Stock Market Matters
Obsessed with the stock market? You bet.
During a time when even the financially disinterested are grasping for daily updates of the market’s performance, GW’s Theodore Rinehart Professor of Business Law Lawrence E. Mitchell explains how the stock market left behind its business origins to become the driver of the U.S. economy and, he writes, “the very reason for the creation of business itself.”
In The Speculation Economy: How Finance Triumphed Over Industry (Berrett-Koehler Publishers, 2007) Mitchell, an expert in progressive corporate law and a champion for ethics, gives a historical perspective on the giant modern corporation, which spurred the rise of Wall Street and investment banking to create what he calls “American corporate capitalism.”
In a comprehensive account of the facets that impacted American business from the final decade of the 1800s until 1920, The Speculation Economy explores the time when American businesses, and Americans, transitioned from investing conservatively—by buying bonds or preferred stock—into market players favoring riskier, yet potentially higher-yielding, common stock. Americans by the tens of thousands were “moving from anticipating income to gambling for capital gain,” he writes, resulting in investors willing to “speculate” rather than invest in an ensured rate of return. At the same time, the federal government adapted to the ever complex role of finance capitalism, transforming into powerful institutions that regulated businesses. The combination, Mitchell writes, bred a new kind of American capitalism and a “speculation economy” where stockholder demands and expectations gained the upper hand.
Throughout the book, which combines legal, economic, and historical angles, Mitchell explains that the relationship between productive industry and capital markets was broken from the start. But he offers suggestions to chart a new course, including implementing further regulations that change incentives so that businesses, he says, “behave as if the long term matters.”
Mitchell is the director of the University’s Institute for International Corporate Governance & Accountability, which he founded in 2000. He also created and directs GW’s Sloan Program for the Study of Business in Society.
A Presidential View
While reflecting on his time running a major American university, GW President Emeritus Stephen Joel Trachtenberg laments that “maintaining perspective can be difficult.”
“I wonder if all university presidents spend a portion of their time with very small problems, as I often did,” he writes. “You can’t see all of America when you’re in the depths of Death Valley or even at the heights of Mount Rainer. Thus, when I tried to focus on the future of higher education in America, I sometimes experienced a panicky vertigo.”
After leading college campuses for nearly three decades, Trachtenberg now shares his clear vision in a new memoir that examines the direction of higher education and proposes advice on sustaining the nation’s natural brain trust.
Big Man on Campus: A University President Speaks Out on Higher Education (Touchstone/Simon & Shuster, 2008), gives a candid, insider’s view on what it takes to run a bustling but often times bureaucratic institution, touching on such diverse responsibilities as fundraising, enhancing academic standards, and building town/gown relations.
Trachtenberg, who in 2007 stepped down from GW’s helm after 19 years, peppers the book with many personal anecdotes, tying in the complex challenges of a university leader with the joys of watching college students grow. With a conversational tone, he critiques the traditional realm of academe by addressing often-cumbersome matters, such as the essentials of study: “The world doesn’t break down into simple pieces the way universities divide up into departments,” he writes. “I don’t think we are as articulate as we should be when planning university curricula.”
The current GW University Professor of Public Service also draws on the lessons he learned from 11 years as president at the University of Hartford and the eight years he was at Boston University as a dean of arts and sciences and vice president. From page to page, he relays his advice to others who may step up to the challenge. University presidents, he explains, shouldn’t be viewed as the institution’s heart or its soul: They are its leaders.
“Great presidents,” he writes, “have the ability to reconcile disparate impulses within the institution and to change a series of flashing lights into a steady glow.”
A Defining Decade
After the fall of the Berlin Wall, America entered a 12-year period of relative peace before the terrorist attacks of Sept. 11, 2001, set the nation on a new and contentious path.
Some call this post-Cold-War time, in which the United States became the triumphant superpower, a “holiday from history”— an era of complacency, quiet, and repose. But James Goldgeier, GW professor of political science and international affairs, argues that the debates and decisions in these misunderstood years from the fall of the Wall to the fall of the Twin Towers shaped the events, arguments, and politics of today.
In America Between the Wars: From 11/9 to 9/11 (PublicAffairs, 2008), foreign policy analysts Dr. Goldgeier and co-author Derek Chollet use their expertise and wide access to key political players to reveal how each political party, and America as a whole, struggled to define its role in a post-Cold-War world. The challenges of combating extremist forces, stemming the proliferation of weapons of mass destruction, and integrating a global economy did not begin with the Sept. 11 attacks—but with the symbolic collapse of the iron curtain on Nov. 9, 1989, Dr. Goldgeier says.
“It is the legacy of 11/9—and the uncertainties, hopes, confusion, threats, and opportunities it produced—that we still live with today, as Republicans and Democrats try to define the direction the country should take,” he writes.
Re-examining this time period and how we think about the recent past, he says, can uncover important lessons for the nation’s future.
Dr. Goldgeier is a senior fellow at the Council on Foreign Relations and has served on the National Security Council staff. Chollet is a senior fellow at the Center for a New American Security in Washington, D.C.