Book Bits | 10.12.13

The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life
By Uri Gneezy and John List
Review via Publishers Weekly
Gneezy and List, economists at U.C. San Diego and the University of Chicago, respectively, specialize in ingenious “field experiments” that elucidate the workings of social psychology and decision making: from a ball-tossing game that exposes the social pressures that make women shy away from competition, to role-playing skits that tease out the subtleties of discrimination at car dealerships. There are some less-groundbreaking findings—men, it seems, give more money to door-to-door fundraisers if they are attractive females—but also many counterintuitive insights: it’s possible to boost sales of a wine by raising its price; increase charitable giving by letting prospects opt out of solicitations; and even raise profits by letting customers pay whatever they want for a product. Writing in the Freakonomics vein of breezy pop-econ (Steven Levitt provides the foreword), Gneezy and List assert that “self-interest lies at the root of human motivation,” but it’s a self-interest broadly conceived to include the “warm glow” of philanthropic sacrifice and readily influenced by the unobtrusive policy nudges they suggest.

The Terrible 10: A Century of Economic Folly
By Burton Abrams
Summary via publisher, The Independent Institute
The U.S. economy made impressive gains in the 20th century, but this progress makes it easy to forget a harsh reality: Americans were also the victims of disastrous government policies that cost trillions of dollars in wasted resources, created mass unemployment, and kept millions in poverty who otherwise could have participated in the nation’s growing prosperity. Government decision-makers, regardless of political party, have tended to favor short-run benefits for friends while imposing costs on current and later generations. The ten worst blunders divide equally among Democrats and Republicans.
Global Pension Crisis: Unfunded Liabilities and How We Can Fill the Gap
By Richard A. Marin
Summary via publisher, Wiley
As the generational bubble of the Baby Boomers begins to retire, it is increasingly evident that governments, corporations, and individuals have failed to adequately prepare for the obligations and needs of this giant cohort. Retirees are outliving actuarial life expectancies, pension liabilities are skyrocketing, pension plans are chronically underfunded, and medical costs continue to rise. The United States alone can expect unfunded liabilities to exceed $7 trillion over the coming years—and it’s in better shape than many other developed nations. Global Pension Crisis, a new book by finance professor Richard A. Marin,looks at this situation and offers practical advice for retirement plan managers and financial advisors, while also explaining what people and nations can do to strengthen pensions, improve retirement outlooks, and prevent similar crises in the future. It looks at this looming disaster not only through a macro-level lens, but also provides a micro-level look at how the issue will impact individual retirement income and retirement planning.
Harriman vs. Hill: Wall Street’s Great Railroad War
By Larry Haeg
Summary via publisher, University Of Minnesota Press
In 1901, two titans of American railroads set their sights on the Northern Pacific. The subsequent battle was unprecedented in the history of American enterprise, pitting not only James J. Hill against Edward Harriman but also Big Oil against Big Steel and J. P. Morgan against the Rockefellers, with a supporting cast of enough wealthy investors to fill the Waldorf Astoria’s ballroom.
The Gold Cartel: Government Intervention on Gold, the Mega Bubble in Paper, and What This Means for Your Future
By Dimitri Speck
Summary via publisher, Palgrave Macmillan
In times of financial crises and imminent sovereign defaults, gold is the investment on everyone’s lips. As a safe investment, one could traditionally rely on gold markets for good, stable performance, however in recent years, they have seen surprising volatility and price fluctuation, with no visible reason as to why. In The Gold Cartel, seasoned commodity analyst Dimitri Speck illustrates in detail how central banks have secretly manipulated the price of gold in an effort to calm financial markets and control inflation. Using quantitative analysis of historic gold market patterns, the author shows how and when central banks intervene in gold markets, and how this has affected price movement and impacted the global financial markets, leading to the creation of a mega-bubble.
Managing Extreme Financial Risk: Strategies and Tactics for Going Concerns
By Karamjeet Paul
Summary via publisher, Academic Press
Managing Extreme Financial Risk addresses the need for better management strategies in light of increased market risk and volatility in financial institutions’ revenue models. Top officials from the financial and regulatory industries point to real corporate issues, showing how institutions react to financial crises. From first-hand experiences, they explain how effective sustainability management does not just prevent being blindsided; it also leads to proactive solutions that enhance an institution’s strength to weather a sudden financial crisis, add significant shareholder value, and reduce systemic risk. Readable, coherent, and logical, Managing Extreme Financial Risk shows how extreme risk needs to be handled when the cost of being wrong means the difference between life and death of the institution.
Making Capitalism Fit For Society
By Colin Crouch
Review via The London School of Economics
In the latest of a series of books on our current dilemmas, Making Capitalism Fit for Society, Colin Crouch seeks to set out an assertive rather than a defensive version of social democracy. He offers a powerful critique of neoliberalism and in particular of the way in which growing inequality is not only morally questionable but also threatens the smooth functioning of the economy. Political neoliberalism is not about giving consumers more choices in competitive markets, but enhancing the power of great corporations and wealthy individuals. Rather than being about the application of some pure economic theory, but is really a political movement.
The Rise of BRICS in Africa: The Geopolitics of South-South Relations
By Pádraig Carmody
Summary via publisher, Zed Books
A little over a decade ago Africa was being spoken of in the media as the ‘lost’ or ‘hopeless’ continent. Now it has some of the fastest growing economies in the world, largely because of the impact of the BRICS: Brazil, Russia, India, China and South Africa. In this first book to be written about the BRICS as a collective phenomenon, Pádraig Carmody reveals how their engagements with Africa, both individually and collectively, are often contradictory, generating new inequalities and potential for development. Crucially, Carmody shows how the geopolitics of the BRICS countries’ involvement in Africa is impacted by and impacts upon their international relations more generally, and how the emergence of these economies has begun to alter the very nature of globalization, which is no longer purely a Western-led project.