Book Bits | 21 November 2015

Income Inequality: Why It Matters and Why Most Economists Didn’t Notice
By Matthew P. Drennan
Summary via publisher (Yale University Press)
Prevailing economic theory attributes the 2008 crash and the Great Recession that followed to low interest rates, relaxed borrowing standards, and the housing price bubble. After careful analyses of statistical evidence, however, Matthew Drennan discovered that income inequality was the decisive factor behind the crisis. Pressured to keep up consumption in the face of flat or declining incomes, Americans leveraged their home equity to take on excessive debt. The collapse of the housing market left this debt unsupported, causing a domino effect throughout the economy. Drennan also found startling similarities in consumer behavior in the years leading to both the Great Depression and the Great Recession.

From Boom to Bubble: How Finance Built the New Chicago
By Rachel Weber
Summary via publisher (University of Chicago Press)
During the Great Recession, the housing bubble took much of the blame for bringing the American economy to its knees, but commercial real estate also experienced its own boom-and-bust in the same time period. In Chicago, for example, law firms and corporate headquarters abandoned their historic downtown office buildings for the millions of brand-new square feet that were built elsewhere in the central business district. What causes construction booms like this, and why do they so often leave a glut of vacant space and economic distress in their wake? Rachel Weber debunks the idea that booms occur only when cities are growing and innovating. Instead, she argues, even in cities experiencing employment and population decline, developers rush to erect new office towers and apartment buildings when they have financial incentives to do so.

Long Term Interest Rates: Declines, Drivers, Considerations
Edited by Daryl Watkins
Summary via publisher (Nova)
The long-term interest rate is a central variable in the macroeconomy. It matters to borrowers looking to start a business or purchase a home; to lenders weighing the risks and rewards of extending credit; to savers preparing for college or retirement; and to policymakers gauging the state of the economy and financing government expenditure. The global financial crisis and the aggressive policy response pushed long-term interest rates in the United States and in many advanced economies to historically low levels. But today’s low-rate environment is not just a cyclical story. Interest rates had been falling worldwide for nearly twenty years before the crisis. Despite the magnitude and persistence of the secular downtrend, the explanation for the decline is one of the most vexing questions faced by macroeconomists today. The future path of interest rates is even less clear. This book surveys the recent thinking on the many drivers of long-term interest rates in recent decades and going forward. In addition, this book provides a speech by Federal Reserve Board Governor Bernanke at the Sandridge Lecture which discusses the global saving glut and the U.S. current deficit.

America Ascendant: A Revolutionary Nation’s Path to Addressing Its Deepest Problems and Leading the 21st Century
By Stanley B. Greenberg
Excerpt via ABC News
America is being transformed today by revolutionary changes that are fueling the country’s growing economic and cultural dynamism. These revolutions are producing seismic changes to our economy, culture, and politics as well as disruptive, once-in-a-century changes in where we live, our way of life, the structure of families, and what are considered the ascendant values. But those revolutionary changes come with powerful contradictions: they come with a high human cost, stark inequalities, and political dysfunction. People live the contradictions, and increasingly they insist on a bold politics that can mitigate the social costs and create human possibility. That is why reformers have the opportunity to renew America and make it possible for America to be exceptional again.
This is a very different picture than the one offered by those who are averse to government or those who think America is in decline or those who believe we are so deeply gridlocked that it cannot begin to tackle its great problems.

Crippled America: How to Make America Great Again
By Donald Trump
Excerpt via ABC News
Our airports, bridges, water tunnels, power grids, rail systems— our nation’s entire infrastructure is crumbling, and we aren’t doing anything about it. According to engineers, one out of every nine bridges in this country is structurally deficient, approximately a quarter of them are already functionally obsolete, and almost a third of them have exceeded their design lives….
Instead of being at the office or in the factory getting work done, Americans waste countless hours every day sitting in traffic jams or waiting for stalled trains. Our airports? Are you kidding me? A disgrace.
Our power grid, the infrastructure for electricity that keeps everything operating, is way out-of-date. Our highspeed Internet access is only 16th best in the world. When I travel internationally, I see magnificent places you wouldn’t believe. I see properly maintained bridges, tunnels, and airports. I see great highways and unbelievably efficient power systems. Then I come home and I get caught in traffic, and when the car moves, it bangs over potholes.
Why can’t we get these problems fixed? The answer is that the people we put in charge don’t know how to fix them.

The Secure and the Dispossessed: How the Military and Corporations Are Shaping a Climate-Changed World
Edited by Nick Buxton and Ben Hayes
Summary via publisher (Pluto Press)
While the world’s scientists and many of its inhabitants despair at the unfolding impacts of climate change, corporate and military leaders see nothing but challenges and opportunities. For them, melting ice caps mean newly accessible fossil fuels, borders to be secured from ‘climate refugees’, social conflicts to be managed, and more failed states in which to intervene. With one eye on the scientific evidence and the other on their global assets and supply chains, powerful elites are giving increasing thought as to how to maintain control in a world gradually reshaped by climactic extremes. The Secure and the Dispossessed looks at these deadly approaches with a highly critical eye. It also considers the flip-side: that the legitimacy of the global elite is under unprecedented pressure – from resistance by communities to resource grabs to those creating new ecological and socially just models for managing our energy, food and water.