Professor Michael Heller’s book about the problems of property ownership and intransegence is at times interesting, and at times a pointless book. Its an argument that needs to be made, but its book form is up for question, and without a doubt, Heller’s solutions are not all that convincingly.

The Gridlock Economy:  How Too Much Ownership Wrecks Markets, Stops Innovation, and Costs Lives

Michael Heller

Basic Books:  July 2008

Heller’s book is a detailing of the many issues that exist for broad ownership within today’s western society. Specifically, Heller targets pharmaceuticals, bio-engineered products, music, and landed property, and the property rights that have developed around these industries. His argument is that because ownership is so splinted around a product, or a path to a product, that incentives encourage groups to work against each other, to not product valuable goods.

His best example in my mind was the massive problem with commercial airlines in this country, the number

of planes delayed, the sometimes brutal nature of using airports. Yet he cites that no

new large airports besides Denver have been built since the 1970s. And that is because groups (citizens) around established airports have adapted NIMBY (not in my back yard) policies and refuse to allow expansion, new airports, or any sort of development.

Heller also has a very interesting take on the pharmaceutical industries, biotechnology and the innovations that is creating. His argument is that numerous university scientists and for profit companies are using each other ideas to create cures for cancer or disease, or whatever. However, they can’t bring their solutions to market because they don’t own all of the underlying science technology. They would have to buy the patents or pay usage rights to the owners, and because the trouble with getting that done, they often simply don’t go through the effort, depriving the world of cures. This is immensely tragic.

As I said before, Heller has good examples. However, I come away from the book wondering if the problems he cites can be solved, moreover, I very much doubt the world he envisions would be better than ours. Property rights in America are sacrosanct; we have seen this be upheld in reaction to the New London ruling.

In the end, Heller doesn’t succeed at convincing me his solutions will solve the problems he has found.

Two Melons out of Five.

Christopher Hibbert’s Garibaldi:  Hero of Italian Unification is another example of why libraries and brick and mortar bookstores can never be replaced by online retailers. In fact, its an example why libraries have such an great value that even Borders or Barnes and Noble can match. You can read a book that you don’t necessarily want or need to read and would never ever purchase.

Garibaldi:  Hero of Italian Unification

Christopher Hibbert

Palgrave Macmillan:  2008

Hibbert wrote a biography of one of the more interesting people I could imagine, Giuseppe Garibaldi. Garibaldi was an Italian, who was banished from Italy for leading an insurrection, left for South America where he played a critical role in the independence of Uruguay and then returned to Italy, where he lead a series of unification attempts in Italy, often with the help of more political influential leaders while he saw himself as the military leader.

Garibaldi is that unique character in that he is seen as a spectacularly successful guerrilla military leader, achieving a mythical quality by his compatriots and the peasants who he claimed to be leading/serving. Hibbert’s books traces Garibaldi’s exploits after his return to Italy. He only touches on Garibaldi’s tours in South America when it has direct impact on an event in Italy, such as the death of his wife (who was from South America) or when former comrades joined his banner.

In the end, this book is interesting, and I’m better off for having read it, but its very specific focus on Garibaldi is limiting. It talks very little of the broader picture that is going on throughout Italy, the different unifaction drives that are taking place in the disparate regions and cities. It gives rather short change to Giuseppe Mazzini and Giulio Benso, Count of Cavour (more commonly known as Cavour).

The most interesting part of the book to me is when Garibaldi and 1000 followers set off for Sicily to conquer the island and restart the push for unification after it had been stopped. Its a story of ridiculous faith in an extremely charismatic man, of amazingly poor training for his soldier who yet overcome a large, better trained, better armed force and in spite of some natives siding with the Bourbons. The story is so ridiculous and illogical, the characters all bigger than life and act with unseen motivations that could only be told by Neal Stephenson. And yet, Garibaldi succeeds.

As I said above, this is story about Garibaldi, not about the Italian Unification. If you are new to the history, as I was, this is not the book to start. If you want to know much more about a thoroughly complex and interesting individual, then read this book. But find it at your library. Its not a book to reread. But its a fun one.

Three out of Five Melons!

Justin Fox, an economic columnist and blogger for Time, released a book in June 2009 detailing the rise of the Efficient Market Hypothesis. His tear down of the failures of theories is an interesting read but only for his writing ability. Fox does such an efficient job of pointing out the market’s inefficiencies and irrationality that the book seems almost like a study in restating the obvious. Fox succeeds at telling the story well by using clever anecdotes. However, the book is not a must read except for who are caught up in the stock market.

