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Archive for the ‘Books’ Category

How to Survive and Thrive in a World of Disruption

Posted by hkarner - 11. Dezember 2019

Date: 11‑12‑2019

Source: The Wall Street Journal By Irving Wladawsky‑Berger

Looking back upon my long career, it’s frankly sobering how many once powerful IT companies are no longer around or are shadows of their former selves: Digital Equipment Corp., Wang Laboratories, Sun Microsystems…the list goes on. 

The forces of disruption might have been more powerful in the fast‑changing IT industry, but no industry has been immune. In less than two decades, the global recorded‑music industry has lost over half its revenues, while the drop in newspaper advertising revenue in the U.S. has been even steeper. Retail has undergone major changes with the rise of e‑commerce, as has the telecommunications sector with the transition to mobile phones.

Why have so many companies been done in by disruptive technological and market changes? Is it that in spite of all their efforts in strategy formulation, their leaders failed to anticipate these changes and were caught by surprise?  Or is it that, as if actors in a Greek tragedy, they saw the changes coming and understood what needed to be done, but were somehow unable to make the needed strategic and cultural transformations? Den Rest des Beitrags lesen »

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Our books of the year

Posted by hkarner - 7. Dezember 2019

Date: 05‑12‑2019

Source: The Economist

They were about the IRA, Harper Lee’s lost work, rational economics and an Ohio housewife

Politics and current affairs

Dignity: Seeking Respect in Back Row America. By Chris Arnade. Sentinel; 304 pages; $30 and £25

Over several years the author of this book, a former Wall Street trader, conducted thoughtful interviews in neglected communities across America, and took moving photographs of his subjects. The result is a quietly revelatory portrait of what he calls the country’s “back row”.

An American Summer: Love and Death in Chicago. By Alex Kotlowitz. Nan A. Talese; 304 pages; $27.95

Chicago has suffered 14,000 murders in the past two decades; overwhelmingly the victims are African‑American or Hispanic. This is an intimate and sympathetic depiction of several people involved in, and affected by, deadly crime. The killings seem senseless, but, says the author, the city can do more to grasp their causes.

Winners Take All: The Elite Charade of Changing the World. By Anand Giridharadas. Knopf; 304 pages; $26.95. Allen Lane; £12.99

A timely polemic against philanthrocapitalism, which argues that supposedly do‑gooding companies merely offer sticking‑plaster solutions to social problems that they have helped create. Such efforts, the author says, do little to make up for a winner‑takes‑all philosophy that is holding down wages and transferring the burden of risk onto employees.

No Visible Bruises. By Rachel Louise Snyder. Bloomsbury; 320 pages; $28

It is the dark matter of violent crime: unseen but everywhere. This investigation into domestic violence in America blends harrowing testimony with persuasive recommendations on how to help victims and perpetrators. A book that manages to be both personal and panoramic, angry and hopeful.

Assad or We Burn the Country. By Sam Dagher. Little, Brown; 592 pages; $29 and £25

Although the horrors of Syria’s civil war are well documented, this chronicle by a Wall Street Journal correspondent still offers new insights into a struggle that has reshaped the Middle East. Many are based on his rare access to Manaf Tlass, a one‑time confidant of Bashar al‑Assad, who charts the accidental president’s metamorphosis into a blood‑soaked dictator.

The Light that Failed. By Stephen Holmes and Ivan Krastev. Pegasus Books; 256 pages; $26.95. Allen Lane; £20

When the Soviet Union collapsed and communism fell, the countries of eastern Europe set out to emulate Western democracies. But, as the authors of this perceptive book eloquently relate, their attitude to liberal democracy soured amid globalisation and the financial crisis—forces that also fed the rise of nationalism in the West. Russia, meanwhile, replaced Soviet rule with a revanchist autocracy.

Presidential Misconduct: From George Washington to Today. Edited by James Banner junior. New Press; 512 pages; $29.99

In 1974 the special counsel to the impeachment inquiry commissioned a survey of presidential misconduct from Washington to Lyndon Johnson. Brought up‑to‑date with chapters on presidents from Richard Nixon to Barack Obama, this useful study supplies the scales on which more recent wrongdoing can be weighed.


Say Nothing. By Patrick Radden Keefe. Doubleday; 464 pages; $28.95. William Collins; £20

Framed as an inquiry into the death of Jean McConville, a mother of ten who was abducted and murdered by the ira in 1972, this is a masterful exploration of the motives of terrorists, the stories they tell themselves and how they make the transition to peace—or, in some cases, fail to.

