Thales and the olive presses

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pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alan Greenspan, Alvin Roth, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, benefit corporation, 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, democratizing finance, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial engineering, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, Great Leap Forward, Ida Tarbell, income inequality, information asymmetry, invisible hand, John Bogle, 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, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, social contagion, Steven Pinker, tail risk, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

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.

He was making an asymmetric bet on olive values, bene ting fully if the olives had value above the contract rent but losing only the earnest money if not. That asymmetric bet on prices is the essence of an option. 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.

But we learn from this story that olive press owners were open to the sale of options. Presumably they had made such trades before. Why were they willing to do this? Clearly the pressers got the worse of the deal in this instance. Were they deceived by Thales? In fact it is easy to imagine why olive pressers were willing to sell options on use of their presses when Thales came to them with an o er. Here was an o er of money on the table for the chance—which the pressers must have regarded as small—that olive values would increase to a high level. They must have assumed that Thales did not know that olive prices would be higher, so they were trading the “upper tail” of possible performance for a sure thing today.


pages: 425 words: 122,223

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

Albert Einstein, asset allocation, backtesting, Benoit Mandelbrot, Black Monday: stock market crash in 1987, 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, Glass-Steagall Act, Great Leap Forward, guns versus butter model, implied volatility, index arbitrage, index fund, interest rate swap, invisible hand, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, law of one price, linear programming, Louis Bachelier, mandelbrot fractal, martingale, means of production, Michael Milken, money market fund, Myron Scholes, new economy, New Journalism, Paul Samuelson, Performance of Mutual Funds in the Period, profit maximization, Ralph Nader, RAND corporation, random walk, Richard Thaler, risk free rate, risk/return, Robert Shiller, Robert Solow, 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.

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?

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. 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.


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, AOL-Time Warner, assortative mating, Benoit Mandelbrot, book value, Brownian motion, capital asset pricing model, Carl Icahn, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, 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, low interest rates, Monty Hall problem, 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, Ronald Coase, short squeeze, 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, tontine, transaction costs, vertical integration, zero-sum game

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.” 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.”

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.

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.


pages: 651 words: 180,162

Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb

"World Economic Forum" Davos, Air France Flight 447, Alan Greenspan, Andrei Shleifer, anti-fragile, banking crisis, Benoit Mandelbrot, Berlin Wall, biodiversity loss, Black Swan, business cycle, caloric restriction, caloric restriction, Chuck Templeton: OpenTable:, commoditize, creative destruction, credit crunch, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, discrete time, double entry bookkeeping, Emanuel Derman, epigenetics, fail fast, financial engineering, financial independence, Flash crash, flying shuttle, Gary Taubes, George Santayana, Gini coefficient, Helicobacter pylori, Henri Poincaré, Higgs boson, high net worth, hygiene hypothesis, Ignaz Semmelweis: hand washing, informal economy, invention of the wheel, invisible hand, Isaac Newton, James Hargreaves, Jane Jacobs, Jim Simons, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Arrow, knowledge economy, language acquisition, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, Marc Andreessen, Mark Spitznagel, meta-analysis, microbiome, money market fund, moral hazard, mouse model, Myron Scholes, Norbert Wiener, pattern recognition, Paul Samuelson, placebo effect, Ponzi scheme, Post-Keynesian economics, power law, 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, Rupert Read, selection bias, Silicon Valley, six sigma, spinning jenny, statistical model, Steve Jobs, Steven Pinker, Stewart Brand, stochastic process, stochastic volatility, synthetic biology, tacit knowledge, tail risk, 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

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.

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.

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. Then he went back to philosophizing. What he collected was large, perhaps not enough to make him massively wealthy, but enough to make the point—to others but also, I suspect, to himself—that he talked the talk and was truly above, not below, wealth. This kind of sum I’ve called in my vernacular “f*** you money”—a sum large enough to get most, if not all, of the advantages of wealth (the most important one being independence and the ability to only occupy your mind with matters that interest you) but not its side effects, such as having to attend a black-tie charity event and being forced to listen to a polite exposition of the details of a marble-rich house renovation.


pages: 404 words: 131,034

Cosmos by Carl Sagan

Albert Einstein, Alfred Russel Wallace, Apollo 11, Arthur Eddington, clockwork universe, dark pattern, 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, luminiferous ether, Magellanic Cloud, Mars Rover, Menlo Park, music of the spheres, pattern recognition, planetary scale, Plato's cave, Search for Extraterrestrial Intelligence, spice trade, Suez canal 1869, Thales and the olive presses, Thales of Miletus, time dilation, Tunguska event

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. 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.