I recently finished this tour-de-force of a book that relates the life of Alexander Hamilton starting with his obscure birth in the Caribbean to his death at the hand of the rogue Aaron Burr. This book is a fantastic read, beautifully written. Chernow takes pains to make arguments against many of Hamilton’s detractors throughout history, and he often succeeds in defending Hamilton and in bringing his brilliance into today’s world.

Alexander Hamilton
Ron Chernow

Penguin Press: 2004

Most of Chernow’s previous writing consists of biographies or histories of financial greats such as J.P. Morgan and John D Rockefeller Jr. In this tome (and it is a tome at 852 pages long and even more notes), he turns his face to the first great financial wizard of America, Alexander Hamilton. Throughout the book, Chernow’s writing is clear, excessively coherent, and at times very fun to read.

Before reading the biography, I knew almost nothing of Hamilton– save the fact that his death resulted from a duel, at the hand of the vice president no less! This biography alerted me to the brilliance, the sheer talent and drive that possessed Hamilton throughout his life. But also Hamilton’s amazing ability to infuriate and turn people into enemies. That attribute eventually caused his downfall.

Hamilton was born on a Caribbean Island and later immigrated to New York at the age of 17. After failing to get into Princeton, he attended Kings College (later Columbia University) and was an early adopter of the Revolution Spirit, giving speeches on the college lawn. At the outbreak of the Revolutionary War, he became an Artillery Commander which eventually led him to meeting General George Washington. Washington soon took Hamilton as an aide-de-camp and, eventually, Hamilton acted as Washington’s chief of staff, writing numerous correspondence for the General and in some ways, acting like the son Washington never would have.

After the war, Hamilton was a key figure from New York at the Constitutional Convention and eventually wrote The Federalist Papers with John Jay and James Madison. Though at the time it was known those three wrote them, it has only become apparent that Hamilton wrote the majority of them years later. After the adoption of the Constitution and the election of Washington as President, Hamilton followed his long patron into the Treasury Department and began to make enemies as fast as possible. Hamilton saw America as a united republic, a great power waiting to be born. He believed in the industrialization and powerful merchants as the leaders of America. This brought him into powerful conflict with history’s most notorious idealist, Thomas Jefferson, and his disciples James Madison and James Monroe.

Jefferson saw America’s path as a small agrarian society. Sadly, Jefferson’s idea of America only worked with legalized slavery, an institution he claimed he detested and yet kept slaves throughout his life. During Washington’s presidency, two political groupings started to develop: the Federalists led by Hamilton, and the Republicans (Democrat-Republicans who would later become today’s Democratic Party) led by Jefferson. Both groups saw their viewpoint (a strong union backed by a powerful national government with a very strong executive branch for Hamilton, an intensely weak federal government with unbelievably powerful states rights and most power gifted to the House of Representatives for Jefferson) at what the revolution truly meant. They were unable to understand the other side’s viewpoint, and too often, they sought to distort their enemies’ arguments in atrocious ways.

Hamilton succeeded in convincing Washington (who usually did his best to stay above politics and simply choose better policies) that a strong Treasury, with the ability to tax at the federal level and restricted from the states was the best way to grow the nation. Hamilton served five years at the Treasury and quickly built its size in terms of manpower to be larger than the rest of the executive branch combined. When he left, he returned to his law office and often tried cases before the Supreme Court. He was also still very active in politics. In 1800, he worked too diligently to have his party member, John Adams voted out of the presidency and was soon persona non grata with much of the political establishment. The ascension of his arch-rival of Jefferson to the presidency and Madison (who since he had written the Federalist Papers with Hamilton had moved to oppose most of Hamilton’s positions) to Secretary of State, left Hamilton out in the cold.

Just four short years later, Hamilton would be engaged in a duel after Aaron Burr accused Hamilton of slandering him in private conversation. Hamilton, Chernow argues, threw away his first shot and Burr shot Hamilton. Hamilton died the following day, ending the life of one of America’s most interesting and complex characters. Hamilton has left us millions of words on his political thinkings, and much of it is still very important today. We still use the Federalist Papers in cases before the Supreme Court and we still use his reports on manufacturers to understand the progression of the American economy.

