The ten best Nonfiction books of 2014

single-man-coverVivek Kaul

It is that time of the year when media houses go around writing about the best of the year that was. Given this, I thought it would be an appropriate time to put out a list of what I think are the best nonfiction books that I read in 2014. The list is biased to the extent of what I read, which are basically books in the area of finance and economics. Also, some of the titles were released earlier and I only happened to read them in 2014. The books are listed out in a random order. So here we go.

Saving Capitalism from the Capitalists by Raghuram Rajan and Luigi Zingales: I had read this book when it was first published in 2003. At that point of time I was basically trying to figure out what to do with my life, having finished an MBA in information systems in 2002 and at the same time having realized that the MBA degree was one big con job. In 2014, the book was published again with a new afterword. I read it again and appreciated the book much more than I had done in 2003. The book is a great read for anyone who believes in the idea of free markets. It tells you loud and clear that the incumbent capitalists are the greatest enemies of the free market. The book also helped me understand why so many big businesses in India manage to default on their bank loans without the industrialists having to face the consequences of the same.

After the Music Stopped by Alan S Blinder: This book was published in 2013, but I happened to read it only this year. The best books on historical events are written many years after the event has happened. Take the case of what I think is the best book on the Great Depression—The Great Crash 1929, written by John Kenneth Galbraith. The book was first published in the mid 1950s almost quarter of a century after the Depression started. One possible explanation for this is the fact that writing many years later, the author can leave out all the noise and concentrate on the most important issues. Over the last six years many books have been written on the financial crisis, but After the Music Stopped, in my opinion is perhaps the best book on it. It summarises the economic, the political as well as the legal angles of the financial crisis very well. If you are looking for a ready reckoner on the financial crisis, this has to be your go to book. Capital in the Twenty-First Century by Thomas Piketty: This was by far the bestselling title in economics during the course of this year, having been the number one book on Amazon.com for a while. It is very rare for an economics book running into 700 pages to be number one on Amazon. In this book the core argument offered by Piketty, who is a French economist, is that capitalism has led to greater inequality among people over the years. Piketty offers a lot of data from the developed countries to make his point. The book did not go down well with the American economists, and after it appeared many of them tried to discredit it by trying to find mistakes in the data and methodology used by Piketty. Who is right and who is wrong is too long a debate to get into here. Nevertheless, Piketty’s book remains a must read for the fantastically lucid way in which its written and the several original ideas that it offers. The Dollar Trap by Eswar S. Prasad: The United States is in a huge financial mess. Nevertheless, dollar remains the go to currency of the world at large. Whenever there is a whiff of a crisis anywhere in the world, money is pulled out and moves to the dollar. Ironically, even when the rating agency Standard and Poor’s cut the rating of the debt issued by the United States government from AAA to AA+, money moved into the US dollar. Prasad explains this “exorbitant privilege” of the dollar and the reasons behind it. While the US may not be in a great financial shape, but the world at large still has faith in the dollar. Prasad summarizes the situation well when he says: “It is possible that we are on a sandpile that is just a few grains away from collapse. The dollar trap might one day end in a dollar crash. For all its logical allure, however, this scenario is not easy to lay out in a convincing way.” The book is a great read for anyone trying to understand one of the most fundamental disconnects of the times that we live in. Flashboys by Michael Lewis: No one quite writes about finance like the way Lewis does. From his first book Liars Poker to the latest Flashboys, each one of his books on Wall Street and its ways has been a bestseller. One reason for the same is the fact that Lewis started as a Wall Street insider in the investment bank Salomon Brothers (which has since gone bust) and has managed to maintain his contacts since then. Flashboys is essentially a story of the people and systems that make up algorithmic trading that has taken Wall Street by storm. A majority of the trades on Wall Street are not driven by humans any more. They are driven by computers with a lot of processing power. And that is the fascinating story of Flashboys. If you are the kind who likes reading thrillers over weekends, this is just the right book for you.

