Gorman Skips Business, Jain Likes Faulks: Best Books of 2012

By Simon Kennedy  |  See this article on Bloomberg  

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What books have high-profile readers been enjoying this year?

We asked chief executive officers, policy makers, investors, economists, academics and authors to tell us their favorites. Most chose new titles, while others returned to classics with modern-day relevance.

Among those contributing: CEOs James Gorman of Morgan Stanley, HSBC Holdings Plc’s Stuart Gulliver and Anshu Jain of Deutsche Bank AG. International Monetary Fund Managing Director Christine Lagarde made nominations as did former Federal Reserve Chairman Alan Greenspan and onetime U.S. Treasury secretaries Robert Rubin and Lawrence Summers. Nobel laureates Michael Spence and Edmund Phelps also sent submissions.

The most popular picks were Robert A. Caro’s “The Passage of Power: The Years of Lyndon Johnson,” “Volcker: The Triumph of Persistence” by William L. Silber, “Thinking, Fast and Slow” by Daniel Kahneman, “Why Nations Fail: The Origins of Power, Prosperity and Poverty” by Daron Acemoglu and James Robinson and “The Signal and the Noise” by Nate Silver.

Adrienne Arsht, former chairman of TotalBank and treasurer of the board of the John F. Kennedy Center for the Performing Arts:

“The Warrior Elite: The Forging of SEAL Class 228” by Dick Couch. My focus or interest is on human resilience. If we were better suited to survival and moving forward, then we would recover faster. Navy SEAL training is about disaster training. If you have to call in the SEALs the situation is already beyond the ordinary. They train to manage the expected but then the tail of the helicopter hits a wall or they rappel into the wrong place.

Let’s learn to deal with accidents, then no matter what, we are prepared to deal with it and move on.

Sheila Bair, former Federal Deposit Insurance Corp. chairman:

“Steve Jobs” by Walter Isaacson. Parts of it were painful to read, because the guy was such a jerk, but he was brilliant. I admire his commitment to, if not obsession with, quality. He always put customers first, and in the process, gave his shareholders the most valuable company in the world.

George R. R. Martin’s “Game of Thrones” series. My son got me started on these, and now I’m hooked. I’m working my way through the third volume. I must say, Martin has his power politics down. Betrayal, revenge, lust, ego-driven war and destruction. The guy must have worked in Washington at some point in his life.

Lael Brainard, U.S. Department of the Treasury undersecretary for international affairs:

“Alexander Hamilton” by Ron Chernow. It’s humbling and inspiring to recall the contributions of the key architect of our nation’s monetary and fiscal institutions.

“Lords of Finance: The Bankers Who Broke the World” by Liaquat Ahamed. It’s haunting and instructive to recall the misguided policies that contributed to the misery of so many American families at one of the darkest moments for our nation.

Ian Bremmer, president and founder of Eurasia Group:

“Coming Apart: The State of White America, 1960-2010” by Charles Murray addresses one of the most important challenges the U.S. faces -- that of a widening disparity of wealth that is eroding some of the core tenets of the American dream. Skip the concluding chapter -- there are no useful policy recommendations here -- but still an absolute must-read for anyone interested in U.S. domestic policy and its current trajectory.

“Why Nations Fail: The Origins of Power, Prosperity and Poverty” by Daron Acemoglu and James A. Robinson is an essential diagnosis of what underpins a nation’s sustained growth (or lack thereof). Isolating factors by comparing nations with similar backgrounds, Acemoglu and Robinson conclude that viable political and economic architecture is one of the pre- eminent foundations for success. The reason I find this so fascinating? What does it say for international vitality when global institutions are eroding post financial crisis?

“Odessa: Genius and Death in a City of Dreams” by Charles King. For a deep dive into the contours and humanity of a city, King’s latest work on Odessa is unmatched -- the sheer wealth of expert research makes this a quality read.

“The Hydrogen Sonata” by Iain M. Banks. I’ve always had a soft spot for science fiction. For big-think, expansive ideas that stretch the limits of our critical imagination, Banks cannot be topped -- his latest doesn’t disappoint.

Stephen Cecchetti, head of the monetary and economic department at the Bank for International Settlements:

I read William L. Silber’s “Volcker: The Triumph of Persistence” as soon as it came out. The heart of the book is in the accounts of Volcker’s role in the collapse of the Bretton Woods system and the Federal Reserve’s pressure on the U.S. government to consolidate its fiscal position during the early and mid-1980s. The book holds important lessons: The real danger of keeping interest rates low is that it makes government debt cheap to fund.

Lars Seier Christensen, co-founder and co-chief executive officer of Saxo Bank A/S:

“Europe: The Shattering of Illusions” by Czech President Vaclav Klaus gives a good insight into why things are going wrong in Europe and the dangers of continuing on the current path. It is pretty eye-opening.

I always recommend “Atlas Shrugged” by Ayn Rand. We give it to all new employees because it has such an important message.

Tyler Cowen, professor of economics at George Mason University and co-author of the Marginal Revolution blog:

My favorite nonfiction book this year has been James Fallows’s “China Airborne.” On the surface it’s about aviation in China, but it’s also one of the best books on China ever, one of the best books on industrial organization in years, and an excellent treatment of economic growth. It’s also readable and fun.

Charles Dallara, managing director of the Institute of International Finance:

My favorite book of 2012 was “One for the Books” by Joe Queenan. Since I’m a charter member of the Glenwood Estates Literary Society (a small book club consisting of me, my wife and my best friend), I guess it was inevitable that we would pick a book about books.

For anyone who has the tendency to buy four times as many books as he or she can read, who enjoys reading multiple books at one time, who leaves books scattered around the house and who has wondered why all the quotes on a book jacket are so glowing, this book is for you.

Queenan’s acerbic wit and voracious appetite for reading provide for many chuckles and most likely will lead you in the direction of a few new books -- which, like me, you may buy but never read.

