“The things I want to know are in books; my best friend is the man who’ll get me a book I ain’t read.” – Abraham Lincoln
These days, so much of our information arrives in small bites: posts on social media, text messages, alerts from news sources, and so on. All this may be necessary and possibly desirable. However, I’m writing to make a pitch (and some recommendations) on behalf of reading longer, and with more focus and intention. By “longer” I mean sources that are long enough to make an argument, supported with facts, analysis, and even implications. But to me, “longer” means books. A good book develops a set of ideas, offers more nuance and criticism for the ideas, gives more supporting detail, and concludes with an impressionable conclusion. More importantly, book reading serves you with a host of benefits: more knowledge and viewpoints, entertainment, strengthened skills in oral and written communication, ability to focus, improved memory, sharpened critical thinking, increased creativity, and maybe reduced stress. Some books can give you a new (better) mindset for facing an issue in your life and career. To complete a book gives you a sense of accomplishment and possibly a desire to start another book in the same area. In previous years, I have extolled the importance of reading to sharpen one’s purpose as a leader (see 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, and 2020.
Starting right now, get some good books (as defined by your interests and by people whose judgment you respect); don’t read junk. Set aside a few hours each week to read and make notes about the parts you like. Attend to what struck a chord with you and follow it to more good books. Give any book the first hundred pages to hook you, after which you either finish it or quit and go on to another. If you can, read a book with others and discuss it. Serious reading is intentional. I read 35-60 books per year, mostly because I like to (and partly because it’s my job to keep up with my field of study and stay ahead of my students). In 2022, I sampled widely across politics, economics, finance, history, public policy, fiction, and leadership. The following items resonated the most and carry my strong recommendation. Best wishes to you for reading in 2023!
Some Life Lessons
Tim Harford, Adapt: Why Success Always Starts with Failure (2011).
This book resonated with me because it affirmed what I have observed in businesses, not-for-profits, government, and academia. Harford is a journalist who writes the “Undercover Economist” column for the Financial Times.In this volume, he discusses the vital role of adaptation (learning from failure) in producing successes. Failure, he argues, is everywhere—something like 10% of American companies expire annually. This failure rate is an evolutionary process, the market fumbling its way to success, as he puts it.The problem is that too often people see failure as final and fatal, when in fact it is just feedback. Harford recounts numerous leaders in business, government, and the arts who picked themselves up after a stunning setback and went on to great success. The keys to this, he writes
“are three essential steps…First, try new things, expecting that some will fail. Second, make failure survivable: create safe spaces for failure or move forward in small steps. …And third, make sure you know when you’ve failed, or you will never learn.” (p.224)
The three steps may seem obvious, but Harford explains that human behavior tends to pull one in the opposite direction: stick to tried-and-true, deny that failure has occurred, take big risks, and avoid critics. The book is studded with numerous examples of face-plants that turned into big successes. In all, the book’s insights are excellent and consistent with extensive research, intuition, and human experience.
Angela Duckworth, Grit: The Power of Passion and Perseverance, 2016.
Annie Duke, Quit: The Power of Knowing When to Walk Away, 2022.
I juxtapose these two very good books into a combined recommendation because they complement each other and together confront some of life’s important questions. Should I stay or go? Should I double-down or ease back? What drives success in careers and life? If I stop, do I admit defeat?< And so on.
