Citizen Economists » Book Reviews

¡Nuevo! Read Reed Hundt’s book, “In China’s Shadow”

D H Smith — Mon, 18 Jan 2010 16:22:42 +0000

If you want to understand Democrat fantasies in the absence of financial constraint or common sense, read Reed Hundt’s book, “In China’s Shadow.” Reed Hundt is a permanent member of the American politcal class, a Yalie, a partner in a high-powered law firm, head of Bill Clinton’s FCC, and a member of Barack Obama’s transition team.

Free money is Reed Hundt’s great idea.

Here’s how it works. Muggins, that is you & me, the hard-pressed American taxpayer, should buy everyone from Nome to Tierra del Fuego a pension, healthcare, and education. By these means, the United States will win in the economic competition with China that furnishes the title of his book and a small fraction of its other content.

No, it’s not a joke! He is being serious — if you’re an American with a job, you should spread the wealth around the hemisphere.

The leftist cabal currently in power and the pointy-headed intellectuals who influence them really think this way.

Do It Their Way

Russ Nelson — Tue, 03 Nov 2009 12:51:05 +0000

Tom Slee has written a book entitled No One Makes You Shop at Wal-Mart. The introduction of the book ends with “why we need to rely on collective action rather than individual choice to take us to where we want to be”.

Poor Tom! He fantasizes that once the tools of coercive collective action are created, intellectual such as himself will be in charge of directing the action. And yet, when you point him at collective action gone wrong (e.g. Jim Crow laws, or the War in *, or the War on Drugs), he’ll just tell you that the wrong people (e.g. George Bush) are in charge.

No, it’s far more likely that when powerful tools are created, powerful people (politically and/or economically powerful — which you surely must acknowledge doesn’t include intellectuals) control them. That’s why I oppose the creation and ongoing maintenance of these tools. Not because you can’t do good things with them — you can — but it’s more likely that bad things will be done with them.

Are Policy Makers Responsible for Our Happiness?

Winton Bates — Wed, 12 Aug 2009 10:45:30 +0000

“Societies need subjective indicators of well-being to aid policy makers and ordinary citizens in making decisions.” This is the opening line of the recently published book, “Well-being for Public Policy” by Ed Diener, Richard Lucas, Ulrich Schimmack and John Helliwell. The first three authors are psychologists (Diener has played a leading role in the field of happiness research) and Helliwell is an economist.

The final sentence of the first paragraph explains: “Overall, accounts of subjective indicators of well-being will help policy makers make wiser decisions regarding policy alternatives and help citizens be better educated about the choices that affect their lives”.

I am in favour of research to enable people to become better informed about the choices that affect their lives. I hope that what the authors mean by “help citizens to be better educated” doesn’t involve anything more sinister than publication of research findings.

While reading the book I became irritated by what seems to me to be a naive view it presents of the policy making process. Although the nature of policy making is largely incidental to the purpose of the book, I will devote the remained of this comment to policy making. I promise to focus on the substance of the book in a later post.

According to the “public interest” view presented in the book, public policies are made by “policy makers” who would make wise decisions if only they knew what policies would improve the well-being of citizens. In reality, however, the policy making process is a messy business which involves politicians seeking votes and hoping to further their careers, civil servants seeking to expand and protect empires, voters who have little interest in most policy issues and even less incentive to understand likely consequences of the proposals being considered, interest groups seeking to further the interests of the people they represent and electoral rules that may give disproportionate power to particular groups. The process also attracts ideologues of various kinds who wish to advance their particular views of the good society.

In my view, rather than attempting to persuade us that more information on the subjective well-being of citizens would help some hypothetical “policy maker” to make better decisions, it would have been better if the authors had sought to persuade us that this information would enable policy processes to produce better outcomes.