Business Adventures by John Brooks: I first discovered Brooks in the process of writing and researching my books. Someone suggested that I should be reading Brooks’ version of the Great Depression called Once in Golconda: A True Drama of Wall Street 1920-1938. The book was a fantastic read and made me realize that Wall Street had a Michael Lewis even before the real Michael Lewis appeared on the scene. Early this year, Bill Gates wrote a blog on one of Brooks’ other books called Business Adventures. He called it the best business book that he and Warren Buffett had ever read. This blog pushed the book to the top of the Amazon charts. It was re-issued after this. The book is a collection of twelve long articles that Brooks wrote about the American businesses, government as well as Wall Street, for the New Yorker magazine. And it has tremendous lessons for almost everyone connected with business and finance.

Single Man—The Life & Times of Nitish Kumar of Bihar by Sankarshan Thakur: This book is the joker in the pack. In a list full of books on economics and finance, here is a book on politics. Having been born in erstwhile Bihar, I have always been interested in the politics of Bihar. And there is no better writer on Bihar in English than Thakur, who works as a roving editor for The Telegraph newspaper. Thakur chronicles the rather turbulent life of Nitish Kumar, starting a little before the Emergency, and goes on to chronicle the life of the Bihari politician over the next four decades. As he does that he also goes into the history of Bihar over that period. Unlike a lot of other biography writers, Thakur also goes into Kumar’s unhappy personal life. The book is an excellent model for how to write a biography of an Indian politician. What we normally get to read are either hagiographies or out and out criticism (as is the case with so many books on Narendra Modi which swing at both ends). There is rarely a biography of an Indian politician which takes the middle path. If I had to choose just one book to read this year, then Single Man would have to be it. And this would be more for Thakur’s andaz-e-bayan(the way he tells the story) than Kumar’s story per se. How Not to Be Wrong—The Hidden Maths of Everyday Life by Jordan Ellenberg: This is another joker in the pack. I absolutely love to read good books on Mathematics. Ellenberg in this book goes around explaining the practical aspects of Maths in everyday life. He explains in great detail how media often uses Maths incorrectly to draw wrong conclusions. He also tries to answer some really interesting questions: How early should you get to the airport? What’s the best way to get rich playing a lottery? And does Facebook know you are terrorist? If you are feeling a little adventurous and want to go a little out of your comfort zone, this is just the right book for you.

The End of Normal by James Galbraith: I am reading this book currently and am around half way through it. James Galbraith is the son of John Kenneth Galbraith, who I feel was one of the most lucid writers on economics that the twentieth century saw. Galbraith junior writes in the same lucid way as his father did. Since the financial crisis broke out, economists and politicians have tried to tell the world at large that “all is going to be well,” and that the financial crisis was just caused by bad policy and bad people. Galbraith challenges this world view and offers four reasons against it: the rising cost of real resources, the futility of military power, the labour saving consequences of the digital revolution and the breakdown of law and ethics in the financial sector. Long story short: The global economy will not see acche din(good days) any time soon. Hormegeddon—How Too Much Of a Good Thing Leads to Disaster by Bill Bonner: The regular readers of The Daily Reckoning would know by now that this has been one of favourite books of the year, given the number of times I have already quoted from it in my columns. I have been a big fan of Bonner’s writing since I first met him in late 2008. In this book Bonner goes about explaining how too much of a good thing in public policy, economics and businesses, leads to disaster or what he calls FUBAR (f***ed up beyond all recognition). Bonner offers many examples from history to make his point—from Napoleon’s decision to invade Russia to the outbreak of the Second World War to America’s War on Terror. He then goes on to show that these disasters cannot be prevented by well-informed people with good intentions because they are the ones who cause them in the first place. 