Alistair Darling, former U.K. Chancellor of the Exchequer:

One of the best books I read this year is “Hubris: How HBOS Wrecked the Best Bank in Britain” by Ray Perman. It’s a fascinating book which charts the progress of the Bank of Scotland from its success in the 1980s to its downfall following its merger with the Halifax and its descent into bankruptcy in the banking crisis.

Perman describes a change in the bank’s culture from seeing itself as custodian of customer’s money to increasingly seeing customers as people to whom something had to be sold. That cultural change had disastrous consequences for the bank, which desperately tried to pile on sales in a bid to stave off the inevitable end. The book is very well written and I strongly recommend it be included in every banker’s Christmas stocking.

Another good read is “Dominion,” a novel by C.J. Sansom. The story is set in smog-bound England in 1952. It starts with the idea that Lord Halifax rather than Churchill took over from Chamberlain in 1940 and that the essentially collaborationist government made a deal with Nazi Germany. What is fascinating is the author’s assumptions about who would have been in that government.

Satyajit Das, author of “Extreme Money: Masters of the Universe and the Cult of Risk”:

Jonathan Fenby’s “‘Tiger Head, Snake Tails: China Today, How It Got There and Where It Is Heading” is an antidote to the shallow narratives about China found in airport shops, which frequently form the basis of policy debates at least on television chat shows and in business circles.

Rodolfo De Benedetti, chief executive officer of Compagnie Industriali Riunite SpA:

Of the books I have read this year I particularly liked two, although neither was published in 2012. The first, which came out about 10 years ago, is “Middlesex” by Jeffrey Eugenides. I was particularly struck by the extraordinary portrayal of a Greek family that emigrated to the U.S. and by the way in which the author deals with the subject of sexual identity.

The second was “Nemesis” by Philip Roth. I was most impressed by the way the author dealt with the topics of moral imperative and free will.

Brad DeLong, professor of economics at the University of California, Berkeley, and blogger:

The best thing I have read this year is “The Age of Capital: 1848-1875” by Eric Hobsbawm. There is no better book for understanding both the sheer power of modern economic growth to transform lives and societies and the opportunistic problems that such growth and transformation create for those who are lucky/unlucky enough to get caught in the process.

Barry Eichengreen, professor of economics and political science at the University of California, Berkeley:The Passage of Power

Robert Caro’s “The Passage of Power” recounts the coming of a presidency characterized by a troubled economy, a polarized Congress and an unending foreign military entanglement.

Mohamed El-Erian, CEO of Pacific Investment Management Co.:

“Antifragile: Things That Gain From Disorder” by Nassim Nicholas Taleb was by far my favorite book among several good ones published in 2012.

In addition to being an enjoyable and interesting read, Taleb’s new book advances general understanding of how different systems operate, the great variation in how they respond to unthinkables, and how to make them more adaptable and agile. His systemic insights extend very well to company-specific operational issues -- from ensuring that mistakes provide a learning process to the importance of ensuring sufficient transparency to the myriad of specific risk issues.

Thomas Enders, CEO of European Aeronautic, Defence & Space Co.:

“Masters of Command: Alexander, Hannibal, Caesar and the Genius of Leadership” by Barry Strauss.

Marc Faber, managing director and founder of Marc Faber Ltd.:

This year, I reread some books I had not looked at for years. Milton Friedman’s “Capitalism and Freedom” is an excellent collection of brief essays about a wide range of subjects. It’s a reminder that larger and larger involvement of government in a society comes at a cost. The larger the government is, the more economic and financial volatility, the less growth and the less personal freedom will follow. This is the book you must give for Christmas to your entitlement-spoiled children.

I particularly recommend Will Durant’s “The Greatest Minds and Ideas of All Time,” edited by John Little, for hedge-fund managers who have their eyes glued to Bloomberg terminals all day. In a few chapters, Durant -- whose seminal work is “The Story of Civilization” and whom I consider one of the great historians -- expresses his views about the “The Ten ‘Greatest’ Thinkers,” “The Ten ‘Greatest’ Poets,” “Twelve Vital Dates in World History,” “The One Hundred ‘Best’ Books for an Education” and other subjects.

Durant also had a very human touch. When asked in an interview, “Of all the characters populating ‘The Story of Civilization,’ whom would you have most liked to have known?” he responded, “Madame de Pompadour ... because she was beautiful, she was charming, she was luscious -- what else do you want?” (I agree, although my choice would have been Cassandra.)

The third book I am still reading -- Joseph A. Tainter’s “The Collapse of Complex Societies.” It’s a difficult read and there’s no hurry for me to finish it since Tainter observes “that the problem is not that states collapse (for this happens constantly) but rather that some states last so long.” So let us be cheerful for the U.S. as its society will only collapse once the Facebook generation becomes mature and completely brain-damaged.

Stanley Fischer, governor of the Bank of Israel:

“D-Day: The Battle for Normandy” by Antony Beevor. I’m not reading very fashionably. We went to Normandy so I read Beevor’s book.

Peter Fisher, head of fixed income at BlackRock Inc.:

“Debt: The First 5,000 Years” by David Graeber opened up my mind to the origins of money and the relationship between human behavior and debt.

Gary B. Gorton’s “Misunderstanding Financial Crises: Why We Don’t See Them Coming” provides the clearest historical understanding of banking crises, mostly in the American context.

“Thomas Becket: Warrior, Priest, Rebel -- A 900-Year-Old Story Retold” by John Guy is a detailed account of Becket, his strengths and his compelling flaws.

Richard Fisher, Federal Reserve Bank of Dallas president:

While it doesn’t deal with economics per se, anyone interested in leadership, generally, and in the presidency, in particular, should read Evan Thomas’s brilliant new book on Eisenhower: “Ike’s Bluff: President Eisenhower’s Secret Battle to Save the World.”

