In this episode, Daniel Peris, the host of the “Keep Calm and Carry On Investing” podcast, and David Finegold have a wide-ranging discussion of economics and governance questions inherent in K-12 and higher education. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

New Books in Finance

The Economics of Higher Education

Jeffrey Hooke's The Myth of Private Equity: An Inside Look at Wall Street's Transformative Investments (Columbia Business School, 2021) is a scathing indictment of the high-flying world of private equity. Piece by piece, Hooke takes apart the PE value proposition and shows, instead of the claimed "higher returns and lower volatility", a startling record of poor performance, exorbitant fees, completely opaque reporting, and a network of enablers that allow the business model to proceed.  Daniel Peris is Senior Vice President at Federated Hermes in Pittsburgh. He can be reached at DanielxPeris@gmail.com or via Twitter @HistoryInvestor. His History and Investing blog and Keep Calm & Carry On Investing podcast are at https://strategicdividendinves... Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Jeffrey C. Hooke, "The Myth of Private Equity: An Inside Look at Wall Street's Transformative Investments" (Columbia Business School, 2021)

Neoclassical economic theory shows that under the right conditions, prices alone can guide markets to efficient outcomes. But what if it it’s hard to find the right price? In many important markets, a buyer’s willingness to pay for one good (say, the right to use a certain part of the radio spectrum range in San Francisco) will depend on the price of another complementary good (the right to use that same spectrum in Los Angeles). The number of possible combinations can rapidly become incalculably complex. Such complex markets require new collaborations between economists and computer scientists to create designs that are both incentive compatible and computationally tractable. In Discovering Prices: Auction Design in Markets with Complex Constraints (Columbia UP, 2017), 2020 Economics Nobel Memorial Prize winner Paul Milgrom discusses some of the new economics theory he has developed to help address these challenging contexts, in which neither unfettered market forces nor top-down planning will work well. In our interview we explore these ideas in the context of the most complex auction ever created, the FCC’s broadcast incentive auction. This auction, designed and planned by a team led by Professor Milgrom with his company Auctionomics, purchased underutilized broadcast spectrum from television stations and sold it onward to telecoms providers. This reallocation helped improve wireless network performance and pave the way for 5G wireless services, while also generating over $7 billion for the US treasury. Host Peter Lorentzen is an Associate Professor in the Department of Economics at the University of San Francisco, where he leads a new digital economy-focused Master's program in Applied Economics. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Paul Milgrom, "Discovering Prices: Auction Design in Markets with Complex Constraints" (Columbia UP, 2017)

In Who Gets What — and Why: The New Economics of Matchmaking and Market Design (Mariner Books, 2015), Nobel Memorial Prize Winner Alvin Roth explains his pioneering work in the study of matching markets such as kidney exchange, marriage, job placements for new doctors and new professors, and enrollments in schools or colleges. In these markets, “buyers” and “sellers” must each chose the other, and getting the prices right is only a small part of what makes for a successful transaction, if cash is even involved at all. Roth’s work has led the way in taking microeconomics outside the halls of academic theory to become a practical “engineering” tool for policymakers and businesses. In our interview, we range far beyond the examples from the book to discuss the implications of his work for the design of tech’s market-making “platform” businesses like Airbnb, Amazon, Lyft, or Uber, the challenges he faces when countries or people view some kinds of transactions as “repugnant” or morally unacceptable, and the reasons why San Francisco’s school district (unlike Boston’s or New York’s) chose not to implement the un-gameable school choice plan his team devised for them. Host Peter Lorentzen is an Associate Professor in the Department of Economics at the University of San Francisco, where he leads a new digital economy-focused Master's program in Applied Economics. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Alvin E. Roth, "Who Gets What--and Why: The New Economics of Matchmaking and Market Design" (HMH, 2015)

How can ideas from sociology help us understand history and economics? In Trade and Nation: How Companies and Politics Reshaped Economic Thought (Columbia UP, 2021), Emily Erikson, Associate Professor of Sociology at Yale and Academic Director of the Fox International Fellowship, explores the major shift, which occurred during the seventeenth century, in the history and philosophy of economics. The book combines computational methods from sociology with a detailed and close engagement with historical sources and the philosophy of economics. It demonstrates how a key set of merchants proved highly influential in setting the terms of economics, in the context of the specific conditions and institutional settings in England during the period. The book also offers comparative analysis, adding depth to the numerous methods of testing its core hypothesis about what really drove the changes in economics. Clearly written, and deeply engaging, the book is essential reading for scholars in economics and the social sciences, as well as in history and the humanities. Dave O'Brien is Chancellor's Fellow, Cultural and Creative Industries, at the University of Edinburgh's College of Art. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Emily Erikson, "Trade and Nation: How Companies and Politics Reshaped Economic Thought" (Columbia UP, 2021)

