has a well deserved reputation for being the best in the business. I'd go so far as to say that their documentaries look better than most of the multi-million dollar fictional TV series you can find, which is surprising because those TV series have the benefit of controlled studio lighting and don't have to spend multiple years hunting down footage in the wild.

Blue Planet II is part of this tradition, and is the most amazing TV series I've ever seen. When Amazon had a $10 sale on it and I had a few slow shipping credits to use, I jumped on it, and it was worth every penny. The image quality is nothing less than superb, even over streaming video, and the details are amazing, both on a 70" 4K TV and on a 42" 1080p screen.

The sequences are amazing, ranging from the grouper spawning scene to the one where the film unit caught a cuttlefish pretending to be female to sneak into a dominant alpha male's lair, and cuckolded him right before his eyes. My jaw dropped in scene after scene, which made me watch even the "making of" video that came as part of the set.

There, I continued to be blown away. For instance, the first time they tried to shoot the grouper spawning scene they failed, missing the spawning by a few hours. So they returned a year later with a big enough scuba team to get 24 hour coverage of the grouper in order to get the shot. For the "boiling seas" sequence, they first tried Australia but got unlucky to start filming at the start of El Nino. They waited 18 months before approaching the shoot by using chase helicopters and following a pod of dolphins. The TV show took 4 years to make and the results more than speak for itself.

There are several sequences where the camera got so close to the action that I thought to myself: "This must have been shot by an underwater drone. There's no way the fish let them get that close." Then you see the "making of" video and in some cases not only was it a person shooting it, in some cases the guy was free diving, not even wearing scuba gear! The skill and dedication of the unit is nothing short of amazing.

Needless to say, this TV series comes highly recommended. If you watch nothing else this year, watch this one.

Review: Homo Deus - A Brief History of Tomorrow

Sequels are rarely as good as their example, but I've had good luck with non-fiction, as long as the author picked a completely different topic instead of rehashing the same-old same-old. Unfortunately, the title, Homo Deus should have given me a clue.

Sapiens was a great book, covering Humanity's past and the rise of civilization. Homo Deus is Harari's attempt to predict the future. Let me try to summarize his argument in this book:

• The rise of civilization was a result of human organization: human beings learned to believe the big myths (such as the existence of money, god, or the social order) in order to organize to create big projects (like irrigation, the pyramids, or expensive exploration).
• The rise of science and technology created conflicts between the scientific enterprise and religion ("everything we know is already in the holy book"), and demanded a new "religion" that reflected the new reality: humanism.
• Humanism values the preciousness and uniqueness of human experience. Hence, one man one vote, equality under the law, democracy, and the emphasis on freedom.
• The further development of science and psychology means that the human experience is no longer unique: how can you say that you have a unique self if a drug or electrodes placed in your brain can modify your experience so distinctly that you're no longer the same person?
• The new religion that reflects this reality is "dataism". Collect and use data to choose which unique self you want to be, and share that data with the internet so everyone can learn from and use that data.
• Alternatively, our AI overlords and algorithms might make that selection for us.

I won't claim that the above 6 bullet points summarizes the whole book, but safe to say that the above is enough for you to decide whether it's worth your time. If someone else had summarized the book like this before I read it, I don't think I would have needed to read it.

Review: The Last Child in The Woods

I really wanted to like The Last Child in The Woods. I grew up in Singapore, in a city where door-to-door inspections have eliminated the Anopheles mosquito. Growing up, we hated visiting Malaysia, where mosquitoes were still prevalent and would make us itch. Our Malaysian cousins had all sorts of bite marks and nasty stuff on their legs, and we had no desire to become like them. My first camping experience as a kid was so unloved by me that I never considered camping again until I was in my twenties. I only became an outdoors person when recreational hiking and commuting cycling brought me into contact with so much natural beauty that I said to myself, "There must be more out there." Once I realized that as an adult I could plan my own trips around what I liked rather than being dictated to like a child, my enjoyment of the outdoors increased a million fold.

