For its first 200 years, the American economy exhibited truly impressive performance. The combination of democratically elected governments and a capitalist system worked with ever-increasing levels of efficiency, spurred by division of labour, international trade, and scientific management of companies. By the nation’s bicentenary in 1976, the American economy was the envy of the world.

Since then, outcomes have changed dramatically. Growth in the economic prosperity of the average American family has slowed to a crawl, while the wealth of the richest Americans has grown to a level never seen before. This imbalance threatens the American democratic capitalist system, which only works when the average family benefits enough to keep voting for it.

In this bracing yet constructive book, world-renowned business thinker Roger Martin starkly outlines the fundamental problem: we have treated the economy as a machine for which the pursuit of ever-greater efficiency is considered an inherently good thing. But it has become too much of a good thing. Our obsession with efficiency has inadvertently shifted the shape  of our economic outcomes: from a large middle class and smaller numbers of rich and poor (think of a bell-shaped curve) to a greater share of benefits accruing to a thin tail of already rich Americans (a Pareto distribution).

We must stop treating the economy as a perfectible machine, Martin argues, and shift toward viewing it as a complex adaptive system in which we must seek a fundamental balance of efficiency with resilience.

Licence to be Bad: How Economics Corrupted Us
Jonathan Aldred
Penguin UK
September 2020, $21.99

Licence to be Bad tells the story of how a group of economics theorists changed our world, and how a handful of key ideas, from free-riding to Nudge, seeped into our decision-making and, indeed, almost all aspects of our lives. Aldred reveals the extraordinary hold of economics on our morals and values. Economics has corrupted us. But if this hidden transformation is so recent, it can be reversed. Licence to be Bad shows us where to begin.

Over the past 50 years, the way we value what is “good” and “right” has changed dramatically. Behaviour that to our grandparents’ generation might have seemed stupid, harmful, or simply wicked now seems rational, natural, woven into the very logic of things. And, asserts Jonathan Aldred in this revelatory new book, it’s economics that’s to blame.

Changing World Order: Why Nations Succeed and Fail
Ray Dalio
Simon & Schuster
November 2020, $39.99

A few years ago, renowned investor Ray Dalio began noticing a confluence of political and economic conditions he hadn’t encountered before in his 50-year career. They included large debts and zero or near-zero interest rates in the world’s three major reserve currencies; significant wealth, political, and values divisions within countries; and emerging conflict between a rising world power (China) and the existing one (U.S.). Seeking to explain the cause-effect relationships behind these conditions, he began a study of analogous historical times and discovered that such combinations of conditions were characteristic of periods of transition, such as the years between 1930 and 1945, in which wealth and power shifted in ways that reshaped the world order. Looking back across 500 years of history and nine major empires—including the Dutch, the British, and the American—Changing World Order puts into perspective the cycles and forces that have driven the successes and failures of all the world’s major countries throughout history. Dalio reveals the timeless and universal dynamics that were behind these shifts, while also offering practical principles for policymakers, business leaders, investors, and others operating in this environment

Globalization has profoundly shaped the world we live in, yet its rise was neither inevitable nor planned. It is also one of the most contentious issues of our time. While it may have made goods less expensive, it has also sent massive flows of money across borders and shaken the global balance of power. Outside the Box offers a fresh and lively history of globalization, showing how it has evolved over two centuries in response to changes in demography, technology, and consumer tastes.

Marc Levinson, the acclaimed author of The Box, tells the story of globalization through the people who eliminated barriers and pursued new ways of doing business. He shows how the nature of globalization changed dramatically in the 1980s with the creation of long-distance value chains. This new type of economic relationship shifted manufacturing to Asia, destroying millions of jobs and devastating industrial centers in North America, Europe, and Japan. Levinson describes how improvements in transportation, communications, and computing made international value chains possible, but how globalization was taken too far because of large government subsidies and the systematic misjudgment of risk by businesses.

As companies began to account properly for the risks of globalization, cross-border investment fell sharply and foreign trade lagged, long before Donald Trump became president and the coronavirus disrupted business around the world.

In Outside the Box, Levinson explains that globalization is entering a new era in which moving stuff will matter much less than moving services, information, and ideas.

The Innovation Delusion: How Our Obsession with the New Has Disrupted the Work that Matters Most
Lee Vinsel and Andrew L. Russell
Crown
September 2020, $37.00

It’s hard to avoid innovation these days. Nearly every product gets marketed as being disruptive, whether it’s genuinely a new invention or just a new toothbrush. But in this manifesto on the state of American work, historians of technology Lee Vinsel and Andrew L. Russell argue that our way of thinking about and pursuing innovation has made us poorer, less safe, and—ironically—less innovative.

Drawing on years of original research and reporting, The Innovation Delusion shows how the ideology of change for its own sake has proved a disaster. Corporations have spent millions hiring chief innovation officers while their core businesses tank. Computer science programs have drilled their students on programming and design, even though the overwhelming majority of jobs are in IT and maintenance. In countless cities, suburban sprawl has left local governments with loads of deferred repairs that they can’t afford to fix. And sometimes innovation even kills—like in 2018, when a Miami bridge hailed for its innovative design collapsed onto a highway and killed six people.

