Book Review of False Economy

False Economy

A surprising economic history of the world

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Review of False Economy, by Alan Beattie (Hardcover, 2009)

(You can print this review in landscape mode, if you want a hardcopy)

Reviewer: Mark Lamendola, author of over 6,000 articles.

This book gets off to a rough start. The first sentence of the preface is a statist salvo, and the first chapter begins with two very confusing paragraphs. The bumpy ride in the first few pages of the first chapter just about made me decide to stop reading the book. But that would have been a mistake. The book really does have much to offer, and it is well worth the time spent reading it.

While the author comes from the command and control economy of the U.K. (which also has strong criminal protection laws), he doesn't view the world through that lens. He's an accomplished world traveler, and his travels have taken him deep into troubled areas. He's also reached into a wide range of published works, as the bibliography shows.

Another attribution, which is arguably of dubious quality, is his association with Bono. In my own biased view, Bono is generally on target. I don't know all of his views and haven't read all of his statements, but what I have heard resonates. He strikes me as a well-informed individual. I like U2's music, and that surely colors my perceptions. You don't hear Bono advocating the expansion of the parasite class the way, for example, you hear Alec Baldwin blathering on about it. Bono's comments are more reality-based, as is his perspective of himself (Bono is a humble guy).

In keeping with the traditional nonfiction format, this book consists of ten chapters.

Chapter One contrasts the choices made by leaders of Argentina and leaders of the USA. The two countries share many similarities and many natural advantages. Yet, the USA went on to become an economic powerhouse while Argentina became an economic basket case. While the author doesn't explicitly say so, you can look at the choices again and see how the USA later became an economic basket case (now with the highest tax burden in history and more debt piling on daily).

Chapter Two looks at the subject of limiting the power of capital cities. This is interesting, but I'm not sure the conclusions necessarily follow from the facts. That can be due to my disdain for Washington DC, its criminal protection laws despite ultra-high murder rates, and the fact that the US CONgress engages in so much destructive behavior while meeting there. Holding DC up as an example of anything positive whatsoever generally doesn't inspire my confidence in whatever follows. It's hard to make the case that any other capitol city in history has been so destructive to its nation.

Chapter Three presents an area of economic study that was new to me. It's the topic of embedded water. The case in point is Egypt, and the embedded water concept explains so much that I hadn't understood before.

Chapter Four is supported quite well by other literature on the same topic. Here, Beattie looks at why countries rich in oil or diamonds tend to be poor. And then he explains why it doesn't have to be that way and how some countries are examples that prove it. There are lessons in here for countries that aren't predominantly single-resource countries, too.

In Chapter Five, Beattie takes on the myth that specific religions determine the wealth of nations. He goes through various examples through history to show that religion isn't a common thread. It's not causal at all. The current fad is to declare that Muslim nations are all poor because of their religion. One example he didn't mention is the poorest nation on earth isn't Muslim. The USA, with its massive debt, has a net worth of about $50 million million (I don't like to say "trillion", because people read it as "million" even though it is one million times one million) less than that of, say, Ethiopia.

I read recently that no Muslim nation has a national debt, due to the requirements of the Muslim faith. I haven't verified it's so, but it sounds right. So this completely destroys the idea that Muslim means economic poverty. But any student of Middle Ages history already knows this.

Chapter Six answers the question, "Why does our asparagus from from Peru," while also answering a slew of questions behind that one. If you understand Chapter Three, you understand that much of international trade is inefficient and doesn't make sense. But then when you look at why you see "government" and the lack of logic has an explanation.

Chapter Seven asks the question, "Why doesn't Africa grow cocaine?" The answer is informative and entertaining.

In Chapter Eight, Beattie looks at how corruption figures into the prosperity of nations. In doing so, he reveals that corruption does not in itself make a nation rich or poor. Neither does its absence.

Beattie sees the panda as doomed to extinction. In Chapter Nine, he explains why. The same factors doom national economies to demise. The general concept is "path dependence," and it's one routinely ignored by policy makers today.

Unlike Spendbama's recycling of failed policies (and failed policy makers), there are workable solutions to economic problems. In Chapter Ten, Beattie examines where these solutions come from and what they might be. This chapter is worth reflecting upon.

The statist salvo mentioned earlier was a complimentary nod to FDR. Yes, FDR got his image on Mount Rushmore thanks to a very good PR machine and widespread lack of understanding of basic economics. FDR was the most colossal failure of all US presidents in terms of policy (prolonging the Great Depression, ramping up the federal debt, trampling the Constitution, creating enormous bureaucracy / parasite class, etc.) up to that time.

It's arguable whether the Clinton/Bush reign of error resulted in more devastation than FDR's transgressions, but Spendbama is off to a good start in destruction as I write this review in March of 2009. The author clearly understands that removing capital from a capitalist economy has the same deleterious effect as opening a vein on a stabbing victim, so the nod to FDR is incongruent with the facts presented later in the book.

The confusion in Chapter 1 is an attempt by the author to juxtaposition the September 11 tragedies in the USA with the financial events in Argentina just days later. The confusion could have been avoided by prefacing this with a "what if" bit of text. As written, it doesn't make sense. So, it starts the first chapter off on a note of confusion. Once you get past that, things quickly become engaging. A few more bumps and the book becomes a page turner.

With so much disinformation and logic-free analysis coming from incompetent governments and their sycophant media today, it's good to find a book that looks at economics from an historical and factual perspective. If citizens understand the concepts, they won't be subject to the brainwashing and other manipulations that have put nearly every nation's government above accountability and resulted in today's economic disasters.