The Last Child in The Woods is about nature-deficit disorder. It's an entirely made up syndrome, and the author admits as much. After all, lots of children (especially those from Asia) grow up without any appreciable contact with nature (much like myself), but when given the opportunity as adults, do learn to enjoy the outdoors. The author cites many studies that demonstrate the calming effect of nature exposure to children with varying disorders (such as ADD), but then extrapolates that to include healthy, normal children. This is questionable and there's not a shred of evidence in the book to lead to that conclusion!

Then I ran across this passage:

One might argue that a computer, with its near-infinite coding possibilities, is history’s deepest box of loose parts. But binary code, made of two parts—1 and 0—has its limits. Nature, which excites all the senses, remains the richest source of loose parts. (Kindle Loc: 1261-63)

I don't know if Richard Louv could have destroyed his credibility or demonstrated his ignorance more.

This is a pity, as I agree with much of his complaints about American society and its approach to play and nature. For instance:

Typical Americans spend 101 minutes in their car daily, five times the amount of time they spend exercising. They also take fewer vacation days and work harder than the Japanese or Europeans. (Kindle Loc 1705-6)

I deplore the disappearance of see-saws from American playgrounds because of liability lawsuits. I definitely think that most American cities have little character and definitely aren't as livable as the European cities I've visited. I certainly agree with many of his prescriptions for building a more liveable, green, and environmentally friendly city, where kids get to build tree houses, and children falling out of those said tree houses and breaking body parts wouldn't cause multiple lawsuits and a media frenzy.

The reality, however, is that parents, if they truly cared about the issue, have a lot of control over what trips they take their kids on, and how they portray recreation with their children. For instance, I visited the Montebello OSP Backpack Camp expecting Bowen to be the youngest kid there. He was instead the oldest, with several 1-year olds who were ferried into the campground by dads on Mountain Bikes. I certainly do my best to take Bowen on trips where driving isn't the primary mode of transport as much as possible. There's tons of evidence that building aerobic capacity also improves intelligence and performance in school activities, so this sort of thing isn't even contradictory to being a tiger parent, if that's what you're after.

But Richard Louv chooses instead to wring his hands over declining membership in the Sierra Club, and the graying of hairs and reduction of outdoors activities in the Boy/Girl Scout organizations. The Sierra Club, especially the Loma Prieta Chapter here in Silicon Valley, is famous for fighting against Mountain Bike access to trails, so it's not a surprise that the later, more cycling-friendly generation of outdoors people no longer consider them a friend, but find other ways to express their environmentalism and love of the outdoors. And the less said about the Boy Scout organization's reputation, the better.

All in all, I'm very disappointed in the book. If you're an outdoorsy dad trying to convince your wife that all this hiking/camping/cycling/sailing is good for your kids, the evidence in this book is thin and unconvincing even to me, let alone your wife. If you're looking for help in advocating for more greenery in urban spaces, the book undermines its own credibility in enough places that I'd be leery of citing it if I were faced with determined opposition. I hope the outdoors advocacy literature has people who have more coherent arguments than Richard Louv. But in the end, maybe it doesn't matter: the last time Bowen took friends with him camping, they all became fans of camping, so he's not going to be the last child in the woods.

Review: Capital in the Twenty-First Century

Capital in the Twenty-First Century is Thomas Piketty's magnum opus about the future of capitalism and the implications thereof. It is by far and away the best book I've read this year, and I doubt if I'll read a better book in this decade. It's a combination of economics, political economy, history, literature analysis (of Jane Austen and Honore Balzac no less) and big-data analysis that had me getting up early to read it. In my younger days, I would have devoured this book non-stop in a matter of days, ignoring food, sleep, and work. It is more exciting than any combination of science fiction novels, and in many ways fulfills the idea of economics as psychohistory.

