The Man Who Knew by Sebastian Mallaby

This book is based on almost unlimited access to Alan Greenspan, his papers, and his colleagues and friends, all of whom were generous in their collaboration. For a period of five years, starting in the autumn of 2010, I was a familiar visitor to Greenspan’s offices in Washington, D.C., and saw him in other contexts, too: at home, hosting a dinner for a former British prime minister; at his suite in the Ritz on New York’s Central Park South, where the staff welcomed him with a model of the Federal Reserve building made out of chocolate; on the Acela train between his two home cities, where he tipped the porters generously, proclaiming a belief in redistribution. At some point in this process, after we had logged more than seventy hours of recorded conversations, I stopped counting the time. The intriguing bits seemed to come at the least expected moments, and they were not always when the recorder was running. Once, after Greenspan had mentioned his love of automobiles, and particularly their ability to lift his mood from a dark patch, I sent a note over to his office, wondering how seriously he had meant this.

Later that day, Greenspan replied:

Dear Sebastian, In 1959 I bought a Buick convertible with tail fins and red leather seats. It did cheer me up driving on highways with JS Bach loudly pouring out of my car radio speakers. I do not recall being depressed prior to the purchase, however.


I looked around for a photo that matched Greenspan’s description, and sent it over to him. Greenspan’s assistant relayed his answer:

AG said this is his car! But his was red interior with black exterior (not white, as in the photo). He said he had air conditioning.

In the margins of conversations about money and power, the private man would surface unpredictably. Once, rather early in the process, I asked Greenspan about his romantic life. “I dated news anchors, senators, and beauty queens,” he stated, a bit mischievously. I asked him what made him most happy. A sense of progress, a life trajectory angled upward at the steepest possible incline, he replied, with disarming honesty. I asked him why, despite having spent almost two decades as the world’s most powerful economist, he still persisted in describing himself as a “sideman.” The answers stretched back to the love and injury he had experienced as a child. His ambition, his shyness, the manner in which he navigated Washington — all had their roots in a 1930s boyhood on the northern tip of Manhattan.

Some of the best research discoveries came almost despite him. Several assiduous reporters had tried to lay hands on Greenspan’s early writings, contained in his doctoral thesis; oddly, New York University, which awarded the degree, had lost it. But after several months of sitting at the round table in Greenspan’s office, I noticed a pattern: when he referred to his youthful thinking, his eyes would drift up to a certain shelf; and, following his gaze, I spied a fat binder. One day, when Greenspan returned to the subject of his intellectual development, I looked up at that same shelf. I would love to read that early work, I said, staring purposefully at the binder. Despite the awkward nature of the content, he gave it to me.

I knew that in the 1960s, when Greenspan had been the de facto chief economist for the claque of libertarians clustered around the novelist Ayn Rand, he had delivered a series of lectures titled the Economics of a Free Society. I wondered if there were recordings, or possibly a text, affording an insight into Greenspan’s worldview as he crested his late thirties. One day, as I tracked down Greenspan’s friends and colleagues from those times, I found myself in a secluded cabin in the woods of Virginia, talking to Lowell Wiltbank, who had managed the computers and machines at Greenspan’s small consulting firm. Learning that Wiltbank was himself a devotee of Rand’s thinking, I asked whether he had kept memorabilia from her movement. His basement was stocked with it, he said. Before very long, I had three hundred pages of transcripts: the complete map of my subject’s mind, at the height of his intellectual purism.

Inevitably, research of this kind involves drilling many dry boreholes. But the gushers repaid me: the personal files of the Republican provocateur Patrick Buchanan, which contained Greenspan’s unapologetically conservative memos to Richard Nixon on the racial tensions and assassinations of 1968; the untold story of the Fed’s record on derivatives and mortgages, teased out of interviews and documents released under the Freedom of Information Act; the sensitive memories of some of the women who loved him, foremost among them his wife, Andrea Mitchell. As I write in my acknowledgments, my own discoveries were augmented by an exceptional research team at the Council on Foreign Relations. Between us, we conducted hundreds of interviews and consulted thousands of pages of documentary sources in an attempt to reconstruct a life as vividly and accurately as possible. I was moderately surprised when Greenspan agreed to cooperate with this project. I approached him after he expressed admiration for my history of hedge funds, which he cited in his own retrospective work on the 2008 financial crisis. But I imagined his attitude might be colored by an earlier book: my account of the World Bank under its tempestuous boss James Wolfensohn. Although my verdict on Wolfensohn had been broadly positive, it had not been received well: Wolfensohn sought to discredit me, and the World Bank bookshop decided not to display the stacks of copies it had ordered. During one of his tantrums, Wolfensohn’s staff had arranged for a distinguished friend to call and calm him down. The friend was Alan Greenspan.

