Sebastian Mallaby, More Money Than God: Hedge Funds and the Making of a New Elite (New York: Penguin Press, 2010), 496 pp., $29.95.
John Quiggin, Zombie Economics: How Dead Ideas Still Walk Among Us (Princeton, NJ: Princeton University Press, 2010), 216 pp., $24.95.
Robert B. Reich, Aftershock: The Next Economy and America’s Future (New York: Alfred A. Knopf, 2010), 192 pp., $25.00.
Nouriel Roubini and Stephen Mihm, Crisis Economics: A Crash Course in the Future of Finance (New York: Penguin Press, 2010), 368 pp., $27.95.
EARLIER THIS year, Goldman Sachs CEO Lloyd Blankfein attempted to justify his professional existence, proclaiming, “We’re very important. We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. . . . We have a social purpose.” This all sounds good enough, except that finance went from being responsible for 2.5 percent of GDP in 1947 to 7.7 percent in 2005. And at the peak of the housing bubble, the financial sector comprised 40 percent of all the earnings in the Standard & Poor’s 500. The incomes of the country’s top-twenty-five hedge-fund managers exceeded the total income of all the CEOs in that index. And by 2007, just about half of all Harvard graduates headed into finance jobs. If capital markets merely serve as conduits from savers to entrepreneurs, then why does such a large slice of them get siphoned off to compensate people like Lloyd Blankfein? To put it more broadly, what is the role of finance in a good and just society?