Book Bits | 11.2.12

How They Got Away with It: White Collar Criminals and the Financial Meltdown
Edited by Susan Will, Stephen Handelman, and David C. Brotherton
Summary via publisher, Columbia University Press
An international team of scholars with backgrounds in criminology, sociology, economics, business, government regulation, and law examine the historical, social, and cultural causes of the 2008 economic crisis. They also take stock of the long-term devastation done to governments, businesses, and individuals, and the ongoing, systemic issues that have so far allowed the perpetrators to get away with their crimes. Insightful essays probe the workings of the toxic subprime loan industry, the role of external auditors, the consequences of Wall Street deregulation, the manipulations of alpha hedge fund managers, and the “Ponzi-like” culture of contemporary capitalism. They unravel modern finance’s complex schematics and highlight their susceptibility to corruption, fraud, and outright racketeering. They examine the involvement of enablers, including accountants, lawyers, credit rating agencies, and regulatory workers, who failed to protect the public interest and enforce existing checks and balances. While the United States was “ground zero” of the meltdown, the financial crimes of other countries intensified the disaster. Internationally-focused essays consider bad practice in China and the European property markets, and they draw attention to the far-reaching consequences of transnational money laundering and tax evasion schemes.

The Redistribution Recession: How Labor Market Distortions Contracted the Economy
By Casey Mulligan
Summary via publisher, Oxford University Press
Redistribution, or subsidies and regulations intended to help the poor, unemployed, and financially distressed, have changed in many ways since the onset of the recent financial crisis. The unemployed, for instance, can collect benefits longer and can receive bonuses, health subsidies, and tax deductions, and millions more people have became eligible for food stamps. Economist Casey B. Mulligan argues that while many of these changes were intended to help people endure economic events and boost the economy, they had the unintended consequence of deepening-if not causing-the recession. By dulling incentives for people to maintain their own living standards, redistribution created employment losses according to age, skill, and family composition. Mulligan explains how elevated tax rates and binding minimum-wage laws reduced labor usage, consumption, and investment, and how they increased labor productivity. He points to entire industries that slashed payrolls while experiencing little or no decline in production or revenue, documenting the disconnect between employment and production that occurred during the recession.
Freaks of Fortune: The Emerging World of Capitalism and Risk in America
By Jonathan Levy
Q&A with author via Princeton Alumni Weekly
The role of capitalism and the size of the federal government are more at issue in contemporary American politics than they have been since the 1930s. Jonathan Levy, an assistant professor of history, has studied the ways in which our conceptions of risk and economic freedom have changed throughout history. He traces much of that history in his new book, Freaks of Fortune: The Emerging World of Capitalism and Risk in America, which will be published in 2012. Levy discussed some of his conclusions with PAW.
Q: What is your book about?
A: It’s a history of risk. The notion of personal assumption of risk as we know it was new to the 19th century. Instead of hedging risk outside of the market collectively, people started to do it within the market individually by doing things like buying insurance, putting their money in savings banks, and entering the futures markets.
The Great Persuasion: Reinventing Free Markets since the Depression
By Angus Burgin
Summary via publisher, Harvard University Press
Just as today’s observers struggle to justify the workings of the free market in the wake of a global economic crisis, an earlier generation of economists revisited their worldviews following the Great Depression. The Great Persuasion is an intellectual history of that project. Angus Burgin traces the evolution of postwar economic thought in order to reconsider many of the most basic assumptions of our market-centered world. Conservatives often point to Friedrich Hayek as the most influential defender of the free market. By examining the work of such organizations as the Mont Pèlerin Society, an international association founded by Hayek in 1947 and later led by Milton Friedman, Burgin reveals that Hayek and his colleagues were deeply conflicted about many of the enduring problems of capitalism. Far from adopting an uncompromising stance against the interventionist state, they developed a social philosophy that admitted significant constraints on the market. Postwar conservative thought was more dynamic and cosmopolitan than has previously been understood.
From Pleasure Machines to Moral Communities: An Evolutionary Economics without Homo economicus
By Geoffrey M. Hodgson
Summary via publisher, Chicago University Press
Are humans at their core seekers of their own pleasure or cooperative members of society? Paradoxically, they are both. Pleasure-seeking can take place only within the context of what works within a defined community, and central to any community are the evolved codes and principles guiding appropriate behavior, or morality. The complex interaction of morality and self-interest is at the heart of Geoffrey M. Hodgson’s approach to evolutionary economics, which is designed to bring about a better understanding of human behavior.