Despite this unpropitious background, Greenspan did agree to talk to me, even though he understood that he could claim no power over my account or my conclusions. On the advice of my literary agent, I tried to lock him in, asking that he sign an agreement promising cooperation with me and no other author. At this, Greenspan balked, observing that at some point I was likely to start doing things that he disliked; and since I was not offering to bind my hands, he was not about to bind his either. After that testy beginning, we proceeded on the basis of mutual autonomy — a fitting formula for the biography of a libertarian — and I would not in retrospect have wished anything different. The arrangement gave me full access to my subject combined with untrammeled independence. Married to one journalist, a courter of others over many years, Greenspan understood that he should not try to control me.

At the end of my writing, I hesitated to show my manuscript to Greenspan. Nothing in our relationship required me to do so, and I recognized the risks in putting my cards on the table. The mere extent of my research might come as a shock: in some cases, I had not told Greenspan about the documents I had unearthed because these often spoke for themselves and did not require his comment or elaboration. Besides, people generally do not find it easy to swallow an outsider’s unvarnished account of their doings — like Wolfensohn before, Greenspan might react by firing back at me.

Inevitably, the evidence had led me repeatedly to an understanding of my subject’s actions and motives that was at variance with his own account — he was not going to like that. But after some deliberation, I did show Greenspan the pages. For one thing, openness seemed the more honorable course; he had been open with me, after all. For another, I wanted to submit my research to this final check. After five years of exhaustive efforts to get to the truth, it seemed right to test my results one last time against my subject’s memory.

Three weeks after receiving my pages, Greenspan called me in London. We had two long conversations during which he vigorously disputed my interpretations in only a handful of places. The rest he accepted, noting with a chuckle that my history was perhaps more accurate than positive. I deferred to him on one detail about his relationship with his parents, and added a point about his motives in resisting derivatives reform in the late 1990s. In other instances, I weighed what he said but left my account substantially unaltered.

Positive or not, I hope this history is instructive. As the most influential economic statesman of his age, Greenspan spent a lifetime grappling with a momentous shift: the transformation of finance from the fixed and regulated system of the postwar era to the free-wheeling free-for-all of the past quarter century. No other individual was closer to the decisions that attended this change. The story of Alan Greenspan is also the story of the making of modern finance.

From The Man Who Knew, the Life and Times of Alan Greenspan by Sebastian Mallaby is published by Bloomsbury, Hardback — £25

Makers and Takers by Rana Foroohar

It wasn’t the way Steve Jobs would have done it.

In the spring of 2013, Jobs’s successor as CEO of Apple Inc., Tim Cook, decided the company needed to borrow $17 billion. Yes, borrow. Never mind that Apple was the world’s most valuable corporation, that it had sold more than a billion devices so far, and that it already had $145 billion sitting in the bank, with another $3 billion in profits flowing in every month.

So, why borrow? It was not because the company was a little short, obviously, or because it couldn’t put its hands on any of its cash. The reason, rather, was that Apple’s financial masters had determined borrowing was the better, more cost-effective way to obtain the funds. Whatever a loan might normally cost, it would cost Apple far less, thanks to a low-interest bond offering available only to blue-chip companies. Even better, Apple would not actually have to touch its bank accounts, which aren’t held someplace down the street like yours or mine. Rather, they are scattered in a variety of places around the globe, including offshore financial institutions. (The company is secretive about the details.) If that money were to return to the United States, Apple would have to pay hefty tax rates on it, something it has always studiously avoided, even though there is something a little off about a quintessentially American firm dodging a huge chunk of American taxes.

So Apple borrowed the $17 billion.

This was never the Steve Jobs way. Jobs focused relentlessly on creating irresistible, life-changing products, and was confident that money would follow. By contrast, Cook pays close attention to the money and to increasingly sophisticated manipulations of money. And why? Part of the reason is that Apple hasn’t introduced any truly game-changing technology since Jobs’s death in 2011. That has at times depressed the company’s stock price and led to concerns about its long-term future, despite the fact that it still sells a heck of a lot of devices. It’s a chicken-and-egg cycle, of course. The more a company focuses on financial engineering rather than the real kind, the more it ensures it will need to continue to do so. But right now, what Apple does have is cash.

