“Asia is leading the way in the recovery of the world economy,” Professor Shang-Jin Wei said in his introduction of Jong-Wha Lee, chief economist of the Asian Development Bank. Lee spoke at the School on April 20, 2010, in an event sponsored by the Center on Japanese Economy and Business and the Jerome A. Chazen Institute of International Business. Wei, director of the Chazen Institute, is coeditor of the recently published book, China’s Growing Role in World Trade (University of Chicago Press, 2010).

Lee outlined several key messages in his presentation, saying that Asian recovery was taking “firm hold.” He predicted 1.7 percent growth in GDP for major industrial economies in 2010 and the number moving to 2.0 percent for 2011. In contrast, the figures for GDP growth in Asia are 7.5 percent in 2010 and 7.3 percent in 2011, he said. Drivers for Asia’s strong recovery included growth in private consumption and investment.

Lee also discussed inflation — on the rise but manageable — and the risks stemming from uncertain global recovery and volatile capital flows. He said Asian economies will gradually unwind stimulus support and shift to private demand in the future.

The oil spill disaster in the Gulf of Mexico has placed renewed focus on clean energy, writes adjunct professor Bruce Usher, a carbon finance leader and executive in residence at the School.

In an op-ed in the New York Times (“Red China, Green China” May 6, 2010), Usher says that the United States lacks the political will to become a world leader in clean energy while China has been moving ahead with creating jobs and policies in the sector. Last year, China spent a total of $35 billion — double the amount of the United States — on projects related to renewable energy. In 2008, China held 84 percent of global market share for clean-development projects. Usher called for aggressive action by the United States to compete with China in the clean-tech race, outlining three actions to develop new technologies:

First, institute national feed-in tariffs or a renewable portfolio standard — two ways to require that utilities buy clean energy in a minimum amount or at a certain price. Such standards have been effectively put into practice in several states, most notably in Texas with wind power, but only a federal program will provide the scale necessary to compete with China, which has a national feed-in tariff program of its own.

Second, establish a price on carbon via either a tax or a cap-and-trade program to encourage low-carbon technologies. The Clean Development Mechanism placed a price on carbon in developing countries, initiating thousands of emissions-reduction projects in China. Putting a price on carbon in the United States would provide an incentive for domestic developers to build similar projects here.

Finally, get serious about supporting the research and development of carbon capture and storage, and maintain America’s lead in a field that offers enormous opportunity but is too large for any one company to finance. Coal is the No. 1 source of greenhouse gas emissions, and the first country to develop economically viable capture-and-storage technology will dictate the terms for reducing carbon dioxide emissions from coal-fired utilities globally.

The biggest threat to international security is not terrorism but illicit trade, Moisés Naím, editor in chief of Foreign Policy, told students at the KPMG Peat Marwick/Stanley R. Klion Forum on Ethics on March 31, 2010. Technological innovation coupled with cultural and demographic shifts are changing the ways illicit trade is conducted and perceived, he said. Professor Bruce Kogut introduced the speaker and the event was hosted by the Sanford C. Bernstein & Co. Center for Leadership and Ethics.

Underground economies have become a central part of globalization and are increasingly pervasive as the lines between legal and illegal business activities blur. Naím cited several drivers that are blurring the lines, including the diversification of business and the need for factions to influence regulators. “Some places call this corruption,” he said. “Others call it lobbying.” Philanthropy is another possible grey area for corruption and Naím suggested that criminal elements give away money, much like businesses do, as a way to build feel-good awareness for their “brand.”

The recent Rio Tinto case, which Professor Ray Fisman examined in Foreign Policy, highlighted the challenges multinational companies face in diverse business environments where they are subject to different standards and laws.

Additional reporting provided by the Sanford C. Bernstein & Co. Center for Leadership and Ethics.

Greece is likely to leave the Eurozone in the next few years unless it can achieve major fiscal reform, Professor Charles Calomiris says. In his article “The Painful Arithmetic of Greek Debt Default” (March 18, 2010) from e21, an online economics journal, Calomiris maps out the difficult road ahead for the country’s economy.