Throughout his life, Hamilton was often demonized by the Jefferson faction as an aspiring monarchist with connections to Great Britain with hopes of bringing back the King. Throughout his life, Hamilton was notoriously thin-skinned and took these assertions personally, which often led him to act completely irrationally in his attempts to put them to bed. There is no evidence for this, however. In fact, there is a complete lack of evidence that Hamilton was anything other than a brilliant financier and writer who was one of our greatest patriots. Because he fought poorly against Jefferson, he came down on the wrong side of history when Jefferson led his Revolution in 1800 and he tried to push America away from the Hamilton Empire and back towards an agrarian backward, nonfunctional society.

Chernow’s book does a great service to rehabilitate Hamilton and, more importantly, to portray this multi-sided character very well.

Five out of five Melons!

Matt Miller‘s latest book, The Tyranny of Dead Ideas is an interesting and enveloping read. I finished it in just two short days. Miller, who writes for Forbes occasionally and has consulted for various companies lays out his ideas on why America is in trouble, and then, the opposite (or corresponding idea) that would solve the problems that these ideas have led us into.

The Tyranny of Dead Ideas

Matt Miller

TIMES BOOKS, New York: 2009

While Miller’s tale is eminently interesting, he sadly fails to convince me on the face that the ideas he claims are dead, are truly dead. I come away from the book more often remembering him simply repeating the same mantra over and over again, and not necessarily arguing that it was dead. The first of these “Dead Ideas” is that our children will earn more than we do, or that rephrased, incomes will continue to go up. Miller cites evidence that since the 1970s, the median income in America has actually gone down or stayed falt while the wealthy have grown at ridiculous and preposterous rates thus making the ‘average’ income in America increase. But that’s the whole extent of his evidence. Sadly, it left me unconvinced. I’m not sure I could argue the other way, that I see a path to ensure that I make more than my parents, that my kids will start off better than I did right out of college, but I sure as hell don’t buy his argument. I come away going “mehh” which really isn’t a good way to start your opening chapter.

Miller’s other Dead Ideas are:

“Free trade is ‘good’ (no matter how many people get hurt)”

“Your company should take care of you”

“Taxes hurt the economy (and they’re always too high)”

“Schools are a local matter”

“Money follows merit”

I come away after reading this book that I don’t really buy on face much of Miller’s

arguments. I understand his criticism of free trade, and it is a good criticism, but I don’t know of any economist who defends free trade absolutely, but that those who endorse as a general rule. Miller’s next straw man is ridiculous to anyone of my generation, and should be to anyone with any understanding of business.

In his chapter detailing how businesses are getting out of managing health care and pensions and how government will be forced to step in. I don’t know anyone who holds true to this idea besides ideologues who’s arguments we should be discounting. He acknowledges that its ideology mainly driving the debate, not reality based views. Conservatives on Capitol Hill are resistant to a national health care solutions because politically they must be, but they don’t offer other solutions, they can’t because they are stuck in this Dead Idea. (Okay, so i give in, this Dead Idea is still valued by a rapidly decreasing amount of the population.)

Miller’s focus on schools is particularly interesting. He discusses how the creation of independent school districts and how the recent government actions in education have created 50 state standards and even more ways to define who is meeting those standards. Miller’s final endorsement to solve the education crisis which he claims to be embroiling America is to create national standards but then give schools, teachers, and superintendents the ability and resources to meet them. He advises increasing federal dollars in school to make the education moneys equal across the nation, and perhaps even more money to the poorer more distressed districts (often inner-city) than the suburbs and rural districts. I don’t have issues with this at all. He also advises curtailing the power of teachers unions. I know I’m quite biased, as my father has long been the president or negotiator for his teacher’s union, but I see teacher’s unions as quite valuable. However, we must remember that teacher’s unions don’t always look out for the best of the students; they look out for the best of their members, often fighting to keep jobs for teachers who don’t deserve them.

If teachers (and their unions) really want to help their cause and stop being black-guarded by moderates and conservatives, they need to do more to turn bad teachers into good teachers, or simply get rid of them-and not defend them to the nth degree.

