False Economy: A Surprising Economic History of the World
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Product Description
An important book for turbulent times-an accessible and engaging economic history of the world, by a leading economic writer.
Alan Beattie has long been intrigued by the fates of different countries, economies, and societies-why some fail and some succeed. Here, he weaves together elements of economics, history, politics, and human stories, revealing that societies, economies, and countries usually make concrete choices that determine their destinies… More >>
False Economy: A Surprising Economic History of the World
March 11th, 2010 at 12:07 pm
I had taken this book out from the library to read, unfortunatly I had also just gotten an eleven month old German Shepherd also. Yes you guessed it, the dog ate it (always wanted to say that!). Here I replaced the book, quickly (it was received in less than three days), in as new shape and for less than it was available in any of the local stores. Fantastic service! Rating: 5 / 5
March 11th, 2010 at 2:28 pm
The US had several recessions in the past – some severe, some mild, some moderate, we’ve had democrats, republicans, we have watergate scandals, lewinsky scandal … – but always the the economy has recovered and kept going on towards a path of progress. This is in stark contrast to countries such as Pakistan where the the progress is dependent on the kind of rulers who rule the country at that time – it can swing between extremes of political & economic instability.
What sets different countries part is certain key strategic decisions which their leaders took. The book goes on to describe the various paths which the nations took and why they are here today. Rating: 4 / 5
March 11th, 2010 at 2:35 pm
This book should be required reading in any economics, political science, or history course. This is really an economics political history instead of a political economics history book of nine case studies, of which I’ve read five thusfar.
The subtitle of this book is “A Surprising Economic History of the World”, not, as other commentors have suggested, an economic history of the world. The provacative surprise is to read how orthodox economic principles fail to explain the economic development of nations.
Sorry about the long review here–I thought each of the 9 case studies is worthy. Feel free to skip to the end for my summary.
One need to have sat through many Samuelson type of economics and political economics classes and many political science and theory classes to understand why this book is valuable, as I did when as a double major in a college with right wing economists and left wing political scientists. Economics classes talking about things–justice, why that’s just a measurement of certain rights, religion–it’s as is. Political science classes–sentimental outpourings of some rights being infringed on. How do these tie-in together, and which should be emphasized, the political or orthodox economics principles?
The case studies do not have to be read in consecutive order, so below is my reading order. First is a case study of why Argentina and United States, which were about equal in economic development in the 1700 to 1800, ended up one bankrupt and the other a superpower. The author’s view, though not specifically stated, is that a more democratic United States, with its history originating in Britain, handled crises and made better decisions than a more authoritarian Argentina, with its history originating in a more autocratic Spain. If one reads political theory, this should be the case; but how does this happen? This chapter explains how–the ideologies and its specific historical impacts on development.
Next, a case study of corruption, comparing a corrupt Phillipines dictator and an honest Tanzania ruler. Contrary to what political theory might suggest, the Phillipines dictator came out ahead? How? Because, the Phillipines had just one crook and bureaucracy to deal with; whereas, the honest Tanzania ruler was unable to enforce justice among his subordinates, and the result was its economy had many crooks and bureaucracies for businessmen to deal with. Why does India attract less foreign investment than China? Because China has one crooked bureaucracy; and India has several layers of crooked bureaucracies. Now, it makes a lot more sense why some crooks get further ahead than others.
Third, where the author makes the case that the historic-caused proclivities of a culture tends to set a nation-state toward a certain level of political structure, with the ensuing economic result. A democratic, egalitarian nation-state would result in a competitive economy, and varying from this results in less effective economies. So, Mongol’s influence on Russia causes a dictatorship. China’s Confucian burecracry causes a corrupt China Communist party burecracry, but is partially effective due to Confucian ideals of merit exams. India’s democracy which results in zero-sum economic gains due to a growing population that matches total economic gains and caste system factions that then block each other politically from further progress.
