False Economy: A Surprising Economic History of the World

I enjoyed this book very much. It's main premise is that nations, through their own decisions, determine how successful their economies will turn out. Beattie makes a strong case against any fatalistic theory of the wealth of nations (that any nation had to end up as it did, due to its climate, religion or natural resources). The first chapter is a fascinating look at how similarly Argentina and the USA started out, but, through a series of poor economic choices, Argentina ended up as a second-rate nation. What is chilling is that the USA has, in the last decade, been making decisions quite similar to those made historically by Argentina. (Hopefully the USA can turn this around before it's too late.) The second chapter discusses the rise (and sometimes fall) of a number of famous cities throughout history. For instance, it's interesting to see how leaders in Rome became controlled by a large population of idle hangers-on, each grown custom to regularly receiving free grain and how coliseums with gladiator contests developed largely in an attempt to placate this group. Chapters 3, 6 and 7 examine what nations choose to import (versus produce themselves) and discusses the notion of "embedded water"; for example, when one imports wheat, one is in effect avoiding the cost of coming up with the water that would have been needed to grow that wheat. I had no idea that the USA in 1870s shipped 12,000 tons of ice to India each year. There is an excellent discussion of the issues of distance, scarcity of a resource, the logistical requirements for its transport and the role of special-interest groups and how these various issues have impacted trade across different nations throughout history. The fourth chapter was a revelation to me. I had not realized that the discovery of mineral wealth (diamonds, gold, copper, oil) has been an economic curse for many developing countries (why? because such sources of wealth tend to drive out other industries within those countries -- raising the value of their currencies enough to kill off their export industries and causing a variety of political problems for their citizens). The fifth chapter vigorously attacks the theory (originally espoused by Max Weber in his 1905 book The Protestant Ethic and The Spirit of Capitalism) that religion greatly influences a nation's economic success. Specifically, through recent and historic comparisons of nations he refutes the thesis of that the religion of Islam keeps Muslim countries poor. Chapter 8 discusses the role of political corruption in making countries poor. Beattie argues that there are two different forms of corruption: one form is a mainly drag on economic growth while the other is deadly to it. He discusses instances in which well-meaning leaders mistakenly established state mechanisms that resulted in the more deadly form of corruption. There is a tendency for governments (and peoples) to blame others for their problems (for example, rarely ha

This is a fabulous book that provides an analysis of why some countries and cities get prosperous while others stumble. I wanted to read it because I was not born in the U.S., so I personally experienced differences, and I appreciate the U.S. very much. The author says that countries and cities do not get rich by accident. They make choices that affect their economies. I liked the example of Argentina versus the United States. Before the Great Depression, Argentina was one of the top ten richest economies in the world. A century later, it is broke, and the United States has become the most powerful economy on the planet. I really liked the analysis of why countries with natural resources, such as oil, are not rich. The author says that the reason for this is because to extract resources from the ground requires heavy machines and equipment instead of human labor. People in these countries do not have jobs. On the other hand, countries such as China and Taiwan reduced poverty because their economies provided low-paying or medium-paying jobs. Those people have money to spend, fueling the economy. This is a great book and I recommend it. - Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

This book is going to dispel the myths you've carried about economics by offering facts as truth to explain how other countries stumbled and landed into the same predicaments the US is in today. BUT more importantly, Beattie does an excellent job distinguishing the successful actions of countries that escaped their crisis, those that took longer and some that never recovered. That part alone will help you revise your perspective on what America is currently doing right and other things we're needlessly gambling on for the sake of politics instead of any hope of contributing to our economic recovery. The topic of economics is enough to threaten the sales of Lunesta since 99.5% of all economists and their books are horribly boring. The biggest problem with the publics perception of economics is the majority of Americans still believe there are is only a "single solution" or limited choice of options that can solve our current crisis. The fallacy of this mentality should be self evident to think that just one or a few set of ideas can be used to solve a crisis created by countless people and events that were never devised as "bad decisions" but uniquely contributed to the state of things today. Since there are too many opportunities for the consumer to realize this truth, the same misperception of single and limited solutions to complex issues is irrigated with revisionist history that a few greedy elements like Wall St and Republicans got us here, ergo a crisis defined in simple terms and created by a handful of evil sources can be easily solved by a few earnest ideas bundled as a stimulus plan.

This was an amazingly well researched and intriguing book on how the economies of the world have become how they are. Covering the political, geographical and social tendencies in a multitude of locations and times, the author critically dissects the decisions that were made that lead up to how various countries operate today. In the process, the reader is exposed to numerous items that would seem counter-intuitive: corruption, if done "correctly," can help an economy more than a completely open and honest government in one example. While the book focuses on histories up to the present, it also makes various references to the current economic "crisis" of 2008 (and now, 2009), though this is not the focus of the book. The author is also incredibly talented at drawing the reader in and making the stories very interesting - this is not some kind of college thesis wrapped up to be a book. This is actually enjoyable, so much so that you don't want to put it down. (When is the last time you read a historical economics book that you wanted to keep reading?) There is very little I would do to improve this book. There is one thing that may already have been done in the final press edition (I read the limited distribution copy) - and that would be to include more "stopping points." Each chapter is around 20 pages, and they're so cohesive that there really isn't a good stopping point in-between. For that reason, it took me a bit longer to read this, as I knew that once I started a chapter, I would want to finish it, and wasn't able to take 10-15 minute breaks to read it. Overall...very good book for those interested in economics, politics, history, or "the way the world works." Highly recommended.

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.