At the heart of Greece’s fiscal problems is a toxic combination of outstanding sovereign debt (which exceeds 123 percent of the GDP), poor confidence in the legal and political systems, institutionalized corruption and huge amounts of social-welfare spending. Calomiris says that spending cuts are likely to be the most successful tool the government can use, however, without reform that addresses the country’s chronic corruption, the prognosis for sustainable recovery remains dim. Calomiris writes:

The top priority for Greece right now is to make the immediate and massive cuts in public expenditure that are necessary to restore fiscal balance. Cutting expenditures by a total of, say, 14 percent and promising tax and corruption reforms that would increase taxes by 14 percent would buy Greece time to make the deep reforms necessary to restore its tax base. Failing those tax reforms, additional expenditure cuts would be needed quickly. Following that path not only would resolve the Greek debt problem, it would help restore Greece’s productive competitiveness, increase labor participation and increase savings, all of which would boost growth and reduce the Greek current account deficit. … In the medium term, even if Greece restores fiscal sustainability through expenditure cuts alone, it must address the deeper problems that plague its economy, its taxation system and its society more broadly, all of which revolve around the problem of endemic corruption.

Photo credit: Flickr/lpinseel

What can Japanese businesses learn from the unprecedented crisis engulfing Toyota, Japan’s flagship automaker?

It’s a question that was raised over spring break as the Japan Business Association and the Jerome A. Chazen Institute of International Business launched the 21st annual Japan Study Tour. Forty students, one faculty member and a Chazen representative spent nine days in Kyoto, Hakone and Tokyo. The tour, which was impeccably organized, included site visits to Nomura Holdings, Sony, the Mori Building, Gekkeikan’s sake-brewing facility and, of course, Toyota.

The revered automaker is probably the most powerful symbol of Japan’s rise to manufacturing excellence over the half-century since World War II, and a symbol of Japan’s self-confidence on the world stage in the 1980s. With the perceived safety and reliability of its vehicles providing a key competitive advantage, Toyota has grown in stature over the last two decades, recently eclipsing General Motors to claim the title of the world’s number one automaker.

Then came the recall. Over the past six months, Toyota’s reputation has been severely tarnished by a worldwide vehicle safety recall in which more than eight million vehicles, including the cutting-edge Prius sedan, have now been called back. The carmaker’s recent troubles are also damaging the excellent standing of other Japanese businesses according to some analysts, which comes at a time when the nation is set to be overtaken by China as the world’s second-largest economy. The crisis at Toyota is raising questions about the viability of Japan’s economy, beset by deflation, and its major corporations. With this in mind, our trip to Toyota City — a municipality that revolves around the automaker and houses its corporate headquarters, main research facilities and manufacturing plants — was perhaps the most anticipated company visit of the 2010 tour.

	Japan’s auto industry can still make a comeback, panelists said.

We toured the corporate museum, a welding facility and an assembly plant, but, not surprisingly, had no meetings with top Toyota executives. However, Toyota’s troubles and their broader implications for Japanese companies was the topic of a lively debate when Columbia Business School’s Alumni Club of Japan hosted us at the Josui Kaikan building in the center of Tokyo.

In a discussion moderated by Japan expert and Michigan’s Ross School of Business Professor Schon Beechler (also a former Columbia Business School professor), alumni and current students talked about the competitive outlook for Japanese businesses and what the future may hold for Asia’s most developed economy. Beechler critiqued the recent Newsweek article “Toyota and the End of Japan” (March 5, 2010) as being too pessimistic. Rather than facing a precipitous decline, she said, Japan is instead at “an exciting inflection point.”

For other panelists — Japanese nationals educated at American business schools — Toyota’s problems are key to understanding Japan’s zeitgeist and are symptomatic of a nation withdrawing from the world. A case in point: While Sony and Nissan both have non-Japanese CEOs, signifying their global outlook, Toyota remains a “homespun” company with its Japanese president, Akio Toyoda, grandson of company founder Kiichiro Toyoda. A company like Toyota needs a leader with a more global mindset, the panelists said.

When it comes to the competiveness of another of Japan’s core industries — electronics — Japanese manufacturers are slipping behind major new rivals like Korea’s Samsung. Panelists agreed that Japanese companies now need to imbue their corporate cultures with a “sense of urgency.” Korea, India and China are nearby nations that are growing quickly and represent a significant threat, they said. The discussion ended on a hopeful note, however. Despite its current troubles, Japan has a lot to offer. The automotive and electronics sectors can come back, the panelists said, and Japan has expertise in healthcare, robotics and tourism that can make it very competitive in the modern global economy. The future of Japan lies in closer integration and cooperation with its neighbors, such as Korea and China.

“There’s a pressure on this country to open up, but there’s also a deep pride in the Japanese culture,” Beechler said. “This is the issue that will determine the future of business in Japan; it will determine whether the nation succeeds or fails.”

