False Economy: A Surprising Economic History of the World (Hardcover)

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Editorial Reviews

From Publishers Weekly

Financial Times world trade editor Beattie combines economic history, psychology and political analysis to identify the factors that predispose economies to sickness or health. The author takes a human interest, Freakonomics-style approach to such economic riddles as why Islamic nations stay mired in poverty (he argues that one reason might be the Qur'an's dictum against usury and interest-earning) and why Africa is dependent on exporting raw materials rather than commercial products (soaring temperatures and shoddy infrastructure). Beattie imbues economics with wonderful mystery as he untangles the mechanisms of the blood diamond trade and Peru's curious stranglehold on the global export of asparagus. Closer to home, Beattie examines the economic rivalry between Argentina and the United States a century ago; when Argentina seemed to be winning, the U.S. made a series of crucial decisions, moved forward and left Argentina poised for financial disaster. Thorough research, eclectic examples and a sprightly tone (Puritans were not big on bling) should make this a hit among those interested in world economics—and a must-read alternative for those who couldn't get through Guns, Germs and Steel. (Apr.)
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From The Washington Post

From The Washington Post's Book World/washingtonpost.com Reviewed by Justin Moyer Pop social science -- think Steven Levitt and Stephen Dubner's "Freakonomics" or Malcolm Gladwell's "The Tipping Point" -- is tricky. Authors risk sacrificing the intricacies of scholarship in the service of reader-friendly anecdotes. But Alan Beattie, the world-trade editor at the Financial Times and a former economist for the Bank of England, resists this kind of reduction in "False Economy," a thorough examination of economies from the age of empire to the age of the IMF. Standing proudly against psychology, dialectical materialism and inevitability, Beattie writes, "History is not determined by fate. . . . It is determined by people." He insists that it is not destiny but the right and wrong decisions by political leaders that cause societies to rise and fall. Beattie's analysis dazzles with particulars: He explains why Africa doesn't grow cocaine (poor infrastructure), why Peru grows most of the asparagus consumed in the United States (good lobbyists), and why pandas (whose diet is almost exclusively bamboo) and command economies (which can function only under inefficient bureaucracies) are endangered by inflexibility. A lover of Adam Smith's invisible hand, Beattie criticizes protectionist mollycoddling of inefficient industries. But despite his generally conservative outlook, his far-reaching history is grounded in a curiously Obama-esque, populist belief that open markets guided by modest, business-friendly policies can guide us through the current economic downturn -- that, as Shakespeare put it, "our remedies oft in ourselves do lie."
Copyright 2009, The Washington Post. All Rights Reserved.

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Product Details

• Hardcover: 336 pages
• Publisher: Riverhead Hardcover (April 16, 2009)
• Language: English
• ISBN-10: 1594488665
• ISBN-13: 978-1594488665
• Product Dimensions: 9.1 x 6.4 x 1.2 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.0 out of 5 stars  See all reviews (29 customer reviews)
• Amazon.com Sales Rank: #25,215 in Books (See Bestsellers in Books)

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88 of 92 people found the following review helpful:

4.0 out of 5 stars Bits & Pieces; Highly Relevant, March 14, 2009

By	The Spinozanator (Waco, Texas) - See all my reviews (TOP 500 REVIEWER)

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Rules for successful countries: Don't be overly isolationist. Don't strive toward complete self-sufficiency. Plan ahead for cities but don't support them over and above what supply and demand allows. Support your country's economy for those things it does well, not what neighboring countries may do well or other preconceived notions. Prevent any group from hijacking religion for their own political purposes. Don't let your government ignore property rights and the rule of law. Don't let natural resource windfalls, such as oil or diamonds, distract you from finding employment for your middle and lower classes. Don't let small interest groups hold your politicians hostage to the detriment of the rest of the country. Poor nations - worry less about trade policy and more about obstructive customs procedures and corruption that drives away business. Worry less about corruption that is moderate and predictable. When your country falls off the wagon, make every attempt to recognize it and get it back on course.

Each chapter asks a question. Here are the author's answers:

1. Argentina failed and the United States succeeded because the United States consistently self-corrected from a good start based on a good English model. Argentina consistently repeated mistakes from a bad pattern inherited from an autocratic Spanish model.

2. Like countries, cities are shaped not just by big economic forces and geography (although those have a big influence) but also by choices made by governments and their people. Washington DC was placed in a "federal district" because the founding fathers were paranoid about giving any state the upper hand. Political inertia has kept DC without a vote but this is not a chapter about Washington DC. It is a fascinating survey about the rise and fall of cities in general.

3. Egypt imports half its staple foods because becoming self-sufficient in agriculture would use more water than it can afford to. When countries import certain commodities, with those commodities comes "virtual water."

4. Oil and diamonds are more trouble than they are worth (to a country as a whole) because the rulers and their buddies can't seem to resist taking all the profits; neglecting other industries and leaving the rest of the nation on its own. A notable exception is Botswana, which shows the formula to success.

5. Islamic countries don't get rich, not because of the religion itself, but because of the actions of priests, politicians, monarchs, and bureaucrats exploiting malleable religious doctrines to pursue personal goals of wealth and power.

6. At the expense of growers in the United States, we import our asparagus from Peru because the US spends millions subsidizing Peru asparagus growers so they won't grow cocoa and make it into cocaine - despite the futility of efforts such as this. This chapter is full of examples from around the world of failed economic policies that gain a life of their own.

