Posts Tagged ‘economics’

Book Review: Pity the Billionaire by Thomas Frank

Author:Thomas Frank
Narrator: Thomas Frank
Title: Pity the Billionaire 
Publication Info: Macmillan Audio, 2012
ISBN: 9781427223128
Previous books read by the same authorWhat’s the Matter With Kansas?
Summary/Review:

Thomas Frank explores the ways in which the crash of 2008 and ensuing great recession failed to lead to a populist revolt against capitalists nor for greater government intervention into the economy, as it has in past recessions.  In fact, we got the Tea Party instead where the government was blamed for over-regulating business and banking instead.  Frank examines the common explanations for the rise of the Tea Party, dismisses them, and proposes the long growing movement that paints capitalists as victims of government overreach drawing from the works of neoliberal economists and Ayn Rand.  It’s all very interesting, and well-composed, although nothing I’ve not read before.  My favorite part of the book turned out to be the last chapter where Thomas Frank condemns the Democratic Party for failing to have any populist ideology to counter the right, nor drawing on what made them successful in past recessions, while at the same time maintaining cozy relations with Big Business.  The Democrats failure to act on the historic principles of their party makes it somewhat plausible that they can be blamed for being affiliated with the banks that bankrupted the country while at the same time too strictly regulating those banks.

Recommended books:  The Price of Inequality: How Today’s Divided Society Endangers Our Future by Joseph E. Stiglitz, The Whites of Their Eyes: The Tea Party’s Revolution and the Battle over American History by Jill Lepore, and Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) by David Cay Johnston.
Rating: ***1/2

Book Review: Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell

Author: Ellen Ruppel Shell, Lorna Raver (narrator)
Title: Cheap: The High Cost of Discount Culture
Publication Info: Tantor Media (2009)
ASIN: B002HIT0SG
Summary/Review:

Cheap is an intriguing expose on the modern American desire for bargains fed by discount stores and discount ideology in more areas of commerce than one would realize.  Ruppel Shell offers a fascinating history of discount stores from the late 19th-century to present.  Interestingly, many of the originators went under by the 1980s to be absorbed by the more ruthless corporations of today.  The hidden costs of inexpensive purchases are then detailed from environmental destruction, human rights violations of the employees who manufacture, distribute, and sell the products, the dangers of poor quality goods to the consumer, the erosion of the middle class, and the fact that a lot of this cheap stuff isn’t even worth what we pay for it.  Ruppel Shell makes the interesting point that we now live in a world where there are high-end goods and discount goods, but no reliable in-between.  IKEA, Wal-Mart, and outlet malls are singled out as some actors in the discount culture, but the closing “hope-for-the-future” chapter also details companies like Wegmans and Costco that are thriving despite adopting strategies that go against the grain of discount culture.  While the essence of this book is not likely to be surprising to most readers, it is still eye-opening in its details.


Recommended books:Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) by David Cay Johnston, Nickel and Dimed: On (Not) Getting By in America by Barbara Ehrenreich, and In Defense of Food: An Eater’s Manifesto by Michael Pollan,
Rating:****

Book Review: Soccernomics by Simon Kuper and Stefan Syzmanksi

Author: Simon Kuper and Stefan Syzmanksi
Title: Soccernomics : why England loses, why Germany and Brazil win, and why the U.S., Japan, Australia, Turkey and even India are destined to become the kings of the world’s most popular sport
Publication Info: New York : Nation Books, c2009.
ISBN: 9781568584256

Also by the same author: Football Against the Enemy

Summary/Review: A soccer writer and an economist bring a sabermetrics/Freakonomics approach to global soccer.  Issues covered include:

  • That England based on their experience, population, and other demographics they are actually not underachievers but win more often than they should.  The authors also give some tips on how England can improve (like not playing in the physically taxing Premier League).
  • Why soccer clubs are bad businesses and should not be run as a business.
  • Secrets of the transfer market, such as the wisdom of crowds, buy players in their early 20s, sell whenever another club offers more than he’s worth, and help players to relocate and adjust to their new culture.  Olympique Lyonnais is the Moneyball club of Europe winning French titles using unconventional techniques.
  • Fans are analyzed with the devoted Nick Hornby-type fan proving a rarity (not so surprising) and the world’s most soccer-mad fans are in an unexpected nation.
  • Rankings of the most overperforming and underperforming soccer nations in the world and a glimpse at the future world soccer order.

It’s a fun book with a lot of analysis that seems to be based on  hard data – although I sometimes wonder if it’s relevant data – but I can’t quibble too much with the results.

