Economics

House of Debt awarded the 2016 Laing Prize

April 28, 2016
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House of Debt awarded the 2016 Laing Prize

*** The University of Chicago Press is pleased to announce that House of Debt: How They (and You) Caused the Great Recession and How We Can Prevent It from Happening Again, by Amir Sufi and Atif Mian, has been awarded the 2016 Gordon J. Laing Prize. The prize was announced during a reception on April 21st at the University of Chicago Quadrangle Club. The Gordon J. Laing Prize is awarded annually by the University of Chicago Press to the faculty author, editor, or translator of a book published in the previous three years that has brought the greatest distinction to the Press’s list. Books published in 2013 or 2014 were eligible for this year’s award. The prize is named in honor of the scholar who, serving as general editor from 1909 until 1940, firmly established the character and reputation of the University of Chicago Press as the premier academic publisher in the United States. Taking a close look at the financial crisis and housing bust of 2008, House of Debt digs deep into economic data to show that it wasn’t the banks themselves that caused the crisis to be so bad—it was an incredible increase in household debt in the . . .

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Free e-book for March: The Longevity Seekers

March 7, 2016
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Free e-book for March: The Longevity Seekers

Our free e-book for March is Ted Anton’s The Longevity Seekers: Science, Business, and the Fountain of Youth  *** People have searched for the fountain of youth everywhere from Bimini to St. Augustine. But for a steadfast group of scientists, the secret to a long life lies elsewhere: in the lowly lab worm. By suppressing the function of just a few key genes, these scientists were able to lengthen worms’ lifespans up to tenfold, while also controlling the onset of many of the physical problems that beset old age. As the global population ages, the potential impact of this discovery on society is vast—as is the potential for profit. With The Longevity Seekers, science writer Ted Anton takes readers inside this tale that began with worms and branched out to snare innovative minds from California to Crete, investments from big biotech, and endorsements from TV personalities like Oprah and Dr. Oz. Some of the research was remarkable, such as the discovery of an enzyme in humans that stops cells from aging. And some, like an oft-cited study touting the compound resveratrol, found in red wine—proved highly controversial, igniting a science war over truth, credit, and potential profit. As the pace of . . .

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On personal liability: Better Bankers, Better Banks in the NYT

February 19, 2016
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On personal liability: Better Bankers, Better Banks in the NYT

A recent New York Times piece on the necessary culpability of bankers in bank misconduct builds on interviews with Claire A. Hill and Richard W. Painter, the authors of Better Bankers, Better Banks: Promoting Good Business through Contractual Commitment, which argues that it’s the bankers’ ability to hide behind their banks to dodge any personal stakes in the hefty fines, penalties, and legal fees levied by the government in the wake of the financial crisis of 2008, or any forthcoming. And Hill and Painter have a plan for how to change that—make bankers personally liable. Here’s a bit from the NYT: A different proposal comes in a new book by Claire A. Hill and Richard W. Painter, professors at the University of Minnesota Law School. In “Better Bankers, Better Banks,” they argue for making financial executives personally liable for a portion of any fines and fraud-based judgments a bank enters into, including legal settlements. The professors call this covenant banking. And it looks a lot like the kind of personal liability that was a fact of life among the top Wall Street firms when they were private partnerships. With their own money at risk, partners of Salomon Brothers, Lehman Brothers and Goldman Sachs were much . . .

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If the US economy is so good, why does it feel so bad?

January 19, 2016
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If the US economy is so good, why does it feel so bad?

“If the US economy is so good, why does it feel so bad?”* by Salvatore Babones (*adapted from Sixteen for ’16: A Progressive Agenda for a Better America, first published on the Policy Press Blog) *** With a 2 percent annual growth rate, 5 percent unemployment, and zero inflation, the US economy is the envy of the world. Growth seems to be rising and unemployment seems to be falling, which means that most analysts expect an even better US economy in 2016. Throw in low gas prices and a strong dollar, and what’s not to like? If the US economy is doing so well, why are ordinary people so unhappy with their own economic prospects? The aggregate US economy may be growing but most people’s personal economies are not. Census Bureau data show that real per capita income is still below 2007 levels—despite six years of solid economic growth. And Bureau of Labor Statistics data show that despite today’s low unemployment rates the jobs still haven’t come back. Back in 2006 the employment rate of the civilian population—the proportion of adults who had jobs—was over 63 percent. Allowing for people who are still in school, people who are retired, people who . . .

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The Political Origins of Inequality

December 22, 2015
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The Political Origins of Inequality

“How To Spread the World’s Wealth beyond Corporate Elites,” from The Political Origins of Inequality: We have reached a crossroads in our history. For all the achievements and riches of our time, the world has never been so unequal or more unjust. A century ago, at the time of the First World War, the richest 20% of the world’s population earned eleven times more than the poorest 20%. By the end of the twentieth century they earned seventy-four times as much. Today, despite seven decades of international development, three decades of the Washington Consensus, and a decade and a half of Millennium Development Goals, our world is even more divided among the haves, the have-nots, and—as President George W. Bush once quipped in an after-dinner speech—the have-mores. When it comes to wealth, rather than income, the picture is more extreme. Globally, the richest 1% now own nearly half of all the world’s wealth. The poorest 50% of the world, by contrast—fully 3 billion people—own less than 1% of its wealth. Anyone with assets of more than $10,000 a year is an exception to the global norm and is better off than 70% of everyone else alive. Yet most of us . . .

