Value(s) by Mark Carney — Book Review

Content: 2/5

Readability: 1/5

Relevance: 4/5

I have no doubt that the author is a brilliant, successful, and well-intentioned person. However, this book was the epitomy of being too verbose. And I can summarize everything he said in a simple article and still deliver the value and effectiveness of the message he was trying to send in this lengthy book. It would seem every turn and opportunity, he was bright and informed, but taking the longest possible route to overexplaining everything to the detail that a meticulous policy decision maker would need to fulfill the job, but lacking the emotional intelligence to realize no one is going to read through this book and think they needed to put themselves through all 600 pages.

That being said, what he had to say I think is still critical and relevant, but I can save everybody the time I lost skimming this to deliver to you 90% of the value you could get from this book if you read it yourself.

To think in a high-abstract level, to see the whole picture, and to thread the needle through complex and deeply integrated systems, policies, factors, finances, and relationships, that is the job of policymakers, regulators, and governors of society.

And we get a really good glimpse into what kind of thought process is required to handle this task.

Value(s) talks less about monetary value (although that is relevant) and more about the societal and citizens’ values-set in order to orchestrate a functioning market, society, and economy, while handling crisises and long-term battles against greater issues beyond the basic citizen and family.

We need to redefine and uphold values in order to function better as a society, in order to move away from market society back into a market economy.

The moment we value products and commodities, services, and critical assets as purely monetary value, we lose the essential question of providing for people’s needs and the market starts to dictate society rather than the society dictating the market. And such is what differentiates market society from market economy. The free market should drive the economy, but it should never drive/control society. The moment we become a market society, we lose those values that help stabilize the economy and harmony in general.

This starts with the valuation of money in each country. Money must be resilient, responsible, transparent, dynamic, and trusted. Crypto is never backed by central banks, backed by anything or anyone for that matter, and therefore it may be dynamic, but it is not trusted, it is not reliable.

So until that is so, crypto will never replace money.

We used to rely on gold as the standard, however, once gold was mined unproportionally and could enter and disrupt a market by simply mining new gold at a rapid rate, that inflation is uncontrolled and therefore it was never a perfect standard. Money, however, can be regulated, can be printed at a rate to stabilize the economy and be resilient in its value over time so that people can depend on it. They can see the value of money even as it evolves over time.

Markets are essential to progress. Markets are the engine that runs the economy and drives the movement of goods, motivates people, and incentivizes innovation and improvements over time. It gives people the ability to get what they want and give what they can to obtain it. It is a social construct but very much vital to economics.

If little emphasis is put on pluralism of market, pro business will take over and push a market in an unhealthy direction that doesn’t benefit the majority.

Only regulation and people can keep the morality of a market or it can go south and only benefit the greedy or the immoral. So markets are critical to success, but a market without any reins or checks and balances can ruin things.

Why does commodification coorde value?

1. Demonstrably, in a pure commercial society where social hierarchy is purely based on wealth, people are led to focus on nothing else but acquiring it. If money becomes the ends, society suffers.
2. Risk of growing market fundamentalism are amplified by weakening of the traditional constraints on behavior. For 1000s of years, religion kept entrepreneurship and honesty alive, while internalising certain forms of acceptable behavior. With that in decline, there must be other ways to influence folks to reinvest in society rather than just bundle and pile up their wealth and lock it up for themselves
3. Spread of markets lead to more unequal exchanges, and in effect, forced sellers, undermining human dignity. It becomes fairly obvious that something is wrong when someone is so poor they’re forced to sell their kidney
4. Commodification, putting a good up for sale, can coorde value of the activity being priced. If logic of buy and sell governs how the goods are acquired and utilizes — allocation of healthcare, education, public safety, environmental protection, if these are all commodified, incentives to profit can outweigh public good

When it comes to the financial crisis of 2008. and the 2022 one. Look simply at it this way. When evaluating investments, if something doesn’t make sense twice, run… Don’t look back.