Recommended books: Moneyball: The Art of Winning an Unfair Game by Michael Lewis, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt, Fever Pitch by Nick Hornby and How Soccer Explains the World: An Unlikely Theory of Globalization by Franklin Foer.
Rating: ***

Book Review: 23 Things They Don’t Tell You About Capitalism by Ha-Joon Chang

Author: Ha-Joon Chang
Title: 23 Things They Don’t Tell You About Capitalism
Publication Info: Bloomsbury Press (2011)
ISBN: 97816081916666
Summary/Review:

I received this book as an advanced reading copy through the Library Thing Early Reviewers program.  Like the title says, it goes through 23 aspects of capitalism that are myths, misrepresentations, or simply bald-faced lies.  Now this book is not anti-capitalism, but the author does seek to debunk the ideology of free-market capitalism (itself misnamed) that over the past three decades has gained an almost religious reverence in political and economic circles.  Some of the most interesting tidbits include:

  • The economic and technological revolution of the internet has been vastly overstated.  We do not live in a post-industrial age and the washing machine has changed the world more than the internet has.
  • There is no such thing as a free market as there is some level of regulation in all markets.
  • Running a company for shareholder interest is inefficient for the company and bad for the national economy.
  • If we assume the worst about people we will get the worst out of them (this applies to the frequently repeated belief that the economy is based on individual self-interest and denials that people are moral agents).
  • Many successful endeavors have been initiated by the government or through public-private partnerships.
  • Regulation works not because the government knows better but because it deliberately restricts our choices within the scope of humanity’s bounded rationality.
  • Bigger government allows people to take more risks by re-tooling their work skills knowing there is a safety net if they fail.

Chang’s writing style can be dry – although there are flashes of good humor – and he gets repetitive since the 23 things overlap often.  I found it an interesting overview of economics and capitalism and makes a lot of good points about what’s wrong with the prevailing opinion.  Of course, I may be predisposed to agree with Chang’s thesis, but I also feel I learned a number of things I never understood before.
Favorite Passages:

“The higher purchasing power of US citizens (compared to the citizens of other rich countries) is owed in large part to the poverty and insecurity of many of their fellow citizens, especially in the service industries.  The Americans also work considerably longer than their counterparts in competitor nations. Per hour worked, US incomes is lower than that of several European countries, even in purchasing power terms.  It is debatable that that can be described as having a higher living standard.” – p. 111

“Simply making the rich richer does not make the rest of us richer.  If giving more to the rich is going to benefit the rest of society, the rich have to be made to deliver higher investment and thus higher growth through policy measures (e.g., tax cuts for the rich individuals and corporations, conditional on investment), and then share the fruits of such growth through a mechanism such as the welfare state.” – p. 147

“When the managerial classes in the US and, to a lesser extent Britain, possess such economic, political and ideological power that they can manipulate the market and pass on the negative consequences of their actions to other people, it is an illusion to think that executive pay is something whose optimal levels and structures are going to be, and should be, determined by the market.” – p. 156

“Unless we deliberately restrict our choices by creating restrictive rules, thereby simplifying the environment that we have to deal with, our bounded rationality cannot cope with the complexity of the world.  It is not  because the government necessarily knows better that we need regulation.  It is in the humble recognition of our limited mental capability that we do.”  – p. 177

Recommended books: The Great Unraveling by Paul Krugman, Free Lunch by David Cay Johnston, The Big Short by Michael Lewis
Rating: ***

Book Review: The Return of Depression Economics and the Crisis of 2008 by Paul Krugman

Author: Paul Krugman
Title: The Return of Depression Economics and the Crisis of 2008
Publication Info: Books On Tape (2009), Audio CD
ISBN: 1415965080

Previously read: The Great Unraveling

Summary/Review:

Nobel Prize winning economist Paul Krugman writes a brief overview of what he calls “depression economics” that arose from the perfect storm of events that brought down the global economy in 2008.  Much of the book is a revised form of an earlier book about fiscal crises in Latin America and Asia in the 1980s and 1990s.  These earlier crises should have been a clue to what could go wrong with the bubble economy of the 2000s but most of the people who should have known better thought that depression economics were a thing of the past.  Krugman does a good job of explaining what went wrong and offers solutions to prevent a repeat: regulate anything that works like a bank as a bank and allow governments to offer stimulus to the economy when needed.  These solutions seem obvious of course but Krugman also explains how these reforms work and what happens when they’re missing.  In short this is a good overview of the fiscal crisis for the non-economist that is written in an engaging, sometimes even humorous, manner.

Recommended books: Free Lunch David Cay Johnston, What’s the Matter with Kansas? by Thomas Frank and The Way We Never Were by Stephanie Coontz
Rating: ***

Book Review: The Invisible Hook by Peter T. Leeson

Author: Peter T. Leeson
Title: The invisible hook : the hidden economics of pirates
Publication Info: Princeton : Princeton University Press, c2009.
ISBN: 9780691137476

Summary/Review:

I awaited the release of this book with great anticipation as it contains three elements I can’t resists: pirates, quirky application of social sciences,  and a terrific pun in the title.  Overall it did not disappoint.  Leeson examines the Golden Age of Piracy (roughly 1680-1720) through the lens of economics, seeking economic reason for what pirates did.  Much of pirate behavior is based in reaction to the harsh and unrewarding life of sailors under cruel captains.  Leeson shows how pirates preceded both James Madison and Adam Smith by decades by creating democracies and free market capitalism aboard their floating communities.  It was beneficial to the crews as a whole to elect their captains and to sign pirate codes that would determine fair treatment – and a fair share of the booty.  Pirates also should a fair amount of tolerance for black sailors among their crew making their racism subservient to the economic benefits of a good hand on board no matter what his color.

