The one-handed economist

I read Peter Leeson’s The Invisible Hook: The Hidden Economics of Pirates a few months ago, but now I have time to write out some thoughts on his entertaining and educational book.

Leeson is a professor of economics at George Mason University, where the default ideology favors free markets and the norm of public engagement means that many professors are active with blogs, podcasts, and popular books.

Leeson’s Hook fits squarely in that tradition by explaining how pirates managed to plunder without fighting each other or getting caught.

Leeson’s central question is: “How can pirates cooperate without appeal to the formal authorities that most of us rely on to maintain order and promote cooperation?”

Related: The rules prisoners enforce among themselves.

The short answer is: By establishing institutions (formal rules and informal norms) that reward cooperation and punish defection. These institutions, Leeson writes, bring wealth to pirates as if “guided by an invisible hook” — a rephrasing of Adam Smith’s famous observation — that investors benefit others as a side effect of pursuing their own profits, i.e., 

He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

As an interesting footnote, consider that the “golden age” of piracy (1716-1726) took place before Smith discussed the invisible hand. I don’t think he was thinking of pirates, but here’s yet another example of academics “discovering” a phenomenon that’s been obvious for ages to normal people.

Contextual preamble done. Now let’s get to my notes on the book:

1. Many pirates had been abused as sailors on merchant ships whose (distant) owners gave officers leave to do as they pleased. The resulting cheating and bad treatment (under the protection of law and contract) led many sailors to abandon ship as soon as they could. Pirate ships were “cooperatives” that were owned by their sailors and managed under pirate articles that allowed sailors to fire officers who mistreated them. These “democratic checks and balances” set expectations on officers’ behavior and protected sailors from abuse.
2. Pirates flags signaled mercy on surrender but death for resistance. Given their superior firepower, pirates would win most battles, but the best battle was an early surrender. Captains often surrendered to pirates because pirates wanted to steal (the boat owner’s) cargo, not kill them.
3. All sailors agreed to the ship’s rules before departure. Changes in the rules required unanimous agreement, which ensured that nobody would be (immediately) disadvantaged by changes.
4. Pirates separated power a century before governments did. The captain would decide where to go and how to battle, but the quarter-master was in charge of arms, discipline, and dividing loot.
5. Pirate democracy, likewise, predated America’s revolutionary democracy by a century. The crew voted for the captain and quartermaster, and could vote them out for abuse of power (or any reason). The worst captains were turned over to the authorities, who would hang them.
6. Near equality on pay also reduced friction. The captain’s quarters were not private. The captain and quartermaster usually received two shares of loot, compared to one for ordinary sailors. The surgeon and carpenter also received two shares, due to their important roles in keeping sailors healthy and the ship at sea, respectively. That said, nothing was distributed until casualties of battle were compensated. This “insurance” maintained morale in a deadly trade.
7. Pirates gossiped. Everyone knew which ships were well or poorly run. Given the norm of joining boats for one voyage at a time, pirates would shift to better boats if they could. Such freedom meant captains competed for crews, resulting in Tiebout competition that raised the standards for all pirates. I lean on the same dynamics with my idea of giving everyone on the planet a second passport, which would improve life for citizens everywhere. (Think Uigurs in Chinese concentration camps, Kurds in Turkey, Venezuelans, et al.)
8. Pirates made rules to reduce “negative externalities,” i.e., prohibiting women, drinking, and fighting on board, or smoking below decks (where powder was stored). These rules kept the crew united in its mission to plunder other boats and not blow up, respectively.
9. Pirates were (relatively) non-discriminatory among each other. They treated other personalities and races equally. They did not force captured prisoners to join them, as that would violate the basic norm of voluntarily agreeing to abide the ship’s constitution. Pirates did not (collectively) keep slaves on ship very often, as the benefit of “free labor” was often outweighed by the cost of losing their boats or lives to a slave’s betrayal. They either invited captured slaves to join as free crew or (more often) sold them at their next port of call.

Leeson’s book gives an entertaining insight into the world of pirates — and the economics under which they lived and prospered (until authorities changed rules and applied far more effort into capturing them around 1730). 

My one-hooked conclusion is that that anyone interested in economics (or piracy) should read this book (rather than Freakonomics or Doughnut Economics) because it’s fun and thought-provoking. I give this book five stars.

I’m a language geek and borrowed this 2010 book by Guy Deutscher from a friend.

The book is interesting but poorly edited too long. Deutscher takes too much room for his own work, i.e., over 100 pages on words to describe color (more below) but only 20 pages on the language of gender. 

This review will therefore record my summary takeaways, for those readers who have better things to do with their time 😉

1. All languages use different means to convey ideas at what turns out to be the same pace. Thus, they may differ in verb endings or placement, noun complexity, etc., but they more or less work with the rate at which we can hear and understand speech. Languages are not equally complex, but they can convey the same information.
2. Languages spoken by small groups can be very complex (e.g., a single word for “your brother-in-law’s father”) as a reflection of complex social relations. In “mass languages,” words and structures are simpler, to help strangers construct shared perspectives. 
3. A single word might be translated into one of several words in another language that does not use relation to convey meaning. Some languages have groups of words to explore nuances (the famous example of eskimos and snow). 
4. The most important colors are black, white and red. Other colors are added to our vocabulary (it seems) as our need to discriminate among them. The sky has always been blue, but the color blue has only come into use as we began to make and trade blue objects.
5. After 150 years of debate over the naming of colors, it turns out that cultures with a limited range of colors are not “color blind” as much as “color indifferent.” They can tell the differences between unnamed colors but don’t bother to differentiate in everyday life. This phenomena is the opposite of eskimo-snow vocabulary (or academic jargon defining obscure ideas), but similar to the practice of counting “1, 2, many” in some cultures.
6. Perhaps the easiest way to show that limited vocabulary does not indicate limited thinking is when someone switches from one language “lacking X” to another where they say “X”. Unspoken doesn’t mean unknown.
7. Languages gain and lose words all the time. If gains exceed losses, then the vocabulary is growing. If the word falls out of use, then it disappears forever. More people speaking the language can reduce word count as they settle on more basic words that more people can understand.
8. Academics have misinterpreted languages for centuries. Languages (and cultures) have been maligned by outsiders imposing a “Latin grammar structure” on the local language, or mistaking someone’s poor use of their non-native tongue for stupidity in their native tongue. German or French philosophy cannot be traced to their native grammars, nor can they be superior due to their expression in a “perfect” language (a common claim).
9. “Languages differ in what they must convey not in what they may convey.” We can say “Dr. Jones” without knowing if the doctor is male or female, but we must know gender if we want to use “Mister” or “Miss.”
10.  The original use of “gender” referred to “type,” e.g., humans, big things, small things, collectives or liquids. Gender became associated with male and female because European languages (and the scholars who speak them) were not aware of how other cultures grouped words.
11. That said, male or female words can influence how one thinks of an object, e.g., the French associate a fork (la fourchette) with feminine qualities while Spaniards use masculine words when thinking of el tenedor.
12. Some languages (especially among Aboriginals in Australia) use cardinal coordinates (N, S, E, W) to refer to objects (“my western hand”) whereas most of us use egocentric coordinates (“my left hand”). Both systems work, but mixed conversations can be confusing.

My one-handed conclusion is that all languages are useful, but some are harder to learn than others, often due to their distance from one’s mother tongue. I give this book three stars.