Robert Shiller discussing FINANCE AND THE GOOD SOCIETY in Darien, CT, with the American Association of Individual Investors

If you happen to be in the Darien, Connecticut, area on June 21, please come out to see Robert Shiller discuss his new book FINANCE AND THE GOOD SOCIETY, hosted by the Connecticut chapter of the American Association of Individual Investors.  The event is open to the public and will be held at The Waters Edge at Giovanni’s II, 2748 Boston Post Rd. (US-1), Darien, CT.  Check in begins at 6:00 PM and dinner served at 7:00 PM.  Please click here to find out more about the event from the AAII website.

This Week’s Book Giveaway (on Google+!)

Are you following PUP on Google+ yet? If not, today’s the day to add us to your circle—we’re giving away a copy of The Founder’s Dilemmas by Noam Wasserman. Follow us by Friday to win!

The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup
by Noam Wasserman

Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder’s Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.

Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.

The Founder’s Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders.

People problems are the leading cause of failure in startups. This book offers solutions.

“Harvard Business School professor Noam Wasserman is one of the writers and teachers who best captures the high stakes decisions that entrepreneurs face every day.”—Scott Kirsner, Boston Globe

“[T]he definitive book on the topic. . . . If you are a founder or thinking about becoming one, you should read this book.”—Dharmesh Shah, OnStartups.com

We invite you to read Chapter 1 here: http://press.princeton.edu/chapters/s9687.pdf

The random draw for this book with be Friday 6/8 at 3 pm EST. Be sure to check out our Google+ page and add us to your circle to be entered to win!

Robert Shiller in the UK

 

Robert Shiller was in the UK during the first week of May to promote his latest book ‘Finance and the Good Society’.  His appearances ranged from an interview on CNBC Europe Squawk Box to videos for The Guardian and Economia as well as lectures at the Royal Society of Arts and the London School of Economics.

Please follow the links to catch up with any of these appearances.

Geoff Mulgan on Election 2012 and the Challenge of Capitalism

Geoff Mulgan is Chief Executive of the National Endowment for Science Technology and the Arts (NESTA) and Visiting Professor at University College, London, the London School of Economics, and the University of Melbourne. He is a member of our European advisory board and author of the forthcoming The Locust and the Bee, which offers the key to understanding capitalism: Why it works, why it falls into crisis, and why it generates such anger and resentment. According to Mulgan, the capitalism that has made our nation wealthy has entered a new and harder phase that the candidates now struggle to address. Read his assessment of the situation after the jump:


 

Election 2012 and the Challenge of Capitalism

Geoff Mulgan

 

Four years ago Barack Obama’s election was an ominous contradiction.  It scaled the heights of exhilaration and hope.  But it also plumbed the depths of bad luck, coming amidst the worst crisis in several generations.  Over the succeeding months the contradiction then deepened, as an immensely clever, pragmatic moderate found himself face to face with an extreme situation demanding extreme measures.

Once installed the money flowed; vast sums bailed out Wall Street; and the worst possibilities didn’t materialise.  But four years on it seems almost impossible for the candidates to persuade voters that they are simultaneously in tune with their lives and their values, and possessed of the key to a brighter future.

Instead all the candidates are struggling. The fire and fury on Tea Party issues and Obamacare seem like symptoms of a deeper, unspoken malaise.  From afar it looks as if none of the candidates wants to face up to the big issues – the continued decline of US influence, the scale of its fiscal crisis, and above all its failure to offer opportunities and growth to the majority of its citizens.

The US is not alone in this respect. Nowhere has a post-crash politics yet crystallised.   Everywhere the left still promises more debt, more education, more infrastructure and more science, while the right still promises that growth will come from scaling government back.  Neither side has come to terms with the bigger problem now faced in all developed societies.  The capitalism that made them wealthy has entered a new and harder phase.   For the first few decades after 1945 it provided not only jobs but also rising wages, and rising standards of living for the great majority.  Now it appears to benefit only the very top layer of society, but does little or anything for the middle or bottom.  The result is a hollowing out of the economy that is visible everywhere, including the statistics showing that US median earnings appear to be continuing their long stagnation and even decline.

You might have expected politics to change, as it did in previous periods when capitalism’s operating model for a time produced more losers than winners.  But we’re still in a transitional moment.  For a start the 1% provide a high proportion of the cash for running campaigns and can’t easily be faced down.  Then there’s the uncertainty over who to trust. In his first period in office Barack Obama put his trust in insiders to guide the perilous decisions over who to bail out and how.   Given the scale of the crisis and his own inexperience it’s understandable that he thought bankers might be best placed to understand how to solve problems caused by bankers. But in retrospect he was far too soft on Wall street and far too influenced by its alumni;  a little bit more of the spirit of FDR, who surrounded himself with a group of radical outsiders, might have paid off by now.