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Can We Race Together? An Autopsy

April 8, 2015
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Can We Race Together? An Autopsy

“Can We Race Together? An Autopsy”* by Ellen Berrey *** Corporate diversity dialogues are ripe for backlash, the research shows, even without coffee counter gimmicks. Corporate executives and university presidents are, yet again, calling for public discussion on race and racial inequality. Revelations about the tech industry’s diversity problem have company officials convening panels on workplace barriers, and, at the University of Oklahoma spokespeople and students are organizing town-hall sessions in response to a fraternity’s racist chant. The most provocative of the efforts was Starbucks’ failed Race Together program. In March, the company announced that it would ask baristas to initiate dialogues with customers about America’s most vexing dilemma. Although public outcry shut down those conversations before they even got to “Hello,” Starbucks said it would nonetheless carry on Race Together with forums and special USA Today discussion guides. As someone who has done sociological research on diversity initiatives for the past 15 years, I was intrigued.  For a moment, let’s take this seriously What would conversations about race have looked like if they played out as Starbucks imagined, given the social science of race? Can companies, in Starbucks’ CEO Howard Schultz’s words, “create a more empathetic and inclusive society—one conversation . . .

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House of Debt on the Independent’s Best of 2014

December 16, 2014
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House of Debt on the Independent’s Best of 2014

Atif Mian and Amir Sufi’s House of Debt, a polemic about the Great Recession and a call to action about the borrowing and lending practices that led us down the fiscal pits, already made a splash on the shortlist for the Financial Times‘s Best Business Book of 2014. Now, over at the Independent, the book tops another Best of 2014 list, this time proclaimed, “the jewel of 2014.” From Ben Chu’s review, which also heralds another university press title—HUP’s blockbuster Capital by Thomas Piketty (“the asteroid”): As with Capital, House of Debt rests on some first-rate empirical research. Using micro data from America, the professors show that the localities where the accumulation of debt by households was the most rapid were also the areas that cut back on spending most drastically when the bubble burst. Mian and Sufi argue that policymakers across the developed world have had the wrong focus over the past half decade. Instead of seeking to restore growth by encouraging bust banks to lend, they should have been writing down household debts. If the professors are correct—and the evidence they assemble is powerful indeed—this work will take its place in the canon of literary economic breakthroughs. We’ve blogged about . . .

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House of Debt on FT’s shortlist for Business Book of the Year

September 24, 2014
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House of Debt on FT’s shortlist for Business Book of the Year

Congrats (!) to House of Debt authors Atif Mian and Amir Sufi for making the shortlist for the Financial Times and McKinsey Business Book of the Year. Now in competition with five other titles from an initial offering of 300 nominations, House of Debt—and its story of the predatory lending practices behind the Great American Recession, the burden of consumer debt on fragile markets, and the need for government-bailed banks to share risk-taking rather than skirt blame—will find out its fate at the November 11th award ceremony. From the official announcement: “The provocative questions raised by this year’s titles have been addressed with originality, depth of research and lively writing.”  The award, now in its 10th edition, aims to find the book that provides “the most compelling and enjoyable insight into modern business issues, including management, finance and economics.” The judges—who include former winners Mohamed El-Erian and Steve Coll—also gave preference this year to books “whose influence is most likely to stand the test of time.” To read more about House of Debt, including a list of reviews and a link to the authors’ blog, click here. . . .

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Lawrence Summers on House of Debt

June 9, 2014
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Lawrence Summers on House of Debt

From Lawrence H. Summers, former Secretary of the Treasury and president emeritus of Harvard University, in the Financial Times: “Atif Mian and Amir Sufi’s House of Debt, despite some tough competition, looks likely to be the most important economics book of 2014; it could be the most important book to come out of the 2008 financial crisis and subsequent Great Recession. Its arguments deserve careful attention, and its publication provides an opportunity to reconsider policy choices made in 2009 and 2010 regarding mortgage debt.” House of Debt takes a complicated premise—unraveling the threads of the 2008 financial crisis from a tangle of Federal Reserve policies, insolvent investment banks, predatory mortgage lenders, and private label securities—and delivers a clean-cut conclusion:  the Great Recession and Great Depression, as well as the current economic malaise in Europe, were caused by a large run-up in household debt followed by a significantly large drop in household spending. Recently, in addition to Summers’s endorsement in today’s Financial Times, the book has been profiled at the New York Times, the Wall Street Journal, the Atlantic, and the Economist, among others; Paul Krugman, writing for the NYT, noted that  its associated House of Debt blog has “instantly become must reading.” How do . . .

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Gary S. Becker (1930–2014)

May 6, 2014
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Gary S. Becker (1930–2014)

Gary S. Becker (1930–2014), a Nobel Prize–winning economist and longtime professor at the University of Chicago, who in later years became a noted columnist and blogger, died this past Saturday, May 3, at Northwestern Memorial Hospital in Chicago, following a long illness. Born in Pottsville, Pennsylvania, Becker earned in MA (1953) and PhD (1955) from the University of Chicago, where he studied with the economist Milton Friedman, and began teaching as an assistant professor in 1954, leaving Chicago in 1957 for Columbia University, where he conducted research at the National Bureau for Economic Research, and returning to Chicago in 1970, where he would spend the rest of his career. Becker, who held a joint appointment as University Professor in the the Departments of Economics and Sociology, remained active well into his eighties, where his acute stance on the role of human capital in labor economics, free-market orientation, and commentator on the economic dimensions of social phenomena helped earn his reputation as “an original, prolific, and sometimes provocative” scholar. As a columnist for Business Week from 1985 to 2004, Becker “was forced to learn how to write about economic and social issues without using technical jargon, and in about 800 words . . .

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