Incroyable, n’est pas? C’est dommage…mais je suppose que c’est la vie. September 30 is the day of reckoning for the beloved seventy-four year old bookshop, Librairie de France in Rockefeller Center.  According to this New York Times blurb the rent is too much for the current owner and he will be forced to close.  This saddens me greatly.  I spent many a yuletide visit to New York with widened, childlike eyes, browsing the stacks and imagining myself in Paris instead of packed in, shoulder to shoulder, with the holiday matinee crowds.  The shuttering of theLibrairie means that yet another little relic of Old Manhattan will disappear into the history books.

What are your memories of the Librairie de France and other long-gone vestiges of book culture?

We were very pleased to hear this week that two Princeton University Press economicstitles are on the longlist for consideration of the Financial Times/Goldman Sachs Business Book of the Year–the only university press on the list.  Congratulations to George Akerlof and Robert Shiller for ANIMAL SPIRITS: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, and to Carmen Reinhart and Kenneth Rogoff for their soon-to-be published THIS TIME IS DIFFERENT: Eight Centuries of Financial Folly. Shortlist  announcements will be made in September.

Amar Bhide speaking at the Kauffman Foundation about The Venturesome Economy.

Jon Macey gives a great interview on Fox Business last night on the subject of his op-ed in the Wall Street Journal (’Say on Pay’ and Other Bad Ideas) yesterday and why the government doesn’t want their bailout money back.

Here’s an excerpt from the transcript:

Host: Welcome, Jonathan you’re saying that the government doesn’t want the money back because they want to continue to control or cap control over Wall Street.

Macey: That’s right if there’s one thing we’ve learned. Over the past couple hundred years about bureaucracies. Is that they don’t like to give up power once they’ve got it. Take a look at the Tennessee Valley Authority. They were created to put electricity into the Tennessee valley. They did that, but did they go away. No they said oh they need phone services. So they got phone services to everybody in that part of the US and did they go away? No, they’re still around and what do they do? Who knows. They loaned money to people and people can never have enough money so they’ll be around forever…

Amar Bhide has an excellent op-ed on the resiliency of venturesome consumption even in times of financial crisis over at the Wall Street Journal today. Click through to read the entire thing, but here’s a bit of silver lining:

The good news is that the cutbacks are likely to be more severe in the less productive kind of consumption. History suggests that Americans don’t shirk from venturesome consumption in hard times. The personal computer took off in the dark days of the early 1980s. I paid more than a fourth of my annual income to buy an IBM XT then — as did millions of others. Similarly, in spite of the Great Depression, the rapid increase in the use of new technologies made the 1930s a period of exceptional productivity growth. Today, sales of Apple’s iPhone continue to expand at double-digit rates. Low-income groups (in the $25,000 to $49,999 income segment) are showing the most rapid growth, with resourceful buyers using the latest models as their primary device for accessing the Internet.

Amar’s concept of the venturesome consumer is fully developed in his recent PUP title, The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World.

Amar Bhide, Glaubinger Professor at Columbia Business School and author of The Venturesome Economy, has a fascinating article posted at Business Week in which he argues that the mess we’re in started with financial theories that substituted banking innovation for due diligence and sensible regulation. Amar’s work was also featured this past weekend in the New York Times Magazine’s Consumed column.

A longer version of the article is also available at Amar’s site.

“Where enterprise leads,” wrote British economist Joan Robinson in 1952, “finance follows.” But now finance has led industry—into a ravine. It didn’t start with the recent missteps of bankers, rating agencies, and mortgage brokers. Finance has been on the wrong trajectory for more than a half-century: The current crisis has deep historical roots in financial theories that regarded diversification as a substitute for due diligence—and in a dysfunctional regulatory system.

Commercial banking’s diversification, its expansion beyond traditional lending, has been disastrous. What’s needed now is a Glass-Steagall Act for the 21st century—rules requiring banks to focus simply on taking deposits and granting loans. This would protect depositors, limit financial-risk contagion, and allow the FDIC and the Federal Reserve to do what they do best. Others—hedge funds, private equity firms—would face no further regulation.