7. Africa doesn't grow cocaine because it doesn't have a good enough infrastructure. In this sense, the author means more than infrastructure such as roads to transport goods, although those aren't adequate either. Africa also doesn't have the business networking systems necessary to expedite business. Instead, there are bribes to pay at every juncture. The European former colonies all over the world were left with a business infrastructure. Europe tried to colonize equatorial Africa but because of malaria and other diseases, they lost too many colonizers, so they just took as many slaves as they could (the healthiest individuals) and got out.

8. Indonesia prospered under Suharto (a crooked ruler) and Tanzania stayed poor under Nyerere (an honest ruler) partly because Suharto, as corrupt as he was, maintained order and had some good economic policies. Nyerere had isolationist, self-sufficiency policies and his officials took wide advantage to extract bribes - not exactly a good business atmosphere.

9. Pandas (in the author's opinion) are useless because they went down an evolutionary cul-de-sac. Their incompetence at consuming and reproducing makes them hopelessly vulnerable. Contrast that to the flexible business plan of the ordinary housecat. Recognizing that Homo sapiens was going to have companionship needs for the foreseeable future, cats instantly spotted this opportunity and filled that slot in the market. Many countries act like Pandas rather than cats.

10. Conclusion: Entertainment is free and frequent at meetings of the World Trade Organization. Representatives of countries, including the US, relentlessly do things that are bad for their countries in the long haul to satisfy their small special-interest groups. Meanwhile, because of their oil, Russia is not even there. The job of staying on the right track only gets more difficult as the world economy gets larger, more integrated, and more complex. Lets hope we continue to make more right than wrong choices.

30 of 31 people found the following review helpful:

3.0 out of 5 stars Good material but you really have to work to get at it, March 12, 2009

By	M. McDonald (Chicago, IL United States) - See all my reviews (TOP 1000 REVIEWER)    (REAL NAME)

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False Economy is more of a random set of musings, stories and discussions than a consolidated economic history of the world. Organized across a combination of economic and societal principles, the book reads more like a private tutorial session -- over coffee -- at Oxford or Cambridge than a book intended to illuminate the reader. If the author intended this book to follow in the footsteps of Thomas Friedman, then he has come up short, not from lack of material, but rather from lack of organization and telling a consistent story across the chapters.

The chapters themselves are interesting, full of personal opinion, and provide a subtle but decidedly British point of view. The bias and slant that this includes sheds additional light on the subject of each chapter but only if you read for it and recognize that its there. Its a little like British humor which you have to listen to the words. In this book you have to read every sentence because more likely than not the main idea is buried in a sentence in the middle of a paragraph. Just a note to readers.

This makes the book tough to read for someone who is used to reading while they are travelling, have an hour or two to spare, etc. To get the most out of this book, I had to reserve an hour or so at the start of the day to do nothing but read and think about what the author was saying.

The assertions made in across the chapters on economic choices, cities, trade, natural resources, religion, etc are deliberately provocative -- again in the British style. The author's words are not as radical as the titles would suggest, and his prose can be indirect in several places.

So three stars, good content, interesting conjecture, well written technically, but not well structured for the reader. Given the plethora of books that are coming out on the economy and economic crisis, this would not be the first book I would naturally buy, but it is perhaps the one I will return to time after time.

30 of 32 people found the following review helpful:

5.0 out of 5 stars A surprising economic history indeed -- the surprise is, it's interesting, March 19, 2009

By	Edward Durney (San Francisco) - See all my reviews (REAL NAME)

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Alan Beattie writes for the Financial Times. Here, he departs from financial reporting to write something geared to a more general audience. People who have an interest in economics, and history, but who are not economists or historians.

False Economy was just right for me. Not too technical, but not too general. Economic history has always interested me. With economics, no one has a crystal ball to peer into the future. The past is our only clue. For economists, studying the past is important. Ben Bernanke, head of the Federal Reserve, knows as much about the Great Depression as any historian.

But economic history books can be some of the toughest to get through. Dense information must be presented. Careful analysis must be made. Comparing and contrasting different economic theories must be done in detail. Most of the time, that detail is excruciating.

Robert Samuelson's book The Great Inflation shows that. I like to read Samuelson's columns in Newsweek and the Washington Post, and I enjoyed reading his book. But it was a chore to get through. (To be quite honest, there were some parts I skipped.) Same with Lords of Finance: The Bankers Who Broke the World, a fine but occasionally tedious history of the four men who led the central banks in the US, France, England and Germany during the Great Depression.

For me, tedium was not a problem with False Economy. The book reads well, with interesting examples carefully analyzed. Each chapter takes a topic and runs with it. One example, comparing the economic histories of the United States with Argentina, appears several times in the book. The rest divides into discrete chapters.

Those without much interest in this kind of book, though, may find even False Economy a bit of a chore. As one might expect, Alan Beattie does not quite make economic history read like a good spy novel.

But he's pretty close. Certainly economic history buffs should, I think, find False Economy to be a refreshing change from our usual fare. Alan Beattie tries to teach by using surprising questions, like why doesn't Africa grow the cocaine that travels through it to Europe (it's grown in South America in countries that have the infrastructure to support it).

Unlike many books of this type, Alan Beattie does not take any particular political posture. He does not advocate for anything. His opinions come through in the book, certainly. But nothing you have to agree or disagree with. The countries and times tell their story, and you can interpret it how you wish.

My only caveat is to those who are looking for something scholarly, a book that provides the detail a student or teacher might want from an economic history. This book does not have that. It's more milk than meat. For some, that may be a reason to pass on it.