Duckworth, a psychologist at University of Pennsylvania (and recipient of a MacArthur “genius” fellowship) conducted extensive field research and data analysis. She found that self-control and perseverance predict the achievement of long-term goals better than talent or intelligence. Anyone who has raised and mentored kids, or taught students, has seen examples where self-control and perseverance were decisive in surmounting a hurdle. Thus, the thesis has intuitive appeal. Duckworth asserts that anybody can make grit a habit. She has carried her insights into practice, consulting for schools, educators, and government officials. Her TED talk has garnered 11 million views—“grit,” she says, “is living life like it’s a marathon, not a sprint.” Duckworth concludes her book as follows:
“Is grit the only psychological factor that determines success? Not at all. A lot of factors determine success. Emotional intelligence. Physical talent. Intelligence. Conscientiousness. Self-control. Imagination. The list goes on. For everyday functioning, my research suggests that grit isn’t as important as self-control in the face of distractions and temptations. For making friends, emotional intelligence is probably more useful. And…there is a long list of character strengths more consequential than grit in a moral sense. Greatness is wonderful but goodness ever so much more so. And, of course, there is luck. And opportunity. Grit isn’t everything…[But] grit holds special significance for the achievement of excellence…When you look at the best of the best across domains, the combination of passion and perseverance sustained over the long term is a common denominator. It’s often said that the last mile is the longest.Grit keeps you on the path.” (pg. 291)
Annie Duke’s Quit does not reject the importance of self-control and perseverance, but asks the reader to focus those qualities on tasks that matter. She writes,
“Success does not lie in sticking to things. It lies in picking the right thing to stick to and quitting the rest…Success is not achieved by quitting things just because they are hard. But success is also not achieved by sticking to hard things that are not worthwhile.” (pgs.xix, xxvi)
Her counsel is to prioritize and focus, to cut the unimportant and invest time and effort in the important stuff. For instance, she says that great investors are great quitters, continuously exiting from losing trades and making more promising ones. Duke brought an unusual mix of life experience and academic research into the book. A Ph.D. candidate in psychology at the University of Pennsylvania, she finished all requirements and then quit one
month before defending her dissertation. Then she embarked on a career as a professional poker player, netting more than $4 million over her career and receiving high distinction in the field. Duke’s book is good advice for avoiding the “sunk cost” fallacy that sticking with the current plan is justified because of the earlier commitment of time, effort, and money. Virtually all business schools warn students about this bad reasoning, though journalists regularly report its recurrence. Duke concludes her book this way:
“Goals can make it possible to achieve worthwhile things, but goals can also increase the chances that we will escalate commitment when we should quit. Goals are pass-fail in nature. You either reach the finish line or you don’t and progress along the way matters very little. Don’t just measure whether you hit the goal, ask what you have achieved and learned along the way. Set intermediate goals and prioritize goals that allow you to recognize progress along the way or acquire something valuable even if you don’t reach the goal. Goals, when set, are a proxy for an expected value equation, balancing the benefits that you’re trying to gain against the costs you’re willing to bear. Inflexible goals aren’t a good fit for a flexible world. With better advance planning … and the help of a good quitting coach, you can make goals more flexible, setting at least one [go/no-go point] and planning regular check-ins on the analysis that initially led to setting the goal. In general, when we quit, we fear two things: that we’ve failed and that we’ve wasted our time, effort, or money. Waste is a forward-looking problem, not a backward-looking one.” (pg. 247)
In sum, the books by Duckworth and Duke offer complementary messages. Self-control and perseverance matter, but in pursuit of sensible goals. As Kenny Rodgers sang it “You’ve got to know when to hold ‘em, know when to fold ‘em. Know when to walk away, know when to run.”
Nicholas Wapshott, Keynes Hayek: The Clash that Defined Modern Economics, (2011).
Nicholas Wapshott, Samuelson Friedman: The Battle Over the Free Market, (2021).
I recommend Wapshott’s two books for their insights into the state of economics today and for the larger lesson that what we understand about the economy is actually contingent, dynamic, and the focus of fierce debate. Thus, these books qualify for what scholars call “intellectual history”—to a general reader that may seem like a good reason not to buy these books. Yet the engagingly-written paired comparisons in these books suggest that the stakes in these debates are relevant and even dramatic for the average citizen. As Keynes wrote in the final page of his General Theory,
“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Wapshott’s books challenge us to decide which major economists are defunct and which not. Keynes Hayek frames the major debate over state intervention into markets that emerged during and since the Great Depression. Samuelson Friedman sustains that debate and strives to nail the coffin shut on laissez-faire economics. The journey through both books yields a healthy dose of modern economic history, which alone is worth the price of admission. Wapshott’s gift is to distill seemingly arcane disputes into highly relevant implications for decision-makers in business and government. In his earlier book Wapshott is evenhanded in his treatment of the two economists; but in the second, he shows his colors, favoring Samuelson over Friedman. History, however, tends to deal harshly with absolute assertions. With the passage of time, might not all economists become defunct? Samuelson Friedman was recommended by the Financial Times as one of the best books of 2021. Both books have won strong accolades.
