Book Bits: 15 October 2022

Permanent Distortion: How the Financial Markets Abandoned the Real Economy Forever
Nomi Prins
Review via
During the pandemic, Prins explains, “too big to fail” became “too big to correct.” As economies ground to a halt around the globe, central banks printed trillions more to keep markets afloat. The result has been perhaps the single greatest transfer of wealth in human history. Between the fourth quarters of 2019 and 2020, she writes, the planet’s more than two thousand billionaires saw their net worth increase by $1.9 trillion — a figure that has only increased in the years since. In December of 2020, when the United States averaged approximately 2,500 COVID deaths per day, the Dow Jones Industrial Average soared to a then record 30,606.48. Meanwhile, poverty rose from 9.3 percent in June of that year to 11.7 percent in November, with eight million more people falling below the poverty line. The latest Congressional Budget Office report indicates that the poorest half of the country now holds just 2 percent of its wealth.

Investing in the Era of Climate Change
Bruce Usher
Summary via publisher (Columbia U. Press)
A climate catastrophe can be avoided, but only with a rapid and sustained investment in companies and projects that reduce greenhouse gas emissions. To the surprise of many, this has already begun. Investors are abandoning fossil-fuel companies and other polluting industries and financing businesses offering climate solutions. Rising risks, evolving social norms, government policies, and technological innovation are all accelerating this movement of capital. Bruce Usher offers an indispensable guide to the risks and opportunities for investors as the world faces climate change. He explores the role that investment plays in reducing emissions to net zero by 2050, detailing how to finance the winners and avoid the losers in a transforming global economy.

The Economy of Promises: Trust, Power, and Credit in America
Bruce G. Carruthers
Summary via publisher (Princeton U. Press)
The Economy of Promises is a far-reaching study of credit in nineteenth- and twentieth-century America. Synthesizing and surveying economic and social history, Bruce Carruthers examines how issues of trust stitch together the modern U.S. economy. In the case of credit, that trust involves a commitment by debtors to repay money they have borrowed from lenders. Each promise poses a fundamental question: why does the lender trust the borrower? The book tracks the dramatic shift from personal qualitative judgments to the impersonal quantitative measurements of credit scores and ratings, which make lending on a much greater scale possible. It discusses how lending is shaped by the shadow of failure, and the possibility that borrowers will break their promises and fail to repay their debts.

A Monetary and Fiscal History of the United States, 1961–2021
Alan S. Blinder
Q&A with author via Bloomberg
Q: What are some of the lessons from history for today’s policy makers?
A: There are numerous episodes in history of fiscal overshoot, too much demand stimulus. One is with Lyndon Johnson and the Vietnam War. Another one is Richard Nixon over-stimulating the economy quite deliberately to get elected. There was too much fiscal stimulus again this time. But the quantitative dimension in causing the inflation we’re dealing with is greatly exaggerated. It caused some but not close to most.

Delinquent: Inside America’s Debt Machine
Elena Botella
Summary via publisher (U. of California Press)
Delinquent takes readers on a journey from Capital One’s headquarters to street corners in Detroit, kitchen tables in Sacramento, and other places where debt affects people’s everyday lives. Uncovering the true costs of consumer credit to American families in addition to the benefits, investigative journalist Elena Botella—formerly an industry insider who helped set credit policy at Capital One—reveals the underhanded and often predatory ways that banks induce American borrowers into debt they can’t pay back. Combining Botella’s insights from the banking industry, quantitative data, and research findings as well as personal stories from interviews with indebted families around the country, Delinquent provides a relatable and humane entry into understanding debt. Botella exposes the ways that bank marketing, product design, and customer management strategies exploit our common weaknesses and fantasies in how we think about money, and she also demonstrates why competition between banks has failed to make life better for Americans in debt.

When AI Rules the World: China, the U.S., and the Race to Control a Smart Planet
Handel Jones
Review via Harvard Business Review
The corporate strategist Handel Jones draws on his four decades of experience in tech and defense to paint a similar picture regarding artificial intelligence in When AI Rules the World: China, the U.S., and the Race to Control a Smart Planet. He argues that its unique regulatory and economic context has enabled China to far surpass the West in AI applications as wide-ranging as health care, virtual reality, and self-driving cars. “China,” he writes, “with its longer-term goals and ability to turn those goals into reality, had a distinct advantage over a system driven solely by market forces.” Jones concludes that “the United States simply has no master plan” guiding its development of critical AI capabilities. As a result, he writes, “by 2030, China will be firmly ahead of the United States in AI. In 2040, major parts of society will be under the control of AI, and it will be too late.”

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