It portrays a true leader, not a showboat, a man of great common sense bred of experience who understood the proper place of theoreticians and overeager bureaucrats and ambitious subordinates.

“Ike’s Bluff” is a testimony to the need for national leaders who place the nation above self. When you read it, compare and contrast Ike to what substitutes today as leadership in Washington. And be haunted by the words of his farewell address of Jan. 17, 1961, when he warned against “plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.” The book should be required reading for every member of Congress and the president as well.

James Gorman, chairman and CEO of Morgan Stanley:

“The Party: The Secret World of China’s Communist Rulers” by Richard McGregor. To better understand the workings of the Chinese Communist Party given the once-in-a-decade leadership change this year. It’s a little long on intrigue, but a valuable explanation of the party structure and processes.

“The Longest Shot” by Neil Sagebiel. How a massive underdog, Jack Fleck, upset Ben Hogan in the 1955 U.S. Open. If you have the talent anything is possible!

“Love in the Time of Cholera” by Gabriel Garcia Marquez. I read it to discuss with my daughter who was studying it in high school. A beautiful but tragic story of obsession masquerading as love.

“Rowing Faster” edited by Volker Nolte. I have taken up rowing on the ergometer and am trying to learn technique and optimal training regimen. The book was a gift from a colleague who rowed competitively in Ireland.

“The Tourist” by Olen Steinhauer. Encouraged by my son’s enthusiasm for the series I read and loved this thriller. Not John le Carre, but not bad!

Business books: I started many and for the 25th consecutive year since graduating from business school I was unable to finish any.

Thinking, Fast and SlowAlan Greenspan, former Federal Reserve chairman:

“Thinking, Fast and Slow,” by Daniel Kahneman is an important addition to our understanding of behavioral economics.

Stuart Gulliver, CEO of HSBC Holdings Plc:

Antony Beevor’s “Stalingrad.” In the ruins of an industrial city, German and Russian soldiers froze and starved as they contested every inch of ground. The cruelty that both sides endured -- and inflicted -- made my blood run cold, but Beevor also shows how some held on to their humanity, finding reserves of courage and compassion in the middle of unbearable hardship.

Excerpts from official histories, newspaper accounts and soldiers’ letters home bring the siege to life. It’s an astonishing feat of research and insight. The tenacity, will and courage of those involved on both sides is humbling and inspiring.

Amy Gutmann, president of the University of Pennsylvania:

Robert Caro’s “The Passage of Power.” After a dismal vice-presidency, LBJ redeems himself at the outset of his presidency by demonstrating that if politics is the art of the possible, compromise (and shrewd deal making) is the artistry of progress.

Nate Silver’s “The Signal and the Noise.” Smart people who take this book’s message to heart -- numbers and data do not speak for themselves -- would become wiser. Silver shows how important it is not to overvalue one’s own intelligence or underestimate the limits of one’s knowledge.

Katherine Boo’s “Behind the Beautiful Forevers.” The recyclable garbage settlement in Mumbai (the city where my parents lived before I was born) is the setting for this captivating book. Boo, with her sharp reporter’s eye, tells real-life stories of fascinating Indians who valiantly struggle against all odds and enormous injustice to make a living by collecting garbage.

Ian McEwan’s “Sweet Tooth.” A brilliantly witty and seductive novel about intelligence, wit, espionage and love -- or is it just seduction?

Andrew Haldane, executive director for financial stability at the Bank of England:

This year, Thomas Kuhn’s “The Structure of Scientific Revolutions” celebrated its 50th birthday. Yet its description of the process of a “paradigm shift” could just as easily be describing the state of transition under way in economics and finance.

If so, Atul Gawande’s “The Checklist Manifesto: How to Get Things Right” may offer a road map through this process of transition. Gawande’s message is simplicity itself: the greater the complexity of the modern world, the stronger the case for simple lists, principles or commandments to navigate through the fog.

Policy makers like me, with an eye to avoiding future cockup and catastrophe, should take note of both Kuhn and Gawande’s message.

Guy Hands, chairman of Terra Firma Capital Partners Ltd.:

“How Do We Fix This Mess? The Economic Price of Having It All, and the Route to Lasting Prosperity” by Robert Peston. A brilliant insight into the reasons for the 2007-08 financial crash from the British Broadcasting Corp.’s face of business.

Jan Hatzius, chief economist of Goldman Sachs Group Inc.:

During the 2007-08 presidential primaries, my wife and I -- both foreign-born U.S. politics junkies -- stumbled across a little-known blogger named “Poblano” who was providing statistical analysis of the Clinton versus Obama race. We quickly decided that Poblano’s analysis was far superior to any of the existing political horserace analysis at the time.

Later during the campaign, Poblano revealed his true identity as Nate Silver, a University of Chicago economics graduate who had been an international tax consultant, baseball analyst and professional poker player before turning his attention to politics. Since then, Silver has rocketed to prominence, capped by his success in correctly predicting the winner in all 50 states in the 2012 presidential election.

In “The Signal and the Noise,” Silver discusses prediction and his own approach to it with wit and verve, using examples from a wide range of areas including politics, economics, terrorism, weather, poker and baseball.

Glenn Hubbard, dean of Columbia Business School and former chairman of the Council of Economic Advisors:

“The Passage of Power” by Robert Caro. How a real leader overcomes skill deficits to negotiate big things.

“The Man Who Saved the Union: Ulysses Grant in War and Peace” by H.W. Brands. How Grant developed a leadership style that led to Civil War victory and championed the difficult cause of Reconstruction.Volcker

“Volcker: The Triumph of Persistence” by William L. Silber. How a great Federal Reserve chairman conquered the inflation dragon with ideas, consensus building and a willingness to tough it out.

Each of these might make good “fiscal cliff” reading for folks more important than I.