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. Thus he showed the world philosophers can easily be rich if they like, but that their ambition is of another sort.

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. 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.”


pages: 162 words: 50,108

The Little Book of Hedge Funds by Anthony Scaramucci

Alan Greenspan, Andrei Shleifer, asset allocation, Bear Stearns, Bernie Madoff, business process, carried interest, corporate raider, Credit Default Swap, diversification, diversified portfolio, Donald Trump, Eugene Fama: efficient market hypothesis, fear of failure, financial engineering, fixed income, follow your passion, global macro, Gordon Gekko, high net worth, index fund, it's over 9,000, John Bogle, John Meriwether, Long Term Capital Management, mail merge, managed futures, margin call, mass immigration, merger arbitrage, Michael Milken, money market fund, Myron Scholes, NetJets, Ponzi scheme, profit motive, proprietary trading, quantitative trading / quantitative finance, random walk, Renaissance Technologies, risk-adjusted returns, risk/return, Ronald Reagan, Saturday Night Live, Sharpe ratio, short selling, short squeeze, Silicon Valley, tail risk, Thales and the olive presses, Thales of Miletus, the new new thing, too big to fail, transaction costs, two and twenty, uptick rule, 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.

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. And, so my observant readers, the first hedge fund-like practice was born—using contrarian investing practices and foresight to achieve high returns. Speculation, prognostication, and risk taking have been with us since the dawn of time. The hedge fund industry has taken it to a new level by refining the agreement between the speculators and their capital partners and by setting up a remuneration process that allows for heavy compensation for those who have bet correctly.


pages: 807 words: 154,435

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

Airbus A320, Alan Greenspan, Albert Einstein, Albert Michelson, algorithmic trading, anti-fragile, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Bear Stearns, behavioural economics, Benoit Mandelbrot, bitcoin, Black Swan, Boeing 737 MAX, Bonfire of the Vanities, Brexit referendum, 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, DeepMind, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, Dutch auction, easy for humans, difficult for computers, eat what you kill, Eddington experiment, 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, Goodhart's law, Hans Rosling, Helicobacter pylori, high-speed rail, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Jim Simons, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Kōnosuke Matsushita, Linda problem, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, military-industrial complex, Money creation, Moneyball by Michael Lewis explains big data, Monty Hall problem, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, nudge theory, oil shock, PalmPilot, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Phillips curve, Pierre-Simon Laplace, popular electronics, power law, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, reality distortion field, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Suez crisis 1956, 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 market for maybe five computers, World Values Survey, Yom Kippur War, zero-sum game

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.

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.

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.


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, Plato's cave, 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.

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.

CHAPTER II The Milesian School IN every history of philosophy for students, the first thing mentioned is that philosophy began with Thales, who said that everything is made of water. This is discouraging to the beginner, who is struggling—perhaps not very hard—to feel that respect for philosophy which the curriculum seems to expect. There is, however, ample reason to feel respect for Thales, though perhaps rather as a man of science than as a philosopher in the modern sense of the word. Thales was a native of Miletus, in Asia Minor, a flourishing commercial city, in which there was a large slave population, and a bitter class struggle between the rich and poor among the free population.


pages: 206 words: 70,924

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

Abraham Wald, Albert Einstein, Bayesian statistics, Bear Stearns, 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 engineering, 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 free rate, risk tolerance, risk/return, Robert Solow, 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

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. 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.

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.


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, carbon tax, clean water, Community Supported Agriculture, corporate raider, critique of consumerism, Daniel Kahneman / Amos Tversky, dark matter, degrowth, 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, it is difficult to get a man to understand something, when his salary depends on his not understanding it, loss aversion, McMansion, means of production, move fast and break things, negative equity, New Urbanism, off-the-grid, Paradox of Choice, paradox of thrift, Ralph Waldo Emerson, sunk-cost fallacy, Thales and the olive presses, Thales of Miletus, the market place, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, Upton Sinclair, Veblen good, Virgin Galactic, 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 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.