Remembering Emmett Till. By Dave Tell. University of Chicago Press; 312 pages; $25 and £19

A fine history of racism, poverty and memory in the Mississippi Delta told through the lynching of Emmett Till, a black 14‑year‑old from Chicago whose murder in 1955—and his mother’s determination to display his mutilated features in an open coffin—made him an early martyr of the civil‑rights movement.

Amritsar 1919: An Empire of Fear and the Making of a Massacre. By Kim Wagner. Yale University Press; 360 pages; $32.50 and £20

At least 379 people were killed by British soldiers in the Amritsar massacre on April 13th 1919, making that one of the darkest days in the history of the empire. On the event’s centenary, this book persuasively argues that it was less of an aberration than apologists for empire, including Winston Churchill, have chosen to believe.

Maoism: A Global History. By Julia Lovell. Knopf; 610 pages; $37.50. Bodley Head; £30

Mao Zedong was a despot who caused tens of millions of deaths; yet his name does not attract the same opprobrium as Hitler’s or Stalin’s. Indeed, his legend and ideas have inspired revolutionaries around the world. As the author of this book shows, his manipulated image retains a powerful allure in China and beyond. “Like a dormant virus”, she writes, “Maoism has demonstrated a tenacious, global talent for latency.”

The Regency Years. By Robert Morrison. W.W. Norton; 416 pages; $29.95. Published in Britain as “The Regency Revolution”; Atlantic Books; £20

“I awoke one morning and found myself famous,” Lord Byron, a Regency poet, once said. The period itself has suffered from the opposite problem—eclipsed by the more solemn and substantial Georgian and Victorian ones that preceded and followed it. Arguing that Britain truly started to become modern in the Regency era, this delightful book explains why it deserves to be better known.

How to be a Dictator. By Frank Dikötter. Bloomsbury; 304 pages; $28 and £25

What do Mussolini, Hitler, Stalin, Mao, Kim Il Sung, Nicolae Ceausescu, Papa Doc Duvalier and Mengistu Haile Mariam have in common? This insightful handbook for gangsters is written by a distinguished historian of 20th‑century China.

Biography and memoir

An Impeccable Spy: Richard Sorge, Stalin’s Master Agent. By Owen Matthews. Bloomsbury; 448 pages; $30 and £25

Richard Sorge’s bravery and recklessness in the Soviet cause in Tokyo—where boozing and seduction were among his main espionage techniques—were matched by the venality and cowardice of his masters in Moscow. Despite their brutal incompetence, his intelligence helped turn the course of the second world war. A tragic, heroic story, magnificently told with an understated rage.

The Education of an Idealist. By Samantha Power. Dey Street Books; 592 pages; $29.99. William Collins; £20

An engaging insider’s account of foreign‑policymaking in what now seems like a different era of diplomacy. It describes the efforts of its author—Barack Obama’s Irish‑born ambassador to the United Nations—to juggle idealism with the realities of governing, while also juggling motherhood with the demands of representing America on the world stage.

Family Papers: A Sephardic Journey Through the Twentieth Century. By Sarah Abrevaya Stein. Farrar, Straus and Giroux; 336 pages; $28

This history of the Levy family of Salonika follows its subjects through interwar Greece to the present day. It is a painstaking feat of reconstruction that draws on correspondence in Ottoman Turkish, Hebrew, French and especially Ladino, the language of Sephardic Jewry. Much of the clan was murdered in Auschwitz in 1943; those who survive are now spread across the globe. And yet, the author says, they retain a family resemblance.

The Last Stone. By Mark Bowden. Atlantic Monthly Press; 304 pages; $27. Grove Press; £16.99

True‑crime writers in America face a high bar, set by illustrious predecessors such as Truman Capote. The author of “Black Hawk Down” rises to the challenge in this reconstruction of how a horrific crime—the disappearance of two sisters from a mall in Maryland in 1975—was partially solved 40 years later. Dogged and ingenious interrogation of a mendacious suspect finally gets at the truth.



Good Economics for Hard Times. By Abhijit Banerjee and Esther Duflo. PublicAffairs; 432 pages; $30. Allen Lane; £25

The real meaning of this book by a Nobel‑prizewinning duo of economists lies in its method—a patient attempt to take on tough problems through empirical evidence. Known for pioneering the use of randomised controlled trials, the pair offer insights into thorny global issues ranging from inequality to corruption, all with refreshing humility.