Anshu Jain, co-CEO of Deutsche Bank AG:

“Germania: In Wayward Pursuit of the Germans and Their History” by Simon Winder is a wry take on Germany over the ages, written as a personal history.

Sebastian Faulks has been a favorite for years. I really enjoy his lean prose, a voice that is uniquely his (“Birdsong” is required reading). “A Possible Life” is a compendium of five novellas which narrate the story of five lives, with no apparent connection initially, till you start to see the linkages.

Simon Johnson, professor at MIT Sloan School of Management and a Bloomberg View columnist:

Sheila Bair’s “Bull by the Horns: Fighting to Save Main Street From Wall Street and Wall Street from Itself” takes you inside the room with decision-makers fighting the financial crisis in 2008-09 and attempting financial reform in 2009-10. Bair’s account is detailed and completely credible. The bailouts did not need to be so generous to Citigroup Inc. and its fellow travelers. Big trouble lies ahead.

I also liked “Bailout: An Inside Account of How Washington Abdandoned Main Street While Rescuing Wall Street” by Neil Barofsky. Thank goodness Barofsky was running a key part of oversight for the bailout programs. Left to its own devices, the Treasury would have been even more generous to global megabanks.

“The Payoff: Why Wall Street Always Wins” by Jeff Connaughton is chilling.

Kay Krill, president and CEO of Ann Inc.:

Madeleine Albright’s “Prague Winter: A Personal Story of Remembrance and War, 1937-1948.” I enjoyed this book because I had the great pleasure of meeting Madeleine this year and am in awe of her as an extremely accomplished woman and a loving mother. This book is a remarkable account of her family journey and the meaningful occurrences in her life that shaped the amazing woman she was to become.

Christine Lagarde, managing director of the International Monetary Fund:

“Predator Nation: Corporate Criminals, Political Corruption and the Hijacking of America” by Charles H. Ferguson and Madeleine Albright’s “Prague Winter: A Personal Story of Remembrance and War, 1937-1948.”

Pascal Lamy, director-general of the World Trade Organization:

“Le Jour ou la Vierge a Marche sur la Lune” by Rolf Bauerdick. A novel full of wit on Romania before and after Ceausescu. It is full of scenes of village life that verge on the medieval and which come as a shock to the rest of the world used to television images portraying a very different situation. One cannot help but develop affection for these families and appreciate the difficulties they encountered.

“Congo” by David Van Reybrouck is a monument of non- fiction literature, which delves deep into the history of this country at a time of colonization and its aftermath. The documentation is peerless. Life and death, music and screams are in abundance throughout the book. One criticism: The analysis veers toward anti-Rwanda prejudices in the closing chapters.

“Entrer Dans une Pensee: Ou des Possibles de l’Esprit” by Francois Jullien is a dense and sometimes difficult book which brings the reader into the Chinese mindset. This is a culture in which the beginning and the end, the bad and the good, the same and the different are measured by a set of benchmarks that are different from those in the West. This book is useful as a means of understanding the immensity of the task required to even begin to understand the complexities of Chinese culture and thought.

Myles Lee, CEO of building-material supplier CRH Plc:

Robert Caro’s “The Passage of Power” was fascinating. I’ve read all the previous volumes in the series. In fiction, “Canada” by Richard Ford was a very good read.

Sebastian Mallaby, director of the Maurice R. Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations:

I recently read William L. Silber’s “Volcker: The Triumph of Persistence.” The book itself is a triumph.

Silber delivers just the right amount of human portrait to make his main story engrossing: how the U.S. left the gold standard at the start of the 1970s; how it simultaneously lost control of inflation; and how it regained monetary credibility under Volcker’s Fed chairmanship from 1979 on.

In many ways, Volcker’s painful victory over inflation made today’s world possible. Before his arrival, the Fed had been routinely bullied and belittled by the executive branch; and a cynical public presumed that government would fail in its duty to protect the value of their money.

Paul Volcker changed all that. Today, central-bank credibility is so well-established that even extremely unconventional monetary policy has yet to ignite inflation.

Thomas Mayer, senior adviser to Deutsche Bank AG:

“Human Action: A Treatise on Economics” by Ludwig von Mises. Modern macroeconomics and finance did not anticipate the financial crisis, cannot explain it, and have nothing to offer to solve it. We would not have been surprised by the crisis and would now not apply useless remedies had we paid attention to the Austrian economic school. Ludwig von Mises is the most lucid proponent of Austrian economics, and “Human Action,” his masterpiece first published in 1949, offers the key to a deeper understanding of the Austrian school.

In the Austrian view, the financial crisis was caused by constructivist economic policies, which manipulated interest rates below natural levels and encouraged excessive borrowing. The answer of politicians to the crisis is more intervention and not less, as the Austrians would recommend.

Politicians ignore the Austrian view of economics because it denies them an active role. Their interest is to create complex systems, which allow them to exercise power by directing and controlling economic activity. Since the ability to direct and control declines with the increase in complexity, politicians tend to build economic systems that are inherently unstable and crisis-prone.

Vivid illustrations of this behavior are present efforts at regulating the financial sector and improving the architecture of EMU. In both cases, politicians seize the opportunity to increase their power by ever more regulation, intervention and control. Ludwig von Mises would not have been surprised, and would have confidently predicted the next crises caused by this presumption of knowledge.

Allan Meltzer, professor at Carnegie Mellon University’s Tepper School of Business and author of “Why Capitalism?”:

I especially enjoyed Robert Caro’s “The Passage of Power,” his volume on Lyndon Johnson as vice president and the early years of his presidency. Caro gives an excellent account of the relationship between President John F. Kennedy and his administration and Johnson. He also shows how and why Johnson succeeded where Kennedy failed to pass major legislation. The book does an excellent job of showing how the presidency operates and the importance of leadership.