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.


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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, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, 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, Jeremy Corbyn, 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, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, 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 Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, 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.

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.

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.


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In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest by Andrew W. Lo, Stephen R. Foerster

Alan Greenspan, Albert Einstein, AOL-Time Warner, asset allocation, backtesting, behavioural economics, Benoit Mandelbrot, Black Monday: stock market crash in 1987, Black-Scholes formula, Bretton Woods, Brownian motion, business cycle, buy and hold, capital asset pricing model, Charles Babbage, Charles Lindbergh, compound rate of return, corporate governance, COVID-19, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, Donald Trump, Edward Glaeser, equity premium, equity risk premium, estate planning, Eugene Fama: efficient market hypothesis, fake news, family office, fear index, fiat currency, financial engineering, financial innovation, financial intermediation, fixed income, hiring and firing, Hyman Minsky, implied volatility, index fund, interest rate swap, Internet Archive, invention of the wheel, Isaac Newton, Jim Simons, John Bogle, John Meriwether, John von Neumann, joint-stock company, junk bonds, Kenneth Arrow, linear programming, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, new economy, New Journalism, Own Your Own Home, passive investing, Paul Samuelson, Performance of Mutual Funds in the Period, prediction markets, price stability, profit maximization, quantitative trading / quantitative finance, RAND corporation, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, Savings and loan crisis, selection bias, seminal paper, shareholder value, Sharpe ratio, short selling, South Sea Bubble, stochastic process, stocks for the long run, survivorship bias, tail risk, Thales and the olive presses, Thales of Miletus, The Myth of the Rational Market, The Wisdom of Crowds, Thomas Bayes, time value of money, transaction costs, transfer pricing, tulip mania, Vanguard fund, yield curve, zero-coupon bond, zero-sum game

At the time, olive oil was used for making soap and for cooking and was also used as fuel for lamps and as a skin softener.10 After several years of poor harvests, the Greek philosopher and mathematician Thales of Miletus (known as one of the Seven Sages of Greece) used astronomy to predict an upcoming bumper olive crop. During the winter, he negotiated call options to buy the presses in the spring at their depressed current prices. He bought all the olive presses he could find from discouraged growers and made a fortune when the predicted bumper crop arrived. As recounted later by Aristotle in his famous Politics, Thales “succeeded in proving it is easy for philosophers to become rich if they so desire, though it is not the business in which they are really about.”11 In the fourth century BCE, the well-known Greek orator Demosthenes was grappling with an investment issue.

., Markowitz on, 33–34 Sprenkle, Case, 152 “Stability of a Monetary Economy with Inflationary Expectations” (Siegel), 283–84 Standard & Poor’s (S&P), 248, 251 Standard Oil of New Jersey, growth trap and, 298–99 Steinberg, Jonathan (Jono), 304 Steinberg, Saul, 304 Steinberger, Jack, 174 Stewart, Ian, 148 Stigler, George, 166 stock market: bubbles in (see bubbles); business cycles and, Siegel’s interest in, 286–88; cyclically adjusted price-to-earnings ratio and, 246–47; Fed leadership’s expression of opinions about, 237–40; irrational exuberance and, 237–39; Shiller/Siegel controversy over overvaluation of, 302–4; Trump’s election and, 301 stock market crashes: of Black Monday (October 19, 1987), 236–37; Fama on, 245; of 1929, Bogle family and, 114 Stocks for the Long Run (Siegel), 229, 281, 289, 291–95, 300, 305–6 stock splits, Fama’s research on, 90–93 Strange, Robert, 258 “Studies in the Theory of Risk Bearing” (Mossin), 71 Stulz, René, 108, 110–11 substitution swaps, 211 swaps, Leibowitz and Homer’s memorandum on, 211–12 Swensen, David, 219, 269, 270–71 target date funds, 224 Target Date Retirement Income Funds, 196, 197 taxes, 48, 322; Bogle on, 135; corporate, 1964 cut in, 260; Ellis on, 279 technical analysis, 88, 89 technology sector overvaluation, Siegel on, 295–98 terminal wealth, Scholes on, 167 Tesler, Lester, 87 Texas Instruments calculators, 161 Thaler, Richard (Dick): on equity premium, 290; on market efficiency, 245; as Nobel Prize winner, 83, 245, 290; publications of, 245; relationship with Fama, 245 Thales of Miletus, 4–5 Theiler, Max, as Nobel Prize winner, 174 The Theory of Finance (Fama and Miller), 108 The Theory of Interest, as Determined by Impatience to Spend Income and Opportunity to Invest It (Fisher), 15 The Theory of Investment Value (Williams), 15, 23, 28 “The Theory of Speculation” (Bachelier), 83 Thorndike, Doran, Paine & Lewis, 121 three-factor model, 102–5 Three P’s of Investments, 322–23 time value of money, 2 timing: achieving financial goals and, 332; market timing and, 318 Timmons, Bruce, 228 Tobin, James, 22, 39, 231 “To Get Performance, You Have to Be Organized for It” (Ellis), 261 tokens, for ancient record keeping, 2 Toronto Maple Leafs, 141 traditional index funds (TIFs), exchange-traded funds vs., 136–37 transfer prices, Sharpe’s interest in, 55 Treasury bills, Fama’s predictability study of, 105 Treasury bonds, Fama’s predictability study of, 106–7 Treasury Inflation-Protected Securities (TIPS), 193, 197, 198, 311, 322 Trente demoiselles de Geneve, 13–14 Treynor, Jack, 69–70, 347n46; “Market Value, Time, and Risk,” 69; research on option pricing, 149–50 trills, 253–54 Trump, Donald, Siegel and Shiller’s views on stock market effects of election of, 301 tulip bubble, 9–10 Tversky, Amos, 42, 83 Twain, Shania, 141 Twardowski, Jan, 127 underperformance, Ellis on, 272–73 Ur, financial district of, 3 Uspensky, J.