Few revolutions in economics have been as under-covered in general literature as the emergence and development of competition theory and policymaking. Political threats to break up the tech giants or restrain Russian gas pipelines make the headlines while academic lawyers churn out textbooks on 130 years of precedent and practicing lawyers test its limits. What has been missing is an up-to-date, general legislative and intellectual history of how and why politicians, lawyers, and economists in capitalist democracies decided they needed to step in and correct the market. Why did this happen first in the US in that crucial quarter-century preceding the first world war? The Foundations of Antitrust: Events, Ideas, and Doctrines by Gregory Werden (Carolina Academic Press, 2020) fills that gap, examines the overlaps between legal innovation and common law, and busts a few myths en route. From 1977 until his retirement in 2019, Gregory Werden worked in the Antitrust Division of the US Department of Justice – most recently as Senior Economic Counsel. A PhD economist from the University of Wisconsin, he has published extensively on antitrust policy. *The author's own book recommendation is Trusts: The Recent Combinations in Trade, Their Character, Legality and Mode of Organization, and the Rights, Duties and Liabilities of Their Managers and Certificate Holders by William W Cook (Gale - Making of Modern Law, 2020; originally published by L. K. Strouse, 1888) Tim Gwynn Jones is an economic and political-risk analyst at Medley advisors (a division of Energy Aspects). Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Gregory Werden, "The Foundations of Antitrust: Events, Ideas, and Doctrines" (Carolina Academic Press, 2020)

Moving Beyond Modern Portfolio Theory: Investing that Matters (Routledge, 2021) tells the story of how Modern Portfolio Theory (MPT) revolutionized the investing world and the real economy, but is now showing its age. MPT has no mechanism to understand its impacts on the environmental, social and financial systems, nor any tools for investors to mitigate the havoc that systemic risks can wreck on their portfolios. It's time for MPT to evolve. The authors, Jon Lukomnik and James Hawley, propose a new imperative to improve finance's ability to fulfil its twin main purposes: providing adequate returns to individuals and directing capital to where it is needed in the economy. They show how some of the largest investors in the world focus not on picking stocks, but on mitigating systemic risks, such as climate change, so as to improve the risk/return profile of the market as a whole. The author's "Investing that matters" embraces MPT's focus on diversification and risk adjusted return, but understands them in the context of the real economy and the total return needs of investors. Whether an investor, an MBA student, a Finance Professor or a sustainability professional, Moving Beyond Modern Portfolio Theory: Investing That Matters is thought-provoking and relevant. Daniel Peris is Senior Vice President at Federated Hermes in Pittsburgh. He can be reached at DanielxPeris@gmail.com or via Twitter @HistoryInvestor. His History and Investing blog and Keep Calm & Carry On Investing podcast are at https://strategicdividendinves... Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Jon Lukomnik and James P. Hawley, "Moving Beyond Modern Portfolio Theory: Investing That Matters" (Routledge, 2021)

In the late nineteenth century, as much of the world adopted some variant of the gold standard, China remained the most populous country still using silver. Yet China had no unified national currency; there was not one monetary standard but many. Silver coins circulated alongside chunks of silver and every transaction became an "encounter of wits." China and the End of Global Silver, 1873–1937 (Cornell UP, 2020) focuses on how officials, policy makers, bankers, merchants, academics, and journalists in China and around the world answered a simple question: how should China change its monetary system? Far from a narrow, technical issue, Chinese monetary reform is a dramatic story full of political revolutions, economic depressions, chance, and contingency. As different governments in China attempted to create a unified monetary standard in the late nineteenth and early twentieth century, the United States, England, and Japan tried to shape the direction of Chinese monetary reform for their own benefit.  Austin Dean argues convincingly that the Silver Era in world history ended owing to the interaction of imperial competition in East Asia and the state-building projects of different governments in China. When the Nationalist government of China went off the silver standard in 1935, it marked a key moment not just in Chinese history but in world history. Austin Dean is Assistant Professor of History at the University of Nevada, Las Vegas. His work has appeared in Modern China and the Journal of American-East Asian Relations. He is on twitter @thelicentiate. Ghassan Moazzin is an Assistant Professor at the Hong Kong Institute for the Humanities and Social Sciences and the Department of History at the University of Hong Kong. He works on the economic and business history of 19th and 20th century China, with a particular focus on the history of foreign banking, international finance and electricity in modern China. His first book, tentatively titled Foreign Banks and Global Finance in Modern China: Banking on the Chinese Frontier, 1870–1919, is forthcoming with Cambridge University Press. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Austin Dean, "China and the End of Global Silver, 1873–1937" (Cornell UP, 2020)