The weirdest part of Miller’s book is his section on meritocracy and his classification of the Upper Middle Class (bankers, doctors, well-paid lawyers) and their hatred and envy at the Ultras (the super rich, investment bankers, hedge funds, oil barons). Miller’s dead idea is that “that market capitalism is a meritocracy-that is, a system in which people basically end up, in economic terms, where they deserve to.” Another ridiculous straw-man. People have known for centuries that the railroad barons, or the oil barons, or other super rich weren’t significantly smarter, or faster, or better than the other very well off but not super rich. The super rich are lucky. They have been throughout history. Miller at times seems to be worried about some sort of super-rich vs. upper-middle-class class war. And its kind of weird.

Where Miller stridently excels is when he talks about the conservative (REAGAN!) argument that taxes are always bad and that they must always go down. Miller argues strongly and fluently that the middle class is demanded more services and that they will (and are) willing to tax themselves for those services. Miller calmly explains that right now, the US is spending about 20% to 21% of GDP, is bringing in revenues of about 19%, but to make future entitlements (Medicare, Social Security) sure, we need to bring in revenues of about 24%. He displays numerous reality-based conservatives (sadly few and far between in the tax debate) who endorse this view and have publicly argued for it.

Miller in the end argues for business leaders, who he sees as inherently practical, to change their viewpoint, advocate higher taxes, social spending by the state and thus move America back to a leader in the world. I think I agree with Miller, though I don’t know if he argues his point as well as he should have.

One area that I think Miller sadly misses is that how bigger government can actually create a more robust capitalist state. In this country, as millions of jobs are being lost the economy collapses, we have a major problem. Our government policy is actually discouraging people from attempting to start a new business, or leave failing companies to start out on their own. Because so many individuals depend on their employer for health care, they need to keep their jobs to keep their medicines, to keep their children healthy. They can’t leave and attempt to start a new business because they can’t get health care. At the same time, numerous companies are cutting health care to compete with rivals and with other countries that have health care managed by the state. Our capitalism would be more vibrant and would allow more people to pursue their dream to open a pizza parlor, to start a bicycle repair shop, to start up their own company if the government was there to help them with health care costs.

Miller doesn’t make the above argument, at least, if he does, it is quite subsumed in his text.

Overall, this book simply doesn’t delivery on its premise to demolish these dead ideas. As I said above, I read it quickly, and found some points interesting, but sadly, this book isn’t really worth the time. Read something more interesting.

Two out of Five Melons!

Thomas Friedman’s latest is a big step up from his last work. Hot, Flat, and Crowded which first came out in September is as all of Friedman’s writings, a very easy and quick read. Friedman does a great job simplifying subjects and making clear and coherent arguments. Most importantly, this book is significant because Friedman is the first to clearly make the case that our current Economic, Energy, Environment and  Foreign Policy (mainly confined to the Middle East, Russia  the oil rich parts of Africa) Crisis is actually one problem that a series of small step solutions can solve together. He ties that argument together well.

Hot, Flat, and Crowded:  Why we need a Green Revolution and how it will renew America  (Friedman is in the running for the longest title of the year)

Thomas Friedman (Personal Website)

Farrar, Straus and Giroux; September 8, 2008

I’ll the be the first to explain to you that I don’t like The World is Flat, Friedman’s last book, or that I really dislike most of the columns he writes for the New York Times. My feeling is simple:  his arguments are simple and he too often argues against straw men, setting himself up for an easy and unqualified success. I’m still very upset with him endorsing the War in Iraq for what I think him trying to appear a moderate more than actual reviewing whether success was even possible or the if the invasion was necessary.

The World is Flat upsets me because while Friedman focuses on the insane growth of the IT industry in Bangalore, I can tell you the rest of India isn’t much like that. Moreover, most of Bangalore is not like Infosys or Satyam or Wipro. He’s argument throughout the book is that all of these countries are becoming competitors with the rest of the world. The sad part it is simply not true. If you take any of the average business within any state in India, whether it is a stainless steel manufacturing company, or a bank and you put them in America, they would fail epically. They don’t have the skills, they don’t have the knowledge, they don’t have know how to solve problems. They compete with lesser firms. Throughout history, there have been firms or individuals that competed world wide in trade in industry. How did the gems and spices of the East Indies get to Europe but through the middlemen of Egypt and Malabar. My point that if you take the average American or European company and plunked them down in any developing country, no matter how along they are, they would out-compete and out skill the local competition.

