Many commonly held beliefs have emerged in the aftermath of the 2007–08 US financial crisis to explain its cause. Conventional wisdom blames Wall Street and the mortgage industry for using low down payments, teaser rates, and other predatory tactics to seduce unsuspecting homeowners into assuming mortgages they could not afford. It also blames average Americans for borrowing recklessly and spending too much. And, finally, it blames the tax policies and deregulatory environment of the Reagan and George W. Bush administrations for encouraging reckless risk taking by wealthy individuals and financial institutions.

But according to Edward Conard’s Unintended Consequences: Why Everything You’ve Been Told about the Economy Is Wrong, conventional wisdom masks the real causes of  US economic disruption and puts us at risk of facing a slew of unintended—and potentially dangerous—consequences. Conard’s book addresses many essential but overlooked questions such as:

• If the United States had become a nation of reckless consumers rather than investors, why did productivity soar in the years leading up to the meltdown?

• If predatory bankers took advantage of homeowners, why did down payments decline, thereby shifting risk from homeowners to lenders?

• If the risks were easy to spot, why did top political and financial advisers encourage lenders to make unsound investments?

• If new regulations encourage banks to hold enough capital to fund withdrawals and not just loan losses, how will the economy underwrite the risks necessary to reach full employment?

In an attempt to set the record straight and fill the void left by other analysts, Conard presents a fascinating and contrarian case for how the economy really works, what went wrong over the past decade, and what steps we can take to start growing again.

What They’re Saying about Unintended Consequences:

 “There are an amazing number of good ideas and interesting points made in this book. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.”
—Steven Levitt, Coauthor of Freakonomics; 2004 John Bates Clark Medal Recipient

“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.”
—Tyler Cowen, Professor, George Mason University; Columnist, New York Times; Author, Marginal Revolution

“. . . the book, written by a former Bain partner, gives a good overview of the forces behind the financial crisis. It is far smarter and more thought-provoking than most economics written for the general public.”
—Greg Mankiw, Professor of Economics, Harvard University

“Ed Conard has written a provocative and important book about the economy that challenges conventional wisdom about the financial crisis, the trade deficit, government policy, and the path to prosperity.  His insights into the kind of risk-taking we need to spur innovation and job creation are particularly salient, given the inevitable flight from all risk coming out of the crisis.  I hope policymakers and business leaders will pay close attention to Conard’s framework.”
—William A. Sahlman, Senior Associate Dean, Harvard Business School