Scholes: A Partial Differential Equation That Changed the World.”63 Jarrow observed that options (when properly priced) are a useful vehicle for both insurance and speculation. He emphasized that the Black-Scholes/Merton option pricing technology “was the equivalent of applying a miracle-growing fertilizer to a sparse and relatively infertile field within finance,” raising an entirely new harvest of derivatives. Jarrow concluded, “The Black-Merton-Scholes option pricing theory is believed by many scholars, myself included, to be one of the most successful applications of economic theory in the history of economics.” For Merton, financial tools such as derivatives are a key to progress because of their ability to link different financial systems around the world.


pages: 462 words: 150,129

The Rational Optimist: How Prosperity Evolves by Matt Ridley

"World Economic Forum" Davos, 23andMe, Abraham Maslow, agricultural Revolution, air freight, back-to-the-land, banking crisis, barriers to entry, Bernie Madoff, British Empire, call centre, carbon credits, carbon footprint, carbon tax, Cesare Marchetti: Marchetti’s constant, charter city, clean water, cloud computing, cognitive dissonance, collateralized debt obligation, colonial exploitation, colonial rule, Corn Laws, Cornelius Vanderbilt, cotton gin, creative destruction, credit crunch, David Ricardo: comparative advantage, decarbonisation, dematerialisation, demographic dividend, demographic transition, double entry bookkeeping, Easter island, Edward Glaeser, Edward Jenner, electricity market, en.wikipedia.org, everywhere but in the productivity statistics, falling living standards, feminist movement, financial innovation, flying shuttle, Flynn Effect, food miles, Ford Model T, Garrett Hardin, Gordon Gekko, greed is good, Hans Rosling, happiness index / gross national happiness, haute cuisine, hedonic treadmill, Herbert Marcuse, 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, Jevons paradox, John Nash: game theory, joint-stock limited liability company, Joseph Schumpeter, Kevin Kelly, Kickstarter, knowledge worker, Kula ring, Large Hadron Collider, Mark Zuckerberg, Medieval Warm Period, meta-analysis, mutually assured destruction, Naomi Klein, Northern Rock, nuclear winter, ocean acidification, oil shale / tar sands, out of africa, packet switching, patent troll, Pax Mongolica, Peter Thiel, phenotype, plutocrats, Ponzi scheme, precautionary principle, Productivity paradox, profit motive, purchasing power parity, race to the bottom, Ray Kurzweil, rent-seeking, rising living standards, Robert Solow, 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 long tail, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, ultimatum game, upwardly mobile, urban sprawl, Vernor Vinge, Vilfredo Pareto, wage slave, working poor, working-age population, world market for maybe five computers, 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.