But that has little to do with this book. This book discusses the coming environmental apocalypse (my words, not his). Due to global warming, pollution and absolute environmental degredation in the western world and through much of the developing world. Friedman main argument that as more people grow richer, they start consuming more energy. China is pumping out a new coal fired power plant every other week. India needs to be doing that as well (though they aren’t, now we’re having up to 10 hour power cuts in part of the country)

As they start to demand more energy they start to release greater amounts of Carbon Dioxide and thus increase the rate of C02 in the atmosphere so that just when we should be stopping the C02 emissions vehicle and backing down the road, we’re actually pressing the accelerator through the floor (it hit the floor after gas prices fell during the Reagan Administration). More so than just C02 emissions though, Friedman discusses the environmental destructions that industrial growth creates in developing nations, from expanded farmland eventually created dessert (the expanding Gobi Dessert in China) to the necessity in the Amazon of farmers to continue moving into the forest to find better land.

Friedman is very clear that he doesn’t fault the developing nations for wishing to grow and have access to the wealth of much of the Western. We can’t begrudge them for wishing to live like us. However, Friedman’s book seeks to lay out a path that America can layout a path so that American can lead the world in reversing this path.

Friedman’s most brilliant argument and he’s the first I’ve seen lay it out so clearly or concisely is that we’re giving trillions of dollars to people who hate us and actually investing in our own destruction rather than using that to invest in America. He wants us to rapidly change how we invest in petrol (gas), oil and generally energy in general. We need to move towards renewable energies (wind, solar, hydroelectric, and possible biofuels) and thus help ourselves reduce our pollution and reduce our dependence on the Middle East and those who would seek to destroy our lives. But more than that, we have to change how we think about energy. We need to start with reducing energy usage through simple reductions such as buying the smaller car to retrofitting houses and buildings so they waste less heat, less water, less energy.

Friedman goes through a variety of samples of ways to start changing our energy and environmental policies, all of which are relatively useful. I also was very glad to hear his non-endorsement of corn-based biofuels to solve the problem. Its a very simple problem that corn fuels take more energy to produce then they output there is actually no savings. More importantly, they do have a significant impact on food supply and rising and falling prices. I am also hesitant (as is Friedman) to endorse sugar cane biofuels. Though much more efficient (in terms of energy converted to do work), they are also extremely destructive to the environment.

The most important part of Friedman’s book is that he is lucid and clear. Something he never lacks in any of his Op-Eds. And in this wonkish book he provides plenty of the backup evidence he so severely lacks on so many of the Op-Eds. But most importantly, he doesn’t over simply the problems and the solutions. He lays out the solutions need to be market based, but they need government intrusion. In Germany, their is a 20 year guarantee for companies that install and use solar power cells so Germany is now the largest solar market in the world, never mind they don’t have that much sun shining. Friedman argues (convincingly) that we can and make America the leaders in renewable energies through some simple market based ways:  require greater amounts of energy is made from renewable energy, redefine energy demands so that we don’t have peak development but we have smart energy usage, increase car efficiency and many others. All of these solutions are doable and most importantly, they are all being discussed by the Obama Administartion.

One are that Friedman does not discuss, but that is pet project of mine is the net-metering or every household a energy plant. He discusses it only in passing as a way to provide slightly more power. But what he doesn’t discuss is that the possibility of household having the ability to have their entire roof covered in solar cells, having their back yard full of windmills and having a geothermal system setup in under their home so that they can sell their unused power back to the grid. Too many utilities don’t fully utilize this smart grid and smart energy usage. Too many cities and states don’t encourage the net-metering as fully as they should.

When people have to produce their own power they will only begin to truly reduce the amount of energy they need.

Overall, this is a good book, an easy read, and probably most importantly, it will help set out many of the pathways the Obama Administration is going to pursue in order to re-energize America. I suggest you read it.

Four out of Five Melons!

Jean Edward Smith’s extremely long and detailed portrait of Franklin Delano Roosevelt (FDR) is fantastic reading and, perhaps more importantly, a fair review of the man. I truly enjoyed all of the almost 700 pages of text, along with the 150 pages of notes and 50 pages of bibliography and index. Seriously, if bibliography is everything, than this book has it all.

FDR

Jean Edward Smith

Random House, May 2007

I’ll first be honest by saying that before reading this book, I was not much of an FDR expert. In fact, I knew much less about the man than you can find on his wikipedia entry. So I went into this reading hoping to learn much more, and hoping to learn about how he led America through the Great Depression. I have a rather sick feeling that this economic downturn is going to be deeper and more destructive than most people realize so I wanted to study about how the previous generations pulled through their tough times. So my goal was more than just to understand FDR, but to understand the time period and the reactions to it.