Photo credits: Junichiro Mimaki; Guzel Chechenova

Drawing on their industry background and experience, Columbia Business School’s Chazen Fellows are a group of students selected to report on events and activities relating to international business. In the most recent edition of the Chazen Web Journal, two fellows explore competitive advantage in old and new industries — energy and social networking — in Latin America.

James Walsh ’10 examines the emergence of socialism in Venezuela and its effect on the energy industry. He brings a unique perspective to this issue: before business school Walsh worked in economic and market analysis at Citigroup, researching domestic and international economic issues. After he graduates, he plans to return to his native Texas to work on energy-related matters. Exxon’s decision to pull out of Venezuela, Walsh argues, was one that put the energy company at a “disadvantage relative to its competitors, who clearly still find operating in the increasingly difficult Venezuelan market profitable.”

Walsh says the larger geopolitical risk for the United States is less volatile and concludes that a symbiosis exists that is mutually beneficial. “The U.S. needs foreign oil and will continue to purchase it from Venezuela and other not-so-friendly regimes,” he writes. “Conversely, Venezuela needs the U.S. as the closest large-scale consumer of its energy resources and as a source of institutional and operational expertise in the exploration and production industry.”

This issue also features a report on an emerging industry in Latin America: online social media. Lauren Frasca ’10 examines the battle between Orkut and Facebook for social networking dominance in Brazil. She draws on her prior experience developing television and digital content for major broadcast networks, along with her business school studies and a newfound interest in Brazil.

Frasca argues that although Orkut currently has dominance in Brazil, it would be mistaken to overlook Facebook as a major player in the near future. Indeed, Orkut once had dominance in India as well, but “recent numbers released show Orkut’s unique visitors in India falling by 800,000 within the month of August, while Facebook grew its unique visitors in India by 700,000 during the same time period. Indeed, Facebook has launched a few strategies to aggressively pursue Orkut’s user base in Brazil.” While both companies also need to focus on monetizing their businesses, Frasca concludes that the number of users is as important. “The key battle in winning the social networking war is that of developing a scalable, profitable business model.”

Read more in the March issue of the Chazen Web Journal.

Photo credit: Beatrice Murch/Flickr

The new issue of the Chazen Web Journal — our second in 2010 — highlights several stories that echo a larger discourse currently affecting millions around the globe: the economy’s intersection with regulation. Two recent forums explored the issue with views on the banking industries in Japan and China.

In December, the Sanford C. Bernstein & Co. Center for Leadership and Ethics and the Center on Japanese Economy and Business hosted the panel “Why Was the Financial Crisis Less Enduring in Japan and Other Countries…This Time Around?” Adrian Almazan ’10 reports on the panel’s discussion of Japan’s banking history and exposure to risk, and how reform and regulation in Japan’s financial sector helped set the country apart during the recent economic crisis.

Almazan also reports on the China Business Initiative’s forum, which took place in October and featured Ma Weihua, president and CEO of China Merchants Bank. Weihua gave his insights on the globalization of the Chinese banking sector and how the government’s use of regulatory measures may have helped China avoid a more severe impact from the current crisis.

Mr. Ma compares the current industry dynamic to a marathon race: Those runners that once led the pack have fallen down, and the Chinese banking industry has an opportunity to sprint to the front. One of those potential sprinters is Mr. Ma’s own China Merchants Bank (CMB). CMB began 20 years ago with RMB 100 million in capital and a single office of 36 people. Today, CMB is a national commercial bank listed on both Shanghai and Hong Kong Stock Exchanges. CMB has net capital exceeding RMB 100 billion and total assets approaching RMB 2 trillion, with a network of 700 outlets and employee headcount of 37,000.

This issue also features an interview by James Walsh ’10 with Professor Ray Horton about the defining political events and trends that have shaped — and continue to shape — the world’s economy. In addition, Brian Hindo ’10 shares a discussion with Professor Gita Johar on the application the “4Ps” of marketing to the world’s the poor.

Read more in the February issue of the Chazen Web Journal

Photo courtesy of Chazen Institute

The ho-hum results from December’s international climate summit in Denmark drew out uncertainty about the future of global environmental laws — and that could cripple economic progress toward lower carbon emissions, says Professor Shang-Jin Wei. The 2009 Copenhagen Accord recognized the need for cooperative action on climate change but no legally binding targets were set. In a recent interview with Public Offering, Wei, newly appointed director of the Jerome A. Chazen Institute of International Business, shared his thoughts on how innovation and the environment are tied to the global economy.

