Finance and the Good Society
I felt like a lot of this material could been explained more concisely. More bothersome was Schiller's insistence on painting every possible player in the best possible light, and offering sometimes convoluted "just so" stories about how their often very high compensation actually were at least approximately tied to the real value of their contributions.
He occasionally considered the possibility that finance salaries might be a "bubble," but didn't consider a more realistic hypothesis--that high salaries in the finance sector are due to rent-seeking behavior i. Schiller cites behavioral economics and relevant branches of psychology, neurology, and philosophy when it suits him and his book on irrational exuberance shows that he takes some of these things very seriously , but I would have liked to see him address some of the more worrisome results from these disciplines--e.
Similarly, we have good evidence that charitable giving by the super-rich is often rather inefficient they often give large sums to religious institutions or rich universities, rather that to less "prestigious" causes like public health. This strongly suggests that it would be more efficient to tax them more heavily since the government would spend the money in better ways. This doesn't fit well with Schiller's story of "finance allows people to get super rich, but only so that they help society" story he tells at the end of the book.
The good parts of this book are toward the end, and they are at times very good. Schiller has lots of ideas for novel financial instruments to help reduce long-term risk mortgage insurance, climate insurance , government funding selling equity in future GDP, consumption taxes, inequality-indexed income tax rates , and general tax policy eliminating the standard deduction to incentivize charitable giving, setting up equity-issuing non-profits. Nov 27, Breakingviews rated it it was ok.
Finance and the Good Society
Shiller, who thinks investors should be protected, not exploited. The possible UK government year fixed coupon bond, which would be issued at an artificially low rate, is almost the antithesis of everything Shiller believes in. Shiller the stock market commentator is much loved. But Shiller as advocate of financial justice?
That key point is only made clearly at the end of the book, and he never discusses clearly the social benefits of finance. He should have dedicated a few pages to the ability of banks, insurers and financial markets to gather and allocate capital effectively and provide a healthy check on wayward governments.
That would take five or ten pages. Flexible debt would come first: and bonds whose coupons are linked to rises and falls in GDP are not his only idea. Each of these raises practical issues but they are all far more appealing examples of financial innovation than the usual products of investment banks. Also compelling is his idea of an inequality tax. Under that regime, tax rates would not be set in advance but would change along with pre-tax income inequality to be exactly progressive enough to ensure that the after-tax distribution of incomes was socially acceptable.
There are also two more common but still good ideas — the further spread of corporate ownership, especially to employees, and the classification of some debts as odious and not subject to the same enforcement as salubrious obligations. Sadly this is — at best — a hit-and-miss book. The first 18 chapters, pages, are a whirlwind tour of the world of finance with a chapter for everyone from investment managers to philanthropists. But the purpose of this survey is unclear.
The rest of the book is better, though marred by simplistic discussions of neurology, animal behaviour and human psychology. The last does not rise far above the generalisations about group behaviour typical of popular treatises on investment. Shiller is arguably the most imaginative and informed thinker in finance today. Perhaps he will put those talents to better use in his next book.
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Feb 20, Aminul Haque rated it really liked it Shelves: economics. An excellent and must-read book for finance professionals, especially ones like me who strayed from other career tracks that are deemed more utilitarian engineer in this case. This book validates that Finance is as useful a profession as any other in a complex, advanced society. If markets and professionals do their job, risk is identified, priced and either mitigated or diversified.
This facilitates many enterprises, transactions and trades that otherwise would not have happened. Finance also An excellent and must-read book for finance professionals, especially ones like me who strayed from other career tracks that are deemed more utilitarian engineer in this case. Finance also facilitates the creation of new markets and participation by new parties, thus widening the reach of economic and social activities notably Chapter 1, Market Designers and Financial Engineers. This is not one of Professor Shiller's most scholarly books and we do not expect every point to be meticulously researched and established.
The issue problem or challenge of asymmetric rewards remains and there is little evidence that democratization of finance, as he suggests, is about to solve this issue. There are real structural barriers that make mega-sized financial transactions still the purview of large institutions and out of reach for crowd-sourcing.
