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Summer Reading, Public Finance Edition
Summer reading recommendations on domestic and international finance, financial markets, and history intersecting with public finance.
It’s officially summer! And time for summer reading lists.
Public finance doesn’t always lend itself as a typical beach read and some of these topics may be a little heavy. The books cover domestic and international finance, financial markets, and history — a little something for most readers. Each of the writers delivers their subject in compelling ways and intersects with issues in public finance.
Here are our recommendations. Hope you enjoy!
Only the Rich Can Play, by David Wessel
Only the Rich Can Play is about Opportunity Zones (OZs), the program that offers tax breaks for investors who lock away capital gains for a decade in exchange for investing in distressed communities. It’s a compelling story of OZs across the U.S., the Washington policy process, and how the best of intentions can go awry.
A report by the Urban Institute found that while OZs are helping to establish a “new community growth ecosystem,” engaging both project developers and investors who have previously had minimal involvement with community development initiatives, many "mission-oriented actors are struggling to access capital."
As the Financial Times book review summarized it,
In a sobering reflection on how policy can go wrong, its backers spent too much time creating a policy to encourage the rich to invest and far too little learning the lessons of the past or listening to those in the communities their policies were supposed to benefit. A moral tale for wealthy do-gooders everywhere.
Deaths of Despair and the Future of Capitalism, by Anne Case and Angus Deaton
Deaths of Despair and the Future of Capitalism is a sobering and detailed look at one of the major social and economic issues facing the U.S.
“Deaths of despair” are deaths from suicide, drug overdoses and alcoholic liver disease primarily affecting white Americans in their mid-40s to mid-50s over the past two decades. The increase in these death rates is partially related to declining economic opportunity, change in community life, and the mass opioid addiction fostered by the U.S. healthcare system. Only recently are state and local governments starting to receive money from the national opioid settlements.
A book review in The New Yorker summarized it as,
We Americans are reluctant to acknowledge that our economy serves the educated classes and penalizes the rest. But that’s exactly the situation, and “Deaths of Despair” shows how the immiseration of the less educated has resulted in the loss of hundreds of thousands of lives, even as the economy has thrived and the stock market has soared.
The World for Sale, by Javier Blas and Jack Farchy
The World for Sale is about the secretive business of commodities traders and how resources travel the globe. Whether its getting resources out of countries on sanctions lists or storing oil during the 2020 glut to sell another day, commodity traders have an outside influence on the global economy.
It’s an informative read filled with interviews and knowledge spanning decades. There was also an interesting anecdote about public pension funds investing in “Oilflow OSPV 1 DAC,” an Irish company with a nondescript address owned by the world’s large commodity trading company, Glencore. You can read more about it on Bloomberg: “U.S. Teachers’ Pensions Helped Fund War Over Oil in Iraq.”
The book itself sheds important light on this corner of the financial markets. As the Foreign Policy book review put it,
The book is superbly researched and tidily written: There’s no overwrought prose or tortured jargon, just a clean, compelling chronicle of the central role that commodity traders have played in the global economy from the end of World War II to the present.
What they found isn’t pretty—but it’s plenty illuminating.
Why Nations Fail, by Daron Acemoglu and James Robinson
Why Nations Fail was published in 2012, but its relevance continues to hold as we think about how political institutions effect economic outcomes. Prior work on the topic has focused on geography or other factors to explain why Western countries are multiples more prosperous than those in Latin American countries and other parts of the world.
The authors focus on a distinction between “inclusive” and “extractive” economic institutions. Through data and historical background on where and how these institutions came about, the authors show who these types of institutions ultimately serve and their effect on society.
A book review in The Washington Post summarized it as,
“Why Nations Fail” focuses on the historical currents and critical junctures that mold modern polities: the processes of institutional drift that produce political and economic institutions that can be either inclusive — focused on power-sharing, productivity, education, technological advances and the well-being of the nation as a whole; or extractive — bent on grabbing wealth and resources away from one part of society to benefit another.
Ways and Means, by Roger Lowenstein
Ways and Means is about how the civil war was financed, a long overdue narrative on how the nascent U.S. financial system was able to reform and borrow large sums of money in the midst of a rebellion.
Less attention is paid to the Confederacy, but what Lowenstein write’s is informative. Only 6% of the Confederacy’s government was funded by income taxes compared to 20% in the Union. Summarized by The New York Times, “The planters who controlled Southern politics and most of the region’s wealth knew that the burden of taxation would fall primarily on them, and they were not willing to share the pain.”
A book review in the Wall Street Journal noted,
To great effect, Mr. Lowenstein makes the most of opportunities to view wartime milestones, political and military included, through an economic lens. He cheers, for example, the salutary humanitarian impact of the Emancipation Proclamation, but reminds us “it did nothing to calm Wall Street.” The Union suffers a morale-crushing loss at the May 1863 Battle of Chancellorsville, but Mr. Lowenstein insists that, as far as the Northern business world was concerned, incurable Confederate financial woes at the time made the war seem “not only not lost but, in fact, already won.”
Any opinions expressed herein are those of the author and the author alone.