“The uncertainty over whether Copenhagen and related negotiations will turn into binding policies deters businesses and governments from moving forward,” he said. “If environmental policy is not law, then firms and governments don’t want to produce something that is 20 percent more expensive than existing, less environmentally safe products. However, once it looks more certain that a law is going to exist, firms will respond or, more likely, take advantage of whatever new laws will be put in place.”

Wei suggested that innovation of environmentally friendly products can benefit firms in both rich and poor countries.

“Invention and production don’t necessarily have to go together and outsourcing is a demonstration of that,” he said. “It is quite possible that both high-income and low-income countries can benefit. Firms in high-income countries can get royalties and other profits from inventing products and innovating ideas; low-income countries benefit by producing or assembling some of those products or parts.”

However, key questions remain: who will finance long-term carbon-reduction measures and what will those measures look like? Sharing the environmental and fiscal burden is likely to come through financial or technology transfer, or some combination thereof, from industrialized nations to emerging markets. Potential for new markets to leapfrog into next generation low-emission technologies is also a promising alternative. As the issue of legally binding targets gets closer to reality, Wei shed light on the view from across the Pacific.

“The governments of developing economies worry that industrialized countries have already reaped the benefits of emitting pollution into the atmosphere,” he said. “High-income countries have already had the main course. Now as emerging markets come to the table, they feel they only get the dessert but are being asked to pay for the entire bill.”

“Of course, inaction by all sides is not really an option,” he adds. “Science suggests we’re not running out of time right now but we’re on course to, and something has to be done.”

Photo credit: COP 15

On January 9, 2010, a group of 22 Columbia Business School students and Professor Todd Jick embarked on a trip to Dubai and Abu Dhabi organized by the Jerome A. Chazen Institute of International Business to learn about the United Arab Emirates through meetings with local and multinational companies and cultural excursions.

After ardently studying Dubai prior to the Chazen study tour — and then spending a week there — I had to ask myself, what’s not to love about Dubai? From a lifestyle perspective, the public amenities are endless: a remarkable public train system, well-maintained roads, modern construction, an educated population and great weather (almost) all year round. From a business perspective, there are tax privileges for many companies, particularly those that choose to reside in a tax-free zone such as the Dubai International Financial Center where businesses only need to pay rent and an incorporation fee. For many, that is a small price to pay for setting up a commercial hub in the Middle East. That incentive combined with the numerous amenities that Dubai has to offer make it a hot spot for attracting well-educated Western talent.

However, from another perspective, a question crossed the minds of many professionals: What are the drawbacks of being in Dubai? As one professional said, “There is not just a glass ceiling, there is a concrete ceiling here.”

	The allure of Dubai: the DIFC tax-free zone (arch) and in the distance, the tallest building in the world.

He explained that the concrete ceiling exists because the native Emiratis receive a preference for top positions in government, private-public organizations, sovereign wealth funds and, in Dubai, these organizations have driven its massive growth. The Sheikh and his government have designed the country such that native Emiratis and offspring of male Emiratis will be the only people allowed to become UAE citizens and will be protected financially under UAE law. Such a system is unfamiliar to many of the Westerners that reside in or plan to move to Dubai and may hinder their plans to settle there for the long term. In addition to the drawbacks from a professional perspective, what implications does the UAE citizenship law hold in other areas, such as the justice system? Do Emiratis receive preference in procedures of law and order?

These questions and concerns were frequently discussed on our Chazen Study Tour. Our group was curious as to what lay below the glitz and glamour of Dubai. Regardless of the current drawbacks, I believe that Sheikh Mohammed and his government should be commended for having made incredible strides in Dubai’s development, such as transforming from a small desert city in the 1990s to a bustling commercial hub with remarkable worldly achievements, including the largest computer-operated train system and the tallest building in the world. As an emerging economy with much more to accomplish, I am sure that the UAE government will learn what is right and best for the country’s economy and its citizens.

Photo credits: Michelle Nathan ’10

New research from Professor Shang-Jin Wei featured in the latest issue of Columbia Ideas at Work attributes the high savings rate in China to the severely skewed gender ratio — 100 girls born for approximately every 122 boys — that has emerged under the country’s one-child policy, which was instituted in 1980. The result is that today, 30 years later, there is a very competitive marriage market. Parents save at high levels in order to give their sons every possible advantage in attracting a wife, Wei says. It is clear that a rise in the sex ratio imbalance would lead to more unmarried men. In January, China’s state media reported that the government anticipates that at least 24 million men of reproductive age will remain single by 2020.