The central premise of the book is the inequality r > g. Through human history, while growth rates have usually been around 1%, the return on capital has usually been around 5% (in real terms, not nominal terms). You might question this 5% number as contradicting Bernstein's 2% number. Note that Bernstein's numbers includes major catastrophes, such as the world wars wiping out most assets in Europe. From a personal finance point of view, such events usually mean that you care a lot more about staying alive than your portfolio! The implications on wealth accumulation is fairly straightforward: if you can accumulate capital such that you can live on less than 5% over a long period of time, you can reinvest the remainder of your capital income and grow well above the growth rate of the economy, leaving you not only with increasing assets, but also freeing you and your heirs from ever having to work for an income ever again. In the extreme case (let's say you're Bill Gates), you can live on 0.01% of your income from capital and essentially reinvest all the proceeds, creating dynastic level wealth. The Hiltons, Kennedys, Rockefellers, and Kochs are of course in this category.

Wait a minute, you say, isn't the world GDP growth more than 3%? Isn't China growing at 7-8%? This is where historical data comes in. Piketty provides convincing evidence that these numbers can only occur because of (1) population growth, and (2) catchup with the modern economies. In other words, Europe could only grow at 6-8% a year until it caught up with the USA at the frontier of technology and infrastructure, at which point it devolved down to 1-1.5% growth. The same happened to Japan, and will happen to China. It's reasonable to expect the world to degenerate to that case eventually, but the developed world is already there.

Even more impressively, Piketty has current data. This data in particular, shows that the top 1% in Europe and USA already own more than 70% of the capital assets in their respective economic arenas. Even worse, there's reasonable evidence that because of the existence of tax havens, these estimates are low. Piketty analyzes total capital known to be in existence, and reveals that the world owes more money than exists in developed country accounts. The remainder of the dark capital exists in tax havens and is likely to be around 10% of global wealth.

How bad can things get? Here, Piketty turns to history for data and to literature to make it real. This section of the book is impressive and amazing to read. During the Gilded Age (called Belle Epoque in the book), the wealthy commanded 90% of the capital in their respective countries. Fully half of the population (then and now) owned essentially nothing or had a negative net-worth, and there was no middle class. There was effectively no inflation, which explained why Austen and Balzac would provide numbers in terms of income for the characters in their novels and expect readers to understand what situations each character was in. Worse, there was no way for anyone to get ahead by hard work or education: even judges could at most make 5 to 7 times the average income, compared to the wealthy heirs and heiresses who would have 30 to 60 times the average income from the capital they inherited. Hence, the plots of those novels always involved marrying someone so wealthy that they could provide a dignified existence (meaning that they could hire enough servants to take care of the needs of daily living, given the non-existence of refrigeration, cars, etc).

Lest you think that this state of affairs could only occur because of a stagnant technology, Piketty reminds the reader that automobiles, steam engines, etc. were all invented during this period. It was hardly a period of stagnation. Yet because all new technology required capital, the inventors didn't make off with the lion's share of the profits.

So how did the situation change? Was it the progressive income tax? Was it the introduction of inflation? The answer was that it took 2 world wars to essentially destroy most of the existing capital stock in Europe in order for a more egalitarian post-war generation to exist. This essentially created a middle class that owned about 40% of the wealth and consisted of 40% of the population. 50% of the population continued to own no property, while the top 10% owns 60% of the wealth. In the U.S., punitive taxation levels of 90% kept inequality low, essentially keeping the American middle class from suffering the same fate. Piketty points out that the 90% tax rate was hardly ever paid. Instead, what it did was to keep executives (who essentially set their own pay) from asking for compensation at that level. When those tax rates were dismantled in the 1980s, CEO and other executive compensation sky-rocketed in response.