Do you trust corporations? Do you trust politicians? Do you trust the science? Does anyone trust anyone anymore? In Why Trust Matters: An Economist's Guide to the Ties That Bind Us (Columbia UP, 2021), Professor Ben Ho reveals the surprising importance of trust to how we understand our day-to-day economic lives. Starting with the earliest societies and proceeding through the evolution of the modern economy, he explores its role across an astonishing range of institutions and practices, surveying and synthesizing research across economics, political science, psychology, and other disciplines, and presents his own cutting-edge behavioral economics research on the role of apologies in restoring trust. He argues that we trust far more than we may realize, and that mostly this is a good thing. Check out the New Yorker's review of the book. Ben Ho is an associate professor at Vassar College. Ho applies economic tools like game theory and experimental design to topics like apologies, trust, identity, inequality and climate change. Before Vassar, he taught MBA students at Cornell, served as lead energy economist at the White House Council of Economic Advisers, and worked/consulted for Morgan Stanley and several tech startups. Professor Ho also teaches at Columbia University where he is a faculty affiliate for the Center for Global Energy Policy. His work has been featured in the New York Times and the Wall Street Journal. Ho holds seven degrees from Stanford and MIT in economics, education, political science, math, computer science and electrical engineering. Peter Lorentzen is economics professor at the University of San Francisco. He heads USF's Applied Economics Master's program, which focuses on the digital economy. His research is mainly on China's political economy. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Benjamin Ho, "Why Trust Matters: An Economist's Guide to the Ties That Bind Us" (Columbia UP, 2021)

Statistical graphing was born in the seventeenth century as a scientific tool, but it quickly escaped all disciplinary bounds. Today graphics are ubiquitous in daily life. In their just-published A History of Data Visualization and Graphic Communication (Harvard UP, 2021), Michael Friendly and Howard Wainer detail the history of graphs and tables, how they help solve problems, and even changed the way we think. You'll never look at an excel chart the same way again.... Daniel Peris is Senior Vice President at Federated Hermes in Pittsburgh. He can be reached at DanielxPeris@gmail.com or via Twitter @HistoryInvestor. His History and Investing blog and Keep Calm & Carry On Investing podcast are at https://strategicdividendinves... Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Michael Friendly and Howard Wainer, "A History of Data Visualization and Graphic Communication" (Harvard UP, 2021)

Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today’s investors. Inspiring such monikers as the Bond Guru, Wall Street’s Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Andrew W. Lo and Stephen R. Foerster, "In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest" (Princeton UP, 2021)

In July 2021, nine summers after its then president saved the euro with three choice words (“whatever it takes”), the European Central Bank published the results of a thoroughgoing review of its strategy. A policy framework built for times when inflation posed a modest upside challenge had coped – but only just – with successive financial, sovereign-debt, banking and health crises that threatened chronically weak inflation at best and deflation at worst. Essential to the review was research conducted to mark the 20th anniversary of the ECB in 2019 and now updated and published as a book: Monetary Policy in Times of Crisis: A Tale of Two Decades of the European Central Bank (Oxford UP, 2021) by Massimo Rostagno, Carlo Altavilla, Giacomo Carboni, Wolfgang Lemke, Roberto Motto, Arthur Saint Guilhem and Jonathan Yiangou. This exhaustive analytical history concludes that the ECB operated two policy regimes – one from 1999 to 2012 and a second crisis-informed strategy until the narrative ends before the onset of the pandemic. With its strategic review over, the history lessons from this book will be an essential guide to ECB thinking as it prepares a slow and careful unwinding of its emergency policy settings. Massimo Rostagno has been the ECB’s Director General Monetary Policy since August 2017 and has worked at the central bank since 1998. He has served as head of the Monetary Policy Strategy Division and Director Monetary Policy and, before that, worked at the Banca d’Italia and the International Monetary Fund. He holds a PhD in economics from the University of California, Los Angeles. (Any views expressed are personal and not necessarily those of the ECB). *The author's own book recommendations are Capital in the Twenty-First Century by Thomas Piketty (Harvard University Press, 2014) and The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era by Barry Eichengreen (OUP USA, 2018). Tim Gwynn Jones is an economic and political-risk analyst at Medley Global (Energy Aspects). Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Massimo Rostagno et al., "Monetary Policy in Times of Crisis: A Tale of Two Decades of the European Central Bank" (Oxford UP, 2021)

