Books to Read in 2023 (Part 1)

I have compiled a list of the top 15 books I have read over the past year – a mixture of new and old, some very contemporary and some from decades past. For each book, I have included a brief description, some of the key ideas, and a quote that encapsulates one of the main arguments.

All of the books highly relevant to where we are today and where we are heading in the future. If you're viewing this post in a browser, you will also be able to see the cover of each book and a brief preview, courtesy of Amazon (As an affiliate, I benefit from any purchases made through my website).

Below is the first part of the list. Part 2 is available here. I will publish Part 3 next week. I would love to hear your thoughts if you've read any of these.

Talent by Tyler Cowen and Daniel Gross

Talent is about how to identify, develop, and retain talent in the 21st Century. The authors explore the concept of talent and how it can be used to create value and drive innovation. They discuss the importance of creating an environment that encourages and rewards talent how to identify and nurture the right talent for the right job, and the importance of different innate and acquired traits in different scenarios.

Cowen and Gross rely on their own experience in academia, business, and finance, but make an effort to cite specific studies and data wherever possible. They also explore the role of technology in talent management and the implications of the gig economy.

The book is rich with ideas and data, as well as practical advice on how to structure interviews, how to approach different corporate needs, and more. Whether you're hiring, investing, or trying to figure out how to land your next job, you'll enjoy this book.

Ideas that stood out:

• The role of intelligence in different professions, and the difference between jobs that require "inventors" and those that rely on "normal" high-skilled professionals.
• The high cost of mis-allocating talent for society at large. Many wonderful people never end up in the jobs and situations that make the most of their potential. This is party due to misaligned incentives: The people who are in a position to promote / teach / help us along the way, often have no clear incentive to do so. If we had a way to truly invest in people we believe in, the allocation of talent would possibly be much more efficient. This ties into my earlier article about "people" becoming one of the most interesting asset classes in the future.

A quote from the book:

If we look at the growth in U.S. output since 1960, by the best available estimates at least 20 to 40 percent of that growth has stemmed from the better allocation of talent. Circa 1960, the United States was doing a stunningly bad job at allocating talent, in part due to sheer prejudice and misconception. For instance, 94 percent of doctors and lawyers were white men. In 1952, when Sandra Day O’Connor graduated third in her class from Stanford Law School, she could only get a job as a legal secretary.

Unequal Cities by Richard McGahey

Unequal Cities examines the growing inequality within cities in the United States, with lessons that are relevant for cities everywhere. McGahey looks at the factors that contribute to this inequality, such as the lack of affordable housing, the prevalence of low-wage jobs, and the lack of access to quality education. He also examines the role of government policies and government structure in exacerbating the problem.

An idea that stood out:

• Cities play a critical role in driving economic growth, but the benefits of this growth is disproportionately allocated to the suburbs around them and that states above them. The state and the suburb enjoy the fruits of the innovations and gains produced by cities, but they don't shoulder enough of the burden of maintaining urban infrastructure and urban services including policing, education, social insurance, and healthcare.
• In the US, cities have limited fiscal autonomy and a limited ability to annex new areas and expand. This limits the political growth of cities, but no their physical growth. As a result, many cities are surrounded by so-called suburbs that are an integral part of the city but are not government by city government and do not contribute to the city's budget. This state of affairs resulted from a long power struggle between states and cities, stretching back into the 19th Century.

A quote from the book:

Metropolitan areas—regional economies with a core city surrounded by many separately governed, smaller cities and suburbs—do produce economic prosperity. But cities at the center of these metros have inherited poverty, outdated infrastructure, inadequate schools and housing, and reduced tax capacity. This disjunction between the overall regional economy and its fragmented governance is central to understanding inequality.

Private Truths, Public Lies by Timur Kuran

Private Truths, Public Lies examines the phenomenon of preference falsification, which occurs when people conceal their political and/or clutural preferences in order to conform to the expectations of others. The book explores the implications of preference falsification in various contexts, including politics, economics, and social life. Kuran argues that preference falsification can have far-reaching consequences, such as the distortion of markets and public opinion, and the perpetuation of oppressive social norms.

Ultimately, it is a book about how revolutions or massive social changes occur. It provides a mechanical or scientific-ish model of the conditions required to cause a large group of people to unite in favor of an idea or action.

Ideas that stood out:

• When a revolution succeeds, we tend to overestimate the tensions that produced it and the support it originally had. The revolution allows people to express grievances that they previously kept to themselves. At the same time, it is also supported by many people that were "content with the old order" and only support the revolution because it reached a tipping point and seemed inevitable.
• The ultimate success of major changes often depends on seemingly unimportant events and actions of individual people. These group dynamics are explored in some of the other recommended books below — Sync, Complexity, Linked, and Rational Ritual.