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.


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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, Boeing 747, British Empire, Broken windows theory, carbon footprint, carbon tax, Celebration, Florida, classic study, clean water, company town, congestion charging, congestion pricing, Cornelius Vanderbilt, declining real wages, desegregation, different worldview, diversified portfolio, Edward Glaeser, Elisha Otis, endowment effect, European colonialism, Fairchild Semiconductor, financial innovation, Ford Model T, Frank Gehry, global village, Guggenheim Bilbao, haute cuisine, high-speed rail, Home mortgage interest deduction, James Watt: steam engine, Jane Jacobs, job-hopping, John Snow's cholera map, junk bonds, Lewis Mumford, machine readable, Mahatma Gandhi, McMansion, megacity, megaproject, Michael Milken, 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, streetcar suburb, 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, vertical integration, William Shockley: the traitorous eight, Works Progress Administration, young professional

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.

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.


pages: 733 words: 179,391

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

Alan Greenspan, 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, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, bitcoin, Bob Litterman, Bonfire of the Vanities, bonus culture, break the buck, Brexit referendum, Brownian motion, business cycle, business process, butterfly effect, buy and hold, capital asset pricing model, Captain Sullenberger Hudson, carbon tax, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computerized trading, confounding variable, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, Daniel Kahneman / Amos Tversky, delayed gratification, democratizing finance, Diane Coyle, diversification, diversified portfolio, do well by doing good, double helix, easy for humans, difficult for computers, equity risk premium, Ernest Rutherford, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Fractional reserve banking, framing effect, Glass-Steagall Act, global macro, Gordon Gekko, greed is good, Hans Rosling, Henri Poincaré, high net worth, housing crisis, incomplete markets, index fund, information security, interest rate derivative, invention of the telegraph, Isaac Newton, it's over 9,000, James Watt: steam engine, Jeff Hawkins, Jim Simons, job satisfaction, John Bogle, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, language acquisition, London Interbank Offered Rate, Long Term Capital Management, longitudinal study, loss aversion, Louis Pasteur, mandelbrot fractal, margin call, Mark Zuckerberg, market fundamentalism, martingale, megaproject, merger arbitrage, meta-analysis, Milgram experiment, mirror neurons, money market fund, moral hazard, Myron Scholes, Neil Armstrong, Nick Leeson, old-boy network, One Laptop per Child (OLPC), out of africa, p-value, PalmPilot, paper trading, passive investing, Paul Lévy, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, Ponzi scheme, predatory finance, prediction markets, price discovery process, profit maximization, profit motive, proprietary trading, public intellectual, 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 Solow, Sam Peltzman, Savings and loan crisis, seminal paper, Shai Danziger, short selling, sovereign wealth fund, Stanford marshmallow experiment, Stanford prison experiment, statistical arbitrage, Steven Pinker, stochastic process, stocks for the long run, subprime mortgage crisis, survivorship bias, systematic 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, uptick rule, Upton Sinclair, US Airways Flight 1549, Walter Mischel, Watson beat the top human players on Jeopardy!, WikiLeaks, Yogi Berra, zero-sum game

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 “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.

., 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 Shuttle Challenger, 12–16, 24, 38 specialization, 217 speech synthesis, 132 Sperry, Roger, 113–114 “spoofing,” 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 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 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 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

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

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.

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.

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.


pages: 308 words: 99,298

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

"World Economic Forum" Davos, 3D printing, Alan Greenspan, Alvin Toffler, banking crisis, battle of ideas, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, centre right, Corn Laws, deindustrialization, Doha Development Round, Donald Trump, Etonian, European colonialism, fake news, financial engineering, first-past-the-post, fixed income, Gini coefficient, greed is good, illegal immigration, information security, James Dyson, Jeremy Corbyn, labour mobility, liberal capitalism, low cost airline, low interest rates, Martin Wolf, mass immigration, military-industrial complex, Mont Pelerin Society, negative equity, Neil Kinnock, new economy, non-tariff barriers, offshore financial centre, open borders, open economy, post-truth, 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.

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.

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

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, 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, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, 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, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, 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 Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, 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, Suez canal 1869, TaskRabbit, techlash, 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 Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, 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, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

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.

