A bold attack on a system that needs major overhaul.
A blistering indictment of auditors and their role in permitting corporate fraud.
Reading Littman’s well-researched, legitimately angry book will likely reinforce the already widely pessimistic perspective on both self-regulation and governmental oversight of the financial world. Littman attacks the “triangle” of “fraudulent executives, complicit auditors and intolerable public injury” in an impressive work that extends beyond analyzing just the latest financial debacle. In fact, the author demonstrates that the “era of low standards” that began with Enron in late 2001 “was a long one and is not over.” Littman assails fraudulent corporate executives, but as he documents in case after case, the fraud they perpetrate largely goes unchecked by auditing firms. Governmental regulation has proven to be less than effective as well, according to Littman. The SEC made a “drastic error in leaving auditing standard development to the care of the audit profession.” And beginning in 2006, the well-intentioned Sarbanes-Oxley Act, aimed at corporate reform, was subject to “a movement to dilute [it] and press for more restrictions on litigation against auditors or financial institutions by victims of fraud.” These are just two glaring examples in a sea awash with weak and contradictory rules. The most damaging assessment made by the author is his strong claim that the designers of derivative securities “based on platforms of bundled sub-prime mortgages and other sub-par platforms could not have been ignorant of the potential consequences of what they had constructed.” Littman writes that both public officials and private executives caused “severe public injury” and “all bear heavy burdens of responsibility for the crash of 2007-2009.” Littman concludes that auditors could have prevented the “major frauds” that occurred and “had they done so, the damages would have been very substantially less.” Littman offers a set of conclusions and suggestions for improvement, and their implications are significant. This is a sobering but much-needed exposé of the real culprits behind the country’s financial maladies. Unfortunately, it appears those in both the private and public sectors must share the blame.
A bold attack on a system that needs major overhaul.Pub Date: Dec. 1, 2010
ISBN: 978-1452810997
Page Count: 492
Publisher: CreateSpace
Review Posted Online: Jan. 12, 2011
Review Program: Kirkus Indie
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.
“Quality of life means more than just consumption”: Two MIT economists urge that a smarter, more politically aware economics be brought to bear on social issues.
It’s no secret, write Banerjee and Duflo (co-authors: Poor Economics: A Radical Rethinking of the Way To Fight Global Poverty, 2011), that “we seem to have fallen on hard times.” Immigration, trade, inequality, and taxation problems present themselves daily, and they seem to be intractable. Economics can be put to use in figuring out these big-issue questions. Data can be adduced, for example, to answer the question of whether immigration tends to suppress wages. The answer: “There is no evidence low-skilled migration to rich countries drives wage and employment down for the natives.” In fact, it opens up opportunities for those natives by freeing them to look for better work. The problem becomes thornier when it comes to the matter of free trade; as the authors observe, “left-behind people live in left-behind places,” which explains why regional poverty descended on Appalachia when so many manufacturing jobs left for China in the age of globalism, leaving behind not just left-behind people but also people ripe for exploitation by nationalist politicians. The authors add, interestingly, that the same thing occurred in parts of Germany, Spain, and Norway that fell victim to the “China shock.” In what they call a “slightly technical aside,” they build a case for addressing trade issues not with trade wars but with consumption taxes: “It makes no sense to ask agricultural workers to lose their jobs just so steelworkers can keep theirs, which is what tariffs accomplish.” Policymakers might want to consider such counsel, especially when it is coupled with the observation that free trade benefits workers in poor countries but punishes workers in rich ones.
Occasionally wonky but overall a good case for how the dismal science can make the world less—well, dismal.Pub Date: Nov. 12, 2019
ISBN: 978-1-61039-950-0
Page Count: 432
Publisher: PublicAffairs
Review Posted Online: Aug. 28, 2019
Kirkus Reviews Issue: Sept. 15, 2019
SEEN & HEARD
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.
A well-constructed critique of an economic system that, by the author’s account, is a driver of the world’s destruction.
Harvard Business School professor Henderson vigorously questions the bromide that “management’s only duty is to maximize shareholder value,” a notion advanced by Milton Friedman and accepted uncritically in business schools ever since. By that logic, writes the author, there is no reason why corporations should not fish out the oceans, raise drug prices, militate against public education (since it costs tax money), and otherwise behave ruinously and anti-socially. Many do, even though an alternative theory of business organization argues that corporations and society should enjoy a symbiotic relationship of mutual benefit, which includes corporate investment in what economists call public goods. Given that the history of humankind is “the story of our increasing ability to cooperate at larger and larger scales,” one would hope that in the face of environmental degradation and other threats, we might adopt the symbiotic model rather than the winner-take-all one. Problems abound, of course, including that of the “free rider,” the corporation that takes the benefits from collaborative agreements but does none of the work. Henderson examines case studies such as a large food company that emphasized environmentally responsible production and in turn built “purpose-led, sustainable living brands” and otherwise led the way in increasing shareholder value by reducing risk while building demand. The author argues that the “short-termism” that dominates corporate thinking needs to be adjusted to a longer view even though the larger problem might be better characterized as “failure of information.” Henderson closes with a set of prescriptions for bringing a more equitable economics to the personal level, one that, among other things, asks us to step outside routine—eat less meat, drive less—and become active in forcing corporations (and politicians) to be better citizens.
A readable, persuasive argument that our ways of doing business will have to change if we are to prosper—or even survive.Pub Date: May 1, 2020
ISBN: 978-1-5417-3015-1
Page Count: 336
Publisher: PublicAffairs
Review Posted Online: Feb. 16, 2020
Kirkus Reviews Issue: March 15, 2020
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