Which gets us to that $17 billion. Apple didn’t need that money to build a new plant or to develop a new product line. It needed the funds to buy off investors by repurchasing stock and fattening dividends, which would goose the company’s lagging share price. And, at least for a little while, the tactic worked. The stock soared, yielding hundreds of millions of dollars in paper wealth for Apple board members who approved the maneuver and for the company’s shareholders, of whom Cook is one of the largest. That was great for them, but it didn’t put much shine on Apple. David Einhorn, the hedge fund manager who’d long been complaining that the company wasn’t sharing enough of its cash hoard, inadvertently put it very well when he said that Apple should apply “the same level of creativity” on its balance sheet as it does to producing revolutionary products. To him, and to many others in corporate America today, one kind of creativity is just as good as another.

I’ll argue differently in this book.

The fact that Apple, probably the best-known company in the world and surely one of the most admired, now spends a large amount of its time and effort thinking about how to make more money via financial engineering rather than by the old-fashioned kind, tells us how upside down our biggest corporation’s priorities have become, not to mention the politics behind a tax system that encourages it all. This little vignette also demonstrates how detached many of America’s biggest businesses have become from the needs and desires of their consumers — and from the hearts and minds of the country at large.

Because make no mistake, Apple’s behavior is no aberration. Stock buybacks and dividend payments of the kind being made by Apple — moves that enrich mainly a firm’s top management and its largest shareholders but often stifle its capacity for innovation, depress job creation, and erode its competitive position over the longer haul — have become commonplace. The S&P 500 companies as a whole have spent more than $6 trillion on such payments between 2005 and 2014, bolstering share prices and the markets even as they were cutting jobs and investment. Corporate coffers like Apple’s are filled to overflowing, and America’s top companies will very likely hand back a record amount of cash to shareholders this year.

Meanwhile, our economy limps along in a “recovery” that is tremendously bifurcated. Wage growth is flat. Six out of the top ten fastest-growing job categories pay $15 an hour and workforce participation is as low as it’s been since the late 1970s. It used to be that as the fortunes of American companies improved, the fortunes of the average American rose, too. But now something has broken that relationship.

That something is Wall Street. Just consider that only weeks after Apple announced it would pay off investors with the $17 billion, more sharks began circling. Corporate raider Carl Icahn, one of the original barbarians at the gate who attacked companies from TWA to RJR Nabisco in the 1980s and 1990s, promptly began buying up Apple stock, all the while tweeting demands that Cook spend billions and billions more on buybacks. With each tweet, Apple’s share price jumped. By May 2015, Icahn’s stake in Apple had soared 330 percent, to more than $6.5 billion, and Apple had pledged to spend a total of $200 billion on dividends and buybacks through March 2017.

Meanwhile, the company’s R&D as a percentage of sales, which has been falling since 2001, is creeping ever lower. What these sorts of sugar highs portend for Apple’s long-term future is anyone’s guess, but one thing is clear: the business of America isn’t business anymore. It’s finance. From “activist investors” to investment banks, from management consultants to asset managers, from high-frequency traders to insurance companies, today, financiers dictate terms to American business, rather than the other way around. Wealth creation within the financial markets has become an end in itself, rather than a means to the end of shared economic prosperity. The tail is wagging the dog.

Our economic illness has a name: financialization. It’s a term for the trend by which Wall Street and its way of thinking have come to reign supreme in America, permeating not just the financial industry but all American business. The very type of short-term, risky thinking that nearly toppled the global economy in 2008 is today widening the gap between rich and poor, hampering economic progress, and threatening the future of the American Dream itself. The financialization of America includes everything from the growth in size and scope of finance and financial activity in our economy to the rise of debt-fueled speculation over productive lending, to the ascendancy of shareholder value as a model for corporate governance, to the proliferation of risky, selfish thinking in both our private and public sectors, to the increasing political power of financiers and the CEOs they enrich, to the way in which a “markets know best” ideology remains the status quo, even after it caused the worst financial crisis in seventy-five years. It’s a shift that has even affected our language, our civic life, and our way of relating to one another. We speak about human or social “capital” and securitize everything from education to critical infrastructure to prison terms, a mark of our burgeoning “portfolio society.”