Axel Merk, president and chief investment officer at Merk Investments LLC:

For anyone spending too much time reading finance books, “30 Lessons for Living: Tried and True Advice From the Wisest Americans” by Karl Pillemer reminds us of what’s important in life. Superbly written.

When in doubt, go back to the basics. “Capitalism and Freedom: Fortieth Anniversary Edition” by Milton Friedman is a classic as important as ever.

Scott Minerd, chief investment officer of Guggenheim Partners LLC:

“Faust: Parts 1 and 2” by Johann Wolfgang von Goethe. As I revisited this classic by Germany’s most famous author, I drew parallels between today’s global central banks and this story, which is concerned with making so-called deals with the devil.

In addition to containing a valuable analogy on short-term thinking for the world of economics, this is also a brilliant and compelling story for anyone interested in ethics, philosophy and social phenomena.

“Keynes Hayek: The Clash That Defined Modern Economics” by Nicholas Wapshott. The matter of how to fix and prevent another occurrence of the Great Depression of the 1930s led to one of economics’ greatest ideological battles: Keynesianism versus Austrian-School austerity as described by Hayek. Today, we are five years into a period of reduced growth and financial malaise, so there could scarcely be a better time to revisit the views of these two titans of economic theory.

“Thinking, Fast and Slow” by Daniel Kahneman. I have read and admired Danny’s work for years and we are pleased to have him as an adviser at Guggenheim Partners. This book is abundantly accessible and makes an excellent contribution to the discourse on behavioral economics for which Kahneman became a Nobel laureate. In a nutshell, we are well served not to blindly trust our gut. Test then trust is the superior way.

“The Road to Serfdom” by Friedrich Hayek. With acclaim from Winston Churchill and George Orwell, Hayek’s best-known book is regarded by many as the Libertarian Manifesto. Hayek the economist put on his political-philosophy cap to write this brilliant meditation on the importance of defending individualism under free-market capitalism.

Who today wouldn’t jump at the chance to sit with Professor Hayek and discuss the government intrusion which we call global quantitative easing as well as the seemingly endless economic stimulus? Hayek’s book is no less relevant today than it was almost 70 years ago.

Andrea Morante, CEO of Pomellato SpA:

“The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True” by Simon Lack provides excellent evidence on how hedge-fund managers have taken investors for a ride by, de facto, keeping for themselves a disproportionate amount of the wealth they created investing third-party funds. The book clarifies why hedge-fund managers should not have become a very rich financial elite risking so very little.

“What Is Happening to News: The Information Explosion and the Crisis in Journalism” by Jack Fuller helped me understand the importance of neuroscience to understanding what people really want to see or read and perhaps buy, and the challenges in having serious, well-researched and ethical journalism survive.

Nader Mousavizadeh, chief executive of Oxford Analytica and co- author, with Kofi Annan, of “Interventions: A Life in War and Peace”:

Among the most important questions of the second decade of the 21st century is the legitimacy and accountability of power -- from Wall Street to the Arab street to the halls of power in Beijing and Brasilia. Closely related to this question is what kind of capitalism will succeed in providing growth and prosperity for more than merely an elite -- whether that elite be hereditary, meritocratic, ideological or entirely illegitimate.

“Why Nations Fail: The Origins of Power, Prosperity and Poverty” by Daron Acemoglu and James A. Robinson is a powerful account of the role of politics, and the centrality of institutions, in setting a national framework for long-term economic prosperity.

“It’s the political economy, stupid” is the message -- one investors and policy makers from China to Saudi Arabia, to Nigeria and the United States should all heed.

Sylvia Nasar, author of “Grand Pursuit: The Story of Economic Genius” and professor at Columbia Journalism School:

“Tombstone: The Untold Story of Mao’s Great Famine” by Yang Jisheng. To exhume your nation’s darkest crimes while the party responsible is still in power takes extraordinary courage. One by one, Yang Jisheng names the names, reproduces the orders to the perpetrators and reveals the victims of Mao’s famine who are no longer mere statistics.

“Iron Curtain: The Crushing of Eastern Europe 1944-56” by Anne Applebaum takes a historical event that has been examined hundreds of times and instead of providing the usual aerial view, recreates it on the ground, one face, one street, one life at a time to powerful effect.

Grover Norquist, president of Americans for Tax Reform:

“The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future” by Arthur C. Brooks is well summarized by its lengthy subtitle.

Brooks, a scholar and the new president of the American Enterprise Institute, takes on the question of how a “70-30 nation in favor of free enterprise” finds the “30 percent coalition firmly in charge” and how to change that.

Eric T. Singer’s “Trade the Congressional Effect: How to Profit From Congress’s Impact on the Stock Market” suggests a novel new investment strategy based on the observation that “since 1965, on days when Congress was in session, the stock market has gone up in price at an annual rate of one percent. And on days when Congress is out of session it went up at an annual rate of 16 percent.” This puts an actual metric to the damage wrought by government-imposed uncertainty on the American economy.

Singer actually runs an SEC approved “Congressional Effect Fund” that invests in the broad stock market when Congress is out of session and in cash when Congress is meeting.

Yaron Brook and Don Watkins’s “Free Market Revolution: How Ayn Rand’s Ideas Can End Big Government” does a fantastic job of resurrecting many of the ideas outlined in Rand’s “Atlas Shrugged.” Brook and Watkins shed light on the book’s popularity and influence on politicians and businessmen, and how it can be used to shape economic policy. The book is both insightful and fun for anyone interested in free market principles.

Ewald Nowotny, president of the National Bank of Austria and member of the European Central Bank Governing Council:

I reread “Fault Lines: How Hidden Fractures Still Threaten the World Economy” by Raghuram G. Rajan this summer and it still is one of the most helpful for me to form opinions on recent developments.

“Finance and the Good Society” by Robert J. Shiller is, for me, a new and refreshingly optimistic approach to the “dismal” field of finance.

