There is a passage in Superforecasters about Rubin's book. The passage describes thinking in probabilities, and how Rubin does it all the time. In an Uncertain World is coauthored with a journalist who wrote a very popular profile of Rubin in the New York Times. I read In an Uncertain World thinking that I would find more about the topic, but there isn't much more than in the article. The article itself is quite interesting and is still available online.
So In an Uncertain World was a bit of a disappointment because I was expecting something else, but it was quite good actually. Rubin was very successful in the private sector before becoming Treasury Secretary of the United States. As Treasury Secretary he was also considered to have done a good job. He writes about how the public and private sectors work differently and how successful business people often fail in the public sector because they fail to appreciate the difference.
There are bits of wisdom spread throughout the book. They do not make a coherent theory but are insightful none the less. For example, writing about a troubled company that was acquired by Goldman Sachs and their efforts to turn it around, Rubin writes: "the people in the front lines of a business often have a better sense of what's happening and what to do about it than the top executives". It is probably true and rare for a CEO to admit it.
When writing about how to get involved in politics, his advice is to help with campaign and party finance, not with policy ideas. This may be hard to swallow. I expect that people will be attracted to politics to influence policy, not to get a second job soliciting political donations.
I appreciated how he openly admits his dislike for team building stuff. He writes about when he became a member of the President's team: "I was not a fan of efforts at formalize camaraderie within the administration. In the middle of our putting together the economic plan, the Clintons invited the entire cabinet and the most senior White House staff to Camp David for a weekend of bonding and discussion of strategy. The concept - which was the Vice President's - may well have been good, but the event itself was pretty awful. Saturday night, after dinner, we sat around in a circle, and each of us was supposed to talk about something the others didn't know about us. The President talked about having been overweight when he was in school and how everyone had made fun of him. When my turn came, I said I didn't have anything I particularly wanted to share. By that point, Lloyd Bentsen had wisely gone home for the evening."
Bill Clinton comes across as having a good grasp of economic issues and as a principled person. He was willing to spend political capital in order to do the right thing, such as participating in emergency financing to troubled countries in spite of popular opposition, because he understood that the effects of contagion could be even worse.
He writes that his initial belief in open markets was based on the standard comparative-advantage argument from David Ricardo - that all countries will benefit if each specializes in the areas where it is most efficient compared to the others and then trades with the others. But Alan [Greenspan] said that the biggest advantage of free trade is competitive pressure within the United States from foreign producers. Companies have to become more efficient in order to meet competitive threats from outside our borders. Trade drives companies to reorganize and invest in pursuit of increased productivity. Conversely, Japan's and Europe's relatively less open markets protected companies and reduced their incentive to become more efficient.
When he retired as Treasury secretary, he got a framed copy of "The Rubin Doctrine of International Finance", which reads:
To which he would like to add an eleventh precept: "The self-interest of the United States requires us to engage and work closely with other nations on issues of the global economy."
He writes on the Asian crisis: "I do believe that a significant share of blame for the crisis should go to private investors and creditors. They systematically underweighted the risks of investing in and lending to underdeveloped markets over a number of years, and consequently supplied capital greatly in excess of what would have been sound and sensible." to which Anwar Ibrahim, then finance minister of Malaysia, had to say: "For every bad borrower, there's a bad lender."
Reflecting on the Asian crisis, he writes: I remember something John Whitehead said to me at Goldman Sachs at the time of the Penn Central bankruptcy. "Now we'll put in all sorts of new processes to deal with commercial paper," he said. "But the next crisis will come from a direction nobody is focused on now."
Random interesting fact: Developing economies buy 40% of American exports.
Rubin is quite prescient in understanding that industrial countries cannot isolate themselves from the rest of the world in a "gated community" style. Global poverty poses a threat not only to developing countries, but to developed ones. He mentions health hazards that can spread from a poor country that has no means to manage them to richer ones and likewise with environmental damage. Not to say that he thinks that isolation would be a good state of affairs if possible. He does give the impression to genuinely care about reducing poverty for its own sake, because someone living in poverty is morally wrong.
Above all, what I liked most about the book, was Rubin's defense of free trade. I think it is good to see the argument coming from a Democrat that has liberal values and cares about poverty and social justice. He lays it out clearly in passages like this: "I remember the negotiations around an African trade bill that the Clinton administration supported. We wanted to remove textile duties but were opposed by unions and some manufacturers in this country. Because of their influence, the best compromise we could negotiate was reducing tariffs on African textiles that where made from fiber originating in the United States. The bill that passed has already produced significant gains for the products and nations that were included and is projected to raise the level of nonoil exports from Africa by roughly 10 percent. But the benefit would have been nearly five times greater without adding restrictive conditions on the terms of market access, according to the IMF" and further down the page continues: "Trade barriers are estimated to cost the developing world at least $100 billion of lost opportunity a year, [...] a multiple of foreign aid spending by all governments. For example, one study estimates that if Africa's share of world exports increased by 1 percent, its trade revenues could grow by $70 billion a year - five times what it receives in aid and debt relief."
Books mentioned:
The Underclass by Ken Auletta. About the replication of poverty through generations.
A way of life by William Osler. Address by a professor of medicine to Yale students in 1913. His takeaway from that book is to live your life in "water-tight" days. Nowadays we would say being mindful and present-focused.
Simon Winchester's book about the creation of the Oxford English Dictionary
The White Nile and The Blue Nile by Alan Moorehead
Philosopher's Holiday by Irwin Edman
The Ends of the Earth: A Journey at the Dawn of the 21st Century by Robert D. Kaplan
Last updated: 2023-03-26