How did finance, a sector that makes up 7 percent of the economy and creates only 4 percent of all jobs, come to generate almost a third of all corporate profits in America at the height of the housing boom, up from some 10 percent of the slice it was taking twenty-five years ago? How did this sector, which was once meant to merely facilitate business, manage to get such a stranglehold over it? That is the question this book will strive to answer, in particular by examining just how the rise of finance has led to the fall of American business, a juxtaposition that has rarely been explored. By looking at the effect of our dysfunctional financial system on business itself, an area that I have covered as a journalist for twenty-three years, I will move beyond sound bites into real analysis of the problem and illustrate how the trend of financialization is damaging the very heart of our economy and thus endangering prosperity for us all.

From Makers and Takers: The Rise of Finance and the Fall of American Business by Rana Foroohar (Crown Publishing/Penguin Random House)

What Works by Iris Bohnet

As late as 1970, only 5 percent of musicians performing in the top five orchestras in the United States were women. Today, women compose more than 35 percent of the most acclaimed orchestras, and they play great music. This did not happen by chance. Rather, it required the introduction of blind auditions. The Boston Symphony Orchestra was the first to ask musicians to audition behind a screen, and in the 1970s and 1980s most other major orchestras followed suit. When they did so, usually in preliminary rounds, it raised the likelihood that a female musician would advance by 50 percent and substantially increased the proportion of women hired.

In theory, an orchestra director cares about the sounds coming out of the bassoon, the flute, and the trumpet, not the ethnicity or sex of the person playing the instrument. In practice, the Vienna Philharmonic, for example, admitted its first female player in 1997. Not so long ago. Orchestra directors and selection committees were quite comfortable with all-male, all-white orchestras and likely not aware of their biases. To change this, no great technological feat was required, just awareness, a curtain, and a decision. Or, more precisely, a design decision. A simple curtain doubled the talent pool, creating amazing music and transforming what orchestras look like. But why did it take so long?

Consider the following image and compare squares A and B. What do you see?

Most people see square B as being lighter than square A. It turns out that this is an illusion. Your mind made sense of the pattern it saw, a checkerboard. You put squares into categories, dark and light, and put them in order: light squares next to dark squares. You may also have taken the shadow into account and made sure it did not trick you into not seeing a pattern that you knew had to be there.

Consider the same checkerboard now, with square B isolated. Note that squares A and B in fact have the same color. They are both dark. By blocking some of the checkerboard, we allowed your mind to see square B for what it is — another dark square. It no longer had to be in a certain category and obey certain rules. It was liberated from the patterns we expect, just as curtains liberated orchestra selection committees. Professional musicians typically are quite shocked when they learn how much they are influenced by visual cues. A recent series of experiments showed that competition judges consciously value sound as central to their decision. Only the experimental evidence shows them that, in fact, they are instead relying heavily on visual cues.

Consider another, quite different example. A study examining the parole rulings of Israeli judges found that they ruled far more leniently right after meal breaks. Differing degrees of leniency were the unintended consequence of hunger, fatigue, the depletion of cognitive resources — and design. Just prior to taking a break, the judges reverted to the easy solution: the status quo. After a break, they were more deliberative. The timing and number of breaks the judges took — the design — had unintentional consequences. Bad designs, whether consciously or unconsciously chosen, lead to bad outcomes. Bias is built into our practices and procedures, not just into our minds. Here is our opportunity.

This book’s goal is to offer good designs to you; designs that make it easier for our biased minds to get things right. Based on research evidence, we can change the environments in which we live, learn, and work. My principal focus here is the stubborn, costly problem of gender in equality, but the recommendations I make stem from a wealth of research about decisions and behavior that go well beyond gender. The book takes as a given that people make mistakes; they make them often and (sometimes) unknowingly. As a consequence, these mistakes reduce everyone’s well- being. The solutions I recommend come from the field of behavioral economics — putting up screens, timing breaks well, and dozens of more and less complicated interventions — all building on insights into how our minds work. My invitation to you is to become a behavioral designer — because it works, because it often is rather easy and inexpensive, and because it will start to level the playing field and give every one greater opportunity to thrive.

Reproduced from What Works: Gender Equality by Design, by Iris Bohnet, Cambridge, Mass.: Harvard University Press. Copyright © 2016 by Iris Bohnet. All rights reserved.

