The Illusion of Control – Why Financial Crises Happen, and What We Can (and Can’t) Do About It
By: Jon Danielsson – London School of Economics
Finance plays a key role in the prosperity of the modern world—but it also brings grave dangers. We seek to manage those threats with a vast array of sophisticated mathematical tools and techniques of financial risk management. Too often, though, we fail to address the greatest risk—the peril posed by our own behavior.
Jón Daníelsson argues that critical risk is generated from within, through the interactions of individuals and perpetuated by their beliefs, objectives, abilities, and prejudices. He asserts that the widespread belief that risk originates outside the financial system frustrates our ability to measure and manage it, and the likely consequences of new regulations will help alleviate small-scale risks but, perversely, encourage excessive risk taking. Daníelsson uses lessons from past and recent crises to show that diversity is the best way to safeguard our financial system.
Too little financial regulation or too much of the wrong kind? Whatever your view, Jon Daníelsson’s lively account and richly informed discussion will surely intrigue you and challenge preconceptions.
Patrick Honohan, Former Governor, Central Bank of Ireland
Never Together – The Economic History of a Segregated America
By: Peter Temin – MIT
In November 2020, The New York Times asked fifteen on its columnists to ‘explain what the past four years have cost America.’ Not one of the columnists focused on President Trump’s racism. This book seeks to redress this imbalance and bring Black Americans’ role in our economy to the forefront. While all humans were created equal, economic history in the United States tells a different story. Reconstruction lasted for only a decade, and Jim Crow laws replaced it. The Civil Rights Movement lasted through the 1960s, yet decayed under President Nixon. The United States has been declining in the Social Product Index, where it now is the lowest of the G7 and 26th in the world. For health and happiness, Temin argues that we need lasting integration efforts that allow Black Americans equal opportunity. This book convincingly integrates Black and white activities into an inclusive economic history of America.
Many tellings of American economic history do not focus on the critical contributions Black Americans have made to our nation. In Never Together, Temin remedies this problem and gives us a rich, inclusive economic history from the American Revolution to the Civil War through the current day. The upshot of this careful historical examination is that progress toward racial equity is far from steady, with important triumphs often stymied by subsequent challenges – an important lesson for everyone seeking to achieve a fairer and more equitable society.
Raj Chetty – Harvard University
The Meddlers – Sovereignty, Empire, and the Birth of Global Economic Governance
By: Jamie Martin – Georgetown University
The Meddlers tells the story of the first international institutions to govern the world economy, including the League of Nations and Bank for International Settlements, created after World War I. These institutions endowed civil servants, bankers, and colonial authorities from Europe and the United States with extraordinary powers: to enforce austerity, coordinate the policies of independent central banks, oversee development programs, and regulate commodity prices. In a highly unequal world, they faced a new political challenge: was it possible to reach into sovereign states and empires to intervene in domestic economic policies without generating a backlash?
Martin follows the intense political conflicts provoked by the earliest international efforts to govern capitalism—from Weimar Germany to the Balkans, Nationalist China to colonial Malaya, and the Chilean desert to Wall Street. The Meddlers shows how the fraught problems of sovereignty and democracy posed by institutions like the IMF are not unique to late twentieth-century globalization, but instead first emerged during an earlier period of imperial competition, world war, and economic crisis.
The Meddlers is an eye-opening, essential new history that places our international financial institutions in the transition from a world defined by empire to one of nation states enmeshed in the world economy.
Adam Tooze, Columbia University
The Chancellors: Steering the British Economy in Crisis Times
By: Howard Davies – Sciences Po
When the Treasury lost control of interest rates to the Bank of England in 1997, its status looked under threat. However, it quickly reasserted its power by dominating policymaking across Whitehall and diminishing other ministries in the process. It also successfully fought off attempts by Prime Ministers, from Blair to Johnson, to cut it down to size.
In this fascinating insider account, based on in-depth interviews with the Chancellors and key senior officials, Howard Davies shows how the past twenty-five years have nonetheless been a roller-coaster ride for the Treasury. Heavily criticized for its response to the global financial crisis, and for the rigours of the austerity programme, it also ran into political controversy through its role in the Scottish referendum and the Brexit debate. The Treasury’s dire predictions of the impact of Brexit have not been borne out. Redemption of a kind, though a costly one, came from its muscular response to the COVID crisis.
Anyone with an interest in economic policymaking, in the UK and elsewhere, will find this a valuable and entertaining account.