Open Borders. By Bryan Caplan. Illustrated by Zach Weinersmith. First Second; 256 pages; $19.99. St. Martin’s Press; £15.99

An enlightened polemic in cartoon format, this book—by a team comprising an economics professor and an illustrator—persuasively rebuffs the arguments against migration commonly made by politicians. At the same time it shows how an accessible and respectful case can be made on a neuralgic subject.

Narrative Economics. By Robert Shiller. Princeton University Press; 400 pages; $27.95 and £20

The author, another Nobel laureate, explores how the public’s subjective perceptions can shape economic trends. The result is a sensible and welcome escape from the dead hand of mathematical models of economics.

Schism. By Paul Blustein. CIGI Press; 400 pages; $27.95. McGill‑Queen’s University Press; £27.99

A fascinating, detailed account of the history of tensions in America’s trade relationship with China. It explains the back story to today’s conflict—and reveals how difficult it will be to escape it.

Capitalism, Alone. By Branko Milanovic. Belknap Press; 304 pages; $29.95 and £23.95

A scholar of inequality warns that while capitalism may have seen off rival economic systems, the survival of liberal democracies is anything but assured. The amoral pursuit of profit in more liberal capitalist societies has eroded the ethical norms that help sustain openness and democracy, he argues; now that tendency threatens to push such places in the direction of more authoritarian capitalist societies, such as China.

Culture and ideas

Furious Hours: Murder, Fraud and the Last Trial of Harper Lee. By Casey Cep. Knopf; 336 pages; $26.95. William Heinemann; £20

An ingeniously structured, beautifully written double mystery—one concerning the Reverend Willie Maxwell, who was accused of murdering five relatives for the insurance money in Alabama in the 1970s (before being fatally shot himself); the other, Harper Lee’s abortive efforts to write a book about the case. Tom Radney, a lawyer who is the story’s third main character, defended Maxwell—and his killer.

Kafka’s Last Trial: The Case of a Literary Legacy. By Benjamin Balint. W.W. Norton; 288 pages; $26.95. Picador; £14.99

An account of the struggle over Kafka’s papers between competing archives in Israel and Germany—plus a woman who inherited them from a friend of his editor, Max Brod—which played out after most of the writer’s family had died in the Holocaust. A book about the provenance of art, and how much, in the end, it matters.

Underland: A Deep Time Journey. By Robert Macfarlane. W.W. Norton; 384 pages; $27.95. Hamish Hamilton; £20

A haunting examination of the world below the surface—a place that has always been envisioned as a zone of treasure and of dread. From the Paris catacombs to the soil of Epping Forest to caverns in remotest Norway, the author, a celebrated nature‑writer, re‑envisions the planet from the ground down.

Three Women. By Lisa Taddeo. Simon & Schuster; 320 pages; $27. Bloomsbury Circus; £16.99

Eight years of reporting went into this portrait of American sexuality from a female perspective. The author’s three subjects “stand for the whole of what longing in America looks like”; she spent time in their home towns to study their daily routines, jobs and, above all, their desires. With a novelist’s eye for detail, she captures the pain and powerlessness of sex, as well as its heady joys.

A Month in Siena. By Hisham Matar. Random House; 126 pages; $27. Viking; £12.99

The author’s life and writing have been shaped by his Libyan father’s kidnapping in 1990 by the regime of Muammar Qaddafi. In previous work he tried to uncover what happened; in this slim, bewitching book he finds answers, of a sort, by travelling to Siena. Meditating on art, history and the relationship between them, this is both a portrait of a city and an affirmation of life’s quiet dignities in the face of loss.

This is Shakespeare. By Emma Smith. Pelican; 368 pages; £20

A brilliant and accessible tour of Shakespeare’s plays that is also a radical manifesto for how to read and watch his work. Witty, irreverent and searching, this book, by a professor at Oxford University, shines dazzling new light on the oeuvre of the world’s greatest literary genius.


Stalingrad: A Novel. By Vasily Grossman. Translated by Robert and Elizabeth Chandler. NYRB Classics; 1,088 pages; $27.95. Harvill Secker; £25

At last, the Russian novelist‑journalist’s mighty prequel to “Life and Fate”, his epic of the battle of Stalingrad and its aftermath, has received a definitive—and hugely powerful—English translation. A seething fresco of combat, domestic routine under siege and intellectual debate, it confirms that Grossman was the supreme bard of the second world war.

