Arnold Kling  

Business Books

The Nanny State... How Many Americans Could Pass ...

Joe Nocera picks the best business narratives. I assume this means a book that describes an individual, a company, an event, or an era. I agree with him that Barbarians at the Gate (about the RJR-Nabisco takeover) and Liar's Poker (Michael Lewis writing about Wall Street mortgage-backed securities traders) are must-reads. They are well written, and they emphasize the role of ego on Wall Street in a way that reinforces my priors.

I would not include Roger Lowenstein's book on When Genius Failed. In my view, he does not really get at where Long Term Capital Management, the star-studded hedge fund, went wrong.

The other books on his list I have not read. I am most intrigued by The Go-go Years and least likely to approve of The Smartest Guys in the Room (the latter, about Enron, I saw as a movie, and that had some really asinine perspectives, particularly in its conspiratorial take on market value accounting).

Books I would add:

'Adam Smith' (George Goodman), both The Money Game and Supermoney, about Wall Street in the late 60's and early 70's (in the latter book, the Penn Central railroad bankruptcy is not unlike recent financial events).

Michael S. Malone, Infinite Loop, about Apple Computer.

David Halberstam, The Fifties. Not strictly a business book, but his descriptions of the great mass-market phenomena of the period, from McDonalds' to Holiday Inn to Levittown, are superb.

George Gilder, Microcosm. He caught very early the spirit of the personal computer revolution. This book influenced me a great deal, both in my career moves (a few years after reading it, I became an early Internet entrepreneur) and in my economic views (he leads you to think about the long-term evolution of the economy).

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COMMENTS (5 to date)
Ironman writes:

I'll add Sidney Finkelstein's Why Smart Executives Fail to the list, but not for the obvious reasons. While the book does a pretty good job covering the circumstances and egos that drove a lot of businesses onto the shoals during the 1990s, it's greatest asset is that it cites Boeing's Phil Condit as a positive model for an executive building a "culture of openness."

Little did Finkelstein know!....

aaron writes:

Barbarian's was too long.

I would add Monkey Business by John Rolfe and Peter Troob.

And you're remiss in not mentioning Casino Moscow

The Enron movie was asinine.

dWj writes:

I thought "Smartest Guys in the Room" was a pretty good book; I didn't realize a movie was made of it, and could well imagine such a thing to be terrible.

"Grounded: Frank Lorenzo and the Destruction of Eastern Airlines" is worth mentioning.

I was astounded at some basic errors of finance in "When Genius Failed". I don't think he understood the relationship between the idea of fat tails and the efficient market hypothesis; in particular, he seemed to think they were closely related. Actually, the best part of that book was the fact that the author seemed consistently overconfident in his understanding of things that he clearly didn't understand, and that you could tell from the reporting, in spite of his own conclusions, that similar lack of humility was ultimately the cause of the collapse of LTCM. I tend to recommend the book to friends whom I expect to see through the errors, but not to friends who don't already have a good grasp of finance.

Howard Schultz's Pour Your Heart Into It is a fascinating story of how a kid from the Brooklyn projects, whose mother and father were both high school dropouts, became a billionaire selling coffee. It's also a very good nuts and bolts description of how you build a business from the ground up.

George Tabor's The Judgment of Paris tells how California's wine industry came to rival France's through an accidental wine tasting put on by a minor British aristocrat who owned a wine shop in Paris.

B. writes:

I would add "Confessions of a Street Addict" by Jim Cramer. Whatever you think of Cramer's show and antics, the book is interesting. It tells about his life, from Harvard to journalist to Harvard Law to independent trader to Goldman Sachs to hedge fund manager... It is at least a good read.

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