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However, this does not take away from the usefulness or relevance of finance, which is the main point of this book. Jan 21, David Wilusz rated it really liked it. Shiller states that "finance is the science of goal architecture", a refreshingly positive - and I believe accurate - view of finance. He freely admits to the capitalist system's failures and its role in the recent global recession, but views these not as an indictment on the system itself, but on misguided incentives, policies, and human weaknesses.
For the world to thrive, he believes that financial innovation should be released, and not restricted. However improvements to the current system a Shiller states that "finance is the science of goal architecture", a refreshingly positive - and I believe accurate - view of finance.
However improvements to the current system are obviously called for. The first half of the book looks at the 'cast of characters' in finance CEOs, fund managers, insurers, etc. The second half of the book proposes specific ways that financial capitalism might be further democratized, with the goal of reducing inequality and engaging more people in its benefits.
For example, the tax code could be changed to further encourage the starting of small businesses, inter-personal giving to those less well off not just registered charities , the ability to buy shares in nonprofits with special tax status, etc. Overall this book provides a defense of the global financial capitalist system, at a time when it seems to be universally under attack. The system's weaknesses are acknowledged, and specific suggestions are made as to how it can be further democratized to allow ever more people to achieve their individual goals, and through that process, allow society as a whole to achieve its goals.
Jul 26, Venky rated it liked it Shelves: bibliocase. At a time when the world is reeling under the spell of the worst ever economic crisis since the Great Depression of , the financial domain has come in for some scathing and loathsome attack much of it deserved for the blatant ills promulgated and propagated by its practitioners in a shameless manner.
Robert Schiller, one of the most respected and prescient economists plying his wares today, offers, in this book a set of measures and means by which Finance can be restored to a pedestal of r At a time when the world is reeling under the spell of the worst ever economic crisis since the Great Depression of , the financial domain has come in for some scathing and loathsome attack much of it deserved for the blatant ills promulgated and propagated by its practitioners in a shameless manner.
Listeners Also Bought
Robert Schiller, one of the most respected and prescient economists plying his wares today, offers, in this book a set of measures and means by which Finance can be restored to a pedestal of respectability and trust. By exhorting the concept of democratization of the whole spectrum of Finance, Schiller argues that the road to economic prosperity lies in the facets of transparency, innovation, comprehension and reciprocal trust.
Set out in two halves, the first part of the book deals with the indispensable roles and responsibilities of a whole gamut of market participants such as investment bankers, regulators, traders, financial engineers, insurers, lobbyists, lawyers, regulators, public goods financiers and the likes. The latter half of the book explores the discontent of Finance and measures to ameliorate if not obliterate such discontent.
Employing a blend of common sense suggestions and radically innovative solutions, Schiller strives to rid Finance of its stigma with a view to make the interconnected economic world a better and more trustworthy place to live and transact. Aug 17, Meepspeeps rated it really liked it. This book has cred because the author has previously documented his prediction of the He shares several old and new ideas that probably make too much sense, and are too non-traditional to be accepted by financiers and governments.
It's interesting to consider using "units" as Chile does instead of currency to establish mortgages, rents and certain other core goods; he explains how this could smooth out volatility in some markets. I think h This book has cred because the author has previously documented his prediction of the I think he gives academia a bit too much credit, as in "Our colleges and universities are where finance starts, where the people who make the decisions are first exposed to the theory and philosophy of business. Otherwise he provides some convincing arguments for why many financial instruments such as derivatives are good, how speculation what some peeps call gambling helps markets, and refutes some other widely-held illusions about how finance works and can work effectively for our global economy.
His discussion of inequality and philanthropy as they relate to business and business peeps is also a great addition to his other topics. Jan 04, Henry Barry added it Shelves: finance. This is a if you count the footnotes at the end nonfiction book about finance and why it is important to society.
The first half of the book describes the "industry" I put that in quotes because finance is more of an institution than an industry through the various roles banker, educator, CEO in finance. The second half of the book gives arguments for and against finance and their implications. This was a bit tough to read at some points because it was very dense sometimes, but it This is a if you count the footnotes at the end nonfiction book about finance and why it is important to society. This was a bit tough to read at some points because it was very dense sometimes, but it was very good.