So that was my list of what I thought were the ten best books that I read this year. Happy reading. The India edition of The Daily Reckoning will be taking a year end break and will be back early next year on January 3. Here is wishing you a Merry Christmas and a Happy New Year. Meanwhile you can continue reading the international edition of The Daily Reckoning authored by Bill Bonner. The article originally appeared on www.equitymaster.com as a part of The Daily Reckoning, on Dec 24, 2014

How Nitish's pragmatic politics beat brand Modi in Bihar

220px-Nitish_Kumar

In the recently concluded bye-election in Bihar, the Bhartiya Janata Party (BJP) won only four out of the 10 seats that went to the polls. The alliance of Rashtriya Janata Dal (RJD), Janata Dal United (JD(U)) and Indian National Congress won six seats.
It was widely expected that BJP would do well in these polls given that in the Lok Sabha elections along with Ram Vilas Paswan’s Lok Janshakti Party(LJP) it had won 28 out of the 40 Lok Sabha seats in the state. The LJP won six out of the 28 seats.
In the aftermath of this débâcle a lot of analysis has been put out on why the BJP lost. Some analysts pointed out that the Modi magic did not work in the same way during the bye-poll as it did during the Lok Sabha polls, a few months back. Some others said that Modi did not manage these polls on his own and it was the Bihar unit of the party that managed the polls, and hence the BJP+LJP combine lost.
As veteran political journalist Ajoy Bose writes in The Economic Times “
Narendra Modi’s spectacular triumph in the Lok Sabha polls three months ago may not signal a tectonic shift in Indian politics as many political pundits predicted. Nor does the BJP seem poised to become the predominant party in the country despite forming the first single-party majority government in New Delhi after three decades.” Still others have said that people tend to vote differently in Lok Sabha and state assembly elections.
The trouble is none of these analysts have bothered to look at the voting pattern. If they had done that, they would have known that there is just one reason behind the BJP not doing well in Bihar and that is the “first past the post system”.
In the Indian political system, the candidate who wins the most number of votes wins the election, even though a major part of the electorate maybe against him. It is not the perfect way to elect leaders, but that is what we have got.
Election commission data shows that in the Lok Sabha elections, the BJP+LJP combine had got 35.8% of the votes polled. The RJD and the Congress had an alliance during the Lok Sabha polls. The JD(U) had fought the polls on its own. The RJD got 20.1%, the Congress got 8.4% and the JD(U) got 15.8% of the votes polled. In total, this amounted to 44.3% of the total votes polled.
So RJD+Congress+JD(U) got more votes than BJP+LJP. Nevertheless, since RJD+ Congress and JD(U) were not in alliance, these votes did not translate into Lok Sabha seats.
Now what happened in the recent bye-election? Data from the election commission shows that the RJD+Congress+JD(U) got 45.6% of the total votes polled. The BJP+LJP got 37.9% of the votes polled. Given that, this time JD(U) was not fighting the elections separately, the votes polled translated into assembly seats as well, unlike the Lok Sabha polls.
Further, the vote percentages have not changed majorly since the Lok Sabha elections, as a lot of analysis seems to suggest. In fact, the vote share of both the RJD+Congress+JD(U)alliance and the BJP+LJP has improved marginally at the cost of other parties.