Alibaba by Duncan Clark

Alibaba is an unusual name for a Chinese company. Its founder, Jack Ma, a former English teacher, is an unlikely corporate titan.

Yet the house that Jack built is home to the largest virtual shopping mall in the world, soon to overtake Walmart in the amount of goods sold. The company’s IPO on the New York Stock Exchange in September 2014 raised $25 billion, the largest stock market flotation in history. In the months that followed, Alibaba’s shares soared, making it one of the top ten most valuable companies in the world, worth almost $300 billion. Alibaba became the most valuable Internet company in the world after Google, its shares worth more than Amazon and eBay combined. Nine days before the IPO, Jack celebrated his fiftieth birth­day, the soaring value of his stake making him the richest man in Asia. But since that peak Alibaba’s life as a publicly listed company has not gone according to plan. Its shares fell by half from their post ­IPO peak, even briefly falling below the initial offer price. Investor concerns were sparked in early 2015 by a surprising entanglement with a gov­ernment agency over intellectual property, then fueled by the slowing Chinese economy and volatile stock markets, which dragged down Alibaba’s shares in their wake.

Despite the ups and downs of the stock market, with a dominant share of the e­commerce market, Alibaba is uniquely well positioned to benefit from the rise of China’s consuming classes. Over 400 million people, more than the population of the United States, make purchases on Alibaba’s websites each year. The tens of millions of packages gener­ated each day account for almost two­ thirds of all parcel deliveries in China.

Alibaba has transformed the way Chinese shop, giving them access to a range and quality of items that previous generations could only dream of. Like Amazon in the West, Alibaba brings the convenience of home delivery to millions of consumers. Yet this comparison under­ states Alibaba’s impact. Taobao, its online shopping website, has given many Chinese people their first sense of being truly valued as a cus­tomer. Alibaba is playing a pivotal role in China’s economic restructur­ing, helping move the country away from a “Made in China” past to a “Bought in China” present.

The Old China growth model lasted three decades. Based on manufacturing, construction, and exports, it delivered hundreds of millions out of poverty but left China with a bitter legacy of overcapac­ity, overbuilding, and pollution. Now a new model is emerging, one centered on catering to the needs of a middle class expected to grow from 300 million to half a billion people within ten years.

Jack, more than any other, is the face of the new China. Already something of a folk hero at home, he stands at the intersection of China’s newfound cults of consumerism and entrepreneurship.

His fame extends well beyond China’s borders. A meeting (and a selfie) with Jack is coveted by presidents, prime ministers and princes, CEOs, entrepreneurs, investors, and movie stars. Jack regularly shares the stage with the world’s political and corporate elite. A masterful public speaker, more often than not he outshines them. To go onstage after Jack is a losing proposition. In a remarkable reversal of protocol, President Obama even volunteered to act as moderator for Jack at a Q&A session during the November 2015 APEC meeting in Manila. At the World Economic Forum in Davos in January 2016, Jack dined with Leonardo DiCaprio, Kevin Spacey, and Bono, along with the CEOs of the Coca­Cola Company, DHL, and JPMorgan Chase. The founder of another China Internet company remarked to me: “It was almost as though Alibaba’s PR department was writing Obama’s script!”

Facebook founder Mark Zuckerberg has been demonstrating his commitment to learning Mandarin Chinese in speeches he has made since 2014, starting at Tsinghua University in Beijing. But Jack, English teacher turned tycoon, has been wowing crowds in both English and Chinese at conferences around the world for over seventeen years.

I first met Jack in the summer of 1999, a few months after he founded Alibaba in a small apartment in Hangzhou, some hundred miles southwest of Shanghai. On my first visit, I could count the num­ber of cofounders by the toothbrushes jammed into mugs on a shelf in the bathroom. In addition to Jack, they included his wife, Cathy, and sixteen others. Jack and Cathy had wagered everything they owned on the company, including their home. Jack’s ambition then, as it remains today, was breathtaking. He talked of building an Internet company that would last eighty years — the typical span of a human life. A few years later, he extended Alibaba’s life expectancy to “a hundred and two” years, so that the company would span three centuries from 1999. From the very beginning, he vowed to take on and topple the giants of Silicon Valley. Within the confines of that modest apartment this should have seemed delusional. Yet there was something about his pas­sion for the venture that made it sound entirely credible.