Ray Dalio, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail, (2021).
A student brought this book to me as part of an independent study on global conflict. Dalio is the founder and Chairman of Bridgewater Associates, a macro-style asset management company. Given my interests in financial crises and in the fate of democratic capitalism, the book got my attention. Drawing on economic and political data analysis over five centuries, Dalio fits the rise and fall of major global powers into a “Big Cycle.” Then he reflects on the path forward for major countries today: China, he says, is ascending while the U.S. is receding.
I was (and remain) suspicious of efforts to shoehorn history into a theory because history tends not to cooperate. Mark Twain allegedly said, “History does not repeat itself; it rhymes”—the stuff that gets excised when you go from repetition to rhyme can be significant. And periodic reports of the impending demise of the U.S. have been greatly exaggerated. Finally, the field of asset management is littered with investors who have tried to make money betting on cycles of some sort or other and usually leave money on the table. To be fair to Dalio, he admits that “what I don’t know is much greater than what I know.” (pg. 16) And he explains that his theory is the result of intensive study, supported by a large staff and by conversations with numerous experts and scholars.
Still, as an intellectual exercise, I found the book to be fascinating and recommend it to students and practitioners for the economic logic it develops. And it confirms several insights. For instance, the path of macroeconomic progress tends to be non-linear—abandoning assumptions of linear growth, for instance, is a lesson I have taught for years. Second, you should assume change, not stasis in the way you think about the future. Investing regimes change over time—so do political and economic regimes. Dalio says that changes in the Big Cycle result from a confluence of forces that produces episodes of peaceful expansion and violent depression. Third, Dalio highlights cycles in long-term debt and capital market conditions as precursors to decline: when interest rates fall to zero, he says that central banks tend to print money: by debasing the currency, countries commence a downward spiral. A fourth lesson is important and a strong reminder of why reading and life-long learning matters:
“I believe that the reason people typically miss the big moments of evolution coming at them in life is because they experience only tiny pieces of what’s happening. We are like ants preoccupied with our jobs of carrying crumbs in our very brief lifetimes instead of having a broader perspective of the big-picture patterns and cycles, the important interrelated things driving them, where we are within the cycles, and what’s likely to transpire.” (pg. 8)
The book is accessible to the general reader, though some familiarity with economics will help. And its lavish presentation of graphs is worth the purchase price alone. A New York Times best seller and winner of various commendations, the book will stimulate serious reflections on the future course of global politics and economics.
Markus K. Brunnermeier’s book, The Resilient Society (2021), addresses the need for societal resilience, an issue that resonates with my work on the impact of financial crises. The author, a financial economist at Princeton, is a prominent theorist about international financial markets and the macroeconomy. He writes,
“Resilience pertains to what happens after a shock has occurred. A long-lasting impact is known as a persistent shock…In contrast, a resilient process occurs when a society bounces back like a trampoline…Resilience is, in formal mathematical language, a reversion back to the mean, back to the original conditions. In fact, the concept of resilience originated in the field of materials science. For example, a metal is resilient if, after it deforms under stress (the shock), it returns to its original state…Resilience pertains to the ability to adapt and react rather than panic. Importantly, resilient people are able to reinvent themselves, to be actively engaged in the rebound. …A society is resilient if all, or at least most, individuals have the option to react in order to bounce back.” (pp. 14-16)
Resilience in any system is heightened by shock absorbers. At the level of a macroeconomy, these could be a strong capital base, a good credit rating, a well-educated and mobile work force, or a great endowment of natural resources. In general, a redundant supply of an important resources affords flexibility to respond to shocks.