Would this have made any difference to the book? Although the basic arguments about the validity of subjective well-being measures and their potential usefulness would have been unchanged, I think this change of focus would have made some difference. In particular, it seems to me is that the authors would have had less difficulty convincing readers that they “do not advocate the idea that governments should intervene strongly to move society towards a primary goal of increased well-being” (p209). When most of the book seems to be devoted to telling “policy makers” how they can use subjective information to improve the well-being of citizens it is natural enough to expect readers to be concerned that some “policy makers” might act paternalistically in using this information. Some readers might not be entirely reassured that paternalistic “policy makers” would have regard to the findings of happiness research which show that humans tend to feel most satisfied when they perceive that they have freedom to choose how to live their lives.

The problem of how paternalistic interventionists might like to use research findings is placed in perspective once it is recognized that competing interests are involved in policy-making through discussions in a range of different forums. These discussions are about various things, but the matters discussed by vast majority of participants usually relate in some way to the effects of different policies on the well-being of people.

The important issue is whether measures of subjective well-being can make useful contributions to the discussion of policy issues.

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How Can a Conservative Favor Centralization of Power?

Winton Bates — Fri, 07 Aug 2009 18:00:25 +0000

One of my reasons for reading Tony Abbott’s recent book, “Battlelines”, was to remind myself why I am not a conservative. The more serious reason was to find our how a politician who proudly wears the conservative label would attempt to justify proposing an amendment to the Australian constitution that would remove current restrictions on the policy areas in which the federal government has power to make laws.

In writing this book Tony Abbott, a former minister in the Howard Government who is now on the opposition front bench in the federal parliament, seems to have taken on the role of defining where the battlelines should be drawn in the approach to the next election.

One of the things Abbott is clearly trying to do in this book is to identify enduring values that will continue to bind the Liberal Party together. In the process he does a reasonably good job of minimizing the differences between Hayekian liberals and Burkean conservatives. At one point he writes: “Following Adam Smith, Liberals tend to think that government is necessary to keep the peace but otherwise should let people make mutually beneficial arrangements with each other” (p 82). If I believed that was a statement of conservative philosophy, I would not mind being called a conservative. In other places in the book, however, Abbott displays the contempt for personal freedom that is associated with traditional conservative values. For example: “The basic problem is that most Western countries have privatised the next generation. Having children tends to be regarded as a personal choice rather than a social good” (p 97).

Having now reminded myself why I am not a conservative, let me turn to Abbott’s views on federalism. The essence of his argument is as follows:

When nothing else seems to solve problems, voters always expect the central government to ‘do something’.
After more than 50 years of increasing federal government involvement in matters that were formerly the exclusive responsibility of the states, the federation has become dysfunctional. “There are few problems in contemporary Australia that a dysfunctional federation doesn’t make worse”.
Current attempts to end the “blame game” between different levels of government are not going to work. Someone has to have the legal power to take responsibility.
The only credible way to fix the problem is to give the central government the legal power to call the shots i.e. to over-ride the states.
The argument that the states form a bulwark against the potential tyranny of the national government is “far-fetched”. Australia has states because this was the price of becoming a nation, not because the fathers of federation thought that an intermediate level of government was necessary to avoid tyranny.

I agree, more or less, with the first three points, but disagree with the last two. What reason do we have for thinking that a government attempting to run schools and hospitals out of Canberra would do a better job than one trying to run them from some office in a state capital? Absolutely none! And I think that Tony Abbott agrees with me. What he has in mind is that if the federal government was able to over-ride the states on health and education the most likely result would be for public hospital and school services to be “provided on a contestable basis by a range of independent and autonomous organisations as well as by state-government instrumentalities” (p 129). That sounds to me like a move in the right direction, but we can’t be sure that some control freak in charge of the central government would not attempt to intervene more directly in the management of hospitals and schools if he/she had the power to do so.