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, spice trade, Suez canal 1869, Suez crisis 1956, sustainable-tourism, Thales and the olive presses, trade route, urban planning, urban sprawl

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.

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.

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.


Egypt Travel Guide by Lonely Planet

call centre, carbon footprint, Eratosthenes, friendly fire, haute cuisine, Khartoum Gordon, late fees, low cost airline, off grid, place-making, spice trade, Suez canal 1869, Suez crisis 1956, sustainable-tourism, Thales and the olive presses, trade route, urban planning, urban sprawl

Philosophers' CircleMONUMENT ( MAP GOOGLE MAP ) This is quite a sad-looking group of Greek statues, which are arranged in a semicircle and sheltered by a spectacularly ugly concrete shelter. It 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. SerapeumTOMB ( MAP GOOGLE MAP ) The Serapeum, dedicated to the sacred Apis bull, is one of the highlights of visiting Saqqara. The first Apis burial took place in the reign of Amenhotep III (1390–1352 BC), and the practice continued until 30 BC.

A dramatic pointed arch at the entrance frames a huge studded wooden door. Built of mud brick, and on a grander scale than the surrounding houses, it incorporates massive 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; h9am-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.

NilometerNOTABLE BUILDING ( MAP GOOGLE MAP ; Sharia al-Malek as-Salih, Roda; admission E£15; h9am-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, it measured the rise and fall of the river, and thus predicted the fortunes of the annual harvest. The Turkish-style pencil-point dome is a Farouk-era reconstruction of an earlier one wrecked by Napoleon’s troops. 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 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, Suez canal 1869, Suez crisis 1956, sustainable-tourism, Thales and the olive presses, trade route, urban sprawl, young professional

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.

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.

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


pages: 2,313 words: 330,238

Lonely Planet Turkey (Travel Guide) by Lonely Planet, James Bainbridge, Brett Atkinson, Steve Fallon, Jessica Lee, Virginia Maxwell, Hugh McNaughtan, John Noble

British Empire, car-free, carbon footprint, country house hotel, Exxon Valdez, Kickstarter, megacity, Mustafa Suleyman, place-making, restrictive zoning, sensible shoes, sustainable-tourism, Thales and the olive presses, trade route, urban planning, urban renewal, urban sprawl, yield management, young professional

Although Miletus' distant origins remain unclear, it's likely that Minoan Cretans came in the Bronze Age (the word Miletus is of Cretan origin). Ionian Greeks consolidated themselves from 1000 BC, and Miletus became a leading centre of Greek thought and culture over the following centuries; most significantly, the Milesian School of Philosophy (from the 6th century BC) featured such great thinkers as Thales, Anaximander and Anaximenes. Their observations of nature emphasised rational answers rather than recourse to mythical explanations, putting them among the world's first scientists. Like the other coastal cities in the region, Miletus was fought over by Athens and Persia, and finally taken in 334 BC by Alexander the Great, who ushered in the city's golden age.

Patara View Point HotelHOTEL$$ (%0242-843 5184; www.pataraviewpoint.com; s/d with fan ₺140/170, apt per week ₺1800; pnaiWs) This country-chic hotel has a lovely pool, 27 sea- or mountain-facing rooms, a cosy library and an Ottoman-style terrace with a cedar fire to banish mosquitoes. Owner Muzaffer is a history buff and you'll find 350-plus antiques here and old farm implements outside, including a 2000-year-old olive press, an ancient beehive and a replica Lycian tomb (for his dog). Muzaffer and English wife Anna-Louise also offer four absolutely gorgeous, modern and spacious apartments you can rent by the week in a secluded spot right at the end of the village. 5Eating With a little notice, most pensions prepare excellent home-cooked meals for both guests and nonguests.

Meze spreads draw on freshly harvested artichoke, broad bean and walnut. Seasonal salads feature cucumber, corn and tomato; watermelon and fig start their four-month seasons. Fall (Sep–Nov) Locals celebrate the start of the four-month hamsi (anchovy), palamut (bonito) and lüfer (bluefish) seasons, as well as the short çupra (gilthead sea bream) season. Pomegranates appear in October and are plentiful until the end of February. Winter (Dec–Feb) The best season for fish; December is known for its hamsi and January for istavrit (horse mackerel), lüfer and palamut. Chestnuts are harvested and roasted on street corners throughout the country.