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As a graduate of the University of Chicago, a law professor, a senior attorney at the FTC with practical experience in antitrust issues, and a long-time student of history and economics, Kenneth Davidson is uniquely qualified to take the reader through a well-researched and fascinating history of the development of the Chicago School of Economics and its impact on American economics, law, politics and public thinking between 1970-2008.
Davidson's balanced approach acknowledges that "the market works, but not by itself," meaning that the fundamentalist, laissez-faire, caveat emptor views of the Chicago School that has guided American politics and economics for the last 35 years needs to be tempered by wise, but not excessive, government regulation. His careful reading of the evolving works of Milton Friedman, George Stigler and scores of other contributors to, and critics of, the Chicago School theories, provides a comprehensive analysis the strengths and weaknesses of the Chicago School.
Davidson demonstrates convincingly that the Chicago School market theories that supplanted neo-Keynesian theories in the late 1970's actually ignore the realities of the way the market really works. He shows both why and how unthinking, ideologically-strict, conformity to the Chicago School competition views seriously threatens the stability and growth of the American economy.
Davidson further demonstrates convincingly that steady deregulation of American business since the 1980's, especially the financial sector, has led to the creation of a huge, American "shadow economy" that operates dangerously outside the control of the Federal Reserve or any other government agency.Read more ›
Kenneth Davidson, who was a Federal Trade Commission colleague of mine some years ago, has crystallized decades of thinking in this well-written and provocative book. His thesis is that Chicago school economics, which was hailed by many conservatives and even by many moderates as the key to understanding economics and antitrust, is at best simplistic and at worst fatally flawed. Davidson brings many excellent examples of economic phenomena that the Chicago thinkers attempt to fathom but fall far short of understanding. The book would have been even better had most of the examples been taken from the economic crisis of the last several years, rather than from the 1970s, but is still a fascinating read.
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This is an extremely important book. It is essential for anyone who wants to understand the economic meltdown of 2007-8. As has been widely discussed, the origin of the collapse lay in an intellectual failure. A set of economic theories that were riddled with ideology became the basis for public policy for almost three decades. The failure of this economics has devastated the lives of millions of Americans. This book is a major contribution to our understanding how it happened. What is important about the book is that it describes how this economic thinking moved from the academic world into the world of public policy. The story is told from the perspective of the Federal Trade Commission, an agency with the responsibility for enforcing the antitrust laws. What is really important is how economics thinking that was indifferent to, if not absolutely hostile to, empirical evidence could capture a law enforcement agency which presumably acted on the basis of evidence. The result was a triumph of hard core ideology over good economics and common sense. This story is extremely well told by someone who is clearly well grounded both in economics and in law.
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That is the premise of this book. Without government regulation, society won't function properly. Why? Because the author believes that business people are basically pirates and consumers are too tired and stupid to take care of their own interests. Save your money and check it out of the library for free. See why the author feels you need to be a charge of the nanny-state.
A book that lacks essence, ignores history and eschews from human intelligence towards the bovine cult of the mentally inept. No PHD in Economics needed...just a "lite" history background and common sense.