As I see it, the main problem of the federation arise from the stupidity of the central government in its choice of forms of intervention. The basic problem in both hospitals and schools prior to federal intervention was that people were unhappy with the services that state governments were providing from tax revenues. Instead of giving state governments more money to waste, the central government should have given people back some of the money they had paid in taxes so that they could purchase alternative services.

The central government does not need additional power in order to achieve contestable service provision. It just needs to stop propping up inefficient state bureaucracies and give power back to the people.

In concluding I would like to commend Tony Abbott for presenting his views in a forthright manner. It is nice to be able to disagree with quite a lot of the things he has written and yet still feel that, as politicians go, Tony Abbott is not a bad bloke.

Read Reed Hundt’s book, “In China’s Shadow”

D H Smith — Mon, 13 Jul 2009 15:20:18 +0000

If you want to understand Democrat fantasies in the absence of financial constraint or common sense, read Reed Hundt’s book, “In China’s Shadow.” Reed Hundt is a permanent member of the American political class, a Yalie, a partner in a high-powered law firm, head of Bill Clinton’s FCC, and a member of Barack Obama’s transition team.

Free money is Reed Hundt’s great idea. Muggins, that is you me, the hard-pressed American taxpayer, should buy everyone from Nome to Tierra del Fuego a pension, healthcare, and education. By these means, the United States will win in the economic competition with China that furnishes the title of his book and a small fraction of its other content.

No, it’s not a joke. People with power and influence really think this way.

What Has Government Done To Our Money?

Trace Mayer — Mon, 29 Jun 2009 11:24:36 +0000

On 25 June 2009 I was invited to the Cafe Libertalia to speak at a book club where I was given the latitude to choose the book for discussion. I picked What Has Government Done To Our Money And The Case For A 100% Gold Dollar by Murray Rothbard. This book is an easy to read foundation for the student of the Austrian school of economics. Therefore, I think everyone should get and read a copy.

What Has Government Done To Our Money is 119 pages while The Case For A 100% Gold Dollar is 61 pages. It is printed on archival quality acid-free paper and has a sleek cover. This book makes a great addition to any library.

WHAT HAS GOVERNMENT DONE TO OUR MONEY

This is a well done objective monetary history. It discusses how money developed, the rise of fractional reserve banking and the constant meddling by government in money and currency. A key reason governments meddle in the money and currency markets is because it is a source of funding.

The reader learns some some basics of history, government and economics such as the development of monetary names, benefits of money, a short discussion on legal tender application and an entire part on The Monetary Breakdown of the West.

THE CASE FOR A 100% GOLD DOLLAR

This is a persuasive essay on why a 100% gold Dollar should be adopted. This essay originally appeared in the out of print and hard to find In Search Of A Monetary Constitution by Leland Yeager and published in 1962 by the Harvard University Press. While the arguments Rothbard makes are sound; I do not really agree because of advances in information technology and monetary evolution over the past 47 years.

Four and a half decades ago there was no Fandango, online checkin for airplane flights, etc. So likewise there have been advances made in monetary application and I am of the opinion that private digital commodity currencies, like GoldMoney, provide the most efficient solution to the monetary chaos the world has found itself in.

WHO THIS BOOK IS FOR

What Has Government Done To Our Money And The Case For A 100% Gold Dollar by Murray Rothbard is a quick and easy read divided into two main portions. I think the objective presentation of monetary history is a good read for anybody. The persuasive essay is a good read to for anyone who wants to stimulate their analytical capacities but keep in mind it is obsolete. Therefore, I think everyone should get and read a copy of this book.

You can get a free digital copy from the Mises Institute or purchase a physical copy from Amazon.

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Get The Skinny On Silver Investing

Trace Mayer — Wed, 10 Jun 2009 12:10:36 +0000

I remember an offhand remark someone made about ‘If you think the gold bugs are crazy just wait until you meet a silver bug.’ Well, a few months ago at an investment conference I met David Morgan of Silver-Investor.com. I found him to be another right thinking person.