The deeper structural problem is also one that’s becoming more visible.    Finance has become as much a predator on the rest of the economy as a source of wealth.   It circulates money, but doesn’t actually do much to provide investment in new ideas, technologies or firms, despite soaking up a much larger share of GDP than in previous decades.   None of the major financial markets plays any serious role in investing in future products and services.  Venture capital has almost opted out – even at the beginning of the 2000s it was only providing 2% of investment in innovation and now the figure is even smaller.  Meanwhile big firms are now sitting on unprecedentedly large cash piles rather than investing it in new ideas, and even the highest tech have chosen share buybacks over investment.

In my book I show that these are symptoms of what has always been the challenge of capitalism – it can be immensely productive, good at rewarding inventors and entrepreneurs. But it has always also rewarded predators, speculators and non-productive activity.  Adam Smith saw this all too clearly.   And for much of the last 150 years legislators and governments have tried to rein in the predators and give more encouragement to the creators.  Over the last generation they lost the will to do this, and were much more likely to end up fawning over billionaires than challenging their wealth and power.

To fix the imbalances and flaws radical new settlements will be needed, that will involve rethinking how we create wealth, what we value, and how we use wealth.  These settlements will have to reshape capital markets to more directly serve the public interest rather than predation;  they’ll have to reshape welfare and education to promote resilience and self-reliance; and they’ll have to recast health not just as a right but as a public good that depends for its realisation as much on the individual and their circles of support as it does on the state or the medical profession.  Some countries are now well down the road of reimagining their social contracts, and shaping a capitalism that can serve the many not just the few.  But Obama’ misfortune may have been to be elected a couple of terms too early, before the landscape is ready.

Some Presidential elections in retrospect made the weather and set the nation on a decisive course. Others were, in the bigger scheme of things, beside the point.  It’s not too late for this one to get real.   But the odds are lengthening.

This Week’s Book Giveaway

Did you know that May is Zombie Awareness Month? We’re celebrating by offering one lucky winner a copy of Zombie Economics! In the graveyard of economic ideology, dead ideas still stalk the land. . .

Zombie Economics: How Dead Ideas Still Walk among Us
by John Quiggin
With a new chapter by the author

The recent financial crisis laid bare many of the assumptions behind market liberalism—the theory that market-based solutions are always best, regardless of the problem. For decades, their advocates dominated mainstream economics, and their influence created a system where an unthinking faith in markets led many to view speculative investments as fundamentally safe. The crisis seemed to have killed off these ideas, but they still live on in the minds of many—members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess. In Zombie Economics, John Quiggin explains how these dead ideas still walk among us—and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future.

Zombie Economics takes the reader through the origins, consequences, and implosion of a system of ideas whose time has come and gone. These beliefs—that deregulation had conquered the financial cycle, that markets were always the best judge of value, that policies designed to benefit the rich made everyone better off—brought us to the brink of disaster once before, and their persistent hold on many threatens to do so again. Because these ideas will never die unless there is an alternative, Zombie Economics also looks ahead at what could replace market liberalism, arguing that a simple return to traditional Keynesian economics and the politics of the welfare state will not be enough—either to kill dead ideas, or prevent future crises.

In a new chapter, Quiggin brings the book up to date with a discussion of the re-emergence of pre-Keynesian ideas about austerity and balanced budgets as a response to recession.

“Entertaining and thought-provoking.”—Philip Coggan, Economist

“Lucid, lively and loaded with hard data, passionate, provocative and . . . persuasive. . . . (Zombie Economics) should be required reading, even for those who aren’t Keynesians or Krugmaniacs.”—Glenn C. Altschuler, Barron’s

The random draw for this book with be Friday 5/11 at 3 pm EST. Be sure to like us on Facebook if you haven’t already to be entered to win!

Princeton in Europe Lecture

Paul Seabright gave a fascinating and typically wide ranging talk “On Lying, Risk Taking and the Euro” for our second annual Princeton University Press
in Europe lecture on 18th April.  The talk, which is open to the public, honours our European Advisory Board.  In the lecture, Seabright argued that many of the factors which led to the Euro crisis were in plain sight from its launch.  The challenge is that in many different ways we are hard wired not to notice.  We tend for example to like to tell a morality tale with good guys and bad guys; we tend not to notice slow creeping crises; and we succumb to the very human desire not to rock the boat. Drawing on a wealth of economic data and the insights of neuroscience and behavioural economics, Seabright’s analysis is both compelling – and chilling.

