Monday, July 8, 2013

What a Relief: It Appears Greg Mankiw Will Get His $1.6 Million in Royalties

On Saturday, I reported that textbook publisher Cengage Learning Inc. filed for bankruptcy protection. Among the publishers unsecured creditors is Harvard economist and textbook author, Greg Mankiw.

The publishing firm, according to the bankruptcy filing, owes Mankiw $1.6 million in royalty payments. As I acknowledged, I first learned about the bankruptcy as a result of a post by Paul Krugman.

Mankiw has responded to Krugman's post:
Over on his blog, Paul Krugman calls attention to the Cengage bankruptcy.  I am not sure why he thinks this event is noteworthy.  He seems to do so because Cengage is the publisher of my favorite textbook. I suppose it is schadenfreude on Paul's part.
Mankiw goes to say:
The short story is that this is a Chapter 11 bankruptcy (a reorganization), not a Chapter 7 bankruptcy (a liquidation).  These are very different things. In this case, the equity holders are being wiped out, and the debt holders are the new equity holders.
But it appears that Mankiw, as an author will be paid in cash, in full. He quotes from an article:
The transaction is expected to be largely a non-event for others doing business with Cengage. The company has permission from the lenders to keep using cash flow from operations to fund the business, and expects to keep paying vendors, authors’ royalties, and employees on schedule.
BTW: Mankiw's text  Principles of Macroeconomics is ranked # 29 in terms of sales under the category popular economics.

Both Friedrich Hayek's Road to Serfdom and Henry Hazlitt's Economics in One Lesson rank ahead of Mankiw's text. They come in at #25 and #26, respectively.

Mankiw's Principles of Microeconomics is ranked # 33. None o Krugman's books appear in the top 100.

1 comment:

  1. And of course, Mankiw would never be in the top sales running at all if people like myself had not been forced to buy his textbook for a mandatory class unrelated to my major of study.