Not exactly cheery, but definitely worth knowing. (Introduction by Paul A. Volcker)

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ON MONEY AND MARKETS

A WALL STREET MEMOIR

A superior course in economics (with a glimpse of biography) from “Dr. Gloom,” the famous monetarist, financial forecaster, and bond guru who earned his sobriquet with his infallably honest, level, and sometimes unwelcome economic pronouncements.

Kaufman’s life began in a small town in Germany, continued as a young refugee of the Nazi regime and ends with this, the accumulation of a life’s study of the way money works. And reasonable and clear-headed it all is, too. Here’s how economies rise and fall: it all hinges on credit-risk evaluation (often improperly assayed or, in the midst of profit lust, not done at all). Hence, Mexico, Penn Central, the Savings and Loan debacle, and a host of other financial dark days. The more risk out there, the more instruments will be created to hedge against that risk, Kaufman maintains, and the more volatile markets become. That’s us. Now. The efficient and careful allocation of credit precludes disaster. Not too much debt; not too much regulation; not too much of much. What’s needed is a re-tooling of the IMF and the World Bank, and the creation of something Kaufman calls a “Board of Overseers of World Markets,” which would serve as a finger-shaker rather than a regulator. Decency has always been a hallmark of Kaufman’s and, thanks to it, he saved his (and the firm that bore his name’s) neck by withdrawing from a collaboration with the ill-fated Drexel Burnham (when he heard that Michael Milken was to be involved). The market isn’t human, he insists, and it doesn’t have human characteristics. “It is the sum total of thousands of largely uncoordinated decisions, many of which are based on little or no analysis.” Nothing in the recent economic climate has happened to improve his rainy mood. The apocalypse is nigh, so look out. “I am confident that sometime within the next few years, the financial euphoria will be reversed.”

Not exactly cheery, but definitely worth knowing. (Introduction by Paul A. Volcker)

Pub Date: June 1, 2000

ISBN: 0-07-136049-2

Page Count: 388

Publisher: McGraw-Hill

Review Posted Online: May 20, 2010

Kirkus Reviews Issue: May 15, 2000

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Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our...

THINKING, FAST AND SLOW

A psychologist and Nobel Prize winner summarizes and synthesizes the recent decades of research on intuition and systematic thinking.

The author of several scholarly texts, Kahneman (Emeritus Psychology and Public Affairs/Princeton Univ.) now offers general readers not just the findings of psychological research but also a better understanding of how research questions arise and how scholars systematically frame and answer them. He begins with the distinction between System 1 and System 2 mental operations, the former referring to quick, automatic thought, the latter to more effortful, overt thinking. We rely heavily, writes, on System 1, resorting to the higher-energy System 2 only when we need or want to. Kahneman continually refers to System 2 as “lazy”: We don’t want to think rigorously about something. The author then explores the nuances of our two-system minds, showing how they perform in various situations. Psychological experiments have repeatedly revealed that our intuitions are generally wrong, that our assessments are based on biases and that our System 1 hates doubt and despises ambiguity. Kahneman largely avoids jargon; when he does use some (“heuristics,” for example), he argues that such terms really ought to join our everyday vocabulary. He reviews many fundamental concepts in psychology and statistics (regression to the mean, the narrative fallacy, the optimistic bias), showing how they relate to his overall concerns about how we think and why we make the decisions that we do. Some of the later chapters (dealing with risk-taking and statistics and probabilities) are denser than others (some readers may resent such demands on System 2!), but the passages that deal with the economic and political implications of the research are gripping.

Striking research showing the immense complexity of ordinary thought and revealing the identities of the gatekeepers in our minds.

Pub Date: Nov. 1, 2011

ISBN: 978-0-374-27563-1

Page Count: 512

Publisher: Farrar, Straus and Giroux

Review Posted Online: Sept. 4, 2011

Kirkus Reviews Issue: Sept. 15, 2011

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A deftly argued case for a new kind of socialism that, while sure to inspire controversy, bears widespread discussion.

CAPITAL AND IDEOLOGY

A massive investigation of economic history in the service of proposing a political order to overcome inequality.

Readers who like their political manifestoes in manageable sizes, à la Common Sense or The Communist Manifesto, may be overwhelmed by the latest from famed French economist Piketty (Top Incomes in France in the Twentieth Century: Inequality and Redistribution, 1901-1998, 2014, etc.), but it’s a significant work. The author interrogates the principal forms of economic organization over time, from slavery to “non-European trifunctional societies,” Chinese-style communism, and “hypercapitalist” orders, in order to examine relative levels of inequality and its evolution. Each system is founded on an ideology, and “every ideology, no matter how extreme it may seem in its defense of inequality, expresses a certain idea of social justice.” In the present era, at least in the U.S., that idea of social justice would seem to be only that the big ones eat the little ones, the principal justification being that the wealthiest people became rich because they are “the most enterprising, deserving, and useful.” In fact, as Piketty demonstrates, there’s more to inequality than the mere “size of the income gap.” Contrary to hypercapitalist ideology and its defenders, the playing field is not level, the market is not self-regulating, and access is not evenly distributed. Against this, Piketty arrives at a proposed system that, among other things, would redistribute wealth across societies by heavy taxation, especially of inheritances, to create a “participatory socialism” in which power is widely shared and trade across nations is truly free. The word “socialism,” he allows, is a kind of Pandora’s box that can scare people off—and, he further acknowledges, “the Russian and Czech oligarchs who buy athletic teams and newspapers may not be the most savory characters, but the Soviet system was a nightmare and had to go.” Yet so, too, writes the author, is a capitalism that rewards so few at the expense of so many.

A deftly argued case for a new kind of socialism that, while sure to inspire controversy, bears widespread discussion.

Pub Date: March 10, 2020

ISBN: 978-0-674-98082-2

Page Count: 976

Publisher: Belknap/Harvard Univ.

Review Posted Online: Dec. 22, 2019

Kirkus Reviews Issue: Jan. 15, 2020

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