Fourth on religion and economic progress. Religion is probably the best and most controversial chapter. Here, the author challenges Max Weber’s classic “The Protestant Ethics and Spirit of Capitalism” by indicating that most world religions do not in themselves hinder economic goals, but that as the religion and culture develops, the religion is used by the upper classes to suppress the lower classes, and thus, the society itself tends to develop intrinsic means to perpetuate certain economic structure and tendencies, and this is reinforced by the religion. Weber’s view is more that the religion’s ethics causes certain economic structures to develop. The topic is debatable, but the author’s supporting evidence is excellent.
Fifth, why is it that many of the most mineral rich (diamond, gold, oil) countries eventually become many of the world’s most corrupt and poorest nations? The author points to that successful economic development usually results from the nation’s masses developing skills, not from a few benefiting from its mineral riches. The mineral riches extraction require immense capital requirements from developed nations, have to be defended against from internal competitors for riches and power, and have to be defended against external competitors (e.g. Iraq invade Kwait). Furthermore, the resources that previously went into prior indigenous economic development are diverted to mineral production and protection, making prices higher for prior indigenous economic development and destroying prior indigenous production, making the nation state poorer eventually. This is a superior explanation of economic development than standard microeconomic theories on development.
This is not a detailed, academic book on economics or political history. It is a historian view. None of my economics courses ever dealt in detail with how injustice impacts economic growth; and none of my political science courses ever dealt with in detail exactly how justice or injustice fosters economic growth. Excellent book on this topic.
I always had felt the way justice was applied made the real difference in economic prosperity, but it’s difficult to demonstrate this, as in business, there are lots of unethical, successful business people. And economics tend to be better at and tend to measure short term (under a few years) type of gains. It takes a book as this to explain the impact of justice over long periods of time. This book points out that it takes a number of factors to achieve this–right rulers, right policies, cultural influencers, and most importantly, right political (not short-term economic) direction.
Excellent for theoritical-to-practical explanations of, for example, when does centralization or decentralization (free market) work better; which forms of injustice better fosters economic growth, how does religion foster economics growth, what happens with windfalls such as discovering oil– political economy type of questions.
If your reading objective is to figure out how this book will change your stock market investments or your economic position on policies affecting the stock market, this is not the right book. If your objective is to understand how political, historical, and cultural forces create the economic policies affecting the stock market, this is the right book.
Rating: 5 / 5
March 11th, 2010 at 5:12 pm
As I write this today, the Dow, Nasdaq and S&P 500 reached 11 year lows, amid news of a deepening US and indeed global recession. But do you want some unusual perspective, as provided here by Beattie? He also talks about economies, and he compares these across the world and across centuries. However in this book you will find no equations of econometrics, or much talk about the Dow or investment tips about companies to buy or avoid.
The take here is about how or why, or rather maybe why, some countries and cultures do well, while others stagnate. There are intangibles that have led the US to great success, while pushing others like Argentina into bouts of parlous recessions. Nor does the book confine itself to European-descended societies. It also looks at Muslim nations, with their prohibitions against interest (usury), which give rise to a radically different worldview. Intermingled with this is a study of oil rich exporters, and how the surfeit of oil can be a curse upon its nation. At least for some nations.
If nothing else, the book can make you grateful that things are worse elsewhere. Unless of course you live in one of those elsewhere places that the book pans.
You should also appreciate that it is not a given that the US will continue to be the pre-eminent nation. Examples cited by Beattie show how bad choices can impoverish nations for decades; secular effects that overwhelm any cyclic bull and bear markets.
A sobering book. Rating: 4 / 5
March 11th, 2010 at 5:52 pm
With the exception of its first sentence, the preface to this volume is an excellent assessment of how modern writers make mistakes when forming economic models in light of history. That the writer then plunges immediately into the same abyss of which he has just warned the reader came as a complete and unpleasant surprise. He chose random historical details for support although he has usually informed the reader of his presuppositions far in advance of any substantive conclusion. His presentation of historical events does make for interesting reading, but many of the ideas presented in this work have already been presented far better in Lester Thurow’s Building Wealth: The New Rules for Individuals, Companies, and Nations in a Knowledge-Based Economy. For anyone interested in learning about economic history and development, I would recommend Thurow’s book over this one. Rating: 1 / 5