The notion that finance is wise is predicated on the notion that humans are wise, and of that I remain unconvinced.

The logic of the leverage bonus : by embedding yourself in demanding relationships and making commitments, you may well just become a better person. In offering advice to young people, Thomas Watson, the founder of IBM, said, “Don’t make friends who are comfortable to be with. Make friends who will force you to lever yourself up.” Commitments to smart and demanding people keep us from doing stupid things—we gain from those commitments. Leverage is not a zero-sum game.”

The very fact that Mihir Desai attempted to write a book like this and succeeded, should be celebrated. Gave it only four stars as it could have been better edited and I would have liked more examples.

The Wisdom of Finance it seems is a primer on the moral hazards undergraduate and more so graduate business students can expect to find once they leave the academy and join Wall Street.

Author Mihir A. Desai employs literature to explain how the principles of business and high finance inform universal human challenges not only in business, but in life.

As a graduate of English Lit and later an MBA, I was a sucker for this kind of book. Indeed, I enjoyed it, if I didn’t think all of the chapters were equally strong, or the morals all that intimidating.

It is substantively a book of moral philosophy.

I ran into my own moral philosopher in business school, the noted Canadian accounting professor Al Rosen, the sort of guy you either loved, or loved to hate. The guy who failed an entire accounting class, but then had to walk it back after the students complained.

What Prof. Rosen taught me — and our relationship wasn’t the easiest — was that numbers masked lies as often as they told the truth, perhaps moreso. And the reason he taught this to his accounting students was that the evolution of accounting was the evolution of storytelling.

If you look at a balance sheet or a profit and loss statement, you were purportedly looking at the viability of a business in a moment of time and that the conventions of accounting storytelling, like “accounts receivable” and “accounts payable” not to mention “fixed assets” were to tell you the value in real time of a business even though none of those values could possibly be right.

The numbers were usually created to pacify the reader, to keep the reader from looking behind the numbers at the underlying value of the business, and the lying liers who wanted you to accept them as truth...usually management. Rosen’s point wasn’t that the numbers were always meant to to disguise malfeasance, just that the nature of the process of storytelling required simplification and gross generalization.

Desai gets at some of this in his chapter about the problem of agency, whether managers are really working for shareholders, or customers, or their employees, or just themselves. This is not necessarily a problem of finance. It is as much a problem of commerce and social psychology.

Economic behaviouralists like Daniel Kahneman, psychologist Dan Ariely, Richard Thaler and Cass Sunstein get into how the mind actually works when people are given moral choices disguised as financial options.

Another book I read recently, “Scarcity: Why Having Too Little Means So Much,” by Sandhills Mullainathan and Eldar Shafir, shows how perceived scarcity can ruin or enhance our decision making, depending on the circumstances.

But today I am dealing with the moral quandary of what to do in a pandemic that will accord with my personal ethics, and the dictates of business. How much loyalty as a businessman I owe to my employees vs my family and their sacrifices on the road to building a viable business.

if I close up my shops and lay people off am I protecting my employees or letting them down and dumping their personal needs on to society. The customers seem to need our goods and services, and the gov’t has classified my business as essential to the economy...so we stay open to the extent that my employees will come in to work.

In other crisis I have simply met the challenges head on and worked harder. In this crisis I have to change directions fast and, because I am at a high risk of infection, have to stay out of my stores for mine and my family’s safety.

There are my obligations to landlords, to suppliers, to the financial institutions, the utilities, and to govt.

These are not easy questions either. And literature, while a nice diversion, doesn’t really help me all that much.

The Wisdom of Finance is worth reading if only to marvel at Mihir Desai’s amazing mind, wide range, and exciting set of insights. The book undersells itself, claiming to use a range of novels, movies, music, TV shows, philosophy and history to better understand and illuminate finance. And it certainly does that, covering the full set of topics: insurance, asset pricing, corporate finance, principal-agent problems and bankruptcy among other topics. But the book is about much more, including better understanding literature and our own lives.

To give one example that illustrates the astonishing range of Desai’s understanding, consider his illustration of leverage by comparing George Orwell (who went into semi-seclusion for years to write 1984) to Jeff Koons (who at his peak employed 150 people to produce his ideas). He uses this not just to understand the role of leverage in the financial system but also to introspect about his own life where he is on the Orwell-Koons spectrum, and how that relates to happiness.

And did I mention the astonishing range? We have gotten used to Jane Austen and Leo Tolstoy showing up in economics books. But everything from ancient Greek tragedy to Kanye West? All effortless incorporated in many cases with interesting juxtapositions, like the Orwell-Koons example.

If this enjoyable and thought provoking book does not convince you of the wisdom of finance it will at least convince you of the wisdom of Mihir Desai.

Desai, the dean of Harvard Business School, offers an insightful and provocative view on finance. Rather than condemning finance practitioners as immoral persons, he challenges them to see their profession as a practice in reducing risk while increasing rewards for everyone. By contrast, he also tries to educate outsiders about the benefits and risks of finance. As a trained finance professional with schooling from a school like HBS, I found much of the argument refreshing. Finance people often view their jobs as destroying or shuffling value around the economy. While many do not add value to the economy, others add staggering amounts. He calls for a reframing of finance away from shuffling value and towards adding value. If professionals view their jobs in a positive light, they’re more likely to enjoy it and act in a morally defensible manner than if they view their jobs as predatory.

I also found his short pieces on HBS students insightful. I know many people who keep their options open indefinitely, only to discover they never pursued (or even discovered) their real passion.

I’d have rated this book higher if I haven’t read and heard all of this before. Desai is addressing a large audience with a small book, and it’s natural that many, including myself, won’t feel satisfied by the broad strokes. That’s ok. It’s still a neat little book that I’d recommend to some of my less inward-looking peers who need reframing their finance jobs.