I became an adviser to Alibaba in its early years, helping Jack and his right­hand man, Joe Tsai, with the company’s international expansion strategy and recommending to them some of its first foreign employees. Alibaba has assisted me in my research for this book by arranging interviews with senior management and providing access to the company in various locations. But this is an entirely independent account. I have never been an employee of the company and have no professional relationship with them today. My insights come in part from my brief role during the dot­com boom as an adviser to Alibaba and from the proximity that this early contact has afforded since. Yet in writing this book, I have been guided also by my personal experi­ence living in China since 1994, when the Internet first came to the country’s shores, and by my professional career. With support from my previous employer Morgan Stanley, in the summer of 1994, I founded BDA China, a Beijing­ based investment advisory firm, which today numbers more than one hundred professionals, consulting to investors and participants in China’s technology and retail sectors.

As part of the remuneration for my advisory service, in early 2000, Jack and Joe granted me the right to buy a few hundred thousand shares in Alibaba at just thirty cents each. When the deadline was up to buy the shares, in early 2003, things weren’t looking so good for the company. The dot­com bubble had burst and Alibaba’s (original) busi­ness was struggling. In an error of colossal proportions, I decided not to buy the shares. In the weeks after the company’s September 2014 IPO, this mushroomed into a $30 million mistake. I would like to thank you very much for purchasing this book. Writing it has proved (somewhat) cathartic as I explore the stories of others, like Goldman Sachs, who underestimated Jack’s tenacity and sold their early stake too soon, and eBay, who dismissed his firm as a rival, only to be forced out of the China market within a few years.

Jack is different from most of his Internet billionaire peers. He struggled in math as a student and wears his ignorance of technology as a badge of honor. His outsize ambitions and unconventional strate­gies won him the nickname “Crazy Jack.” In this book, we will explore his past and quirky personality to learn the method to his madness.

From ALIBABA by Duncan Clark Copyright © 2016 by Duncan Clark. Reprinted courtesy of Ecco, an imprint of HarperCollins Publishers

The 100-Year Life by Lynda Gratton and Andrew Scott

We are in the midst of an extraordinary transition that few of us are prepared for. If we get it right it will be a real gift; to ignore and fail to prepare will be a curse. Just as globalization and technology changed how people lived and worked, so over the coming years increasing longevity will do the same.

Whoever you are, wherever you live and however old you are, you need to start thinking now about the decisions you will take in order to make the most of this longer life. The same holds for the companies you work for and the society in which you live.

Our lives will be much longer than has historically been the case, longer than the role models on which we currently base life decisions, and longer than is assumed in our current practices and institutional arrangements. Much will change and this process of transformation is already underway. You need to be prepared for this and adapt accordingly, hence our ambition in writing this book.

A long life could be one of the great gifts that those of us alive today enjoy. On average we are all living longer than our parents, longer still than our grandparents. Our children and their children will live even longer. This lengthening of life is happening right now and all of us will be touched by it. This is not trivial — there will be substantial gains in life expectancy. A child born in the West today has a more than 50 per cent chance of living to be over 105, while by contrast, a child born over a century ago had a less than 1 per cent chance of living to that age. This is a gift that has been accruing slowly but steadily. Over the last 200 years, life expectancy has expanded at a steady rate of more than two years every decade. That means that if you are now 20 you have a 50 per cent chance of living to more than 100; if you are 40 you have an even chance of reaching 95; if you are 60, then a 50 per cent chance of making 90 or more.

This is not science fiction. You probably won’t live to 180, and we don’t recommend you take up weird food fads. What is clear is that millions of people can look forward to a long life and this will create pressure on how they live and how society and businesses operate. There is no doubt that new norms and role models will emerge, and already there is plenty of evidence of people and society adapting to these changes. Looking forward, changes will be more extensive still, and this will raise the general issue in the level of public consciousness and debate.

How will you make the most of this gift? This is a question we have asked in our lectures and discussions with a variety of people of different ages. For many of them the gift of time came as a surprise, yet over the period of our discussions people realized they needed to start to alter their plans and to take action immediately. Others had already implicitly adjusted to the reality of longevity but had not realized how many others were thinking the same way.

The forces that shape the living of a long life are economic and financial, psychological and sociological, medical and demographic. Yet fundamentally this is a book about you and how you can plan your life. There will be more choices and you will experience many changes. These are factors that bring into focus what you stand for, what you value and what you wish to base your life around.

