In Review | Dollars & Sense

In Review: Book Reviews from Dollars & Sense

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Goin’ for Broke

A review of Broke, USA by Gary Rivlin (New York: HarperCollins, 2010).

By Steven Pressman | January/February 2011

Gary Rivlin’s illuminating but uneven book introduces us to dozens of people who make money by lending to the poor, and to others who battle these predatory lenders.
     Their stories come from dozens of interviews conducted by the author and revolve around six industries—check-cashing outlets, rent-to-own shops, pawnbrokers, payday loan stores, tax preparers offering tax refund advances, and subprime mortgage lenders. Collectively, these industries make $150 billion in revenue per year; an average low-income family spends $3,800 annually on their services, around 15% of its meager income.
     Many of the individual stories are gripping and reveal the inner workings of businesses that lend to the poor. They clearly show how the enormous rewards from predatory lending inevitably lead to exploitation of the poor.
     But focusing on individual tales makes for a difficult storyline to follow. Like Pirandello’s Six Characters in Search of Author, they need some direction. The tragedy of Broke, USA is that too many good stories get lost ... Read more »
The Will to Power

A review of Power Hungry by Robert Bryce (New York: PublicAffairs, 2010) and Conquering Carbon by Felicia Jackson (London: New Holland Publishers, 2009).

By Steven Pressman | November/December 2010

As the 2007 Stern Review and many other studies make clear, few issues today are more pressing than greenhouse emissions and climate change. The Northern Hemisphere just suffered its hottest summer on record while BP decimated the Gulf of Mexico in pursuit of oil.
The two books under review here take very different approaches to this problem. One argues for natural gas and nuclear energy to support America’s appetite for power, the other for limiting energy consumption and carbon emissions using pollution permits.
Power Hungry is a frustrating book. Its tone constantly shifts from scholarly to glib. ... Read more »
The Fall and Rise of Hotel Worker Unionism

A review of Restoring the Power of Unions: It Takes A Movement by Julius Getman (New Haven, Yale University Press, 2010).

By Steve Early | September/October 2010

The remaking of the Hotel and Restaurant Employees (HERE) union over the past 40 years began in New Haven, Conn., where current UNITE HERE president John Wilhelm, a product of Sixties’ student activism, was fortunate to have both an unusual mentor and a faithful Boswell. In 1969, two years after graduating from Yale, Wilhelm was doing SDS-influenced community organizing in New Haven. While taking a break from his paid job as a laundry delivery driver, he noticed “a weird ad” in the newspaper. It read: “Labor leader trainee wanted, long hours, low pay, must be single.” Sorting through the few replies, including Wilhelm’s, was Vincent Sirabella, a charismatic union militant with a 9th-grade education and a passion for organizing the unorganized. Sirabella chose Wilhelm to be his apprentice HERE business agent (even though he was already married). Before accepting, Wilhelm consulted his “Movement” colleagues; they warned him that unions were “racist, misogynist, imperialist, and hopeless.” ... Read more »

The Underpants Gnomes of Wall Street

A review of The End of Wall Street by Roger Lowenstein (New York: Penguin Books, 2010).

By Steven Pressman | July/August 2010

In a famous South Park episode we encounter the underpants gnomes, who sneak into people’s homes and steal their underwear. This outlandish behavior follows from their simple business plan: “1: Collect Underpants, 2: ? [sic.], 3: Profit.”
As we gain perspective on the greatest financial crisis since the Great Depression, store shelves abound with books seeking to explain how bankers have morphed from the conservative and prudent gnomes of Swiss legend to the underpants gnomes of South Park.
Roger Lowenstein’s contribution is good, but somewhat disappointing, especially given that his book on the rise and fall of Long Term Capital Management, When Genius Failed, has deservedly become the classic account of that episode of financial folly. He writes too little about the outright fraud committed by financial institutions, and there is nothing on the human suffering from foreclosures, unemployment, or the decimation of communities ... Read more »
Minding the Gap

A review of The Spirit Level by Richard Wilkinson and Kate Pickett (New York: Bloomsbury Press, 2010).

By Steven Pressman | May/June 2010

When I began reading The Spirit Level in early 2010, large U.S. financial institutions were rewarding their senior executives with multimillion-dollar bonuses. At the same time, the U.S. Bureau of Labor Statistics reported that average real weekly earnings for non-supervisory workers fell 1.6% in 2009. This figure excludes the millions of Americans who lost their jobs and their weekly earnings last year. The country with the most unequal income distribution in the developed world has become even more economically polarized.
To my professional embarrassment, most economists pay scant attention to income inequality. They see each person’s income as an appropriate reward for their productive activity. They even view income inequality as healthy because it creates incentives for people to innovate, work hard, and produce more. On the other hand, government programs that seek to reduce inequality, and the progressive taxes that support them, are viewed as disincentives for citizens to be productive and successful. ... Read more »
The Defective Society

A review of The Economics of Integrity by Anna Bernasek (HarperCollins, 2010).

By Steven Pressman | March/April 2010

In book publishing, as in comedy, timing is of utmost importance.
     John Kenneth Galbraith described his insecurities surrounding publication of The Affluent Society: “I feared it would be dismissed as another semi-socialist case for public spending.... Then in the autumn of 1957, the Soviets sent up the first Sputnik. No action was ever so admirably timed. ... I knew the book was home.”
     Unfortunately, The Economics of Integrity appears amidst reports of serious defects with the brakes, accelerator pedals, and electrical system on millions of Toyotas. Since Toyota figures prominently in this book, it is likely that it will be dismissed as another case for ethical behavior. This would be too bad, because this is a very good book.
     Bernasek astutely notes that economists ignore cooperation and focus mainly on choices made by individuals to enhance their own welfare. In contrast, integrity is a collective good; everyone benefits from it.
     Using numerous case studies, Bernasek demonstrates the gains from integrity. ... Read more »
Pillaging Villains of the Financial Crisis

A review of It Takes a Pillage: Behind the Bailouts, Bonuses and Back-room Deals from Washington to Wall Street by Nomi Prins (John Wiley & Sons, 2009).

By Steven Pressman | January/February 2010

It Takes a Pillage focuses on our current economic crisis—who to blame and how to prevent future crises. There are many people to blame.
     Near the top of my list, and Prins’, is Hank Paulson, CEO of Goldman Sachs before being made Treasury Secretary by President Bush.
     At Goldman and the Treasury, Paulson pushed for deregulating U.S. financial institutions. As late as the summer of 2008, he insisted that bailing out financial institutions was always a bad idea. And, oh yes, Paulson was the one who let Lehman go belly up.
     Then he had a change of heart. He pressed Congress for money to bail out large financial institutions. He arranged the deal that let Bank of America buy Merrill Lynch. On the last day of the Bush administration, he gave $20 billion in TARP money to Bank of America. And Paulson rescued AIG shortly after letting Lehman go under. ... Read more »