We talked for a while, became friends and occasionally collaborate. He gave me a signed copy of his book Get The Skinny On Silver Investing. At only 120 pages it was a fairly quick read.

It lays a very good and objective groundwork of silver history, the silver industry, silver’s use as money, silver leasing, potential market manipulation along with suggestions on the different ways to invest in silver.

Occasionally I receive a question from a reader about where and how to buy silver. More often than not the question could be answered by reading Get The Skinny On Silver Investing. Therefore, for anyone thinking of investing in the silver market I highly recommend getting a copy so you can quickly assess the terrain.

Order a digital copy for $10.

Order a physical copy from Amazon.

“Limits Of Power” by Andrew Bachevich

Dan McLaughlin — Thu, 21 May 2009 12:10:15 +0000

“The Limits Of Power” is an engaging book that explores the contemporary imperialism of the United States Of America.

Most of the facts that Andrew Bacevich puts forth in the book are quite true. The central core of the book, the weakness of the idea of American exceptionalism, is indeed valid. That exceptionalism and the resulting imperialism is, in the long run, more of a threat to American citizens and society, and indeed the whole world, than most foreign powers. Even though he gets that right, he harbors some essential misunderstandings which only serve bring him to some misguided conclusions.

His premise is that, because Americans have a fetish about freedom, they have succumbed to consumerism and dependence on foreign oil and other goods, in order to live the good life. This dependence has put a premium on military might to protect the freedom to consume. He sees this as the primary cause of the Middle East conflicts. Americans protecting their interests, using the false front of freeing the people of that region from tyrants, use military might to protect their supply of cheap oil.

He is writing from a background as a retired army colonel. Thus, when he speaks of The United States, America or Americans, he is generally speaking of the collective political apparatus of the state, not about the people at all. This does set the tone for much of the book and his outlook. There are times, however, when he does use the terms to describe individual people, consumers in the “crisis of profligacy.” This mixture serves only to confuse the logic of his arguments.

A fundamental error in his logic, which affects most of his conclusions and recommendations, is that he misconstrues the notion of freedom. The only coherent understanding of freedom is that it has limitations only in the responsibility to refrain from interfering with the freedom of others. That is not the understanding of freedom that Bacevich uses. He states that “freedom has an underside.” His statement in the first section of the book is telling. “In the aftermath of the attacks on the World Trade Center and the Pentagon, Washington’s resolve that nothing interfere with the individual American’s pursuit of life, liberty, and happiness only hardened.”

It may be that politicians wanted Americans to think that they were interested in preserving freedom, but everything that they did resulted in the destruction of freedoms for Americans. As he noted later in the book, American politicians and military leaders used the pretext of freedom for Middle East countries to initiate aggressive military and political intervention in the affairs of foreign countries, with the objective of installing friendly governments. Yet he doesn’t grasp his own inconsistent understanding and misuse of the term throughout his discussions.

Through much of the book, that disconnect was quite disturbing, because I agree with much of what he said. Imperialism is weakening America, morally, politically and financially. American politicians are trying to impose on the world standards that they themselves refuse to abide by. Frequently, however, I would be jolted by something that didn’t fit, conclusions that were wrong. It seems to come down to the idea that freedom is the problem.

In his conclusion, he comes close to being right, but then veers off course by construing that international relations are only political or military. He refers to his master, Reinhold Niebuhr, saying “Yet he [Niebuhr] understood that a nation satisfies its interests more easily when those interests are compatible with the interests of others.” What he is stating is the essence of free trade. When people are free to trade with whoever they want on whatever terms they want, the interests of each are made compatible. Lack of coercion creates benefits of cooperation for both parties.

Where he goes wrong is to believe that the interests of American politicians are the interests of the Americans. That is the root of most economic fallacy and problems in international relations. The self interest of politicians is almost always at odds with the self interest of citizens. Bacevich treats them as one and the same. On the very last page, he quotes Neibuhr again, “social orders will probably destroy themselves in the effort to prove that they are indestructible.” The reality is that politicians will destroy social orders because their own self interest is in power, and power ultimately destroys freedom and progress.

