Book Bits | 5.3.14

The Reckoning: Financial Accountability and the Rise and Fall of Nations
By Jacob Soll
Review by James Grant via The Wall Street Journal
It’s shirtsleeves to shirtsleeves for great empires, prosperous city-states and the member companies of the Dow Jones Industrial Average. Debt or sin or war or the tax man finally lays them low. Now comes Jacob Soll with a new theory of the decline and fall of earthly institutions. He fingers the accountants.
According to the author of “The Reckoning,” successful societies—while they last—are those that properly cast their figures. They confront their liabilities as well as their assets. In their enterprise and politics, accountability is the watchword—until one misfortune or another sets the red ink to overflowing.

Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State
By Ralph Nader
Essay by author via The Huffington Post
Called crony capitalism by the right and corporate welfare by the left, there is a rising tide of revulsion against the rich and powerful freeloading on the backs of ordinary taxpayers.
A left-right majority consensus has emerged in the past decade directed against Empire and unconstitutional wars. Conservative members of Congress such as Rep. Walter Jones, former Congressman Ron Paul and libertarian Cato Institute leader Ed Crane are strong in opposing this imperial overreach and the corporate interests profiting from such costly aggressions.

Quantitative Approaches to High Net Worth Investment
By Andrew Rudd and Stephen Satchell
Summary via publisher, Risk Books
High net worth investment is undergoing a quant revolution. Wealthy clients expect more sophisticated analysis from their portfolio managers and so the application of quantitative techniques for high net worth (HNW) investing is becoming increasingly popular. Quantitative Approaches to High Net Worth Investment is the first book-length treatment of quantitative methods for HNW investments for family officers, advisors to family funds, HNW individuals and their wealth managers. The book gives readers analytical insight into the areas key to HNW investment and the move to more quantitative methods.

Social Insecurity: 401(k)s and the Retirement Crisis
By James W. Russell
Review via Publishers Weekly
Retirement expert Russell (Double Standard) offers a sobering and persuasive analysis of the gradual shift from more secure defined-benefit plans (pensions) to riskier defined-contribution plans (401(k)s). When he retired at age 65, Russell should have had 70%–100% of his final salary as income, according to conventional wisdom, but despite a frugal lifestyle, he had only 45%–50% of his income, between his 401(k) and projected Social Security. Russell suggests that confusion about retirement saving leads average Americans to become the victims of a swindle perpetrated by think tanks and the financial services industry. He explains how popular economic theory, led by Milton Friedman’s Chicago School, turned against Social Security, and traces changes during the Reagan administration, when more companies switched from pensions to 401(k)s. Russell led a successful movement in his own company to switch back to pensions.

The Euro Crisis and Its Aftermath
By Jean Pisani-Ferry
Review via Foreign Affairs
Pisani-Ferry is the former head of Europe’s top economic think tank and now advises French Prime Minister Jean-Marc Ayrault; his book reads like a collection of policy briefs. Both perfectly capture the current conventional wisdom among European technocrats, who seem unable to chart an attractive way forward. It goes like this: The euro system is basically good for Europeans, but specific institutional design flaws triggered a crisis. The logical solution is for governments that maintain a budget surplus, such as Germany, to accept more risk and liability, while countries with deficits, such as Greece and Spain, must impose controls on their government spending. But politicians lack the requisite political will to implement this solution. So Europeans should muddle through with the current, second-best arrangement.
Every step of that analysis is not only empirically questionable but also strikingly apolitical. By neglecting the question of who gains and who loses within and between countries, and who wields influence, these authors overlook more radical alternatives and ignore the political forces that will ultimately decide whether Europe sustains or abandons the euro.

So Much to Do: A Full Life of Business, Politics, and Confronting Fiscal Crises
By Richard Ravitch
News story about author via Newsday
Former Lt. Gov. Richard Ravitch, who helped New York City escape bankruptcy 40 years ago, warned Wednesday that the fiscal crisis isn’t over in New York and other states, despite election year plans to cut taxes and spend more.
Ravitch said the crises for states and local governments are building as health care costs rise and public pensions become unaffordable for taxpayers.
He blamed Congress, and state and local officials for not working together toward the same goal and lacking the political will to plan beyond their next election.
Ravitch said politicians are encouraged by Wall Street banks to pay pensions and even operating expenses by borrowing against future revenue.

After Occupy: Economic Democracy for the 21st Century
By Tom Malleson
Review via Publishers Weekly
York University research fellow Malleson (Stand Up Against Capitalism) advocates strongly for economic democracy, defined as people’s “equal formal decision-making power in their core economic associations.” In particular, Malleson would like to see worker cooperatives replace the present hierarchical organization of the workplace, where, he asserts, workers are effectively “servants” who are “directed by others.” He cites studies showing that such worker co-ops as La Lega in Italy have more internal equality, increased motivation, and greater job satisfaction. Malleson also illustrates how economic democracy can be instituted in finance and investing through such methods as citizen participation in the budgeting process (currently done in Porte Allegre, Brazil), giving workers a say over the use of their pension funds, and enacting laws to prevent capital flight.

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