The “Jolly Roger” and the wild antics of pirates like Blackbeard also have an economic purpose – to force the pirates’ prey to surrender without a fight.  Sea battles would damage the pirates’ prize, their own ship, and perhaps even the pirates so it behooved them to act as threatening and crazy as possible to actually prevent violence.  For many of these reasons, pirate ships were actually popular among the ordinary sailors who were willing recruits into a society that would allow them a voice in how things are done and take home a greater share of wealth than they’d earn in the merchant marine.  The book concludes with a humorous management course as taught by a pirate with a syllabus of articles and books that back up the economics behind the pirate way.

One quibble I have in this book is that Leeson often deviates from economics to slip in Libertarian ideology in tangents that seem odd and out of place.  For example, he takes up several pages to convince the reader that all government is based on the threat of violence as opposed to pirate societies which were freely joined.  He even writes of the benefits of pirate torture in regulating the behavior of commercial ship captains (who had to treat their sailors well lest they too be caught and tortured by pirates) but seems to see only evil in any regulation whatsover by government.  Nevertheless, this is an enjoyable and educational book that brings the dismal science to life through the romance of piracy.  Arrr!

Recommended books: Freakonomics by Steven D. Levitt; Under the Black Flag: The Romance and the Reality of Life Among the Pirates by David Cordingly
Rating: *** 1/2

Book Review: The Long Tail: Why the Future of Business is Selling Less of More by Chris Anderson

The Long Tail: Why the Future of Business is Selling Less of More (2006) by Chris Anderson has been so discussed, cited, and praised the past few years that listening to the first few chapters I almost felt that I knew it all already.  The basic gist is that businesses can profit from selling just a few units of lots and lots and lots of different products instead of just focusing on selling lots and lots and lots of units of a few “hit” products.  On a graph, the traditional hit economy appears as a short head, while the niche economy appears as a long tail, thus the origins of the term.  Anderson’s original article on The Long Tail is still online at Wired (Issue 12.10 – October 2004) and is worth reading for a summary of the theory behind this book.

Anderson contends that the Hit Economy is actually unusual in economic history.  Examples of the hit economy include Casey Casem’s American Top 40 (which I listened to devotedly as  child), television programing dominated by three networks, and blockbuster films.  All were designed to appeal to a lowest common denominator to attract as many people as possible with the outlets for production controlled by a few.  Prior to mass broadcasting culture was regional, and thus the things people bought as well.   Today, internet communities are gathering around common interests in niches similar to the old regional cultures although the people using them are geographically disparate.

While Anderson credits the internet with providing the resources that allow the Long Tail to flourish, he also provides a history of the Long Tail dating back to Sear, Roebuck’s Wish Book in 1897 and 1-800 numbers in the 1960’s.  The internet allowed the democritization of the tools of production and distribution and allowing enterpreneurs like Jeff Bezos of Amazon and Jimmy Wales of Wikipedia to find success. The economics of scarcity were replaced by the economics of abundance.  It turns out that customers really like lots of choice contrary to the earlier conventional wisdom.  The difference is that consumers need filters like recommendations and reviews.

I like the examples Anderson cites such as the history of house music, the study of jams, and the punk rock revolution.  He makes a very compelling argument of the advantages of niche markets for the future of business.  On the other hand, I wonder how permanent this change is.  Anderson makes a point of the last big blockbuster pop album being an N*Sync record from 2001, their success in sales not repeated since.  Yet this is a very short period of time. Despite the influence of the internet on exposing niche bands to communities who’ll support them, whose to say that commercial forces won’t co-opt these new tools of distribution and production to recreate the Hit Culture?  I’ve read bloggers who are already complaining that blogs are no longer successful unless they have a staff of multiple writers with commercial support behind them.  Another example was the success of the internet phenemom Lonely Island conquering Saturday Night Live with their “Lazy Sunday” skit.  But is that the case?  Could it not be said that the SNL’s of the world will just keep swallowing up the Lonely Islands?

Author Anderson, Chris, 1961-
Title The long tail [sound recording] : [why the future of business is selling less of more] / Chris Anderson.
Publication Info. New York : Hyperion Audiobooks, c2006.
Edition Unabridged.
Description 7 sound discs (approx. 8 hrs.) : digital, 4 3/4 in.
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