The book offers numerous lessons that are valuable and sometimes counterintuitive. For instance:
- Resilience is not achieved at the expense of growth. Holding redundant supplies of important resources would seem to be inefficient and costly. But those redundancies permit faster reversion to a growth trend, thus supporting a faster growth rate over the long term. And the perception of
faster long-term growth encourages more entrepreneurial risk-taking, which also results in more growth. He writes, “sacrificing some long-run growth to eliminate business cycles would prove costly.” (pg. 25)
- The important role of experience: by experiencing smaller shocks, a society learns how to respond to them, and then eventually, to prepare for them. This is like the human immune system: exposure to germs strengthens the body’s resistance. Isolating the body in a “hyper-sterile environment leaves it more vulnerable to infection.” (p. 17) Thus, entrepreneurs who have experienced setbacks are better prepared for future challenges. Translated to the macroeconomy, this raises a question: should a society aim to quell all economic downturns?
- The invention of the limited liability corporation created resilience by sharing downside risks across a society. I would extend this to a variety of other risk-pooling arrangements in economic history.
- The point of policy should not be to minimize risk-taking, since that will sacrifice growth—rather policy should aim to strengthen resilience, with which to absorb shocks and volatility.
- It is not sufficient to focus only on macroeconomic resilience. Society must aim to build resilience at the level of individuals. Failing to do so leads to some portion of society being left behind after a shock. Implicitly this criticizes US fiscal and monetary policy after the crisis of 2008: wealth of the top 1% boomed from 2009 to 2020 whereas wealth of the lower and middle classes did not keep up.
For me, the most appealing parts of the book related to macroeconomic and financial crises. Issued amidst the pandemic, the book devotes four of its 15 chapters to the COVID-19 pandemic. In addition, the book devotes chapters to dealing with the impact of climate change and poverty.
One could go on. The book is loaded with interesting insights. These and other ideas are accessible in plain English for the general reader. The Financial Timeslisted this book among the best economics books for 2021.
Nick Timiraos, Trillion Dollar Triage: How Jay Powell and the Fed Battled a President and a Pandemic—and Prevented Economic Disaster, (2022).
For most of us, the COVID-19 pandemic is still too much with us. The memory of masks, social distancing, meetings by Zoom, and the weird silence of big cities is something we would like to get beyond rather than linger in. But from my perch as a watcher of financial crises, the financial and economic aspects of the pandemic remain a fascination. We should all ask ourselves, “What was that all about?” Though the torrent of journalism and academic research yields an enormous resource, limits on time and attention force us to look to good summaries. The book by Nick Timiraos fills the bill. He is the chief economics correspondent for the Wall Street Journal and by virtue of numerous interviews and briefings offers a ring-side seat on a narrowly averted disaster.
In brief, the realization of a global pandemic spooked investors to liquidate financial assets, creating a “dash for cash” that amounted to runs on major financial markets. The resultant trading imbalances starved firms of the funds they needed to do business. The liquidity crunch, plus the government-mandated lockdown and a depressing economic outlook sparked mass layoffs and business closures. The policy responses (both monetary and fiscal) set new records for speed and size—these will be the focus of debate and research for decades to come.
This book makes a valuable contribution by describing the slow realization, the doubts, the halting process of policy development, the agonizingly slow implementation of policy, and the immense pressures on leaders in government and especially the Federal Reserve System. It builds the case that governments do learn from previous crises: actions taken in 2020 reflected lessons from the crisis of 2008 and from the Great Depression. Timiraos shows that government policy makers “muddle through” a crisis (trying this, trying that). One attribute that sets 2020 apart from previous crises, was the willingness of the Fed and its Chair, Jay Powell, quickly to abandon cautious policy changes in favor of “break the glass” emergency responses. This book is no hagiography: Timiraos is straightforward in acknowledging the adverse effects of the government’s dramatic responses: over-reaction, rising inflation, rising inequality, increased moral hazard, waste, etc. Still, he concludes,
“Quick action stopped a financial panic and averted a potential depression in March 2020. The tense, exhausting days of March, when momentous decisions happened daily, have little precedent in American history. The speed of the Fed’s response was shocking—and essential.” (p. 297)
Mark Koyama and Jared Rubin, How the World Became Rich (2022) Polity Press.