Ducks, Newburyport. By Lucy Ellmann. Biblioasis; 1,040 pages; $22.95. Galley Beggar Press; £14.99

The year’s unlikeliest literary triumph: a 1,000‑page fictional monologue delivered by a worried Ohio housewife and baker, much of which is made up of a single sentence. A prize‑garlanded novel that is funny, angry, erudite, profound—and full of great cake recipes.

10 Minutes 38 Seconds in This Strange World. By Elif Shafak. Bloomsbury; 320 pages; $27. Viking; £14.99

The protagonist of this story is dead when it begins. The body of “Tequila Leila” has been dumped in a wheelie bin on the outskirts of Istanbul; yet, somehow, her mind remains active. While it does, she scrolls back through her life—a pained childhood, stalwart friends in adulthood—in a powerful, unflinching novel that, like all of the Turkish author’s work, is political and lyrical at once.

Homeland. By Fernando Aramburu. Translated by Alfred MacAdam. Pantheon; 608 pages; $29.95. Picador; £16.99

A monumental novel—and a bestseller in Spanish—which explores how eta’s terrorism divided families and lifelong friends in a claustrophobic Basque town. Empathetic but morally acute, this may be the definitive fictional account of the Basque troubles; it suggests that redemption is hard but not impossible.

The Volunteer. By Salvatore Scibona. Penguin Press; 432 pages; $28. Jonathan Cape; £16.99

This intricate novel spans decades and continents and incorporates multiple, looping stories. After being captured in Cambodia, Vollie returns to America and is dispatched to New York to conduct surveillance on a supposed renegade Nazi. This assignment will come to haunt him, too. “Who among us”, he asks, “has lived only once?” A searing yet poetic record of war and the lies people live by.

The Far Field. By Madhuri Vijay. Grove Press; 448 pages; $27 and £14.99

A courageous, insightful and affecting debut novel—and the winner of the prestigious jcb prize for Indian literature—which places a naive upper‑class woman from southern India in the midst of far messier realities in Kashmir. Along the way, the story challenges Indian taboos ranging from sex to politics.

Trust Exercise. By Susan Choi. Henry Holt; 272 pages; $27. Serpent’s Tail; £14.99

The title of this tricksy, beguiling novel, winner of a National Book Award, refers to the relationship between writer and reader, as well as to the bonding exercises undertaken by the theatre students in the story—and to the trust between teenage girls and predatory men. A tale of missed connections and manipulation, and of willing surrender to the lure and peril of the unknown.

Black Sun. By Owen Matthews. Doubleday; 320 pages; $26.95. Bantam Press; £16.99

Based on real events—the bid by Andrei Sakharov to develop a bomb to end all bombs—this story is set in a secret Soviet city in 1961. Featuring murder and betrayals, and a flawed but principled kgb man as its hero, it unfolds in the aftermath of Stalinism, amid the scars left by the purges, denunciations and Great Patriotic War. The prolific author (see Biography), a former Moscow correspondent, knows his terrain inside out.


Science and technology

The Uninhabitable Earth: Life After Warming. By David Wallace‑Wells. Tim Duggan Books; 320 pages; $27. Allen Lane; £20

One of the most persuasive of the many books that spell out the consequences of climate change—and one of the most terrifying. As Earth moves beyond the conditions that allowed people to evolve, the author warns, “the end of normal” has arrived. Yet amid the rising seas, floods, fires, droughts and hurricanes, both current and impending, he remains optimistic about humanity’s ability to deal with the havoc it has caused.

The New Rules of War: Victory in the Age of Durable Disorder. By Sean McFate. William Morrow; 336 pages; $29.99

A former paratrooper and mercenary makes the case that the American armed forces are ill‑equipped for the conflicts of the 21st century. To keep the country safe, he contends, the top brass need to modernise their thinking, and respond to the information warfare that is now waged by their adversaries.

Good Reasons for Bad Feelings. By Randolph Nesse. Dutton; 384 pages; $28. Allen Lane; £20

A fascinating study of the evolutionary roots of mental illness. The author, a professor of psychiatry, argues that, in the right proportion, negative emotions may be useful for survival in a similar way to physical pain. Humans, he says, may have “minds like the legs of racehorses, fast but vulnerable to catastrophic failures”.

Novacene: The Coming Age of Hyperintelligence. By James Lovelock with Bryan Appleyard. MIT Press; 160 pages; $22.95. Allen Lane; £14.99

In a brief but thought‑provoking book, the scientist who developed the “Gaia Theory” about the Earth’s life and climate—and who this year turned 100—predicts that cyborgs may eventually evolve to supplant carbon‑based humankind. But don’t despair: the robots, he suggests, might decide to keep people around as pets.