The BJP+LJP combine lost simply because Lalu Prasad Yadav and Nitish Kumar decided to come together. What it tells us very clearly is that in the first past the post system, tactical political alliances can clearly neutralize the impact of brand Modi. Both Nitish and Lalu realised this the second time around and came together to form an alliance, despite having been sworn political enemies for nearly two decades.
In fact, early in his political career Nitish had decided to be pragmatic about his politics. Sankarshan Thakur descirbes a very interesting incident in the
Single Man: The Life & Times of Nitish Kumar of Bihar. This incident happened sometime in the late 1970s, after the Emergency had been lifted.
Karpuri Thakur became the Chief Minister of Bihar in December 1977. Nitish quickly became disillusioned with this government. As Sankarshan Thakur writes “He thought it had betrayed the promise of the JP movement, strayed from Lohia…He had turned a critic and went about addressing seminars and meetings on how and why this was not the dispensation he had fought for.”
One day, while at the India Coffee House, a scrap at another table, got Niish going. As Thakur writes “He banged the table with his fist and announced: ‘
Satta prapt karoonga, by hook or by crook, lekin satta leke acha kaam karoonga.’ (I shall get power, by hook or by crook, but once I have got power I will do good work.”
Nitish became the Chief Minister of Bihar nearly three decades later in 2005. And for the first half of his political career, he propped up Lalu Prasad Yadav even though he knew that Lalu wasn’t fit to govern. Thakur puts this question to Nitish in the
Single Man: “Why did you promote Laloo Yadav so actively in your early years?” he asked.
And surprisingly, Nitish gave an honest answer. As Thakur writes “’But where was there ever even the question of promoting Laloo Yadav?’ he mumbled…’We always knew what quality of man he was, utterly unfit to govern, totally lacking vision or focus.”
So why then did Nitish decide to support him? “’There wasn’t any other choice at that time,’ Nitish countered…’We came from a certain kind of politics. Backward communities had to be given prime space and Laloo belonged to the most powerful section of Backwards, politically and numerically.” And thus Nitish ended up supporting Lalu for nearly the first two decades of his political career.
Nitish finally decided to go on his own at the
Kurmi Chetna Rally [Nitish belongs to the Kurmi caste] in February 1994. At this rally he roared “Bheekh nahin hissedari chahiye..Jo sarkar hamare hiton ko nazarandaz karti hai who sarkar satta mein reh nahi sakti (We seek our rightful share, not charity, a government that ignores our interests cannot be allowed to remain in power).”
Nevertheless, Nitish had to wait for 11 more years to finally come to power in Bihar. An
d this finally happened after he entered into a pragmatic alliance with the “communal” Bhartiya Janata Party (BJP) (As most of the other parties tend to look at the BJP). After more than eight years, Nitish decided to break this alliance once it was more or less clear that Narendra Modi would be BJP’s prime ministerial candidate.
Given this background, it is not surprising that Nitish decided to ally with Lalu even though he thought that Lalu was “utterly unfit to govern”. It was a pragmatic decision to get power
by hook or by crook, as Nitish put it many years back.
This pragmatism worked in the recent bye-election. Now Nitish is trying to build an even more formidable alliance by getting the left parties together as well. And this alliance, if it comes together, will be even more difficult to beat, the brand Modi notwithstanding.