Vinsel and Russell tell the story of how we devalued the work that underpins modern life—and, in doing so, wrecked our economy and public infrastructure while lining the pockets of consultants who combine the ego of Silicon Valley with the worst of Wall Street’s greed. The authors offer a compelling plan for how we can shift our focus away from the pursuit of growth at all costs, and back toward neglected activities like maintenance, care, and upkeep.

The financial services industry is being transformed by heightened regulation, technological disruption, and changing demographics. These structural forces have lowered barriers to entry, increasing competition from within and outside the industry. While this industry is continuously evolving, the speed and breadth of changes over the past decade have been unprecedented.

The new entrants in financial services range from entrepreneurial fintech start-ups to large, non-financial technology-based companies (TechFins and BigTech). While some new entrants may be looking to replace incumbents, others are motivated to partner with them. This increased competition is forcing the financial incumbents to improve their product offerings and customer service.

This edited volume outlines the strategic implications for financial services firms in North America, Europe, and other advanced economies. The most successful banks, insurance companies and asset managers will partner with financial technology (fintech) companies to provide a better and more innovative experience to retail customers and small businesses. Ultimately this technological revolution will benefit customers and lead to a more open and inclusive financial system.

China’s Trump Card: Cryptocurrency and its Game-Changing Role in Sino-US Trade
Raymond Yeung
Wiley
August 2020, $41.95

As the trade war between the U.S. and China escalates, with the U.S. continuing to raise new tariffs on Chinese goods and China hitting back in kind, there seems to be no end in sight to the economic battle. The World Economy in Digital Times provides an in-depth discussion on this important tit-for-tat battle and sheds light on the various underlying issues, the scope of which is beyond normal trade negotiations. On the surface, the economic dispute seems to have been brought about by globalization and protectionism. However, Raymond Yeung argues that the deeper reason behind this is currency misalignment and current global trade arrangements.

Grasp: The Science Transforming  How We Learn
Sanjay Sarms with Luke Yoquinto
Doubleday
August 2020, $38.95

In the spirit of Thinking, Fast and Slow, Grasp is a ground-breaking look at the science of learning—how it’s transforming education, and how we can use it to discover our true potential, as individuals and across society—by a renowned MIT professor.

As the head of Open Learning at MIT, Sanjay Sarma has a daunting job description: to fling open the doors of the MIT experience for the benefit of the wider world. But if you’re going to undertake such an ambitious project, it behooves you first to ask: How exactly does learning work? What conditions are most conducive? Are our traditional classroom methods-—lecture, homework, test, repeat-—actually effective? And if not, which techniques are?

Grasp takes readers across multiple frontiers, from fundamental neuroscience to cognitive psychology and beyond, as it explores the future of learning

Money for Nothing: The Scientists, Fraudsters and Corrupt Politicians Who Reinvented Money, Panicked a Nation and Made the World Rich
Thomas Levenson
Random House
August 2020, $37.00

Money for Nothing is the sweeping story of how the greatest minds of the Scientific Revolution applied their new ideas to people, money, and markets—and, along the way, invented modern finance.

Thomas Levenson chronicles the moment when the needs of war, discoveries of natural philosophy, and ambitions of investors collided, and how the Scientific Revolution intertwined with finance to set England—and the world—off in an entirely new direction.

At the dawn of the eighteenth century, England was running out of money due to its prolonged war with France. Parliament tried raising additional funds by selling debt to its citizens, taking in money with the promise of interest later. It was the first permanent national debt, but still they needed more. They turned to the stock market—a relatively new invention itself—where Isaac Newton’s new mathematics of change over time, which he applied to the motions of the planets and the natural world, were fast being applied to the world of money. What kind of future returns could a person expect on an investment today? The Scientific Revolution could help. In the hub of London’s stock market—Exchange Alley—the South Sea Company hatched a scheme to turn pieces of the national debt into shares of company stock. Over the spring of 1720, the plan worked brilliantly: stock prices doubled, doubled again, and then doubled once more, drawing everyone in London from tradespeople to the Prince of Wales into a money mania that consumed the people, press, and pocketbooks of the empire.

You’re About to Make a Terrible Mistake!: How Biases Distort Decision-Making and What You Can Do to Fight Them
Olivier Sibony
Little, Brown and Company
July 2020, $37.00

We all make decisions all the time. It’s so natural that we hardly stop to think about it. Yet even the smartest and most experienced among us make frequent and predictable errors. So, what makes a good decision? Should we trust our intuitions, and if so, when? How can we avoid being tripped up by cognitive biases when we are not even aware of them?

In You’re About to Make a Terrible Mistake!, strategy professor and management consultant Olivier Sibony draws on dozens of fascinating and engaging case studies to show how cognitive biases routinely lead all of us—including even the most renowned business titans—into nine common decision-making traps. But instead of rehashing the same old “debiasing” techniques that fail managers time and again, Sibony explains that the best way to avoid the pitfalls of cognitive bias is to craft an effective decision-making architecture in your organization—a system of techniques and processes that leverage collective intelligence to help leaders make the best decisions possible—and provides 40 concrete methods for doing so.

Correction

The author and publication information in last issue’s review for The Sleep-Easy Retirement Guide: Answers to the 12 Biggest Financial Questions that Keep You Up at Night contained incorrect data. The entry should read:

David Aston
Milner & Associates Inc., January 2020, $26.95.

The Analyst apologizes for the error.