First off, regarding Smith’s writing style and prose, he is fantastic. There are few biographies I have read in the past that were easier to read than this one. I seemed to breeze through the book and whenever I picked it up to read for just 10 minutes, I seemed to get lost for an hour. Smith is not simply a prop-artist laboring to prove FDR’s greatness. He is very critical of FDR, especially when FDR made major mistakes, whether it be in his court packing attempt in 1937, which in the long run hurt FDR immensely, or his internment of Japanese citizens during WWII. Smith also praises Roosevelt numerous times for being a grandiloquent speaker. I have never heard Roosevelt speak so I can’t argue that point, but I read some of the speeches he provided, and I was not struck by their brilliance as Smith wanted his readers to be.

As I mentioned above, I wanted to read this book to learn about the period and the societal changes. Sadly, Smith does not cover that aspect in depth. His focus is on FDR and FDR reacting to society, or acting so that society reacts. FDR is his driver, not structural alterations in the fabric of America. That’s not a criticism of Smith; his title is FDR, so it’s fair that the book is not about the Great Depression.

One complaint I do have about Smith’s style is that he often makes off

the cuff references to Ulysses S. Grant. Smith wrote a biography about Grant some years ago and he occasioanlly references Grant’s history. The problem is that I haven’t read the Grant biography and Smith’s references often require a reader to know more about Grant that many people do. That is annoying.

The book is a fantastic read and is extremely informative regarding FDR. If you want to know the man better, you could do much worse than to read this. Sadly, this is the first FDR biography I’ve ever read, so I can’t compare it to the numerous that exist already in the canon, but this one is worth reading.

I did start this book to analyze the Great Depression and see if there were solutions presented in that time period that we can re-analyze and use today. Interestingly, there are few. We can learn from the poor monetary policy that FDR used in 1937 when he tried to balance the budget, thus stalling out the recovery. We also can learn that it is important to work with the other party and not to be so obstinate as to destroy your own chances. Because after FDR failed at packing the court, the Democratic Party lost significant numbers in the next election, but more importantly, he lost the faith of many of those within his party and he had a much tougher job pushing his social change through Congress.

Interestingly, as I got more into the book, I started to realize that FDR was more similar to another President other than Obama. FDR had so many similarities to President George W. Bush. Both were from extremely well to-do families, with notably overbearing mothers. Both reached the presidency from Governorships of very important political states (New York for FDR, Texas for GWB). The differences continue into their way of thinking. FDR often resolutely believed he was right and that his opponents would eventually come to his way of thinking or they were so wrong they weren’t worth the effort to deal with.

We are still trying to understand GWB’s thinking throughout the debacle that is the Iraq War. His refusal to acknowledge what wasn’t working for three years is absolutely astounding. What I found particularly interesting was the attempts by both administrations to set up their paths to bypass government bureaucracy that they felt was entrenched against them.

During WWII, FDR by-passed those within the State Department because he felt he could not trust the high level diplomants who were set against him politically and who were in fact very racist so they severely impeded his objectives in the Pacific. Smith discusses an incident leading up to the Pearl Harbor bombing where Roosevelt and the State Department were working on a draft of an agreement so that the US would continue to sell oil to Japan (ahh the days when the US could sell oil) so that Japan would cease their rollup of the South Pacific (in the pursuit of more oil). However, FDR had by-passed so much of the State Department during his dealings with Europe that he could not control it. Moreover, he did not know how it worked. In this small instance he left it to the State Department to finalize the agreement failed, as they failed to pass on the agreement that eventually led to the Pearl Harbor bombing.

We can compare this to the Bush Administration simply bypassing much of the CIA to use the Department of Defense intelligence gathering because they favored the DoD intelligence because it showed them what they wanted. Because the Bush Administration had so often cut the CIA out of the loop and refused their intelligence that didn’t show what they wanted, they had trouble working with the CIA and getting them to do their jobs in Afghanistan and Pakistan years later. FDR worked around the State Department, and perhaps that worked better for him has he worked directly with Winston Churchill and other leaders in Europe. But it also hurt him when he needed their assistance because he never worked with them to bring them to his point of view; they never fell in line with his mission.

