Amid war and inflation, debt and fragmentation, now may be a better time than ever to step back and consider the bigger and more enduring questions of lives and livelihoods.
Authors from Cambridge economist Diane Coyle to Bank of Japan veteran Masaaki Shirakawa have provided more than enough reason to put down our phones and concentrate, as much as one can, on absorbing the larger lessons from leading thinkers.
Below is a selection of volumes worth picking up, drawn from books recently reviewed in the IMF’s Finance & Development magazine.
A Brief History of Equality
Thomas Piketty’s surprisingly optimistic account of progress toward equality shows that societies have moved toward measurable improvements in the quality of life and fairer distribution of income and assets, but it will take novel solutions to address today’s inequities. His proposed solutions include a return to greater fiscal progressivity: significantly steeper income tax rates on high earners, a global wealth tax on the well-off, basic income programs, and cancellation of debts.
Scott Reynolds Nelson of the University of Georgia argues that wheat plays a key role in the rise and fall of empires. The book is a financial history, and the best passages chronicle international commodity markets bound increasingly together by wheat.
C. Fred Bergsten , founder of the Peterson Institute for International Economics, writes that the United States inevitably will have to share global economic leadership with China. He rejects as fanciful such notions as “containing” China or persuading it to adopt Western views. The relevant question is which shape a sharing of leadership may take.
The US dollar continues to play a predominant role in the global financial system, with enormous spillover effects for US monetary policy. Anthony Elson, a former IMF staff economist, explores the reasons for this phenomenon and the prospects for the future, tracing the historical roots of widespread dollar use for trade and financial flows to the emergence of the United States as the world’s largest economy after World War II.
Harvard’s Claudia Goldin argues US women have made extraordinary gains in the world of work over the past century. Most no longer need choose between having a child or a job. Women’s college enrollment and graduation rates outstrip men’s. And opportunities have expanded enough to give many women the possibility of not just a job, but a career.
Jeffrey E. Garten of the Yale School of Management details President Richard Nixon’s 1971 decision to close the “gold window,” chronicling how he transformed the dominant narrative about doing so: from a mea culpa that acknowledged lax US policies and abrogation of its international responsibilities, to one that proclaimed a triumphant fresh start for its place in the world, which went down well with his domestic audience.
Bronze busts of John Maynard Keynes and Harry Dexter White stand on pedestals in the anteroom of the IMF’s Executive Board. While innumerable books and biographies have been written about the former, much less is known about the latter. Former IMF Historian James M. Boughton redresses this imbalance in his superb biography of White.
Cambridge economist Diane Coyle examines how upheavals from the global financial crisis to the pandemic cast doubt on earlier beliefs and fueled existing skepticism about capitalism and economics more broadly. She also describes what plagues the profession itself, including entrenched networks preventing fresh ideas, an aggressive debating culture, and a lack of gender and racial diversity.
ECB officials including Massimo Rostagno, head of the Directorate General Monetary Policy, provide a masterful analysis of challenges this young institution faced in its first two crisis-prone decades and how it grappled with a monetary union still in the making. Most are familiar with President Mario Draghi’s 2012 “whatever it takes” dictum, which addressed the existential threat to the euro, but few will be aware of behind-the-scenes early push for creation of the European Stability Mechanism, which made its (never used) Outright Monetary Transaction tool effective in resolving the euro area crisis.
Among many changes in today’s digital economy, disruption is also occurring in one of the most fundamental technologies: money itself. Cornell University’s Eswar Prasad puts this in broader context. He argues that for all the digital innovation in finance in the past decades, we are standing on the precipice of what may be an even more dramatic change, with broad social, economic, and political implications.
Economist Gregory Smith outlines an approach he calls “borrowing with purpose” that involves linking public borrowing with clear development strategies, better coordination among official creditors, more responsible and “virtuous” actions by private creditors, and flexibility by the “umpires and architects” of the international system. Smith devotes a chapter to China’s lending to Africa, detailing its scale, terms, nature, purposes, and risks, and discusses the country’s debt relief to African nations over decades.
Tough economic circumstances shaped Masaaki Shirakawa’s four decades at the Bank of Japan. The economic miracle faded, a bubble inflated and burst, and lost decades ensued. Shirakawa provides an insider’s account of central bank policies and candidly recounts interactions within the government and Parliament. It argues that the first goal of the central bank is financial stability, even before price stability. This challenges the conventional view that price stability should be the primary goal of monetary policy.