A quote from the book:

Neither private preferences nor the corresponding thresholds are common knowledge. A society can therefore come to the brink of a revolution without anyone realizing this, not even those with the power to unleash it.

Complexity: A Guided Tour by Melanie Mitchell

This is the book about the science of complexity, which is the study of how simple components interact to produce complex behavior. The book explores the history of complexity science, its core concepts, and its applications in fields such as artificial intelligence, economics, computer science, and biology. Mitchell also examines the implications of complexity science for our understanding of the world, and for our ability to make predictions and take action in a complex and ever-changing environment. The book opens up dozens of rabbit holes into adjacent fields. It took me months to finish it because I constantly found myself starting other books that the author recommended.

Some ideas that stood out

• The difference between "designed" and "emergent" solutions, and the usefulness of both in different situations.
• The notion of complex systems as "computers" — organisms that process information and respond in order to adapt to their environment. For example, a group of ants that follow simpler rules and produce elaborate social arrangments that allow them to coordinate their work to ensure they explore and exploit the relevant resources around them. The ant colony can be seen as a computer that collects information, processes it, and generates valuable output.
• The similarities and shared logic among different complex systems, from insect colonies, to our brains and immune system, to financial markets and social movements.

A quote from the book:

Since simple rules produce complex behavior in hard-to-predict ways, the macroscopic behavior of such systems is sometimes called emergent. Here is an alternative definition of a complex system: a system that exhibits nontrivial emergent and self-organizing behaviors.

Linked by Albert-Laszlo Barabasi

Linked is the book about network science. More than 20 years after publication, it is a bit dated, but it still provides an excellent and lively introduction to ideas that too few people are familiar with. The book explores the ways in which networks, such as the internet, social networks, and biological networks, are connected and how they affect our lives. It examines the structure of networks, the dynamics of their growth, and the implications of their power. It also looks at the implications of network science for business, medicine, and society.

Some ideas that stood out

• The critical role of network structure in determining the spread of some diseases and ideas — rather than the potency of the diseases or the specific appeal of the idea
• The inherent inequality of most actual (rather than theoretical) networks, and natural desire for efficiency that produces this inequality. I have written more about it here.
• The relationship between networks, randomness, and normal distribution. Once different nodes (people, countries, companies) are connected, they tend to affect each other and produce outcomes that are no longer random. For example, if 100 people are asked to pick a color in isolation, their choices will be random likely be normally distributed (some colors will get more vote than others, but there won't be a big different between the number of votes received but the handful of most popular colors. However, if people are asked to perform the same task when they are "linked" (aware of each other's choice or the choice of the person who picked before them), the distribution of "votes" will change. I hope I didn't butcher the idea with this very simplified example. The books provides numerous examples of how networks reshape whatever they touch and how systems change their behavior once they reach a critical level of interconnectedness.
• Related, the ideas that power laws rarely emerge in systems that are dominated by randomness. So, the existence of power law distributions (as opposed to normal ones) can be seen as a signal of a transition from disorder to order. For example, if social media "likes" are power-law distributed, this implies that people don't randomly like different posts, but that there is some connection between their actions. In this case we know what the connection is: people are more likely to see posts that their friends already liked, and they are more likely to like posts that their friends already liked. In many systems, we don't have a clear idea of what causes power-law distributions. But their existence implies that some mechanism is at work (as opposed to randomness).

A quote from the book:

“In a networked economy, the hubs must get bigger as the network grows”

Rational Ritual by Michael Suk-Young Chwe

Rational Ritual explores the idea that rituals can be used to coordinate behavior and create common knowledge among a group of people. As such, rituals help eliminate or mitigate a variety of coordination problems. Coordination problems are everywhere — they encompass situations where the action of one person depends on the actions of others. For example(s), a person is more likely to get vaccinated if he thinks other people have already been vaccinated. A soldier is more likely to charge ahead if he believes that his fellows will charge alongside him. A person is less likely to follow laws or basic behavioral rules if she believes other people will also disregard them. A person is more likely to buy a stock if she believes that many others are also planning to buy it. A person is likely to use a social networking site if he know many other people are already using it.

In all of these situations (and many more), people's behavior depends on common knowledge — on what they konw about other people's inclinations, and even on the knowledge that other people are aware of their own inclinations. Rituals emerge to help create such common knowledge — to indicate to people what others are thinking and to enable people to signal their preferences and allegiances to each other. A ritual can be a religious ceremony that affirms everyone's commitment to a set of rules or a social activity like watching a Super Bowl with ads that indicate to everyone what are the leading investment products on everyone's mind.

To continue with that last example, Chwe points out that the Super Bowl has become the best "common knowledge generator in the United States." This explains why the majority of Super Boal ads are for what he calls "Coordination Problem Goods" such as crypto exchanges, computer operating systems, social networks, films, and online marketplaces and listings sites.