This article appeared in the Books and arts section of the print edition under the headline „Our books of the year“

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The Billionaire Problem

Posted by hkarner - 2. Dezember 2019

Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, The Baseline Scenario. He is the co-author, with Jonathan Gruber, of Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream.

Writing in the 1830s, as the Industrial Revolution gathered pace, Honoré de Balzac anticipated the broader social concern: “The secret of great fortunes without apparent cause is a crime that has been forgotten, because it was properly carried out.” But today’s billionaires make forgetting impossible.

WASHINGTON, DC – Our billionaire problem is getting worse. Any market-oriented economy creates opportunities for new fortunes to be built, including through innovation. More innovation is likely to take place where fewer rules encumber entrepreneurial creativity. Some of this creativity may lead to processes and products that are actually detrimental to public welfare. Unfortunately, by the time the need for legislation or regulation becomes apparent, the innovators have their billions – and they can use that money to protect their interests. 

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Management research is clear as mud

Posted by hkarner - 29. November 2019

Date: 28‑11‑2019

Source: The Economist: Bartleby

It is not fit for purpose, a new book argues

BEWARE THE guru with a theory that explains how companies behave or the perfect recipe for how firms succeed. Beware, too, the lengthy academic studies to similar effect. That is the stark warning of “Management Studies in Crisis: Fraud, Deception and Meaningless Research”, a new book by Dennis Tourish, a scholar of organisations at the University of Sussex.

The idea of “scientific management” dates back to Frederick Winslow Taylor, who wrote a treatise on it in 1911. One example invoked the Bethlehem Iron company, where he supposedly persuaded an employee named Schmidt (about whom Taylor was very condescending) to work harder by paying a piece rate. Den Rest des Beitrags lesen »

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When the meaning is in the method

Posted by hkarner - 23. November 2019

Date: 21-11-2019
Source: The Economist

Two Nobel-prizewinning economists show how problems should be solved

Good Economics for Hard Times. By Abhijit Banerjee and Esther Duflo. PublicAffairs; 432 pages; $30. Allen Lane; £25.

When the authors of this excellent book were awarded the Nobel prize for economics last month, French media crowed that a Frenchwoman had won it; Indian media that an Indian-born economist and his wife had done so. Most reports eventually mentioned that their national champion was not the sole laureate. But the parochialism of the headlines bears out one of the book’s central observations.

The world is messier than conventional economic models assume. People respond not only to material incentives but also to the pull of tribe and custom. They are not only rational but also emotional, superstitious and attached to the familiar. All economists know that their models oversimplify—that is what models are for. But few have grappled as energetically with the complexity of real life as Esther Duflo and Abhijit Banerjee, or got their boots as dirty in the process.

The couple are best known, along with their fellow Nobel laureate Michael Kremer, for pioneering the use of randomised controlled trials to answer economic questions. An earlier book, “Poor Economics”, is full of powerful examples. To see whether small loans improve the lives of the poor, the team persuaded a microlender in Hyderabad to expand into some randomly selected districts but not others. (They found that microcredit works, but not as well as its boosters claim.) In another trial, they found that Indian teachers were more likely to show up to work if they were made to take date-stamped photos of themselves, and their pay was docked if they missed classes.

“Good Economics for Hard Times” is more wide-ranging. It reviews the evidence for what works and what doesn’t in tackling some of the world’s biggest problems, from climate change to trade. The authors admit that their knowledge is imperfect and their proposals will need refining. They don’t claim to understand what causes rapid economic growth, for instance. They would far rather you absorbed their evidence-based, trial-and-error method than any specific policy. Den Rest des Beitrags lesen »

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Good Economics for Hard Times’

Posted by hkarner - 20. November 2019

Date: 18-11-2019
Source: The Wall Street Journal By William Easterly

Review: Sticky Markets, Tricky Solutions

Free-market advocates often assume the free mobility of labor. The truth is that people don’t move so fluidly. Markets can be sticky.

Free-market advocates often forget that labor markets can be sticky.

