Book Bits | 15 September 2018

Big Debt Crises
Also available as a free pdf
By Ray Dalio
Review via MarketWatch
Let’s make one thing perfectly clear: Ray Dalio sees parallels between the U.S. today and during the unstable 1930s, but the billionaire hedge-fund manager does not expect the next financial crisis to rival the one that knee-capped Americans in 2008 and nearly triggered another Great Depression.
That said, the founder of Bridgewater Associates, the world’s largest hedge-fund firm, is concerned that when the downturn hits — likely within the next couple of years, by his reckoning — investors, companies, politicians and policy makers will be blindsided, or worse. Capitalism and democracy, our system of government, will be under heavier fire than it is already.

A Crisis of Beliefs: Investor Psychology and Financial Fragility
By by Nicola Gennaioli and Andrei Shleifer
Summary via publisher (Princeton University Press)
The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs makes us rethink the financial crisis and the nature of economic risk. In this authoritative and comprehensive book, two of today’s most insightful economists reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks.
Nicola Gennaioli and Andrei Shleifer carefully walk readers through the unraveling of Lehman Brothers and the ensuing meltdown of the US financial system, and then present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist.

Everything for Everyone: The Radical Tradition That Is Shaping the Next Economy
By Nathan Schneider
Summary via publisher (Nation Books)
A new feudalism is on the rise. While monopolistic corporations feed their spoils to the rich, more and more of us are expected to live gig to gig. But, as Nathan Schneider shows, an alternative to the robber-baron economy is hiding in plain sight; we just need to know where to look. Cooperatives are jointly owned, democratically controlled enterprises that advance the economic, social, and cultural interests of their members. They often emerge during moments of crisis not unlike our own, putting people in charge of the workplaces, credit unions, grocery stores, healthcare, and utilities they depend on. Everything for Everyone chronicles this revolution–from taxi cooperatives keeping Uber at bay, to an outspoken mayor transforming his city in the Deep South, to a fugitive building a fairer version of Bitcoin, to the rural electric co-op members who are propelling an aging system into the future

The Cash Ceiling: Why Only the Rich Run for Office–and What We Can Do about It
By Nicholas Carnes
Review via Publishers Weekly
In this detailed but very accessible study, public policy and political science professor Carnes (White-Collar Government: The Hidden Role of Class in Economic Policy Making) identifies a problem with the American political system that has received minimal scrutiny. He observes that, in the more than 14,000 times seats in the House of Representatives have changed hands since 1789, no blue-collar worker has succeeded “another former blue-collar worker in the same congressional seat.” Carnes argues that, because of differences in concerns between people of differing classes, the lack of politicians who are “former workers” leads to policy that “ultimately makes life harder for the majority of Americans from the working class.”

Fear: Trump in the White House
By Bob Woodward
Related news via CBS
President Trump strongly criticized Bob Woodward’s new book, “Fear: Trump in the White House,” as “a total fraud,” “work of fiction” and “totally discredited.” But Woodward said he drew from hundreds of hours of interviews for his book, which is published by Simon & Schuster, a division of CBS. The book depicts a chaotic White House with details from participants and witnesses to the Trump administration.
Asked whether he would release any of the interview tapes, Woodward told “CBS This Morning” on Thursday: “Well, if somebody really wants to challenge me, of course. Of course. But I — again, I’ve made agreements with people that these sources are going to remain confidential.”

Man Out: Men on the Sidelines of American Life
By Andrew L. Yarrow
Review via
“Man Out: Men on the Sidelines of American Life” organizes a cluster of men’s problems — unemployment and underemployment, divorce, social isolation, addictions to porn, drugs, and video games, criminality, misogyny, and general irresponsibility — under the rubric of alienation. Men increasingly feel as if the job market, politics, and culture have no place for them. Their response has been, in various ways, to effectively drop out of society.

Do Central Banks Serve the People?
By Peter Dietsch, et al.
Summary via publisher (Polity)
In the wake of the 2007 financial crisis, central banks injected trillions of dollars of liquidity – through quantitative easing – to prevent financial meltdown and stimulate the economy. The untold story behind these measures is that they have come at a considerable cost.Central bankers argue we had no choice. Using examples from Europe and the US, this book shows why this claim is false. It outlines why we should worry about the role played by central banks since the crisis and what could be done about it. Not only do central bank policies drive economic inequality, they have also become worryingly dependent on financial markets. Far from applying neutral and scientific solutions, their expertise is often biased in predictable ways.

Adam Smith: Father of Economics
By Jesse Norman
Review via The Wall Street Journal
If you want to understand Adam Smith’s “obvious and simple system of natural liberty” (as Smith himself put it), his “liberal plan of [social] equality, [economic] liberty and [legal] justice,” you’ll want to devour Mr. Norman’s “Adam Smith: Father of Economics,” then go on to read Smith’s “Wealth of Nations” (1776) and especially his “Theory of Moral Sentiments” (1759). In fact, you’ll want to read Mr. Norman and then Smith if you have any thought at all of getting beyond the clichés of left and right to understand why we need a middle—or maybe something different. Then you can decide whether Mr. Norman is right to recruit Smith for an interventionist conservatism, as he does.

Wellbeing Economics: The Capabilities Approach to Prosperity
By Paul Dalziel, et al.
Summary via publisher (Palgrave Macmillan)
Economists have long sought to maximise economic growth, believing this to be their best contribution to improving human welfare. That approach is not sustainable in the face of ongoing issues such as global climate change, environmental damage, rising inequality and enduring poverty. Alternatives must be found.