Wei’s research points to a new macroeconomic implication of China’s gender imbalance. The very high savings rate in China is unparalled in the world. On the economic front, the high savings rate has many implications for global business and there is discussion about whether China can adjust its growth models toward more dependence on domestic consumption, Wei says. While exchange rates are part of that policy toolbox, Wei says that it will be important for China to find a more equal balance between males and females if it expects to change savings behavior. He adds that there are several changes that can be influenced by social policy, including increasing the social preference for female babies; improving the status of women in China and reducing sex-selective abortions by controlling information about a fetus’s gender.

“The research suggests that a serious macroeconomic discussion cannot be divorced from an understanding of the social issues,” Wei says.

Photo credit: bebouchard

On Tuesday, Google announced it would postpone the release of two Android phones in China following last week’s fracas between the search engine giant and Beijing. According to reports from Google, its security infrastructure underwent cyber attacks and theft, and the Gmail accounts of human rights activists had been hacked. In response, the company said it may withdraw its operations from the country. But how badly does it need China?

More than it might appear. The fact that the company is continuing to negotiate with Chinese authorities suggests that it places a high value on Chinese customers, Professor Brett Gordon says.

“I think Google does need China. One day China will be an enormously large portion of the Internet,” he says, “and it’s impossible for a company like Google to ignore more than one billion potential users.”

Gordon points to the history of Internet usage in the United States, which has grown quickly since it entered mainstream usage in the mid 1990s. The adoption of new technologies moves even more quickly in developing markets, he says. China’s stats appear to prove that point: the number of Internet users in China grew more than 28 percent from 2008 to 2009 for a total of 384 million last year, making it the largest group of Internet users in the world. And that figure is poised to grow higher given the country’s population of roughly 1.3 billion people.

Currently, Google’s market share in China is about 33 percent, with China’s Baidu.com dominating the market. “To support U.S. business in China,“ Gordon says, ”you would rather that Google be there than not. There is no reason that Baidu won’t become as large or larger than Google.”

The tension between Google and Beijing also points to fault lines around regulation of the Internet is as it grows internationally. “So far the Internet has been very strongly centered in the United States. As more emerging economies continue to grow, and given their large populations, the Internet will slowly keep shifting toward the largest user base and largest revenue base,” Gordon says. “But to try and police that through an international organization is very hard to do. Companies will simply have to decide between making a political point or a profit.”

Photo credit: Josh Chin

For many companies, 2009 was not a growth year. For Walmart, however, its revenue grew more than 7 percent from 2008, topping $401 billion.

In the last decade the retailer expanded rapidly in the United States and around the globe. Today it has more than 7,800 locations worldwide. Yet between 1998 and 2005, 65 percent of proposed new stores in the United States that drew protests were never built. That’s a pretty good batting average — for anti-store crusaders. How could the world’s biggest retail chain get derailed by a handful of local activists? It’s part of Walmart’s management strategy, says Professor Paul Ingram.

Building a new retail outlet is not cheap. A store location encompassing tens of thousands of square feet can cost up to $10 million to build. Added to that, the hunt for viable real estate is fraught with uncertainties, particularly when it comes to community support. Ingram says that allowing for a certain number of concessions about location is part of the company’s negotiating process.

Ingram’s research (PDF), which he conducted with Lori Qingyuan Yue of Columbia University and Hayagreeva Rao of Stanford University, provides evidence that Walmart uses low-cost probes, such as filing a building proposal (typically under $15,000), to quietly suss out local support or opposition to a potential new store. Walmart can then withdraw its proposal or rethink its building plan if protests occur. The strategy both limits the company’s expenditure and investment in a new location and minimizes exposure to the news headlines.

“A lot of people make claims on how a corporation should behave,” Ingram says. “Negotiating is part of management. Here is a strategy that accepts concessions as way to manage costs.”

Photo credit: mjb84

The future of poverty eradication lies in the private sector, says Nancy Barry, president and CEO of Enterprise Solutions to Poverty. Barry, former CEO of Women’s World Banking, created the venture to mobilize corporations and entrepreneurs to engage millions of low-income people to build competitive business models. In an exclusive interview with Columbia Business School at the 2009 Social Enterprise Conference, Barry highlighted the ways in which U.S. and European multinational companies can learn from emerging markets.