One of the most interesting things that is so very different today than it was years ago is the resistance to push into people’s personal lives and the willingness of the press to simply cover up inconvenient facts. For example, there are numerous instances of people in 1944 who were astonished at the poor health of the president. Yet the press at the time simply passed along the doctor’s word that he was extremely healthy, disbelieving their own eyes. He would die just a few months later.

I heartily endorse this book for anyone who is looking for some FDR history. Five out of Five Stars!

Kevin Phillips’ latest book, written in order to influence the 2008 elections, aspires to much, but succeeds at little. The story of the growth of debt in America, its impact upon the society, and America’s place in the world is interesting (and Phillips has much right in his book) but he over extends himself. As a result, his overall argument comes out lacking.

Kevin Phillips

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism

Viking Adult, April 2008

Phillips is a former Republican Strategist who became quite estranged to the Bush family, having published three books about the Connecticut natives and their interesting ties to interesting people throughout the world. This book is much in the mold of the others, a diatribe against the ridiculousness of Republican spending. Though he doesn’t pull many punches from Clinton’s inept handling of the housing boom and his helping to create a badly subsidized housing market.

The basis of Phillips tale is simple: since about 1980, individuals in the US have dramatically increased their debt and decreased their savings rate. Over the same time period, wages for median income worker and family stagnated, while the rich and super rich increasingly consolidated their gains. The argument is that while the US was getting richer overall, only a small percent, about 10% of the population, was in fact seeing those gains.

However, during this time period the consumers did not decrease their rate of consumption growth, so they had no choice but to start saving less and increasing their debt. The expansion of 30-year home loans, rare before the 1950s and seven- or eight-year car loans, the growth during the 1990s of the 2^nd mortgage, and perhaps most importantly, the credit card boom created easy to access debt instruments for US consumers.

This expansion of debt eventually led to sky-rocketing asset prices, first the stock market bubble in 2001 and then the ridiculous housing run-up from 2001-2006. People eventually believed that 10% year-over-year was guaranteed and bought houses at ridiculous rates or took loans out that few had hope of repaying.

Phillips does an excellent job laying out this structure and the antecedents that led to the growth in debt. His examination of the Reagan debt policies is particularly skewering in how the expansion of US Debt coincides with massive expansion of individual debt.

As Phillips expands these ideas, he decides to take his argument off in a different realm. He starts to compare the rapid growth of US debt to the expansion that happened during the 1920’s and eventually helped lead to and extend the Great Depression. The worst part of both Phillips initial argument, and his comparison the Great Depression is that he does only the most preliminary research. This is a short book, and Phillips wrote it in a short period of time, hoping to put out a pop-economics book in order to impact the 2008 US Election (the book first appeared in April 2008).

Phillips weakness is that he doesn’t tie all of his arguments solidly together. He makes an interesting case relating to Reagan and the birth of debt-America, but it’s not sound proof. A reader can not accept the entire argument on its face. I heartily believe that Reagan is highly overrated by most conservatives for his Presidential accomplishments, but that doesn’t mean that today’s economic collapse can be traced to his expansion of Star Wars.

Phillips’ arguments bottom out when he decides to try to apply the expansion of US Government and Consumer Debt since the 1970s to the expansion of Debt incurred by the previous hegemony: Spain, United Provinces (Holland/Netherlands) and England (UK). First off, including Spain along with the United Provinces and England is kind of ridiculous in the Hegemonic Transition World as many people don’t believe they ever projected their power over the entire world the way that UP and the UK did, and more importantly, like the US does today.

Spain simply stole money from the New World, they weren’t traders that truly dominated the entire world like the other nations. With his Spain argument, and also that of UK and UP, Phillips pushes those nations towards some sort of purity, both of race and religion during then end of their reigns. Sadly, this argument goes nowhere as the reactionary forces in every great power ebb and flow throughout the reign. As the power of the anti-reactionary forces wanes in every aspect, the power of the reactionary forces come to more power. That doesn’t mean that they won, it means that the normalizing forces lost their power economically so that the cultural warriors can rise up.

The worldly Brits who kept the Puritans at bay lost the ability to keep them hidden in the fields. The Internationals of Spain, who had been to America, lost the wealth and the Inquisition destroyed the country. But the Inquisition rose not because of its own strength, but because of the inability of the rest of society to put it down. But most important in this entire argument is the fact that the intolerant sector of society, the sector that rejects internationalism is not and will not be in power for a number of years. The crazy left wing Democrats who want to dismantle the US military cannot win. The Libertarians who want to return to the gold standard are laughed at by 95% of the country.