Issues of identity, choice and risk become central to questions of navigating a long life. A long life means more changes; more stages means more individual choices to be made; and the more change and choices you experience, the less the influence of where you started from. So you will need to think about your identity in a different way from those who came before. The longer your life, the more your identity reflects what you craft rather than a reactive response to where you began. Those that came before you did not have to think so consciously about actively navigating their lives through so many distinct changes, or indeed developing their capacity for transition. Long lives are lives of transitions; some of these transitions will be in the company of others, but for many there will be no cohort to offer support. Simply following the herd is not going to work. In a way that past generations simply didn’t have to do, each one of us will need to think about who we are and how we construct our life and how this reflects our identity and values.

We wrote this book for people who understand that the past is not a predictor of the future; who want to learn about options and not just constraints; and who want to positively influence the working life they lead now and into the future. People who want to maximize their chances of making a long life a gift rather than a curse. This book is an invitation to take the first steps towards creating that gift.

From The 100-Year Life, published by Bloomsbury. Hardback; £18.99; June 2016.

The Rise and Fall of American Growth by Robert J. Gordon

The century of revolution in the United States after the Civil War was economic, not political, freeing households from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation, and early death. Only one hundred years later, daily life had changed beyond recognition. Manual outdoor jobs were replaced by work in air-conditioned environments, housework was increasingly performed by electric appliances, darkness was replaced by light, and isolation was replaced not just by travel, but also by color television images bringing the world into the living room. Most important, a newborn infant could expect to live not to age forty-five, but to age seventy-two. The economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.

This book is based on an important idea having innumerable implications: Economic growth is not a steady process that creates economic advance at a regular pace, century after century. Instead, progress occurs much more rapidly in some times than in others. There was virtually no economic growth for millennia until 1770, only slow growth in the transition century before 1870, remarkably rapid growth in the century ending in 1970, and slower growth since then. Our central thesis is that some inventions are more important than others, and that the revolutionary century after the Civil War was made possible by a unique clustering, in the late nineteenth century, of what we will call the “Great Inventions”.

This leads directly to the second big idea: that economic growth since 1970 has been simultaneously dazzling and disappointing. This paradox is resolved when we recognize that advances since 1970 have tended to be channeled into a narrow sphere of human activity having to do with entertainment, communications, and the collection and processing of information. For the rest of what humans care about — food, clothing, shelter, transportation, health, and working conditions both inside and outside the home — progress slowed down after 1970, both qualitatively and quantitatively. Our best measure of the pace of innovation and technical progress is total factor productivity (hereafter TFP), a measure of how quickly output is growing relative to the growth of labor and capital inputs. TFP grew after 1970 at barely a third the rate achieved between 1920 and 1970. The third big idea follows directly from the second. Our chronicle of the rise in the American standard of living over the past 150 years rests heavily on the history of innovations, great and small alike. However, any consideration of US economic progress in the future must look beyond innovation to contemplate the headwinds that are blowing like a gale to slow down the vessel of progress. Chief among these headwinds is the rise of inequality that since 1970 has steadily directed an ever larger share of the fruits of the American growth machine to the top of the income distribution.

Our starting point, that a single hundred-year period, the “special century,” was more important to economic progress than have been all other centuries, represents a rebellion against the theory of economic growth as it has evolved over the last sixty years. Growth theory features an economy operating in a “steady state” in which a continuing inflow of new ideas and technologies creates opportunities for investment. But articles on growth theory rarely mention that the model does not apply to most of human existence. According to the great historian of economic growth, Angus Maddison, the annual rate of growth in the Western world from AD 1 to AD 1820 was a mere 0.06 percent per year, or 6 percent per century. As succinctly stated by economic commentator Steven Landsburg,

Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture — but none of that stuff had much effect on the quality of people’s lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level . . . Then — just a couple of hundred years ago — people started getting richer. And richer and richer still.

This book adopts the “special century” approach to economic growth, holding that economic growth witnessed a singular interval of rapid growth that will not be repeated — the designation of the century between 1870 and 1970 as the special epoch applies only to the United States, the nation which has carved out the technological frontier for all developed nations since the Civil War. This book’s focus on the United States, however, does not deny that other nations also made stupendous progress, that western Europe and Japan largely caught up to the United States in the second half of the twentieth century, and that China and other emerging nations are now well on their way in the catch-up process to the techniques and amenities enjoyed by the developed world.

Excerpted from The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War by Robert J. Gordon. © 2016 Princeton University Press. Reproduced by permission.

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