Bacevich’s entire line of reasoning seems to be based on his understanding that “Freedom is the alter at which Americans worship, whatever their nominal religious persuasion.” That unrestrained pursuit of life, liberty and happiness leads to the outward projection of military might to protect American’s right to buy stuff for cheap. That has led to a dependence on foreign countries for cheap oil and cheap goods. The American standard of living is thus, according to Bacevich, the result of imperialism. The conclusion is that Americans must accept a lower standard of living in order to bring the imperialist government in line. If they keep demanding stuff, the government will feel obliged to get it for them.

There are, in fact, many people who do worship at that alter that Bacevich talks about. But the freedom he is talking about is not freedom with any coherent meaning. That false freedom denies that anyone else has freedom to pursue their own self interests. Because Americans are free to trade does not in any way give any philosophical support to the idea that they have a right to force others, domestic or foreign, to trade with them on terms that they themselves set. That is not freedom, in any coherent sense, but rather the use of coercion, the rejection of freedom of others. True freedom is, in fact, a two way street.

Americans have no right, whatsoever, to the petroleum resources or any other goods of any nation or person. If every Middle East country stopped producing and selling oil, that would probably be harmful to Americans in the short run. That fact does not give the American military or the CIA the right to interfere militarily or politically in the workings of any of those nations. Americans can and would adjust. But moreover, that scenario is highly unlikely to ever happen. The fact that Americans are dependent on foreigners for oil means that they are dependent on us for other things. When Americans pay in dollars, foreigners have to buy something from Americans to use those American dollars.

Bacevich suffers from the illusion that dependence is a bad thing, and that Americans would be better off by being independent of any country for any good. It is a very sound and widely accepted economic principle that international trade between individuals makes all parties better off. Thousands of different factors give comparative advantage to different regions, different cultures and different people. When someone concentrates on what they are good at and trades for what they are not good at, they will likely be significantly better off. The braoder and more international the structure on which comparative advantage can be pursued, the higher the standard of living will be for all involved. It is not dependency but rather interdependency.

The notion that nations trade is a fallacy that promotes imperialism. Nations don’t trade, the people of the nations do. Neither they nor their state apparatus has any right to coerce others to trade with them.

A more realistic line of reasoning to me is that economic freedom created prosperity. That prosperity allowed the possibility of large, powerful government that was capable of imperialism. That large government and its imperialism are a threat to the very freedom that created the prosperity. Thus, massive government and imperialism must be resisted by all people interested in true freedom and future prosperity. If the individuals in America were held responsible for their own lives and were free to trade with people, at home and in other nations, unhindered, and the people in other nations were free to trade with Americans without coercion and the threat of military force, America would be a shining star among nations in the world. Terrorists would not target Americans, because American military would not be using force for economic blackmail and political benefit. America’s military prowess could be deployed in true defense, not interfering in the politics of other nations. As Bacevich states, “We don’t need a bigger army, but rather a smaller foreign policy.”

Book Review – Talent Is Overrated

Dan McLaughlin — Tue, 28 Apr 2009 19:00:16 +0000

“Talent Is Overrated” by Geoff Colvin is an inspirational book that puts exceptional performance into perspective. It presents a solid case that great performance does not come primarily from innate talent, or even hard work, as is supposed by most people.

The thesis of the book reminds me of a theme that I heard many years ago from Albert E. N. Gray called the “Common Denominator Of Success.” Successful people do the things that failures don’t like to do. It is not that successful people necessarily like doing them any more than anyone else, but rather that, by doing the things that unsuccessful people don’t like to do, they are able to get the results that come from doing those things.