Jim O’Neill, chairman of Goldman Sachs Asset Management:

Every “Red Issue,” which is the more edgy of the Manchester United fanzines.

The new edition of “Macroeconomics: Understanding the Global Economy” by David Miles, Andrew Scott and Francis Breedon is up there.

I also liked the “On China” tombstone from the main man of U.S. international diplomatic history, Henry Kissinger, even though he is a Liverpool fan.

Peter Orszag, vice chairman of corporate and investment banking at Citigroup Inc., former director of U.S. Office of Management and Budget and Bloomberg View columnist:

“The Passage of Power” by Robert Caro. I enjoy reading history, and nobody beats Caro for texture (though you should be ready to commit some time to the effort -- Caro’s books are not short). The arc of Lyndon Johnson’s time at the White House covered by this volume -- including his stunning and sudden transformation from a somewhat depressed and out-of-the-loop vice president to a dominant president guiding massive pieces of legislation through the Congress -- makes it a particularly compelling read.

“Why Nations Fail: The Origins of Power, Prosperity and Poverty” by Daron Acemoglu and James A. Robinson sets an ambitious goal -- to explain the patterns of economic growth and development across the globe. Despite the many criticisms that have been lobbed their way, their underlying argument that inclusive institutions and incentives for innovation are crucial seems compelling. And they warn that without significant changes, future growth in China may be much harder to achieve than is commonly accepted -- a wise warning to those who do simplistic extrapolations from the past couple of decades.

The Signal and the Noise“The Signal and the Noise” by Nate Silver. I was a fan of Silver before it was cool to be a fan of Silver. So perhaps I should just repeat my blurb for his book: “Here’s a prediction: after you read ‘The Signal and the Noise,’ you’ll have much more insight into why some models work well -- and also why many don’t. You’ll learn to pay more attention to weather forecasts for the coming week -- and none at all for weather forecasts beyond that. Nate Silver takes a complex, difficult subject and makes it fun, interesting, and relevant.”

Edmund Phelps, Nobel laureate in economics and professor at Columbia University:

I am reading “The Swerve: How the Renaissance Began” by Stephen Greenblatt. It relates to my own upcoming book on how the Modern Age sparked the rise of modern economies -- economies possessing the grassroots dynamism for indigenous innovation.

Richard Portes, professor of economics at London Business School:

In August 2012, I read for the first time a classic novel, Emile Zola’s “L’Argent” (“Money”). Aristide Saccard is a financial wizard. Having made and lost a fortune, he seeks to rise again by founding the Universal Bank, a venture of huge ambition that turns out to be a shell and collapses when another financier attacks it on the Bourse.

We see all the themes of speculative excess. There’s manipulation of market information with rumor; weak and corrupt corporate governance; ineffective financial regulation; links with corrupt or complacent politicians -- all with dire effects on the middle classes who invest their life savings in the Universal Bank, convinced its shares can only go up -- the “madness of crowds.”

Zola lets Saccard’s anti-Semitism come out without apparent criticism, but of course Saccard is the villain, and Zola became the great defender of Dreyfus.

Olli Rehn, European Union Economic and Monetary Affairs Commissioner:

I must mention that my wife and I have each written one book this year in Finnish. So my favorite is bound to be Merja Rehn’s “Yrita Perassa: Nainen Miljoonabisneksessa” (“Enterprise Like I Do: A Woman Running a Million-Euro Business”), which is based on fascinating interviews with nine successful and hard-working Finnish female entrepreneurs. That’s where growth and jobs come from; we need more entrepreneurs like these ladies, in Finland and in Europe. This book is only waiting to get translated into English.

On management theory, I’ve enjoyed the singer-songwriter Neil Young’s self-written memoir, “Waging Heavy Peace,” which is the best contemporary gonzo journalism cum literary road movie, as Hunter S. Thompson does not write any more. Canadians are cool today, from Neil to Mark Carney.

On economics, my favorite is Carlo Bastasin’s “Saving Europe: How National Politics Nearly Destroyed the Euro.” It’s based on a very sound understanding of the economics and politics of the euro, and is well-researched.

Other profoundly enjoyable and worthwhile books have been Sylvia Nasar’s “Grand Pursuit: The Story of Economic Genius” and Nicholas Wapshott’s “Keynes Hayek: The Clash That Defined Modern Economics.” Both deal with Keynes and his legacy, both intellectual and policy-related, and contrast it with other giants of economics like Schumpeter, Hayek and Friedman.

Barry Ritholtz, CEO of FusionIQ and author of the Big Picture blog:

“The Information: A History, a Theory, a Flood” by James Gleick is a tour de force of history and an introduction to information theory for nonscientists. Only rarely does it get a little lost in the weeds. I found it a deeply satisfying read.

“Thinking, Fast and Slow” by Daniel Kahneman, which I read in February on vacation.

“Wait: The Useful Art of Procrastination” by Frank Partnoy was a fun summer read.

Stephen Roach, senior lecturer at Yale University and former nonexecutive chairman for Morgan Stanley Asia:

“The Righteous Mind: Why Good People Are Divided by Politics and Religion” by Jonathan Haidt goes a long way in unmasking the political dysfunction and polarization that are plaguing the world today. Makes a powerful case -- based on psychology, neuroscience, genetics and historical analytics -- as to why we are all self-righteous hypocrites.

“Globalization and Its Enemies” by Daniel Cohen was published in 2006 and I read it for the second time over Thanksgiving. It puts the current globalization debate in great historical context. As dramatic as today’s powerful strain of globalization appears, it pales in comparison with the earlier strain of the late 19th and early 20th centuries.

Robert Rubin, former U.S. Treasury secretary, former chairman of Citigroup Inc. and co-chairman of the Council on Foreign Relations:

“Berlin Diary: The Journal of a Foreign Correspondent, 1934-1941” by William L. Shirer. Shirer and Edward R. Murrow were the two voices of radio in the ’30s when Hitler was taking power. It brings alive that period. It’s one thing to read about it from somebody who writes about it now, but he was writing about it as it happened. And it gives you a sense of how a really heinous totalitarian force could take hold of a country and people could acquiesce to it and even relate to it in very difficult times.