The astonishing growth in world income in the last 60 years to $96 trillion reflects the accumulated effect of several forces beginning centuries earlier. Such is the thesis of Koyama and Rubin’s book, which reads more like a detective mystery than a textbook in economics. What were those forces? This is the focus of an enormous research literature in development economics and features a debate over the relative importance of technology, geography, institutions, culture, demography, and colonization. The book takes a close look at the Great Industrial Revolution in which the countries of northwestern Europe took off in economic growth and finds a close link between growth and the rise of democratic forms of government. The authors argue that institutions—particularly markets and the legal protections they require—were “crucial for sustained economic growth.” (p. 223) Institutions are important, because they protect progress. “What distinguishes rich countries is that they have not experienced growth reversals,” (p. 7)periods of contraction due to war, revolution, corruption, expropriation, repression, etc. This emphasizes a link between economic and political development. The authors give particular attention to the growth of the U.S. economy and conclude that,
“The US had several advantages…It shares a common language and culture with Great Britain so that intellectual developments in one country were rapidly transmitted to the other, even after the Revolutionary War. It had high wages, abundant land, and natural resources. This made it well suited to adopt labor-saving technologies. Similarly, while Britain had a comparatively large international market for a pre-industrial economy, the US had a huge domestic market. This was particularly true as its population expanded and spread west and its internal transport networks improved. All of these factors worked in favor of the US becoming an industrial giant by the late 19th century.” (p. 197)
J. Byrne Murphy, 2008 (2020). Le Deal: How a Young American, in Business, in Love, and in Over His Head, Kick-Started a Multibillion-dollar Industry in Europe, Guilford, Ct: Lyons Press.
Murphy is a former student of mine (Darden MBA 1986) and makes his former professor proud. I recommended this book when it was originally published in 2008 and was pleased to see its republication in 2020. The book wears the passage of years quite well, as do its lessons. Among a legion of business memoirs on the market, it stands out for its humor, humility, and solid insight. It recounts the eight-year saga of an ultimately successful effort to establish the model of designer outlet centers in Europe. The centers carried high-end brands and raised the ire of business competitors from small to large and citizens across the political spectrum.
He captures the enthusiasms and immense challenges of the entrepreneur, particularly one who operates across national borders. Nationalism and chauvinism are roadblocks that any cross-border business leader confronts—Murphy describes these vividly with vignettes of protesters, rotten tomatoes, and bureaucratic foot-dragging. His sheer tenacity succeeds in creating a business of 1,500 stores, $1 billion in revenue, 8,000 jobs, and various competitors. In his prologue to this edition, Murphy cites “pattern recognition” as the principle underlying his success in founding McArthurGlen Europe and two other businesses. I commend it to anyone contemplating a career in business, starting a firm, or going global.
Fyodor Dostoevsky’s Crime and Punishment is one of the foundational novels in the psychology of crime. Set in St. Petersburg, Russia, in the 1860s, the story concerns a university student who murders an elderly pawnbroker. Nominally, the student’s motive is social justice, to take the hoarded savings of the pawnbroker and put it to better social purposes. Dostoevsky is exploring the roots of radicalism which focused on the redistribution of wealth, if necessary, by violent means. The protagonist, Rodion Raskolnikov, is impoverished and socially isolated. He is smitten with the concept of heroism and convinces himself that with money he could go on to do great deeds. Thus, he descends into a belief that the ends justify the means, that heroism will absolve him from the stain of violent crime. However, after he commits the crime, he recoils in disgust and despair. His spiral of guilt obsesses him as a detective closes in for the arrest. The description of Raskolnikov’s mindset before, during, and after the crime makes this story a towering precursor to the vast field of psychological thrillers in print and film.
Every other year or so, I reread Norman MacLean’s autobiographical novella, A River Runs Through It.
