What’s the biggest threat to the stability of the global economy today? Derivatives? Hedge funds? The credit crunch? Actually it could be Pearson, the company that owns the Financial Times. How so? By allowing its Penguin imprint to pay $8.5 million for the memoirs of Alan Greenspan, the former chairman of the US Federal Reserve.
Let me explain. In March last year, Penguin won an auction for worldwide rights to Greenspan’s memoirs — titled The Age of Turbulence — beating off competition from the rest of the publishing industry. The cheque it ultimately wrote was the second-largest ever paid for a non-fiction book, only beaten by Bill Clinton’s My Life at $10 million.
Now, Greenspan is an estimable figure. He ran the Fed from 1987 until 2006, presiding over an extraordinary expansion of the US and global economies. There were ups and downs, but overall he found ways to combine low inflation, high growth and high employment as never before. There is probably no one on the planet whose views on economics deserve more respect.
Still, $8.5 million? If the great man ever takes time off from re-reading the works of his mentor Ayn Rand or fretting about paradigm shifts in productivity, he might pause to consider the economics of his own publishing deal — and wonder whether Penguin is guilty of what he himself famously called ‘irrational exuberance’. Just to get its advance back, Penguin has to sell 600,000 copies. For Greenspan to reap any additional royalties, sales must reach 1.9 million, according to the New York Times. For serious bucks all round, sales have to break two million — a sky-high target when Sharon Osbourne has a new book out as well.
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