Seven surprising facts from WRONG: Nine Economic Policy Disasters and What We Can Learn from Them
1. The American Revolution was fomented by Britain’s insistence that Americans should provide the mother country with raw materials at a reasonable price and buy finished products in return. This led to a somewhat bizarre situation in which an American who wanted to wear a hat made of an American beaver pelt could only buy it after the pelt had been shipped to England, turned into a hat, and shipped back to America to be sold.
2. In the 1600s, Sweden managed to have a coin weighing 43 pounds, causing many large scale transactions to be impossible without a cart and horse. Shortly after this mistake, Sweden switched to paper money.
3. The Federal Reserve System is one of the world’s most powerful and well-regarded central banks. It was not, however, America’s first central bank—or even its second. America had established not one, but two central banks 200 years ago—and dismantled them both before the Federal Reserve was formed.
4. In the 1990s Japan suffered from a financial crisis and deep economic recession. The severity of this “lost decade” can be traced to the authorities’ decision to hide the country’s economic problems for as long as possible. This was accomplished by propping up failing banks, in hopes that they would return to profitability when the economy picked up, rather than closing them.
5. Why did Europe switch to the disastrous Euro as a unified form of currency? Consider the following: During the pre-euro era, if a tourist had started in one of the 12 countries that adopted the euro in 2002 with 100 German marks and then traveled to each of the 11 other eurozone countries doing nothing in each except exchange money into the local currency at each stop, and was charged a standard 3 percent per conversion, he or she would have spent about 28.5 percent of the original sum on commissions alone.
6. The German hyperinflation during the early 1920s was one of the most severe on record. The severity of the hyperinflation led Germans to burn banknotes to generate heat and use them as wallpaper. According to one story, a suitcase filled with money was left by its owner on the sidewalk while he went into a store; when the owner returned to retrieve the suitcase, he discovered that a thief had emptied out the money and stolen the now much lighter suitcase.
7. Shortly before Britain’s announcement of the return to the gold standard in 1925, Winston Churchill hosted a small dinner party with both supporters and opponents of the return to gold. According to the only surviving record of that evening, John Maynard Keynes --one of the era’s most articulate opponents of the gold standard--was not particularly persuasive that evening, and in the following days Britain switched to the gold standard which ultimately contributed to the severity of the Great Depression. Could Keynes’ “off night” have brought about one of the worst economic disasters the industrialized world has ever known?
"His writing is every bit as clear as his title...the author piques our interest with spicy historical detail...he has written a lovely tour, admirably brief, through centuries of economic folly." --Roger Lowenstein, Wall Street Journal
"Grossman does an excellent job in picking up the most severe economic policy mistakes, providing a thorough description and analysis of them, and giving us anecdotes linked to the described events. Wrong is a very eloquently written book that leaves the reader with many new insights." --LSE Review of Books
"A splendid book about the history of economic policy making...unlike the efforts of some popular writers to draw lessons from economic history, Grossman has mastered the scholarly literature for the cases he chooses...I have great admiration for this book. Grossman addresses an important question and his judgments are uniformly well reasoned and balanced. He is also an outstanding teacher of economics." --Hugh Rockoff, EH.net
"Engaging... a welcome publication." --Jim McAloon, Victoria University of Wellington, Australian Economic History Review
"Those who do not learn from the past are doomed to, well, not learn from the past. In an age when ideology rather than economic reasoning increasingly drives public policy, Richard Grossman's provocative and entertaining review of historical experience reminds us of how ideology has led us astray before." --Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California, Berkeley
"The best way to get economic policy right in the future is for aspiring journalists, economists, and policy wonks to read WRONG, a brilliantly concise and entertaining guide to learning from one's mistakes. It's going straight onto my business journalism students' reading list." --Sylvia Nasar, author of Grand Pursuit and A Beautiful Mind
"This is a fascinating book about great economic policy mistakes. If you do not want to be the one who triggers the Great Depression on your watch, or who loses an entire colonial empire because of a small tax, this is the book to read. It even tells you about why we are in the mess we find ourselves in. Full of great vignettes, it is an enjoyable introduction to history's great economic bloopers." --Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance, Booth School of Business, University of Chicago and Chief Economic Advisor, Finance Ministry, Government of India
"Millions of people have suffered greatly, nations have fallen, and wars have been fought because of economic policy blunders. Yet while statesman and generals constantly restudy and relearn the lessons of Pearl Harbor or Vietnam or Munich, economists too often fail to learn lessons from past failures. That makes this book both novel and important. It should be read by anyone taking up a significant economic policy position and anyone seeking to understand and influence economic policy." --Larry Summers, Charles W. Eliot University Professor, John F. Kennedy School of Government, Harvard University and former President of Harvard University and Secretary of the U.S. Treasury