“Berlin 1961: Kennedy, Khrushchev and the Most Dangerous Place on Earth” by Frederick Kempe gives you a vivid picture of Khrushchev and Kennedy as people and then all of the events around their interactions in that time. And I thought to myself what would happen if a Huey Long-type figure came along in today’s America. One would hope it can’t happen here, but it does give you a sort of a chilling sense of how something like this happens. I think unfortunately it’s relevant to us.

Jeffrey Sachs, director of the Earth Institute at Columbia University:

“The Social Conquest of Earth” by Edward O. Wilson. The world’s leading evolutionary biologist explains the two sides of human nature, altruism and conflict, as the result of the two kinds of natural selection, individual and group.

In Daniel Kahneman’s “Thinking, Fast and Slow,” the great psychologist explains the two pathways of thinking, the “fast lane” based on hunches, emotions and gut reactions, and the more costly and difficult “slow lane” based on rational decision making.

“The Land Grabbers: The New Fight Over Who Owns the Earth” by Fred Pearce is a searing report by a renowned journalist on the unprincipled, often corrupt and environmentally destructive land-grabbing under way in the world’s poorest regions. Pearce uncovers the drama and describes the global “system” of tax evasion and irresponsibility that feeds the land grabbing.

Alan Schwartz, executive chairman of Guggenheim Partners LLC and former CEO of Bear Stearns Cos.:

I went back to re-read “The Forgotten Man: A New History of the Great Depression” by Amity Shlaes, as I thought that reacquainting myself with the relationship between FDR’s administration and the business community would help me navigate today’s environment.

Robert Skidelsky, professor emeritus at the University of Warwick and biographer of John Maynard Keynes:

Adair Turner’s “Economics After the Crisis: Objectives and Means,” “Capital” by John Lanchester and “Last Man Standing: Memoirs of a Political Survivor” by Jack Straw.

Anne-Marie Slaughter, professor at Princeton University and former director of policy planning at the U.S. State Department:

“Thinking About Leadership” by Nannerl O. Keohane. Written by the former president of Duke University and Wellesley College who is herself a political theorist, “Thinking About Leadership” offers a concept of leadership that is equally applicable to community leaders and CEOs. She has thought deeply about what leaders actually do, how and why followers matter, the selection and success of leaders, and whether women lead differently than men. Beautifully written and widely researched, this book should be on the Christmas list of any current or aspiring leader.

“China Airborne” by James Fallows. A must-read for anyone doing business in China or simply trying to understand where China goes next. Fallows, who lived in China for three years and has actually piloted a plane in Chinese airspace, uses China’s desire to manufacture the airliners it now purchases from Boeing and Airbus as the lens through which to examine the next phase of the country’s development and all the challenges it faces. Fallows is a wonderful, witty and engaging writer; “China Airborne” is a terrific read.

“Sleeping With Your Smartphone” by Leslie Perlow. A Harvard Business School professor undertook a year-long experiment with the Boston Consulting Group designed to find out what would happen if consulting teams worked together to ensure that each member of the team had “predictable time off,” in this case one night a week. The experiment was so successful that BCG has expanded it to all its teams, discovering the value not only of upgrading the importance of employees’ personal lives but also of team collaboration to accomplish a small but achievable collective goal. BCG’s employee satisfaction, retention and productivity are all up as a result.

Martin Sorrell, CEO of WPP Plc.:

“Steve Jobs” by Walter Isaacson. Business decisions are dominated by technology, as well as geography, and this book is the remarkable story of a unique iconoclast who built the most valuable company in the world and overcame adversity -- dealing with the problems is the real test.

“Catherine the Great: Portrait of a Woman” by Robert K. Massie charts the ruthless rise of a minor German princess to tsarina of Russia. Russia will come again in the near future, along with Germany and Poland. It reminds us of the significance of Russia and of the strength of female leadership.

“A Technique for Producing Ideas” by James Webb Young, one of the early creative leaders of J. Walter Thompson. Really a pamphlet of about 40 pages and first published around 1939, it remains the finest description of the creative process.

It’s all about technology, geography and creativity -- these three books remind me!

Michael Spence, Nobel laureate in economics and professor at New York University Leonard N. Stern School of Business:

Burton Richter’s “Beyond Smoke and Mirrors: Climate Change and Energy in the 21st Century” is a sensible, accessible, honest and factual assessment of the state of our knowledge about climate change and what to do about it by a distinguished scientist.

Lawrence Summers, former U.S. Treasury secretary and former director of the National Economic Council:

“The Better Angels of Our Nature: Why Violence Has Declined” by Steven Pinker because of its profound, but deeply documented, optimism about improvement in the human condition.

Daniel Kahneman’s “Thinking, Fast and Slow” shows that how we think and behave can actually be understood.

“Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else” by Chrystia Freeland -- because the rise of the plutocracy is the newest central issue for economic policy.

Also the movie “Lincoln” for showing the nobility of politics.

Cass Sunstein, former administrator of the White House office of Information and Regulatory Affairs and Bloomberg View columnist:

My favorite book of the year, and possibly the last decade, and possibly even the last quarter-century, is Daniel Kahneman’s “Thinking, Fast and Slow.” It’s profound and it’s fun, and it’s one of the most important books published in my lifetime.

Shirley Tilghman, president of Princeton University:

The most memorable book I read this year is the fourth volume of Robert A. Caro’s magisterial biography of Lyndon Johnson, “The Passage of Power.” Covering the years from 1958- 1964, it tells the fascinating tale of the marginalization of the “Master of the Senate” as vice president, and his phoenix- like rise to the presidency upon the assassination of JFK.