In a world that purports to know more about the future than any before it, why do we still need speculation? Insubstantial speculations – from utopian thinking to high-risk stock gambles – often provoke backlash, even when they prove prophetic. Why does this hypothetical way of thinking generate such controversy? Gayle Rogers, author of Speculation: A Cultural History from Aristotle to AI (Columbia UP, 2021), speaks with Pierre d’Alancaisez about the intellectual history of speculation: from the mirror and the watch tower, the Calvinist reformation, the scientific revolution, through Jane Austen, to the founding of the United States, and the shape of contemporary capitalism – with booms, manias, busts, and bubbles along the way. Unraveling these histories and many other disputes, Rogers argues that what has always been at stake in arguments over speculation, and why it so often appears so threatening, is the authority to produce and control knowledge about the future. Gayle Rogers is professor and chair of English at the University of Pittsburgh. Pierre d’Alancaisez is a contemporary art curator, cultural strategist, researcher. Sometime scientist, financial services professional. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Gayle Rogers, "Speculation: A Cultural History from Aristotle to AI" (Columbia UP, 2021)

Americans rely on credit to provide for their food, clothing, shelter, transportation, and other daily necessities and the 2008 financial crisis demonstrated how they relied on private financial institutions that encouraged risky lending practices. Yet federal policy makers did little to change their approach to curbing risky lending practices and there was little political response from consumers or consumer groups. How can political scientists explain the behavior of government actors, interest groups, or borrowers?  In Democracy Declined: The Failed Politics of Consumer Financial Protection (U Chicago Press, 2020), Dr. SoRelle insists that the expansion of consumer financing -- in terms of access and economic significance -- is fundamentally a political issue with serious political and economic consequences. She offers a policy-centered explanation sensitive to what she calls regulatory feedback effects that shape the behavior of bureaucrats, consumer advocates, and ordinary Americans. Individuals did not fail – they responded to systemic incentives and goals. SoRelle explains how angry borrowers' experiences with nearly invisible government policies teach them to focus their attention primarily on banks and lenders instead of demanding that lawmakers address predatory behavior. As a result, advocacy groups have been mostly unsuccessful in mobilizing borrowers in support of stronger consumer financial protections. The absence of safeguards on consumer financing is particularly dangerous because the consequences extend well beyond harm to individuals--they threaten the stability of entire economies. In addition to explaining the political dynamics of failure, SoRelle identifies possible remedies. This multi-method scholarship contributes to our understanding of policy feedback in an important and timely case study. Dr. Mallory E. SoRelle is an assistant professor at the Sanford School of Public Policy at Duke University. Her research interrogates how public policies are produced by, and how they reproduce, socioeconomic and political inequality in the United States. She has worked in both electoral politics and consumer advocacy. The podcast drops the week of the 10th anniversary of the Consumer Financial Protection Bureau. Susan Liebell is an associate professor of political science at Saint Joseph’s University in Philadelphia. Why Diehard Originalists Aren’t Really Originalists appeared in the Washington Post’s Monkey Cage and “Sensitive Places: Originalism, Gender, and the Myth Self-Defense in District of Columbia v. Heller” can be found in July 2021’s Polity. Email her comments at sliebell@sju.edu or tweet to @SusanLiebell. Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance

Mallory E. SoRelle, "Democracy Declined: The Failed Politics of Consumer Financial Protection" (U Chicago Press, 2020)

Interviews with Scholars of Finance about their New Books

hubhopper

New Books in Finance

hubhopper