How did the banks’ recklessness, masked as innovation, evolve? Until the 1930s, economists had two views of uncertainty. John Maynard Keynes and Frank Knight (who then dominated the University of Chicago’s economics department) treated uncertainties as elements that couldn’t be quantified.Followers of the 18th century mathematician Reverend Thomas Bayes, on the other hand, quantified uncertainties as if they were bets placed on a roulette wheel. Throughout the 1940s and beyond, the Bayesian view gained the upper hand. Its conquest of scholarly journals helped mathematical modeling leap into financial practice. The idea was that all uncertainty could be reduced to probability distributions. Case-by-case judgment? Unnecessary. Returns could be maximized for the least risk simply by diversification.

Continue reading at Business Week.

As we mentioned earlier, Jonathan Macey is guest-blogging at The Icahn Report this week. In his earlier post on director capture, Macey promised to consider shareholder voting rights next and here he argues for lifting restrictions on shareholder voting and expanding the issues shareholders vote on to include generic corporate governance issues which he defines as issues “concerning broad policy that is likely to affect the value of all of the companies in a particular portfolio.”"

A brief excerpt:

The basic infrastructure of the law of corporate voting is in need of repair. For example, the ability of management to control the timing of elections and the federal rules governing proxy solicitations do not serve the interests of shareholders and should be reformed.

Read on at The Icahn Report

Jonathan Macey tackles the issue of Director Capture in an insightful piece at the Icahn Report. A brief excerpt:

In my recent Princeton University Press book Corporate Governance: Promises Made: Promises Broken I apply capture theory, which is usually used to describe and model the behavior of bureaucrats in the public sector, to the directors of publicly traded companies who come to their positions through the board nominating committee.

In my view, such directors are highly susceptible to capture… even more susceptible than bureaucrats and politicians. Capture is inevitable because management controls the machinery of the corporate election process. Management’s narrow interest in having passive and supportive boards manifests itself in the appointment of docile directors who are likely to support management’s initiatives and unlikely to challenge management or to demand that managers earn their compensation by maximizing value for shareholders.

He promises to tackle the problem of shareholder democracy in an upcoming post, too.

Columbia professor Amar Bhide spoke with Reuters to talk about President-elect Barack Obama’s plan to invest in new technological innovation. His counter intuitive argument, further developed in his book The Venturesome Economy, is that technology is relatively portable so it does not matter where it is developed–what is truly important is the ability to package new technologies from diverse sources into products that America’s “venturesome consumers” will buy.

The Venturesome Economy also achieved a trifecta of sorts–included in the books of the year round up for The Economist, a review in The Financial Times, and, of course, that fantastic article in the New York Times.

New York Times columnist Steve Lohr spoke with author Amar Bhidé about innovation, research, technology, and their impact on the U.S. economy.

The resulting article is available here at the New York Times Web site, but here is a quick excerpt:

In a new book, “The Venturesome Economy” (Princeton University Press), Mr. Bhidé makes a detailed argument that contradicts the prevailing view of expert panels and authors who contend that the nation’s prosperity is threatened by the technological rise of China and India, and that America’s capacity for innovation is eroding. To arrest the decline, they insist that more scientists and engineers, and more government spending on research, are sorely needed.

Mr. Bhidé derides the conventional view in science and technology circles as “techno-nationalism,” needlessly alarmist and based on a widely held misunderstanding of how technological innovation yields economic growth. In his view, many analysts put too much emphasis on the production of new technological ideas. Instead, he observes, the real economic payoff lies in innovations in how technologies are used.

Jonathan Macey, author of Corporate Governance: Promises Kept, Promises Broken has been interviewed by Yale Law School.

A quick excerpt:

“It’s unpopular now to talk about deregulation. As I give this interview, we’re in the middle of this big market crash, and everybody seems to be a born again deregulator…My book does focus a lot on deregulation and it criticizes the Sarbanes-Oxley Act, and frankly I think recent events have proven the source of these criticisms to be correct…All the companies that we see imploding today are subject to this statute, and one thing that is painfully clear is that the increased attention to risk management that we were supposed to get with Sarbanes-Oxleywe haven’t gotten. And that firms have been free to engage in really incredibly excessive risk taking and that these so-called regulatory or legislative solutions just haven’t worked very well.”

Listen to the rest of the interview here.