Most of the time, if an investment fails to make sense after twice indulging yourself in understanding it, it’s sketchy enough that you should just abandon it and run fast.

Financial crisis was highlighted in this book. It does come down to simply using subprime mortgages and bundling bad investments together so that no one realizes they are weak and not properly backed, but appear to be average investment risk. Overall, this hiding of true risk ends up backfiring.

If one did not come to this article with the knowledge of 2008 crisis, go obtain it from creditable sources, and this article will still make sense. Or you can read this book.

Three lies of finance are:

• This time is/will be different. It’s not.
• Markets are always clear, they can be assumed to be in equilibrium or that it will get to equilibrium on its own, or it is always right. It’s not.
• Markets are moral. Hahaha, absolutely not. They’re social constructs. They’re what people make them to be.

Very much a hands-off approach to markets will fail due to these 3 lies.

Minksy moment: As described by economist Hyman Minsky, a cycle typically starts with a fundamentally positive development, such as new markets or new technology of broad application. This leads to ensuring prosperity and macroeconomic stabilization, leading to borrowers and lenders making increasingly optimistic assumptions about the future such as ‘house prices always go up’ or ‘financial innovation has reduced risk’. Debt asset prices build, reinforcing over time.

This resulting vulnerability is exposed when economic conditions turn. Lenders hastily revise their expectations — ‘Minsky’ moment — and pull back on lending. Borrowers reduce spending or default. Economic downturn ensures and is deeper and more prolonged.

Keyes: argues that behavior in financial market was similar to people — rather than devoting intelligence in judging and choosing the best investments, went instead to betting and choosing based on what the average opinion was or was expected to be, some even practising that belief to the fourth or fifth degree, separating themselves from the actual decision ground. And this happened, people pricing shares based not on fundamental value estimates but rather on what everybody else thought their value was, everybody else’s assessment must be the average, a derivative of the derivative of subjective utility. Aka. investing based on a false truth that everybody else said was the truth. The garbage stacked on top made it look beautiful, when in fact, if you dug deep enough, was rotten to the core.

COVID showed that without proper weighing of the essentials vs the market, without proper values and good cost/benefit analysis, healthy policy, the world would collapse, the system would never work on its own, and that we had moved too far into market society such that even the most essential PPEs and medicines, masks, rules and regulations, did not stop or stem the tide of COVID 19 as it unevenly and unequally affected people of color, people based on wealth status, and people based on country of residence.

The covid crisis exposes how unprepared we are for a crisis. How we weigh present problems over future problems. How we don’t really invest in fixing issues that last longer than this generation’s turnover. And such, exposing how unprepared and how far we are not along in combating the climate crisis.

Climate crisis equals human conflict. The reality is as the lands and areas of productivity shrink, as extreme weather damages places beyond repair, resources dwindle and get more expensive to access, people will inevitably fight over what little yield there is. So if we cannot increase that yield and simultaneously distribute this yield across our market, people ultimately will feud over it, as a necessity for their survival. We simply don’t think beyond ourselves to future years beyond our era, we don’t think beyond our basic needs, those must be met first before anything else can be discussed.

Countries showing emissions by capita are realistically showing not necessarily their own. As many countries ‘import emissions’ by making other countries produce the goods, emit the emissions, and sell it back to them.

Companies, especially large holding firms and insurance industry are on the frontline of climate crisis in establishing the value of each type of damage or showcasing just how much carbon is emitting in the work they do and products they produce, or what they insure.

Cost benefit analysis is empahsized in this book as an effective thing if incorporated well. One such example is we never put loss of nature as an asset management problem, but it is. And its everybody’s failure when we don’t accommodate for that in our economic calculations. Not limited to one city or country.

I am not yet finished this book. I’m on Chapter: Tragedy on the Horizon.

Any paraphrasing in this article belongs solely to the book I am reviewing and I do not own the content, only my opinion and response to the book.