U.S. power: Down but still unrivaled

BOOK REVIEW

Balance: The Economics of Great Powers from Ancient Rome to Modern America, Authors: Glenn Hubbard and Tim Kane.

By Glenn Hubbard and Tim Kane – Hard power. Soft power. Smart Power. Superpower. This is the language of foreign affairs, full of meaning but empty of measurement. Vagueness is, of course, purposeful in the hands of skilled diplomats and politicians, but it can signal shallowness, ignorance or worse. Lacking clear metrics for power, the U.S. national security establishment speculates about possible rivals while being led astray by trendy catchphrases.

The United States itself has a larger GDP and higher productivity than 10 years ago, but its long-term growth rate has slowed by half. That’s a reflection of internal imbalance – budget deficits, heavy taxes that hinder incentives to work and innovate, unfunded entitlements and more.

Existential threats hide in plain sight. If the United States wants to be a superpower for another century, it needs to focus on the barriers to economic growth within — not phantoms abroad. more> http://tinyurl.com/q8yjmvl

Not in the spirit of Hayek

BOOK REVIEW

Keynes Hayek: The Clash That Defined Modern Economics, Author: Nicholas Wapshott.

By Nicholas Wapshott – Friedrich Hayek has become the patron saint of conservative intellectuals – and with good reason. He went head to head with John Maynard Keynes in 1931 in an effort to stop Keynesianism in its tracks. Hayek failed, but his attempt gave him mythical status among thinkers who deplore big government and central management of the economy.

Hayek became a conservative hero a second time with publication of his Road to Serfdom (pdf)  (1944) that suggested the larger the state sector, the more there was a tendency to tyranny. Many of today’s Hayekians harden up Hayek’s carefully expressed thoughts to declare that all government is potentially despotic, while also ignoring his arguments in favor of governments providing a generous safety net for the less advantaged, including a home for every citizen and universal health care. more> http://tinyurl.com/c3lylpc

Comeback: America’s new economic boom

BOOK REVIEW

Comeback: America’s New Economic Boom, Charles R. Morris.

By Charles R. Morris – This is the world of shale gas and oil — which has revolutionized the U.S. energy position. These particular wells are in Oklahoma and are owned by Devon Energy Inc., one of the country’s larger independent exploration and production companies. Drills go two miles straight down, then turn to go another mile through shale rock steeped with gas and gas liquids. The shale is “fractured” with a high-pressure burst of water, sand and chemicals to start the product flowing. Once the flow is stabilized, the rig is removed and the well is connected to a permanent gathering pipeline. It should produce hydrocabons for 15 to 20 years.

By 2020 or so, the United States is expected to surpass Saudi Arabia in oil output, and Russia in gas, according to the International Energy Association’s best estimate. more> http://tinyurl.com/d6plwhd

Related>

• U.S. oil boom leaves OPEC sidelined from demand growth, Dmitry Zhdannikov and Christopher Johnson, Reuters

Jane Austen, Game Theorist?

BOOK REVIEW

Jane Austen, Game Theorist, Author: Michael Suk-Young Chwe.

Theory of Games and Economic Behavior, Author: John von Neumann.

By Steve Denning – The Scientific American has even published a reply from Jane herself: “Game Theory? Sir, You Flatter Me.”

“It is with a mix of delight, embarrassment and confusion that I have watched people analyze and adapt my novels all these years…  So far, I have been content to simply observe all this from my perch in the firmament—to rest my pen, if not my tongue.”

Sadly this thinking of payoffs and manipulations is pervasive in organizations today. It is the foundation for ideas such as that organizations should be aiming at maximizing shareholder value, that organizations should treat employees and contractors as human resources to be exploited and that they should deal with customers as demand to be manipulated. The thinking is pervasive, even though it has devastated business. more> http://tinyurl.com/ctox9nu

JPMorgan And The Death Of Corporate Reputation

BOOK REVIEW

The Death of Corporate Reputation: How Integrity Has Been Destroyed on Wall Street, Author: Jonathan Macey.

By Steve Denning – All the big financial firms like Goldman Sachs [GS], UBS [UBS], Citibank [C], Bank of America [BAC], and JPMorgan Chase, have settled cases involving not just shady practices like price gouging, gaming the system, toll collecting, zero-sum trading and excessive compensation but also illegal practices such price fixing of LIBOR, abuses in foreclosure, money laundering of drug dealers and terrorists, assisting tax evasion and misleading clients with worthless securities. The cases were settled for what is chump change to the banks, without admitting or denying wrongdoing.

Fixing the financial sector will always appear to be an impossible task if we frame it as one of regulators trying to control and contain the nefarious activities of the banks and the hedge funds. If the issues are seen in a broader context, and the activities of the banks are viewed as one aspect of the way in which the shareholder value notion has been devastating many sectors, then we could get to the root cause of the financial sector’s problem and figure out what would be involved in fixing it. more> http://tinyurl.com/clor8le

Related>

• The failure to prosecute corporate crime undermines U.S. justice, Russell Mokhiber, Reuters