Open-Books Management

Inc. editors handpick five recently published books guaranteed to help you think smarter about your company, your family, and yourself.

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It's that time of year when CEOs look to brush up on their readership skills. Here, then, meet five authors whose books will help you think smarter--about your company, your family, and yourself--by summer's end

Funny money
The Return Of Depression Economics, by Paul Krugman (W.W. Norton & Co., 1999)

When Paul Krugman explains recession in his book The Return of Depression Economics, he doesn't trot out regression analyses. Instead, the 46-year-old economics professor leans on an example far from the staid study of numbers: baby-sitting.

Explaining how recessions can bring an economy to a standstill, he offers the example of a baby-sitting co-op in Washington, D.C., in which members would earn scrip for taking care of other members' children. The co-op faltered when members began hoarding the scrip, which could be traded for child care. What resulted was a full-blown recession in which the members of the co-op, eager to baby-sit, weren't spending anything. Ultimately, they weren't earning it either, as the baby-sitting opportunities ceased.

Krugman also plainly explains how industrialized economies can find themselves in economic states that resemble the Great Depression--without actually being in a true depression. If we can recognize the symptoms of decline, he suggests, there are levers that can be pulled to get the economy on track.

One such lever, Krugman would argue, is consumer spending, which can keep an economy that's mired in depression economics from sinking further. So, as a preventive measure, you can do your part by buying a copy of Krugman's 176-page book. While you're at it, buy a few extra copies for your buddies. The economy will thank you. -- Jeffrey L. Seglin

Inc. : When the Asian financial crisis hit and folks were searching for a label, you came up with the term "baht-ulism," playing off of the name of the Thai currency. Are you the only economist with a sense of humor?

Krugman: There are at least three of us, I think.

Inc. : You draw a distinction between depression economics and a depression. How can we have one without the other?

Krugman: If you look at Japan right now, there aren't bread lines or tent cities of the unemployed. It hasn't had the combination of mass unemployment and mass bankruptcies that we had in the 1930s. Japan is experiencing cold-depression economics--not a high-speed crisis or panic, but a slow grinding down of the economy because the Japanese have turned all the conventional valves all the way to the right, and it's not been enough to get the thing moving again.

Inc. : Instinctively, business owners want to make their companies as efficient as possible. You've observed that that might not be the right course to take when faced with depression economics. Why is that?

Krugman: When you're in depression economics, the things that make sense from the point of view of each individual business can be counterproductive from the point of view of the economy as a whole. You can see that very clearly in Japan right now. Japanese firms are inefficient; they're bloated; they have excess labor. You can understand that there would naturally be a push to get rid of workers they don't need and to become more efficient at producing. And in the long run that might be very good for Japan. But in the immediate short run, unless the Japanese start finding a way to push up overall spending, it's actually going to be counterproductive. It's going to cause the unemployment rate to rise. It's going to make Japanese consumers even more nervous. In the end it may actually even reduce profits because while each individual firm's costs go down, its sales may fall even more.

Inc. : You've said that the United States is not now experiencing depression economics. What would be a sign that we've headed into it?

Krugman: One thing would be a market crash that's big enough to cut into consumer spending. My benchmark is always, what if the Dow went back to where it was on the day [December 5, 1996] that Alan Greenspan warned against "irrational exuberance," which was a Dow of about 6,400?

Inc. : Knowing what you know, where do you have your retirement money?

Krugman: I have an actual pension from MIT. The rest is a mixture of stocks and bonds and a fair bit of short-term money-market funds.

Inc. : You're not worried about having money in the stock market?

Krugman: Oh, I'm worried, but we have enough in bonds and in the money market that I'm not going to be selling apples on the street, even if the market loses half its value.

Animal husbandry
Way of the Guerrilla: Achieving Success and Balance as an Entrepreneur in the 21st Century, by Jay Conrad Levinson (Houghton Mifflin Co., 1997)

You're a CEO struggling to balance your home and work life, Jay Levinson suggests you look at the kitchen sink. Before you balk, think about it: have you picked up a dishrag lately?

While the title of Jay Levinson's book, Way of the Guerrilla: Achieving Success and Balance as an Entrepreneur in the 21st Century (now in paperback), won't stun anyone familiar with his 11 other "guerrilla" books in print, some of the ideas are sure to irk a few readers, such as his insistence that men do their share of the housework. But the most incendiary thought in the book is--are you ready?--a three-day workweek. Many entrepreneurs are workaholics, Levinson concludes, but it doesn't have to be that way. "Guerrillas," he writes, "are much more than earning machines."

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