All great performers get that way by working long and hard, but hard work and long hours obviously don’t make people great. Many people work long and hard and stay mediocre. The meat of the book describes what the author calls deliberate practice, and presents supporting evidence in a convincing manner. It matters what kind of practice, not just how long and how much sweat is spilled.

The practical value of the book comes from the practical application of the thesis. In talking about world class figure skaters, he said that top skaters work on the jumps they are worst at, whereas average skaters work on those they are already good at. In his words, “Landing on your butt twenty thousand times is where great performance comes from.” Each of those hard landings is able to teach a lesson. Those who learn the lesson can move on to the next hard lesson. Those who don’t pay the price and learn the lesson never progress beyond it. In other words, hard work and dedication is necessary but not sufficient in itself for developing higher level performance at any endeavor.

The book is very readable and very entertaining, stocked with examples that anyone can relate to. The book itself will not make great performers or great organizations. The ideas in the book may, however, free the reader from the bondage of the talent or hard work myths. It is worthwhile for anyone to digest if they want to move beyond stagnation.

While everyone will not choose to make the sacrifice to be truly great at what they do, Colvin ends with the encouraging conclusion that great performance isn’t reserved for the pre-ordained few. “By understanding how a few become great, anyone can become better.”

“Free Lunch” By David Cay Johnston

Dan McLaughlin — Fri, 17 Apr 2009 16:49:49 +0000

David Cay Johnston has written a book on a very important topic, the corporate welfare that occurs on a massive scale. Unfortunately, Mr. Johnston takes a very important topic and shoots it so full of populist sensationalism that it is hard to take him seriously. One of the main building blocks of his hype building is the grossly flawed study by Pickety-Saez, which attempts to use income tax data to prove radical changes in the distribution of income, but instead proves that people respond to changes in the tax laws.

The core of the book is the corporate-government partnership, where greed and malice on the part of business people siphons off mountains of money from taxpayers in the form of subsidies and protection for favored businesses and industries. Very surely, that modern day mercantilism is one of the primary problems in most modern societies. Mr. Johnston, however, puts on very thick blinders to the fact that the mercantilist partnership involves two sides. Government is the other partner, and for sure, the more egregious offender.

Business people are in business for profit. It is not all that unexpected that people will try to use whatever tools are available to increase that profit. Politicians and bureaucrats, on the other hand, are elected and hired as servants of the people. The primary legitimate role of government is to protect the rights of the individuals in society. They operate under the expectation that government is there to protect the members of society. Thus, when a politician or bureaucrat aids business at the expense of the individual citizens and taxpayers, they are forsaking their fundamental reason for being, they are worse than the businessman seeking handouts.

The book was hard to read, in spite of the fact that Johnston has a great, easy-to-read writing style. So many times throughout the book, a sentence would stand out as pithy, straightforward and true. Then, a few sentences later, he would make conclusions that didn’t follow or somehow destroyed the credibility that he may have built up. Quotations from Adam Smith are generously sprinkled throughout the book, and made to sound as though the champion of free markets would have supported Johnston’s proposals for big government and heavy regulation of business.

According to Johnston’s analysis, the problems that modern America faces are due to alleged “deregulation”. The author summarizes his confusion early on when he says “In the past quarter century or so our government has enacted new rules that have created not only free markets, but rigged ones.” If the markets are “rigged”, they are not free in any sense. The regulators rig the market and make it un-free. It shouldn’t be that hard to make the connection. The regulation that he longs for has always been written by the regulated, to the detriment of competitors, taxpayers and the buying public.

His conclusion is that people should bring pressure on elected officials, to enact regulation necessary to bring us back to the good old days. That conclusion invites the fox to guard even more henhouses. He plays into the hands of the very people he seeks to control. Economic freedom is the source of progress and prosperity, and limitation of government is the only possible way to limit the power of mercantilists to rip us off. Without government enablers, bad businesses would be punished, either by the market or, if they actually used force, fraud or violence, by government, using its limited power to protect people against those obvious violations of individual rights.