So how does the world look going forward? It looks grim. We are currently in a situation where in the US and Europe, capital from inheritances and capital from savings through work average about 50%. By 2050, if things don't change, we could easily see a return to inequality levels seen during the Gilded Age: most high net-worth households will be those who are inherited, and once again, your path to success would lie mostly in marrying rich rather than hard work and entrepreneurship. The dystopia of Blade Runner or Elysium never looked more likely than through Piketty's statistics. To balance that out a bit, Piketty points out that the European and US welfare states do cushion the blow somewhat: elderly poverty is down substantially since social security was introduced, and the European safety nets are even more generous. Of course, there's no shortage of the usual suspects wanting to tear that down...

Is there any possibility of change? Piketty proposes a global tax on capital, essentially a wealth tax. This is by far the most disappointing section of the book, not because such an idea wouldn't work, but because the political climate just wouldn't allow it. Furthermore, he works in lots of other issues that have very little with inequality and other topics covered by the book. For instance, he covers ways to pay down the national debts of various countries with a one-time exceptional tax. Since Piketty is French, he spends a lot of time discussing the Euro and the need for Eurozone cooperation and sanctions against tax havens, which is an international problem.

But seriously, that's a small nit on the book. I haven't even covered many of the side-topics that Piketty covers in the book. For instance, there's a huge discussion of slavery in the US in the antebellum South. This was a tour de force, as Piketty shows how much wealth slaveholders had: essentially, the northern US states were poor compared with old Europe, but the southern US states were wealthier, and of course, with a correspondingly higher wealth inequality. There cannot be more impoverishment than the inability to own even your own labor, and Piketty's statistics and graphs show the benefit of being on the other side of that equation in stark relief.

Piketty also discusses the American education system in contrast with the European systems, and how elite American colleges perpetuate the inequality that already exist in society: the majority of their incoming students come from the top quartile of society. He does point out the advantages of charging insanely high tuition, so you do get something for your money. Nevertheless, this goes a long way towards understanding why elite American colleges' acceptance tests seem very similar to the old-school European finishing school, complete with piano-playing and other tests of altruism and "leadership." They essentially have not drifted too far from those original prototypical elite institutions.

Finally, is there anything practical you can learn about personal finance in this economics book? The answer is yes. The first of which is that real-estate is a mug's game. Today's real-estate yields about 3-4%. Why so low when all other capital earns 4-5% real returns? The answer: real-estate is the only capital today subject to Piketty's wealth-tax. That wealth tax seems small: 1-1.5% of property value per year. But since it's levied every year, it imposes a drag on performance that's much higher than the capital gains tax, which are the subject of inter-state competition and hence tends towards zero over the long term. Piketty points out that the higher up the wealth ladder you go, the lower the proportion of real estate owned in the portfolio because of these characteristics. In other words, it's better to be equity-heavy and house poor than equity-light and house rich. The other lessons are fairly obvious: you want to have the lowest costs possible (both in investment costs and living expenses) so that your capital has the highest chance to compound. The bigger your portfolio, the faster the money will grow: Piketty points out that there's no difference in performance between Bill Gate's portfolio and Liliane Bettencourt's portfolio, even though one was a brilliant entrepreneur and the other is the heiress of the L'Oreal fortune. Capital is indifferent as to how you came by it. Furthermore, the largest portfolios grow the fastest. The elite university endowments for instance, grow at 8-10% a year, since once you get past a certain size you can take advantage not only of relatively expensive wealth managers through economies of scale, but you also have the ability to buy illiquid assets that cannot be easily sold and hence command a risk premium.

In the writing of this review, my biggest fear is that I haven't convinced you that you must read this book. Not only does it give you tools with which to analyze the world (and Jane Austen's novels --- you might even be able to avoid having to read them at all, since Piketty does such a great job of picking out the essentials), it also gives you the context of why we are still feeling the effects of world war 2, 70 years after the event.

Highly recommended. Pay whatever price you have to, ignore whatever pressing assignments you have to, read this book. It is that good, and whether or not you disagree with the politics, there's plenty in here for you to exercise your intellectual muscle on. Go to it.