Book Bits For Saturday: 10.8.2011

The Coming Jobs War
By Jim Clifton
Review via MoneyWeb
Clifton asserts that job creation will surpass all other issues to dominate politics. He likens the challenges to the second world war while further asserting that the war has already begun… It seems likely that “job creation” is destined to become the leader among business publication categories adding to the pressure on politicians everywhere. Few companies have Gallup’s experience in discerning data. The book points out that the world has 7 billion people with 5 billion being of working age. Of those, 3 billion desire full-time formal employment while globally there are only 1.2 billion jobs that meet his criteria, “pay check from an employer and steady work that averages 30-plus hours per week”.

Capitalism at Risk: Rethinking the Role of Business
By Joseph L. Bower, Herman Leonard and Lynn Sharp Paine
Summary via publisher, Harvard Business Press Books
The spread of capitalism worldwide has made people wealthier than ever before. But capitalism’s future is far from assured. The global financial meltdown of 2008 nearly produced a great depression. Economies in Europe are still teetering. Income inequality, resource depletion, mass migrations from poor to rich countries, religious fundamentalism-these are just a few of the threats to continuing prosperity. How can capitalism be sustained? And who should spearhead the effort? Critics turn to government. In Capitalism at Risk, Harvard Business School professors Joseph Bower, Herman Leonard, and Lynn Paine argue that while governments must play a role, businesses should take the lead. For enterprising companies-whether large multinationals, established regional players, or small start-ups-the current threats to market capitalism present important opportunities.
Red-Blooded Risk: The Secret History of Wall Street
By Aaron Brown
Summary via publisher, Wiley
From 1987 to 1992, a small group of Wall Street quants invented an entirely new way of managing risk to maximize success: risk management for risk-takers. This is the secret that lets tiny quantitative edges create hedge fund billionaires, and defines the powerful modern global derivatives economy. The same practical techniques are still used today by risk-takers in finance as well as many other fields. Red-Blooded Risk examines this approach and offers valuable advice for the calculated risk-takers who need precise quantitative guidance that will help separate them from the rest of the pack. While most commentators say that the last financial crisis proved it’s time to follow risk-minimizing techniques, they’re wrong. The only way to succeed at anything is to manage true risk, which includes the chance of loss. Red-Blooded Risk presents specific, actionable strategies that will allow you to be a practical risk-taker in even the most dynamic markets.
The Risk Premium Factor: A New Model for Understanding the Volatile Forces that Drive Stock Prices
By Stephen D. Hassett
Excerpt via publisher, Wiley
Many researchers have argued that the equity risk premium [ERP] changes over time—and that such fluctuations are a major source of stock price changes—and also that the ERP has experienced a “secular” decline during the past few decades. In Dow 36,000, Kevin Hassett (no relation) and James Glassman argued that the risk premium was declining because investors were viewing stocks as less risky. They went so far as to suggest that that the risk premium could vanish entirely since, given a sufficient amount of time, stocks appeared virtually certain to outperform bonds. In The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street, Justin Fox quotes Eugene Fama, one of the pioneers of the efficient market hypothesis as saying, “My own view is that the risk premium has gone down over time basically because we’ve convinced people that it’s there.” Ibbotson suggested that the decline in the risk premium is a onetime event. “We think of it as a windfall that you shouldn’t get again,” he said. I think Glassman and Hassett were right about the decline in the ERP, but not about the underlying cause.
Collision Course: Ronald Reagan, the Air Traffic Controllers, and the Strike that Changed America
By Joseph A. McCartin
Review via Kirkus Reviews
As a two-time governor of California, Ronald Reagan regularly bargained with public-service employees and, as president (the only one in American history ever to have helmed a union), he offered PATCO, one of the few labor organizations to endorse his candidacy, an unprecedented contract in 1981. When PATCO rejected the proposal and called an illegal strike, Reagan issued a 48 hour return-to-work ultimatum. He ended up firing the vast majority of the more than 10,000 highly specialized controllers, destroyed PATCO and set a precedent that continues to reverberate. An expert on the labor movement, McCartin reviews the origins and evolution of public-sector unions—once universally decried, even by iconic liberal presidents—outlines and translates for the general reader the applicable laws and delivers a detailed history of PATCO from its 1968 founding to its demise. Demonstrating a thorough understanding of PATCO’s culture, the author powerfully describes the high-pressure world of air-traffic control, examines the historically contentious relations between the controllers and the hidebound FAA and charts PATCO’s increasing militancy, even as a powerful anti-union backlash gathered in the country.