The New Financial Order: Risk in the 21st Century - Softcover

Shiller, Robert J.

Softcover

ISBN 10: 0691120110 ISBN 13: 9780691120119

Publisher: Princeton University Press, 2004

Synopsis

In his best-selling Irrational Exuberance, Robert Shiller cautioned that society's obsession with the stock market was fueling the volatility that has since made a roller coaster of the financial system. Less noted was Shiller's admonition that our infatuation with the stock market distracts us from more durable economic prospects. These lie in the hidden potential of real assets, such as income from our livelihoods and homes. But these ''ordinary riches,'' so fundamental to our well-being, are increasingly exposed to the pervasive risks of a rapidly changing global economy. This compelling and important new book presents a fresh vision for hedging risk and securing our economic future.


Shiller describes six fundamental ideas for using modern information technology and advanced financial theory to temper basic risks that have been ignored by risk management institutions--risks to the value of our jobs and our homes, to the vitality of our communities, and to the very stability of national economies. Informed by a comprehensive risk information database, this new financial order would include global markets for trading risks and exploiting myriad new financial opportunities, from inequality insurance to intergenerational social security. Just as developments in insuring risks to life, health, and catastrophe have given us a quality of life unimaginable a century ago, so Shiller's plan for securing crucial assets promises to substantially enrich our condition.


Once again providing an enormous service, Shiller gives us a powerful means to convert our ordinary riches into a level of economic security, equity, and growth never before seen. And once again, what Robert Shiller says should be read and heeded by anyone with a stake in the economy.

About this title

About the Author

Robert J. Shiller is the Stanley B. Resor Professor of Economics at Yale University. He is the author of Macro Markets, which won the first annual Paul A. Samuelson Award of TIAA-CREF, and Irrational Exuberance (Princeton), which was a New York Times bestseller.

From the Back Cover

"Robert Shiller has the remarkable ability to think independently and the courage to propose ideas that to middlebrow thinkers may sound speculative. Think of what your reaction would have been had someone discussed risksharing (insurance) before it became popular. . . . Throughout his career Shiller has stood for unpopular ideas and has been proven right (his 1981 paper on volatility, his 2000 discussion of the bubble). I would read and re-read this book."--Nassim Nicholas Taleb, author of Fooled by Randomness: The Hidden Role of Chance in the Markets and in Life

"Shiller has proved even bolder than we thought. . . . His ambitions are global and systemic. Shiller wants nothing less than to inspire and guide the redesign of the world financial system. The New Financial Order is ... a step-by-step description of what should be done to limit the damage done to people, and even entire nations, by capitalism's creative destruction."--Peter Coy, Business Week

"Bob Shiller has done it again. In The New Financial Order, he tells how innovations in risk management can better the lives not just of the rich, but of the poor and the middle class, insuring against the most serious risks that face us all. There is something for everyone in this brilliant book. It foretells where financial markets are headed in the coming century."--George A. Akerlof, Goldman Professor of Economics, University of California, Berkeley, and Nobel Laureate in Economics

"As the worldly philosophers of the past affirmed, the goal of economics is to improve the way society functions. In The New Financial Order, Robert Shiller joins this proud tradition by directing his brilliant economic skills toward the creation of financial institutions designed to reduce the risks an unknown future visits on most members of our society and others. Shiller's imaginative and compelling analysis will appeal to all readers who share his passion for initiating not only a richer, but a better, century."--Peter L. Bernstein, author of Against the Gods: The Remarkable Story of Risk

"Robert Shiller's book, The New Financial Order, is an important work on a significant topic."--Joseph E. Stiglitz, author of Globalization and its Discontents, and Nobel Laureate in Economics

"This is one of those rare books that really captures the imagination by offering fresh ideas, that makes you think and at the same time is rigorous and serious. It's hard to exaggerate how unusual and exciting this is to a reader. One of the book's real joys is the way it captures the passion of economics for making people's lives better."--Diane Coyle, author of The Weightless World and Sex, Drugs, and Economics

"Shiller is a real visionary, and this book will be widely read and discussed. It suggests a remedy for a situation begging to be remedied: we live in an age of great material wealth, but equally great economic insecurity."--Herbert Gintis, University of Massachusetts, Amherst, and the Santa Fe Institute

"Robert Shiller's book, The New Financial Order, is an important work on a significant topic."--Joseph E. Stiglitz, author of Globalization and its Discontents, and Nobel Laureate in Economics

Reviews

Audaciously taking well-established economic ideas to their logical extreme, Shiller calls for a revolution in the management of risk, both individual and collective. While markets are currently used to hedge away a small number of risks—health problems, rising commodity prices, volatile currencies—Shiller believes that they could also limit risks like falling house prices and rising unemployment. In the future, countries might buy and sell futures contracts based on their own G.D.P., and individuals could insure themselves against choosing the wrong profession. There is a mad-scientist quality to some of these proposals, and the technical and political obstacles to their implementation seem insurmountable. Still, Shiller's ambition is exhilarating, and gives his work something that most business books lack: a deep sense of how economic ideas might transform people's everyday lives.
Copyright © 2005 The New Yorker

Edition details

• Publisher: Princeton University Press
• Publication date: 2004
• Language: English
• ISBN 10: 0691120110
• ISBN 13: 9780691120119
• Binding: Paperback
• Number of pages: 384