Proponents of market reforms are quick to tout the benefits that markets have to deliver. But as Abhijit Banerjee and Esther Duflo, two of this year’s Nobel laureates in economics, repeatedly show in “Good Economics for Hard Times,” some apologists have a tendency to overpromise. Markets, the authors remind us, can be sticky. Pro-market reforms like freer trade, for instance, only work as well as advocates predict when people can freely move to better opportunities. Den Rest des Beitrags lesen »

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How to Transform a ‘Big, Old’ Company into an Agile Digital Business

Posted by hkarner - 10. November 2019

Date: 10-11-2019
Source: The Wall Street Journal By Irving Wladawsky-Berger

Agility, the ability to respond to rapidly changing technologies and markets, is key

A quarter century into the digital age, many corporations and institutions still struggle to embrace digital technology advances.

At a conference several years ago, I learned about the Sunday-night/Monday-morning syndrome. The term captures the frustration of employees who, after having access to the latest devices and applications at home, arrive at work on Monday morning to once again wrestle with primitive devices and applications that their IT departments support.

“If digital technologies are consistently making our consumer lives easier, why aren’t they making it easier to succeed in business?” ask Jeanne Ross, Cynthia Beath and Martin Mocker in „Designed for Digital,“ their recent book. “Why are business leaders anxious about digital disruption rather than marveling about how quickly they can provide new, exciting, and ever-improving digital solutions to their customers?”  Den Rest des Beitrags lesen »

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A scholar of inequality ponders the future of capitalisma

Posted by hkarner - 4. November 2019

Date: 03-11-2019
Source: The Economist: Free exchange

Branko Milanovich’s new book asks whether it is liberal or illiberal

When communism fell, that was supposed to be that. History would continue, but arguments about how to organise society seemed to have been settled. Yet even as capitalism has strengthened its hold on the global economy, history’s verdict has come to seem less final. In a new book, “Capitalism, Alone”, Branko Milanovic of the Stone Centre on Socioeconomic Inequality at the City University of New York argues that this unification of humankind under a single social system lends support to the view of history as a march towards progress. But the belief that liberal capitalism will prove to be the destination has been weakened by financial and political dysfunction in the rich world, and by the rise of China. Its triumph cannot be taken for granted.

Mr Milanovic outlines a taxonomy of capitalisms and traces their evolution from classical capitalism before 1914, through the social-democratic capitalism of the mid-20th century, to “liberal meritocratic capitalism” in much of the rich world, in particular America. He contrasts this with the “political capitalism” found in many emerging countries, with China as the exemplar. These two capitalistic forms now dominate the global landscape. Their co-evolution will shape world history for decades to come. Den Rest des Beitrags lesen »

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How Technology Will Revolutionize Public Trust

Posted by hkarner - 19. Oktober 2019

Date: 18-10-2019
Source: The Wall Street Journal By M. Todd Henderson

Though Americans increasingly distrust their institutions, digital platforms are spurring them to rely on one another like never before

Trust in major institutions seems to be collapsing in America in the era of “fake news,” Russian bots on Facebook and tribal politics. A recent Pew Research Center poll found that about seven in 10 Americans say that trust in society—in government, in each other—is declining. And more than four in 10 Americans think that declining trust is “a very big problem.”

The stakes are high. Research shows a strong correlation between trust and the wealth of a society. Trust enables cooperation, cooperation enables specialization, and specialization drives productivity.

Fortunately, indicators of declining trust miss a deeper reality: While Americans may increasingly distrust many of their institutions, technology is enabling certain kinds of trust at levels seldom before seen in human history. Den Rest des Beitrags lesen »

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How stories can help explain booms and busts

Posted by hkarner - 16. Oktober 2019

Date: 15-10-2019
Source: The Economist

Once a narrative takes hold, it can drive markets

Everyone knows, or thinks they know, the story of the Wall Street shoeshine boy. In 1929 Joseph Kennedy, patriarch of the Boston-Irish political clan, had an epiphany while his shoes were being cleaned. When the boy who shined his shoes offered him stock tips, he realised the stockmarket was about to implode. Kennedy promptly sold all his shares and took a short position, betting that the market would fall. When it crashed that October he made a killing.

In his new book, “Narrative Economics”, Robert Shiller, a Nobel laureate, offers this tale as an example of a contagious narrative that becomes part of folk wisdom. A story need not be accurate to spread. Mr Shiller searched archives of newspapers from the period, and could find no record of it. But he did find a similar kind of story in the Minneapolis Morning Tribune. The stockmarket, it said, could not yet have peaked because “we do not hear of the chamber maids and bootblacks who have cleaned up fortunes by lucky plays.” That story was published in 1915. Den Rest des Beitrags lesen »

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