June 9, 2012
Book Bits | 6.9.2012
● The Price of Inequality: How Today's Divided Society Endangers Our Future
By Joseph Stiglitz
Review via NPR
In his latest book, The Price of Inequality, Stiglitz argues that widely unequal societies don't function effectively or have stable economies and that even the rich will pay a steep price if economic inequalities continue to worsen. In the current system, top income earners who make their money through capital gains and stock dividends pay lower effective tax rates than the average person. Those capital gains tax rates were first lowered during the Clinton administration, when Stiglitz led the Council of Economic Advisers.
● A Capitalism for the People: Recapturing the Lost Genius of American Prosperity
By Luigi Zingales
Summary via publisher, Basic Books
In A Capitalism for the People, Zingales makes a forceful, philosophical, and at times personal argument that the roots of American capitalism are dying, and that the result is a drift toward the more corrupt systems found throughout Europe and much of the rest of the world. American capitalism, according to Zingales, grew in a unique incubator that provided it with a distinct flavor of competitiveness, a meritocratic nature that fostered trust in markets and a faith in mobility. Lately, however, that trust has been eroded by a betrayal of our pro-business elites, whose lobbying has come to dictate the market rather than be subject to it, and this betrayal has taken place with the complicity of our intellectual class.Because of this trend, much of the country is questioning—often with great anger—whether the system that has for so long buoyed their hopes has now betrayed them once and for all. What we are left with is either anti-market pitchfork populism or pro-business technocratic insularity. Neither of these options presents a way to preserve what the author calls “the lighthouse” of American capitalism. Zingales argues that the way forward is pro-market populism, a fostering of truly free and open competition for the good of the people—not for the good of big business.
● Winner Take All: China's Race for Resources and What It Means for the World
By Dambisa Moyo
Review via Kirkus Reviews
Though she is concerned that “the world…remains largely ill-prepared for the challenges of resource scarcity and the evolving dynamics around China's central role,” the author sharply disagrees with those who assert that China is making an imperial-style grab for raw materials. She asserts that China's policy is different and compares statements of leaders and partners from different countries as proof. China is obtaining access to resources to maintain the growth of its own economy, writes the author, who shows how the country's leaders are prepared to offer money, roads, railways, schools and hospitals in exchange. Moyo contrasts what the Chinese call a “win for all involved” approach with the colonialist approach. She writes that if Western countries “are to have any semblance of standing in the emerging world,” they must cease depending on their traditional policy tools.
● Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street are Destroying Investor Confidence and Your Portfolio
By Sal Arnuk and Joseph Saluzzi
Summary via publisher, FT Press
The markets have evolved at breakneck speed during the past decade, and change has accelerated dramatically since 2007's disastrous regulatory "reforms." An unrelenting focus on technology, hyper-short-term trading, speed, and volume has eclipsed sanity: markets have been hijacked by high-powered interests at the expense of investors and the entire capital-raising process. A small consortium of players is making billions by skimming and scalping unaware investors -- and, in so doing, they've transformed our markets from the world's envy into a barren wasteland of terror. Since these events began, Themis Trading's Joe Saluzzi and Sal Arnuk have offered an unwavering voice of reasoned dissent. Their small brokerage has stood up against the hijackers in every venue: their daily writings are now followed by investors, regulators, the media, and "Main Street" investors worldwide. Saluzzi and Arnuk don't take prisoners! Now, in Broken Markets, they explain how all this happened, who did it, what it means, and what's coming next.
● Oracles: How Prediction Markets Turn Employees into Visionaries
By Donald Thompson
Summary via publisher, Harvard Business Review Press
From selecting the lead actress in a Broadway musical, to predicting a crucial delay in the delivery of Boeing's 787 Dreamliner months before the CEO knew about it, to accurately forecasting US presidential elections--prediction markets have realized some amazing successes by aggregating the wisdom of crowds. Until now, the potential for this unique approach has remained merely an interesting curiosity. But a handful of innovative organizations--GE, Google, Motorola, Microsoft, Eli Lily, even the CIA--has successfully tapped employee insights to change how business gets done. In "Oracles," Don Thompson explains how these and other firms use prediction markets to make better decisions, describing what could be the origins of a social revolution. Thompson shows how prediction markets can: (1) draw on the hidden knowledge of every employee, (2) tap the "intellectual bandwidth" of retired employees, (3) replace surveys, and (4) substitute for endless meetings.
● Regulating Competition in Stock Markets: Antitrust Measures to Promote Fairness and Transparency through Investor Protection and Crisis Prevention
Edited by Lawrence Klein, Viktoria Dalko, and Michael Wang
Summary via publisher, Wiley
Engaging and informative, Regulating Competition in Stock Markets skillfully analyzes the impact of the recent global financial crisis on health and happiness, and uses this opportunity to put regulatory systems in perspective. Happiness is lost because of emotional and physical health deterioration resulting from the crisis. Therefore, the authors conclude that financial crisis prevention should be the focus of public policy. This book is the most comprehensive study so far on potential risks to the stock market, especially various forms of market manipulation that lead to mania and eventual crisis.
Posted by jp at June 9, 2012 4:45 AM