Tag Archives: economics

Shake, Rattle and Roll

Aftershock: The Next Economy and America’s Future by Robert B. Reich (Knopf, $14.95, 192 pages)

Robert Reich’s Aftershock: The Next Economy and America’s Future is sectioned into three parts.   In the first two sections, Reich offers arguments for why America’s growing inequality is bad.   The third offers ideas for fixing it.

Part One argues that growing inequality makes it impossible for America’s middle class to consume as much as they produce without going into debt.   The reason for the 2008 meltdown, he argues, was not that Americans had merely spent beyond their means or that Wall Street speculators had trashed the economy, though these he argues were true.   Rather, “their (middle class Americans) means had not kept up with what the larger economy could and should have been able to provide them.”   This is the reason behind the economic collapse.

Part one is the best section of the book.   Reich’s analysis is concise, though well supported.   The argumentation is spot on.   He makes strong points, develops them and supports them without wandering too far from his central theme.   He doesn’t simplify things, but manages to explain them well.

Part two argues that growing inequality will have dangerous social implications if nothing is done to change the direction.   This section begins with a thought experiment involving a fictional future party of populist radicals.   The argument Reich makes here is that capitalism has to be saved from itself.   If the middle class can’t achieve the things they used to, radicals will harness their populist anger and the end result will be the destruction of the economy and capitalism.

The specifics of the thought experiment are a little silly, though not entirely implausible.   It’s also a drawback that he lumps all of the populist anger together into one category.   That’s a bit insulting to middle class intellligence, but maybe Reich is right.   In any case, his main point – that capitalism needs to be saved from itself – is poignant.

Part three cobbles together a  lot of small possible situations, notably changes to tax codes, getting money out of politics, and a complete expansion of Medicare.

The drawback to section three is that there aren’t a lot of connections among the small solutions he cobbles together.   None of them are politically viable.   Reich ends by suggesting that the only real way forward is if financial corporations and the financial elite heed his warning and save capitalism from itself.

The Good:  Reich’s analysis of the structural problem under-girding the American economy appears to be accurate.   His argument is well supported by short at only 147 pages.

The Bad:  Sections two and three of the book simply aren’t as good as the first section.   Section two is purely speculative.   The argument is valid, but the specifics are impractical.   Section three disappoints in its presentation of solutions, which are not politically feasible.

The Bottom Line:  Aftershock is required reading for any progressive wanting to understand the structural economic problem behind the economic meltdown and the barriers to fixing it.   Well recommended.

Trevor Kidd

You can read more from Trevor Kidd at http://trevorkidd.com/ .

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Coming Up Next…

A review of Grand Pursuit: The Story of Economic Genius by Sylvia Nassar.

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Come and Get It

Shiny Objects: Why We Spend Money We Don’t Have in Search of Happiness We Can’t Buy by James A. Roberts (HarperOne, $25.99, 368 pages)

“The chief value of money lies in the fact that one lives in a world in which it is overestimated.”   – H. L. Mencken

Author James A. Roberts is a professor of marketing at Baylor University in Waco, Texas.   There’s no doubt that he knows of what he writes.   In some ways Shiny Objects is similar to The Man Who Sold America by Jeffrey Cruikshank and Arthur Schultz, and Shoptimism – Why the American Consumer Will Keep on Buying No Matter What by Lee Eisenberg.   Among them, the three  books capture a wide view of the marketing tricks, human weaknesses and buying trends that are behind the urge to attain the American dream.

Shiny Objects is clearly written for readers in the USA.   Author Roberts tailors what could easily be just another self-help book into a person-centered experience complete with memorable quotes at the start of each chapter (such as the one posted above).   He includes graphs, charts, sidebars and illustrations that enliven the very serious subject – compulsive acquisition that most folks cloak in the guise of the pursuit of the Great American Dream.

There is a strong interactive presence in many chapters that gently allows the reader to respond to the questionnaires that are designed to reveal personal tendencies, proclivities or urges related to material possessions and their appearance – which is, sadly, a false one – of granting happiness.

There is some original research associated with the writing of the book as well as numerous well-annotated references, data and quotes.   Roberts also references his survey of other researchers’ research on consumption/consumerism.

The marketing classes at Baylor presented by Dr. Roberts must be very popular given his smooth conversational style and ability to weave useful strategies through his narrative.   Perhaps this book, which is highly skeptical of the marketing practices in this country, is his way of offsetting the marketing skills he teaches in his college classes.   This quote makes the point: “The primary goal of this book is to make the argument that lasting happiness lies outside the consumer realm, beyond the shiny-object ethos.”

Highly recommended.

Ruta Arellano

A review copy was provided by the publisher.   Shiny Objects was released on November 8, 2011, and is available as a Kindle Edition and Nook Book download.   “Shiny Objects is ultimately a hopeful statement about the power we each hold to redefine the pursuit of happiness.”   Amazon

Readers who find this book interesting may also want to consider Stumbling on Happiness by Daniel Gilbert (Vintage, $15.95, 336 pages) and Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt (William Morrow Paperbacks, $15.99, 315 pages).