The book examines the role of rituals in various contexts, such as politics, economics, and religion. It looks at how rituals can create collective action and shared understanding. Chwe also looks at how rituals can be used to create social order and stability and how they can be used to develop and maintain social hierarchies.

As the world becomes more connect, more of the products and services we consume become "Coordination Problem Goods" — with social feedback loops playing a growing role in how product are shaped and experienced.

Some ideas that stood out:

• A “coordination problems” describes a situation in which "each person wants to participate in a group action but only if others also participate."
• Repetition helps create common knowledge. It doesn't only deliver the message, but it makes it clear to the listener that others are more likely to have heard it.
• “Higher-order beliefs” are "beliefs about the beliefs of others." This concept is increasingly relevant in finance and economics, since people's behavior is shaped by what they think other people will do. I wrote about this in Perpetual Gamma Squeeze and In Praise of Ponzis.
• Common knowledge can also work in reverse. In some situations, we get along with others by pretending we don't know something For example, a "hotel butler who intrudes upon a naked female guest." Instead of acting embarrassed and letting the guest know that he's seen her, he might say “Pardon me, sir.”
• The concept of "pluralistic ignorance" refers to a situation "in which people hold very incorrect beliefs about the beliefs of others" which might lead them to act based on incorrect assumptions. For example, a 1972 survey found that 15% of white Americans favored racial segregation — but 72% of them believed that a majority of the other whites in their area favored segregation. People thought other people are racist, and that caused them to embrace policies that they thought were "normal" or taking a longer time to alter their preferences and choices.

A quote from the book:

In coordination problems, each person cares about what other people do, and hence each person cares about what other people know.

Sync by Steven H. Strogatz

Sync by Steven H. Strogatz is a book about the science of synchronization, exploring how complex systems and patterns of behavior arise out of the interactions of the components within them. It examines the phenomenon of synchronization in nature, from the flashing of fireflies to the beating of human hearts, and explores how it can be applied to the design of networks, from the Internet to the brain. It also looks at the implications of synchronization for our understanding of the universe and our place in it. This may sound abstract, but the ideas in the book explain many of the dynamics that govern our lives — from the virality of social media posts and the rise of political movements to changes in consumer behavior and the inflation of stock market bubbles.

Some ideas that stood out

• The actions of different "agents" (cells, people, ants) can "happen by accident and even against the will of participants." A famous example is the opening of the Millennium Bridge in London, where people on the bridge started coordinating their motions, ultimately causing the bridge to swing dangerously. Each person was trying to maintain their own balance, but in aggregate, everyone's actions generated movements that affected their movement as a group.
• The same dynamic plays out in other fields, including social fields such as politics. One party may take an extreme position, the other party responds by "leaning" further in the other direction, the first party responds by pushing even harder. Soon enough, the whole political system is polarized and characterized by extreme actions that no one actually supported a priori. Of course, this doesn't always happen. The likelihood of it happening depends on existence of a feedback mechanism that prompts participates to respond to one another. Everyone's behavior is a also function of where they happened to "stand" at some critical moment, rather than of where they actually want to stand or how far they would like to lean to the left or to the right.
• Our natural rhythms seem to be coordinated in strange ways: "Births are most likely to occur in the early morning, around 3–4 A.M.; the same is true of deaths, with the curious implication that we all tend to live an exact, whole number of days."
• There are fascinating similarities between the mechanisms that govern social tipping points are those that govern chemical phase transitions. Society and materials may seem to be in a certain "state", and one small action can tip them to completely change their structure. This, of course, also related to Rational Rituals above — if people suddenly gain common knowledge about other people's preferences, they might immediately change their behavior and cause a cascade that results in the majority of people supporting something that previously seemed marginal or unpopular.
• A system's tendency to "tip" or "cascade" changes in a non-linear fashion. The more people are connected to a network, large swings first become larger and more likely (for example, when political discourse became "connected" on Twitter, the result was more frequent and more dramatic political swings). However, over time, as the size of the network grows and each "node" has more connections, "tips" or "cascades" actually become rarer, but larger. The reason is that each node is "distracted" with information from the many nodes around it, so it is less likely to change its behavior based on any single piece of information (for example, when we were only in touch with 5 people, if 3 of them would tell us they got the Covid vaccine, we would be very likely to get it as well; but when we're in touch with 500 people, the information about the choices of 3 of them makes less of an impact on our own behavior). However, since the network is now much larger and people are more interconnected, once a certain threshold is reached, everyone's behavior can change almost immediately.

A quote from the book:

Once a few oscillators happened to sync by chance, their combined, coherent shouting stood out above the background din, and exerted a stronger effect on all the others. This nucleus recruited other oscillators toward them, which made the nucleus even larger and amplified its signal.

This was Part 1 of my book recommendations for 2023. Part 2 is available here, and Part 3 will be released next week. Thank you again for being a subscriber.