The article was published on www.Firstpost.com on August 26, 2014 

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek) 

How Nitish's pragmatic politics beat brand Modi in Bihar

220px-Nitish_Kumar

In the recently concluded bye-election in Bihar, the Bhartiya Janata Party (BJP) won only four out of the 10 seats that went to the polls. The alliance of Rashtriya Janata Dal (RJD), Janata Dal United (JD(U)) and Indian National Congress won six seats.
It was widely expected that BJP would do well in these polls given that in the Lok Sabha elections along with Ram Vilas Paswan’s Lok Janshakti Party(LJP) it had won 28 out of the 40 Lok Sabha seats in the state. The LJP won six out of the 28 seats.
In the aftermath of this débâcle a lot of analysis has been put out on why the BJP lost. Some analysts pointed out that the Modi magic did not work in the same way during the bye-poll as it did during the Lok Sabha polls, a few months back. Some others said that Modi did not manage these polls on his own and it was the Bihar unit of the party that managed the polls, and hence the BJP+LJP combine lost.
As veteran political journalist Ajoy Bose writes in The Economic Times “
Narendra Modi’s spectacular triumph in the Lok Sabha polls three months ago may not signal a tectonic shift in Indian politics as many political pundits predicted. Nor does the BJP seem poised to become the predominant party in the country despite forming the first single-party majority government in New Delhi after three decades.” Still others have said that people tend to vote differently in Lok Sabha and state assembly elections.
The trouble is none of these analysts have bothered to look at the voting pattern. If they had done that, they would have known that there is just one reason behind the BJP not doing well in Bihar and that is the “first past the post system”.
In the Indian political system, the candidate who wins the most number of votes wins the election, even though a major part of the electorate maybe against him. It is not the perfect way to elect leaders, but that is what we have got.
Election commission data shows that in the Lok Sabha elections, the BJP+LJP combine had got 35.8% of the votes polled. The RJD and the Congress had an alliance during the Lok Sabha polls. The JD(U) had fought the polls on its own. The RJD got 20.1%, the Congress got 8.4% and the JD(U) got 15.8% of the votes polled. In total, this amounted to 44.3% of the total votes polled.
So RJD+Congress+JD(U) got more votes than BJP+LJP. Nevertheless, since RJD+ Congress and JD(U) were not in alliance, these votes did not translate into Lok Sabha seats.
Now what happened in the recent bye-election? Data from the election commission shows that the RJD+Congress+JD(U) got 45.6% of the total votes polled. The BJP+LJP got 37.9% of the votes polled. Given that, this time JD(U) was not fighting the elections separately, the votes polled translated into assembly seats as well, unlike the Lok Sabha polls.
Further, the vote percentages have not changed majorly since the Lok Sabha elections, as a lot of analysis seems to suggest. In fact, the vote share of both the RJD+Congress+JD(U)alliance and the BJP+LJP has improved marginally at the cost of other parties.
The BJP+LJP combine lost simply because Lalu Prasad Yadav and Nitish Kumar decided to come together. What it tells us very clearly is that in the first past the post system, tactical political alliances can clearly neutralize the impact of brand Modi. Both Nitish and Lalu realised this the second time around and came together to form an alliance, despite having been sworn political enemies for nearly two decades.
In fact, early in his political career Nitish had decided to be pragmatic about his politics. Sankarshan Thakur descirbes a very interesting incident in the
Single Man: The Life & Times of Nitish Kumar of Bihar. This incident happened sometime in the late 1970s, after the Emergency had been lifted.
Karpuri Thakur became the Chief Minister of Bihar in December 1977. Nitish quickly became disillusioned with this government. As Sankarshan Thakur writes “He thought it had betrayed the promise of the JP movement, strayed from Lohia…He had turned a critic and went about addressing seminars and meetings on how and why this was not the dispensation he had fought for.”
One day, while at the India Coffee House, a scrap at another table, got Niish going. As Thakur writes “He banged the table with his fist and announced: ‘
Satta prapt karoonga, by hook or by crook, lekin satta leke acha kaam karoonga.’ (I shall get power, by hook or by crook, but once I have got power I will do good work.”
Nitish became the Chief Minister of Bihar nearly three decades later in 2005. And for the first half of his political career, he propped up Lalu Prasad Yadav even though he knew that Lalu wasn’t fit to govern. Thakur puts this question to Nitish in the
Single Man: “Why did you promote Laloo Yadav so actively in your early years?” he asked.
And surprisingly, Nitish gave an honest answer. As Thakur writes “’But where was there ever even the question of promoting Laloo Yadav?’ he mumbled…’We always knew what quality of man he was, utterly unfit to govern, totally lacking vision or focus.”
So why then did Nitish decide to support him? “’There wasn’t any other choice at that time,’ Nitish countered…’We came from a certain kind of politics. Backward communities had to be given prime space and Laloo belonged to the most powerful section of Backwards, politically and numerically.” And thus Nitish ended up supporting Lalu for nearly the first two decades of his political career.
Nitish finally decided to go on his own at the
Kurmi Chetna Rally [Nitish belongs to the Kurmi caste] in February 1994. At this rally he roared “Bheekh nahin hissedari chahiye..Jo sarkar hamare hiton ko nazarandaz karti hai who sarkar satta mein reh nahi sakti (We seek our rightful share, not charity, a government that ignores our interests cannot be allowed to remain in power).”
Nevertheless, Nitish had to wait for 11 more years to finally come to power in Bihar. An
d this finally happened after he entered into a pragmatic alliance with the “communal” Bhartiya Janata Party (BJP) (As most of the other parties tend to look at the BJP). After more than eight years, Nitish decided to break this alliance once it was more or less clear that Narendra Modi would be BJP’s prime ministerial candidate.
Given this background, it is not surprising that Nitish decided to ally with Lalu even though he thought that Lalu was “utterly unfit to govern”. It was a pragmatic decision to get power
by hook or by crook, as Nitish put it many years back.
This pragmatism worked in the recent bye-election. Now Nitish is trying to build an even more formidable alliance by getting the left parties together as well. And this alliance, if it comes together, will be even more difficult to beat, the brand Modi notwithstanding.

The article was published on www.Firstpost.com on August 26, 2014 

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)