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Somebody’s Watching You

The Price of Everything: Solving the Mystery of Why We Pay What We Do by Eduardo Porter (Portfolio Hardcover, $27.95, 304 pages)

“There was a time when the United States offered workers a shot at prosperity.”

“The nicer the nice, the higher the price / This is what you pay for what you need. / The higher the price, the nicer the nice. / Jealous people like to see you bleed.”   Sylvester Stewart (AKA Sly Stone)

Author Eduardo Porter relies on well-known and documented studies for background in supporting his thesis that each thing we decide to purchase has a price.   The price does not always make sense to us.   Moreover, some prices are so attractive that they lead us to make wrong-headed decisions.  

Porter has divided his study into nine elements, each of which carries enormous importance for almost everyone.   The chapter devoted to things reveals some surprising conclusions such as that auctions are searches for fools, those who would actually pay more than an item’s true worth.   The most compelling chapter for this reviewer is about the price of life.   While life is generally perceived as priceless, there are strict rules regarding the criteria used to arrive at the specific figures for victim compensation awards.   (Talk to any law student who has taken Torts and he/she will explain this further.)

The direct approach taken in this book may be a bit jarring for some readers.   And the discussion of the price of women contains phrasing that is sometimes confusing.   This reviewer needed to reread certain passages in order to understand – or attempt to understand – the conclusion(s) drawn by the author.  

This survey book is reminscent of others that have used an organizing principle, like The Tipping Point by Malcolm Gladwell, to bring the reader to an intended conclusion.   Recommended – although the price of $27.95 for just 300 pages seems a bit high!

Ruta Arellano

Reprinted courtesy of San Francisco Book Review.   “A fascinating journey through what we see every day – but do not think enough about.   Eduardo Porter makes you think hard about the corporate interests at work behind the veil of prices (and much more).”   Simon Johnson, co-author of 13 Bankers.

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A New Audio-book Giveaway!

Thanks to Anna at Hachette Audio, we will be giving away three audio book copies of The Art of Choosing by Sheena Iyengar.   This is an unabridged 9-CD set that has a value of $34.98.   You can see a video trailer-preview for this book at the Twelve Books website (Google it).   The following are some comments about this unique non-fiction book.

Sheena Iyengar’s work on choice and how our minds deal with it has been groundbreaking, repeatedly surprising, and enormously important.   She is someone we need to listen to.   Dr. Atul Gawande, author of Better and Complications

No one asks better questions, or comes up with more intriguing answers.   Malcolm Gladwell, author of Outliers

As you take exciting steps into this wide-ranging exploration of the choices we make, you will traverse the worlds of psychology, biology, philosophy, economics, business, public policy and medicine.   Malcolm Gladwell popularized some of Professor Iyengar’s research in Blink, but that is just a glimmer of what readers will discover in The Art of Choosing.

The author’s objective in these pages is a great one:  to help us become better choosers, with greater self-awareness of our biases and values.   She is tackling nothing less than the subtext of our lives – what we are thinking when we make choices; how our environment influences us; and how choice drives, frustrates, sustains and satisfies us.

You will learn why we need choice in our lives to feel control and contentment… (yet) we can sometimes be paralyzed by too many choices.   Unquestionably, it is one of the best books I’ve had the privilege of publishing.   Jonathan Karp, Publisher and Editor-in-Chief, TWELVE

It’s easy to enter this book giveaway.   All you need to do is post a comment here or send an e-mail (using the subject line The Art of Choosing) to Josephsreviews@gmail.com .   This will count as a first entry.   For a second contest entry, tell us what the hardest choice was that you had to make in your life, and why it seemed so difficult at the time.   That’s it.

This contest will run until Midnight PST on Friday, May 7, 2010.   In order to enter, you must be a resident of the United States or Canada, with a residential address.   Audio books cannot be mailed to P.O. boxes.  

Good luck and good listening!

 

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Split Decision

The sub-title of Trade-Off is “Why Some Things Catch On, and Others Don’t.”   It is a title that describes the book itself, which both worked and didn’t work for this reader.   In it Kevin Maney describes “the ever-present tension between quality and convenience” in the business world.   A better way of understanding this is his statement that companies can either be needed or loved…  Something he explains by looking at numerous companies that made the mistake of trying to be both needed and loved.

One clear example is Starbucks.   The company went from being a dependable brewer of bold coffee in select locations to – seemingly overnight – a company whose “shops” were everywhere; a company that tried to sell its customers everything from books to records to dishware.   Its standard mission of selling bold coffee seemed to be lost in its great expansion plans.   By getting bigger, Starbucks became smaller in the eyes of its customer base.   And its exclusivity – its value – was lost.

Think of Nordstrom.   If Nordstrom suddenly expanded to the point where you could find one of its stores next to every 7-11 or Wal-Mart, what would you think about it?   At the least, one would think that it had become ordinary and that something must be “wrong” with the merchant.   This illustrates another accurate point made by Maney, “Great companies figure out what they can do better than anyone else in the world, and then relentlessly focus on that.”