“In [companies’] engagement they are still skating on the surface,” she said in the video interview. “Their traditional business models and ways of working are getting in their way. They need to actually learn from emerging markets and entrepreneurs how to build decentralized distribution systems. The beauty of decentralized systems is that the mom-and-pops of this world actually are the poor people. If you figure out a way how to add value to that mom-and-pop, which is your distribution system, you are helping that family make more money and you are selling more products.”

View more videos from the 2009 Social Enterprise Conference.

Mark Cohen on retail
The luxury bubble will continue to deflate, and only those truly special brands with real brand equity will recover; value players like Walmart, Target, Kohl’s, etc., will see renewed strength. The middle market of poorly differentiated specialty and department stores that lack a clear fashion and value strategy will continue to struggle, and it is unlikely that retail sales will retrace their pre-recession levels until 2011.

Cliff Cramer on the healthcare industry
Consolidation will be a major theme in 2010 as insurers and hospitals seek additional leverage in contract negotiations and pharmaceutical companies explore transformational mergers to broaden product lines, strengthen geographic breadth (emerging markets) and manage earnings in response to major patent expirations in the near term.

Brett Gordon on marketing and technology
Intel will face continued legal pressure from the Federal Trade Commission and the New York attorney general’s office for its alleged anti-competitive practices despite the $1.25B settlement with AMD in November 2009. Online newspapers and other media outlets will test new revenue generation models in a last ditch attempt to stay afloat. Monetization strategies for online video (e.g., Hulu, YouTube) will get serious attention from firms seeking to lure back advertising dollars with more advanced technology.

Paul Ingram on management
Organizational culture will enjoy a renaissance. Firms will increasingly recognize that shared values can attract and retain employees to the company and that the common orientation of a strong culture allows coordinated responses to unforeseen and emerging challenges. In the next year and beyond, organizations with strong cultures will outperform others, and leaders will focus on building those cultures.

Wei Jiang on the economy
As much as we think that we learned from the crisis, new bubbles are already forming thanks to the easy monetary policies around the world. In particular, the weak dollar has fueled a massive rally in 2009 in a wide range of risky assets — equities, commodities and emerging markets — through carry trades. We are facing the danger of a recurring asset bust in the coming years if and when the dollar reverses.

Jonathan Knee on the media industry
The inexorable fragmentation of media will continue in 2010, Comcast’s acquisition of NBCU notwithstanding. This trend will have no impact, however, on the persistent and irrational fears of regulators, politicians and the public that the global markets for media may fall under the control of a handful of malevolent moguls at any moment.

Homepage photo credit: Bart Hiddink

Public Offering asked faculty members what books they enjoyed most this year and here’s what they said. (Take a look at last year’s list for more titles.)

Daniel Ames How to Break a Terrorist by Matthew Alexander is the story of the author’s experiences as a member of a U.S. intelligence and interrogation team working in Iraq in 2006. On one side, he struggles to coax information from hardened fighters as well as hapless suspects. On the other, he struggles with different attitudes in the military on the effectiveness of harsh interrogation techniques. It’s a fascinating glimpse into what is, for most of us, an unknown world. And the underlying story holds some lessons for how many of us might approach the “ordinary” conflicts in our everyday lives.

Ray Fisman Tokyo Vice: An American Reporter on the Police Beat in Japan by Jake Adelstein is an enormously entertaining and instructive look inside the world of the original economic gangsters.

Ray Horton I’ve read a number of good books on the now two-year-old economic crisis, including Robert Skidelsky’s  Keynes: The Return of the Master, Justin Fox’s The Myth of the Rational Market and Animal Spirits by George A. Akerlof and Robert J. Shiller. But the best of the bunch in my opinion is John Cassidy’s new book How Markets Fail: The Logic of Economic Calamities. He does the best job of tying the theory problems to the rationally irrational behaviors that nearly sunk the ship of modern finance.

	What is your book pick of the year? Please share your nomination.

Malia Mason The Big Sort: Why the Clustering of Like-Minded America Is Tearing Us Apart by Bill Bishop with Robert G. Cushing.

Emi Nakamura This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhardt and Kenneth Rogoff.

Many notable books and ideas were published by faculty authors this past year as well. Several of these have been recently featured in Columbia Ideas at Work including: The Curse of the Mogul by Bruce Greenwald, Jonathan Knee and Ava Seave; The Aid Trap by Glenn Hubbard and William Duggan; and Value Above Cost: Driving Superior Financial Performance with CVA: The Most Important Metric You’ve Never Used by Don Sexton.

Photo credit: Melanie