Even if one disagrees with mainstream Democrats or Republicans, they are still internationalist, and they still express a desire for America to remain the dominant political player. There is no walking away by either party. Phillips’ attempt to portray America as too weak to meet its commitments is simply years ahead of its time.

In the end, I say this book should have been written sometime in 2010, and Phillips should have stuck to his original argument: the expansion of debt led to the downfall of the US-and thus the world-economy. It should be a text book, for some high level undergraduate courses at good economics programs. There is an argument in there, but Phillips’ ramblings about the rest of the examples that predated the US downfall simply are poorly done and there exist many better out there.

Two out of Five Melons!

Fareed Zakaria, the brilliant Indian-American political commentator who currently is based out of NYC, published this slim book in May 2008 discussing the rise of the rest of the world, and specifically not the fall of the United States. His argument is quite simple: as the rest of the world gains in power economically, it will also gain in political and social might. Relatively, the expression of US power abroad will become less. However, Zakaria makes the case that this isn’t necessarily a bad thing.

The Post-American World

Fareed Zakaria

WW Norton, May 5, 2008

The premise of Zakaria’s book is quite simply:  the rest of the world is growing and will soon catch up to the US economically. Specifically, the BRIC countries (Brazil, Russia, India, China) are leading the charge and will soon have as much economic weight at the United States and Europe. His argument isn’t that this is bad, but it may in fact help the US regain legitimacy in the international spectrum as the US helps these countries adopt international standards and become apart of the world-system.

More importantly, he emphasizes that the wealth of the United States, if it properly integrates these rising powers and the rest of the growing world in the world-system, will grow as it will have greater access to consumers of its products and will better spread its social structures.

In Zakaria’s discussion of the rise of the West, he dedicates two chapters to the most powerful rising countries:  The Challenger (China) and The Ally (India). The chapter on China discusses the growth of China and its progression towards a market economy (it is still not a capitalist society, not when the state owns almost 50% of GDP). He rightly points out, and I think brilliantly, that the US’s constant preaching on human rights in China is hurting US relations because the two cultures are so different. The Protestant style of the US, or preaching and evangelizing, is so contrary to the Sino ethic that the two countries need to work to overcome these differences. The US, when it does write its yearly State Department Report on those nations with Human Rights abuses, needs to acknowledge that cultural differences do factor into diplomacy and work on how to fix those abuses.

The chapter on India is simply brilliant. As some of you may know, By Ink Alone is currently stationed in southwest India for work. This chapter is the single best explanation of the difficulties and growth and vast differences that exist within India and without India. It is almost worth purchasing the book simply for that chapter. If you are an outsider, looking to learn about India, either culturally or from a business or international relations perspective, Zakaria’s chapter on India is a great 20 minute read and will get you ready for India.

My first complaint about the book is that I read it seven months late, after the collapse of the financial markets and the onset of the Great Depression: Redux. The developing nations are going to be worse off than the United States and the EU. India’s GDP growth will go below 5% this year (note, I’m the only person predicting this, including everyone in India) and China’s is probably going to be somewhere between 5-6%. Considering they’ve been over 8% for the past four years in India, and 10 years in China, this is dangerous. The rest of the world (South Africa, Russia, Brazil, the rest of the Asian Tigers) will be significantly worse off. The Middle East is collapsing due to the fall in the oil price. The Rise of the Rest is currently on hold.

This doesn’t necessarily negate Zakaria’s arguments, but it certainly means that they won’t happen as quickly as thought. US GDP is going to go down by more than 2% in 2009. But Russia’s and much of the rest of the developing world’s could collapse to catastrophic levels.

My other beef is that simply this book, while really short, is too long. Its not really a book. Its a longish article that should have appeared in Foreign Affairs. The Clash of Civilizations, Samuel Huntington’s best known book, first was an article, as Francis Fukuyama‘s End of History. My argument is that there isn’t enough substance here to warrant a full book. I want more case studies: where is the rise of Korea (unification anyone?) the rebirth of Japan, Russia and its Casino Economy, Brazil and the world’s new energy empire? Zakaria doesn’t explore these to the depth I want.

Overall, it is a great book, an excellent, if quick read, and that India chapter is almost worth the price of admission.

Four Melons out of Five!