Jean-Claude Trichet, former European Central Bank president:

I read or am reading with utmost interest “Manias, Panics and Crashes: A History of Financial Crises” by Charles P. Kindleberger, “Stabilizing an Unstable Economy” by Hyman Minsky, “This Time Is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart and Kenneth S. Rogoff, and “Agent-Based Models and Economic Policy” edited by Jean-Luc Gaffard and Mauro Napoletano.

The three “old books” remain essential. The new Gaffard and Napoletano book is very interesting because it explores systematically the new advances in agent-based and computational models.

Three main reasons explain the resurgence of agent-based models. First, computational models had been explored in the past (von Neumann, Herbert Scarf) and led to a distinguished, but largely forgotten, tradition in economics. Second, the impressive advances in information technology are paving the way for modeling based on a new formidable wealth of data. And, last but decisive, because mainstream modeling proved unsatisfactory before and during the present crisis.

Adair Turner, chairman of the U.K. Financial Services Authority:

“The Better Angels of Our Nature: Why Violence Has Declined” by Steven Pinker. Many people hanker back to a more peaceful, less crime-ridden, less selfish world of the past. But Pinker cites a wealth of historical data to prove that mankind has on average become less violent and more tolerant, both within and between societies, as we have progressed from genocidal hunter-gatherers to modern consumers, from intolerant religious fanatics to skeptical humanists.

And he explains brilliantly how our evolved nature, embedded in our brain structure and chemistry, can under different circumstances propel us toward unspeakable cruelty or reasonable social peace. The result is a big (700-page), brilliant and thoroughly heartening book.

John Vickers, former chairman of the U.K.’s Independent Commission on Banking and warden of All Souls College, University of Oxford:

Robert Caro’s “The Passage of Power” is absolutely gripping even though you know what’s going to happen.

William White, former head of the monetary and economic department at the Bank for International Settlements:

William L. Silber’s “Volcker: The Triumph of Persistence,” “Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government and the Free Market” by Janine Wedel, “Boomerang: The Biggest Bust” by Michael Lewis, David Graeber’s “Debt: The First 5,000 Years” and Richard McGregor’s “The Party: The Secret World of China’s Communist Rulers.”

Neal Wolin, deputy U.S. Treasury secretary:

“The Passage of Power” by Robert Caro. A(nother) compelling narrative about the importance of persistence and the use of political power to achieve critical social progress.

“Behind the Beautiful Forevers: Life, Death and Hope in a Mumbai Undercity” by Katherine Boo. A beautiful but heartbreaking window into life in a settlement near the Mumbai airport and a compelling reminder of the importance of the fight for development and against inequality.

Daniel Yergin, vice chairman of IHS Inc. and author of “The Quest: Energy, Security and the Remaking of the Modern World”:

I took “Charles Dickens: A Life” by Claire Tomalin with me all over the world in 2012, reading it with great pleasure. It is an extraordinary story -- of how Dickens rose from sheer poverty, put out at age 12 to work in a boot-blacking factory, to become the pre-eminent novelist of the 19th century and one of that century’s best-known and most influential denizens.

Tomalin captures his relentless, frenetic energy -- writing feverishly during the day, then rushing off to edit a magazine or act in plays or save prostitutes, then prowling the streets at night, and all the time always concerned about money. This unstoppable manic energy helped explain to me at last, at least in part, his extraordinary torrent of creativity. Tomalin also reveals the complexity of a private life that was definitely ajar from the Victorian values with which he was so publicly associated.

Yet this is not only a literary life. For all of this is set in the larger context of the 19th-century industrial revolution, whose injustices and social upheaval were so much Dickens’s subject. But his writing and his own life also tell of a great transformation, of railroads and steamships shrinking geography and knitting the world together into a global economy. It is also the story of the rise of popular culture and mass communications -- in which Dickens, of course, played a central role.

Dieter Zetsche, CEO of Daimler AG:

“The 100-Year-Old Man Who Climbed Out the Window and Disappeared” by Jonas Jonasson. I wouldn’t normally expect a 100-year-old to climb out the window of his retirement home and escape from his own birthday party. But that’s exactly what Allan Karlsson does in this novel. And the adventures he then lives through (drugs, money and an elephant, to name a few) are just as improbable and funny as the flashbacks on his long and eventful life.

It turns out Allan had an incredible influence on world affairs. In fact, he has been in close contact with some of the movers and shakers of the 20th century, among them Harry Truman, Josef Stalin and Mao Zedong.

Why do I like this book so much? Because it’s such a light- hearted tale about a truly cool customer. It’s entertaining and endearing at the same time. Allan is politically naive and doesn’t take himself too seriously. That lands him in the most bizarre situations but also helps him get out of them.

Plus: He is blessed with a good sense of humor, a weakness for vodka and nine lives!Steve Jobs

All in all, his story reads like a road trip through 20th- century history -- with a Swedish Forrest Gump at the wheel. I read it in just two days during a short vacation last August and greatly enjoyed it.

Zhang Xin, chief executive officer of Soho China Ltd.:

This year I read “Benjamin Franklin: An American Life” by Walter Isaacson. I was particularly intrigued by how democracy was hard earned, and how the founding fathers of America designed its governing system. There is much is to be learned from this for modern China.

Usually once I have read a good author, I will read everything they have written, like Lin Yutang, Ayn Rand, Han Suyin and Isaacson.

Isaacson’s “Steve Jobs” and “Einstein: His Life and Universe” are both great reads. Biographies have to be written in a lively way, in a way that the reader cannot put it down, so it is as if the reader enters history and experiences the story herself. In achieving this, Isaacson is an expert.

I have read “Steve Jobs” three times, and I still want to read it again.

Muse highlights include Ryan Sutton on dining.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editors responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net and Craig Stirling at cstirling1@bloomberg.net


> See the full list of books from this article on Money & Markets



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