The author makes very compelling arguments that finance is the most important thing in a society. He defines finance to be about using money to accomplish goals, not just about money as an inherent goal that it is often portrayed to be. He also makes an argument that finance and the economy has been an outlet for the inherent agression and need for competition that humans have, replacing warfare as that outlet. He also goes into why people have such a negative image of finance, and why that image is mostly not justified yes, there are bad apples like the guy in Wolf of Wall Street, but overall, finance is a very good thing.
Sep 16, Jonathan rated it it was ok. Shiller is able to write about complex topics in a fluid and accessible manner, and the book is organized in a way that complements that style.
Reflections on Finance and the Good Society
For that, I'll give it a 2. However, I found the book very grating because of its rather Panglossian view of financial capitalism. Finance, Shiller argues, is, has been, and can be a force for good in the world as long as a few tweaks are made and should be expanded into new realms. He attributes good faith far too often where there is none, underplays Shiller is able to write about complex topics in a fluid and accessible manner, and the book is organized in a way that complements that style. He attributes good faith far too often where there is none, underplays the significance of the revolving door, and fails to sufficiently address the relationship between finance and power.
He never convincingly makes the case for a lot of unstated premises or priors to his argument, and there's an unpleasant elitism and anti-egalitarianism running through it, such as when he treats social insurance and a living wage somewhat dismissively. Although some of his ideas about "democratizing" finance are good, there's an anti-democratic sentiment in other policies offered--and in his views on philanthropy as a sufficient corrective and one in which there are no apparent problems with people of such great wealth exerting control over social priorities. Apr 05, Enrique Bernal rated it liked it.
Robert J. Shiller writes "Finance and the Good Society" in a time of social unrest in the sector. Shiller divides his book in two sections. The first section depicts the role of each major sector in finance and how, in his eyes, these roles should strive for the good society. The author in this section gives an introduction to how financial economics is still in the process of refinement. He urges the reader to think of the possibilities this system could have on society, leaning on that areas o Robert J.
He urges the reader to think of the possibilities this system could have on society, leaning on that areas of opportunity in financial innovation. The first part can be somewhat tiresome due to the academic nature of the texts. In the second part of the book Shiller links the previous theories into his view of the future of finance. Finance and the Good Society opens the door to what it really means to live in a good society.
In my opinion society faces an ethical turning point which will dictate the future framework businesses will have to adhere to. Short term gains will have to transform to long term goals in order for ethical and business goals to align. Jun 10, John rated it it was amazing. I think while Shiller, the original exponent of 'irrational exuberance,' has perhaps moderated his conviction in the efficient markets hypothesis, this book offers a pre-emptive defense of the benefits of financial innovation in an era where public sentiment may encourage policymakers to constrain such activities.
And he's right. Although Shiller's concept of the "good society" is unexplored and as such necessarily narrow, technology that has allowed mitigation of risk and efficient allocation o I think while Shiller, the original exponent of 'irrational exuberance,' has perhaps moderated his conviction in the efficient markets hypothesis, this book offers a pre-emptive defense of the benefits of financial innovation in an era where public sentiment may encourage policymakers to constrain such activities.
Ultimately, Shiller shows how society can once again harness the power of finance for the greater good. Listeners Also Bought See All. Irrational Exuberance Abridged. Keynes Vs. He makes a powerful case for recognizing that finance, far from being a parasite on society, is one of the most powerful tools we have for solving our common problems and increasing the general well-being.
We need more financial innovation--not less--and finance should play a larger role in helping society achieve its goals. Challenging the public and its leaders to rethink finance and its role in society, Shiller argues that finance should be defined not merely as the manipulation of money or the management of risk but as the stewardship of society's assets. He explains how people in financial careers--from CEO, investment manager, and banker to insurer, lawyer, and regulator--can and do manage, protect, and increase these assets.
He describes how finance has historically contributed to the good of society through inventions such as insurance, mortgages, savings accounts, and pensions, and argues that we need to envision new ways to rechannel financial creativity to benefit society as a whole. Ultimately, Shiller shows how society can once again harness the power of finance for the greater good. Jump to. Sections of this page.