Yes, but the all-too-great temptation is to try to do other things, new things, and this is where companies from Motorola (RAZR, anyone?), to Starbucks, to Coach and Tiffany have stumbled.   Right this minute I see the same thing happening with Target, which has gone from being a solid purveyor of quality mid-level customer goods to one which is a sad knock-off of Wal-Mart.   Someone at Target’s corporate headquarters has decided to not let Target be Target, which is unfortunate.

So Maney does a fine job when it comes to making the point, repeatedly, that a business can offer either quality or convenience – it cannot do both.   Many will try to cross the line from quality to convenience – Starbucks again being the best example – and pay a high price for it.   And does anyone remember Krispy Kreme?

About four-fifths of the way through Trade-Off, however, Maney begins drinking his own Kool-Aid.   He began the book by being needed and he succumbs to trying to be loved, giving the reader his prognostications – his guesses – as to how certain businesses can be “fixed.”   His writings become rather silly at this point.   He jumps into the health care debate and decides that “doc in the boxes” are the future, notwithstanding that this trend came and went in the 80s and 90s, and the facts – as he admits – are that they tended to be cash-only enterprises (which does not help those without health insurance) staffed by nurse practitioners and R.N.s rather than licensed physicians.

Maney also goes on to describe the current circulation problems with newspapers.   As a former reporter, his solution is for newspapers to target boomers in their print version, and young people with jazzy internet versions.   This is just plain ridiculous.   Young people avoid certain papers because they’re seen as irrelevant to their own lives.   In my own community of  Sacramento, for example, the alternative Sacramento News & Review sells more advertisements every week, while our mainstream paper claims it cannot find sufficient advertisers due to the recession.   Right… 

There’s simply no way a mainstream newspaper is going to design a website that attracts young readers who are avoiding that paper – that outdated (and un-cool) brand – in droves.   A better solution would be to de-construct what it is that makes the alternative paper attractive [hint: it has an attitude] and attempt to imitate it, although it is probably too late in the day for many of today’s – or rather yesterday’s – newspapers.   It may simply be that their time has come and gone.  

Near the end of Trade-Off  Maney writes, “I hope the trade-off was worth it.”   In the case of this $23.00 list book, the answer is no.   This likely would have made a great airline magazine article, good for passing a half-hour or 45 minutes in the air.   As a business-consumer psychology survey, it winds up being simply ok.   Maney lost more than he gained by going past the book’s logical ending point and filling it with stuffing.

This book was purchased by the reviewer.

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Coming Up Next…

A review of Trade-Off: Why Some Things Catch On, and Others Don’t by Kevin Maney.

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The Sway of Conventionality

Thinking like the crowd won’t help me now.   Oh Girl (song written by E. Record)

No one is likely to win a popularity contest by playing the devil’s advocate.   Sway

Sway: The Irresistible Pull of Irrational Behavior might have been subtitled The Force of Conventionality.   That’s because the pair of brother-authors clearly establish that while following the crowd may make you popular, it is less likely to make you rich or right.   One of the brothers had the idea for this book while sitting in a business school graduate level class and hearing a professor state, “People aren’t rational.”   That is something I also heard in graduate school.   Who, after all, would need a legal/criminal justice system if people acted rationally 100% of the time?

In this book we learn why college football coaches so often lose games when they’re playing not to lose (doesn’t the prevent defense always prevent the team from winning?).   And we learn why presidents enter wars they know they cannot win.   Also, we’re made to understand why we so stubbornly remain in losing situations – whether gambling our fortunes or gambling in love – instead of wisely cutting our losses early on.

One of the ways in which the Brafman brothers explain the notion of loss aversion is that the part of our brain that experiences and seeks pleasure tends to often defeat the part that is responsible for judgment and caution.   The controlling part of our brain, unfortunately, seeks short-term gains rather than adopting a saner long-term view.   As the authors note, “When we adopt the long-term view…  (the) immediate potential losses don’t seem as menacing.”

Most importantly, the authors explain the hazards of group thinking at work and in our society.   Group think so often results in poor, consensus based, decisions that the role of the sole and brave devil’s advocate is essential – he or she should be given a medal rather than castigated.   For the devil’s advocate represents the “…brakes that prevent a group from going down a potentially disastrous path.”   This “can literally save lives.”

To their credit, the authors present numerous examples of poor decisions in many fields from aviation to education and – naturally – the business world.   They also present many examples of exemplary and innovative thinking.   As a bonus, they throw in an explanation of a theory about the four roles that a person can assume within a family (personal or business).   One can be an initiator, a braker, a supporter or an observer.   The reader will enjoy trying to decide where he/she fits in…   I think I’m an observer-braker and occasional supporter.

I’m very rarely engaged by review (or survey) books that cover a lot of territory as I find they often make questionable connections between events of different times and places.   No, I’m not a fan of “connection” based works.   But this book is interesting from page 1 all the way through to page 181.

Reading this book offers the reader lessons which will likely make him/her a better – and certainly more rational – person.   There are also critical lessons to be learned by our society in general; let’s just hope it’s not too late.

Well recommended.

Joseph Arellano

This book was purchased by the reviewer.

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