Please click here to watch the lecture in full. You can also read more about this topic in an article in The Guardian, prompted by the Princeton in Europe Lecture.

Robert Shiller and FINANCE AND THE GOOD SOCIETY at the Princeton Public Library this Thursday evening

If you are in the Princeton area this Thursday, April 26, come hear Yale economist Robert Shiller discuss his new book FINANCE AND THE GOOD SOCIETY at the Princeton Public Library.  The event starts at 7:00 PM sharp, followed by a Q&A.  Shiller, co-creator of the influential S&P/Case-Shiller housing index and New York Times columnist, makes a strong case for finance as a force for good in our society.

Robert Shiller in the UK

Internationally renowned economist Robert Shiller, whose latest book ‘Finance and the Good Society’ is published this month will be in the UK for the week of 30 April.  He is talking in London at the Royal Society of Arts on 1 May, the London School of Economics on 3 May and in Bristol on 4th May at the Festival of Ideas.

Please follow links for more information or to sign up for any of these events.  If you have any queries about his visit please contact Caroline Priday on cpriday@pupress.co.uk

This Week’s Book Giveaway

Finance and the Good Society
by Robert J. Shiller

The reputation of the financial industry could hardly be worse than it is today in the painful aftermath of the 2008 financial crisis. New York Times best-selling economist Robert Shiller is no apologist for the sins of finance—he is probably the only person to have predicted both the stock market bubble of 2000 and the real estate bubble that led up to the subprime mortgage meltdown. But in this important and timely book, Shiller argues that, rather than condemning finance, we need to reclaim it for the common good. 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.

“Finance is in need of a little redemption. In his priestly new book, Finance and the Good Society, Mr. Shiller . . . sets out to provide it. He argues convincingly that finance can, should and usually does make the world a better place. . . . As an advocate for the financial system . . . he is wonderfully persuasive because he never plays down the problems. . . . Mr. Shiller reminds us of the profound importance of finance to making our society work.”—Robin Harding, Financial Times

The random draw for this book with be Friday 4/13 at 3 pm EST. Be sure to like us on Facebook if you haven’t already to be entered to win!

Paul Seabright “On Lying, Risk-Taking and the Implosion of the Euro” – The Princeton in Europe annual lecture

The launch of the Euro was a promise of prosperity made by Europe’s political élites to the citizens of the Euro area. But it has gone badly and dangerously wrong. Why? Much has been written about the causes of the Euro crisis and much ink spilt on trying to assign blame among the active participants in the drama: financiers, politicians, regulators, central bankers.

In this lecture Paul Seabright asks a different question: why did the rest of us play along? The active participants needed our money, our bank deposits, our votes – our trust, in short – in order to construct the Euro project. Trust in the project, like trust in the financial system and in many of the projects of modern democracy, required us to deploy psychological capacities that proved quite inadequate to the task.

Behavioural economics and neuroscience are starting to illuminate just why we have such difficulty evaluating complex financial promises like those made by the founders of the Euro project. In particular we have an evolved tendency to deal in dichotomies – such as risk/safety and truth/lies – that are quite unsuited to the continuous gradations of the modern economic landscape. Drawing on a wide range of sources, from neuroscientific experiments to air accident reports, Seabright brings home to us how much our collective illusions contributed to a major financial disaster with potentially serious consequences for democracy in Europe.

Paul Seabright is professor of economics at the Toulouse School of Economics. He has been a fellow of All Souls College, University of Oxford, and Churchill College, University of Cambridge. The Company of Strangers: A Natural History of Economic Life (Revised Edition) was published by Princeton in 2010 and his new book ‘The War of the Sexes: How Conflict and Cooperation Have Shaped Men and Women from Prehistory to the Present’ will be published on 14 May 2012.

The lecture takes place on 18 April 2012 in the Great Hall at Goodenough College from 6.30pm.

For further information, or to register for the event, please contact princeton_publicity@pupress.co.uk.

Check out Robert Shiller on CNBC’s Squawk Box earlier this week

With the kickoff of Robert Shiller’s book tour this week, on Monday he appeared on the influential business talk show Squawk Box on CNBC to discuss FINANCE AND THE GOOD SOCIETY. It’s a very informative and entertaining interview so take a look!

Robert Shiller talking about FINANCE AND THE GOOD SOCIETY on TheStreet.com

Robert Shiller is doing the media rounds this week for his new book FINANCE AND THE GOOD SOCIETY. He chatted the other day with Gregg Greenberg at TheStreet.com about the book, the housing bubble, and Goldman Sachs. Check it out!