Last week I recapped some of the more interesting titles that appeared in The Capital Spectator’s Book Bits column that runs on Saturday mornings. Here’s Part II of the year-end review of economic and finance books from 2014 that deserve a second look…
● Risk Savvy: How to Make Good Decisions
By Gerd Gigerenzer
Summary via publisher, Viking
In the age of Big Data we often believe that our predictions about the future are better than ever before. But as risk expert Gerd Gigerenzer shows, the surprising truth is that in the real world, we often get better results by using simple rules and considering less information. In Risk Savvy, Gigerenzer reveals that most of us, including doctors, lawyers, financial advisers, and elected officials, misunderstand statistics much more often than we think, leaving us not only misinformed, but vulnerable to exploitation. Yet there is hope. Anyone can learn to make better decisions for their health, finances, family, and business without needing to consult an expert or a super computer, and Gigerenzer shows us how.
● Economics: The User’s Guide
By Ha-Joon Chang
Review via The Guardian
It is a mark of where we are in our political discourse that even to say “neoclassical economics is not the only school” seems radical. This is where Ha-Joon Chang starts, in a book that is more sober and less effervescent than his bestselling 23 Things They Don’t Tell You About Capitalism, but is just as page-turning.
Since no single economic theory has beaten the others, it follows, Chang writes, that there is no objective truth on which every economist is agreed. Economics can never be a science in the way that physics is; it cannot reach a consensus on its fundamental questions, let alone what the answers are. This isn’t some extended handwringing, a trashing of his discipline dressed up as a mea culpa. Chang isn’t looking for a formula: fundamentally, he argues, economics is politics. As such, we shouldn’t be thinking in terms of an ideal answer – the discussion should never close.
● The End of Normal: The Great Crisis and the Future of Growth
By James K. Galbraith
Q&A with author via Institutional Investor
Q; What does the economic future look like, and how might we get there?
A: The private financial sector has ceased to serve as a motor of growth. It is bloated in relation to the economy, and it isn’t geared toward doing many of the things that need doing. It’s not in the business plan of the banking sector to support new private sector job creation, for example, or restore the credit of the household sector. Private credit markets are stagnant, and there has been no full recovery of demand. But companies are swimming in cash.
Why not build factories or buy equipment? We also need to think more about how to organize lives so that the human resources we have are first of all used effectively and secondly supported. We can create institutions that will provide employment in areas where it continues to be needed and useful, of which there are a very large number of possibilities. We need to engineer the economy to grow at a stable, low, positive rate for a long time and adjust ourselves materially to that prospect.
● The Colder War: How the Global Energy Trade Slipped from America’s Grasp
by Marin Katusa
Interview with author via Yahoo Finance
“President Putin has clearly broken the [Sept. 5] truce agreement,” NATO Secretary General Jens Stoltenberg told Germany’s Bild newspaper but, thus far, traders don’t seem to care — perhaps pulling from the same playbook as earlier this year when Russia annexed Crimea.
But “the problem is going to get worse and it is going to get bloodier,” says Marin Katusa, chief energy strategist for Casey Research. “More importantly [Ukraine] is central to [Putin’s] theme of not only making Europe more dependent on Russian oil and natural gas but at the same time he is also expanding his output of energy to countries like China so he’s got a double-pronged approach.”
In his new book, The Colder War, Katusa examines Putin’s long-term strategy of returning Russia to global superpower status via strategic use of its primary weapon: Energy.
● Economic and Business Forecasting: Analyzing and Interpreting Econometric Results
By John Silvia, et al.
Summary via publisher, Wiley
Equipping analysts, practitioners, and graduate students with a statistical framework to make effective decisions based on the application of simple economic and statistical methods, Economic and Business Forecasting offers a comprehensive and practical approach to quantifying and accurate forecasting of key variables. Using simple econometric techniques, author John E. Silvia focuses on a select set of major economic and financial variables, revealing how to optimally use statistical software as a template to apply to your own variables of interest.