The source of one of my favorite movies (of the same name), the book describes MacLean’s family during his youth, and in particular, his relationship with his brother, who is a turbulent risk-taker. Of his relationship with his brother, Maclean writes, “Each one of us here today will, at one time in our lives look upon a loved one who is in need and ask the same question. “We are willing to help, Lord, but what, if anything, is needed?” It is true we can seldom help those closest to us. Either we don’t know what part of ourselves to give or more often than not, the part we have to give is not wanted. And so it is those we live with and should know who elude us, but we can still love them. We can love completely, without complete understanding. The book’s descriptions of the two brothers fly casting in Montana rivers are priceless—it is the river that frames the bond between them.
Each year I have endorsed the mystery novels byMichael Connelly, about detective Hieronymus Bosch. This year I finished novel #24 (The Dark Hours) and thought I had hit the end of the line. But #25 has just appeared (Desert Star) which I eagerly look forward to reading in 2023.
Charles DickensA Tale of Two Cities.
Dickens is one of the towering fiction writers in the English language. But with the passage of time his writing style and subjects have been superseded by more modern authors. His novella, A Christmas Carol, resurfaces each December, with its ability to evoke well the holiday season. I have read other Dickens masterpieces and found them a bit of a slog. But A Tale of Two Cities deserves special consideration.< Evidently, Dickens regarded this book to be his favorite. The story begins in 17XX with the emigration from France to London of the son of a French nobleman who seeks to shed his connection with French absolutism. But the death of his parents force him to return to settle their estate during the revolution. Whether he can escape a reckoning with the revolutionaries is the core tension in the story. The plot builds steadily to the last few pages: will an innocent man be guillotined by the mob? The characters are unforgettable: Madame Lafarge (a vengeful shopkeeper who knits a shroud with the names of everyone she wants decapitated), Sidney Carton (a brilliant but dissolute lawyer who eventually gives his life to save another), and Jarvis Lorry (a private banker who ably assists people to flee the Terror—imagine that: a banker as hero). Finally, it portrays the French Revolution vividly: both the discontent before the revolution and the reign of terror at its height. Politically, Dickens contrasts the absolutist rule in France (under kings and the revolutionary assembly) on one hand, and the more liberal rule of law that prevailed in Britain—hence the name. This comparison emerges from the first few sentences of the book and echoes into the present day:
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”
Simon Schama, 1989. Citizens: Chronicle of the French Revolution, New York: Vintage Books.
A Tale of Two Cities opened for me the subject of the French Revolution and raised questions, for which I turned to Schama’s Citizens. The narrative takes the reader from worsening conditions before the crisis (the early 1700s to 1788), to the uprising and early efforts at democratic rule (1789 to 1793), followed by autocratic rule by the Committee of Public Safety and the reign of terror (September 1793 to July 1794), and to the ultimate overthrow and restoration of order. Schama vividly depicts the exhaustion (both economically and morally) of the French monarchy, which proved unable to serve the people in the face of a bad harvest. Empty stomachs set in motion a chain of spontaneous uprisings that toppled the established order. Drawing some inspiration from the United States, revolutionary leaders sought to create a democratic regime. But the rise of political parties inflamed divisions over who best served the spirit of the revolution. Threats of invasion from without and counter-revolutionary uprisings from within led to an emergency dictatorship that sought to wipe out opposition.
An underlying theme in the book is what Schama calls the “Dictatorship of Virtue” in which the perfect became the enemy of the good. As the Scotsman, Adam Smith, noted earlier, an excess of virtue is more dangerous than vice because virtue is not subject to the constraints of conscience. Schama wrote,
“Popular revolutionary violence was not some sort of boiling subterranean lava that finally forced its way onto the surface of Frenchy politics and then proceeded to scald all those who stepped in its way. Perhaps it would be better to think of the revolutionary elite as rash geologists, themselves gouging open great holes in the crust of polite discourse and then feeding the angry matter through the pipes of their rhetoric out into the open.…And perhaps it was Romanticism, with its addition to the Absolute and the Ideal; its fondness for the vertiginous and the macabre; its concept of political energy as, above all, electrical; its obsession with the heart; its preference for passion over reason, for virtue over peace, that supplied a crucial ingredient in the mentality of the revolutionary elite: its association of liberty with wildness.” (860-861)
 In 2021, I took a pandemic break from offering my annual recommended readings.