4 comments about John Maynard Keynes: 1883-1946: Economist, Philosopher, Statesman.

1. This book is Skidelsky's one volume abridged version of his previous three volume biography(1983,1992,2000)on J M Keynes.Skidelsky successfully weaves all of the different aspects and strands(personal,familial,historical,social,political,economic) of Keynes's life into a beautifully constructed historical tapestry that will keep the reader's attention from the first page to the last.All of the different talents Keynes possessed and displayed during his lifetime come alive on the pages of this book.Skidelsky is the master of his material as long as he concentrates on the vast nontechnical aspects of the life of his subject.Skidelsky has clearly mastered the historical and chronological events and interrelationships that occurred during Keynes's life. Unfortunately,Skidelsky does not have the necessary formal training in mathematics,logic,statistics or probability in order to properly understand or assess any of those parts of Keynes's scholarship that involves the use of formal logical and mathematicalmethods or analysis.These technical deficiencies in Skidelsky's academic training are the main defect,not only in this book but in the entire corpus of Skidelsky's writings on Keynes going back over 30 years.I will concentrate on Skidelsky's error filled statements concerning Keynes's A Treatise on Probability(1921;TP) and the logical theory of probability.On p.95,Skidelsky conflates the principle of indifference(poi) with the principle of insufficient reason.They are not the same.Keynes's poi requires a balance or symmetry of the relevant,available evidence or factors involved before equiprobabilities are assigned.The poi can't be applied if there is no relevant evidence.Advocates of the principle of insufficient reason,on the other hand, argue that equiprobabilities can be applied in states where no relevant evidence exists.Keynes always rejected this kind of reasoning.Skidelsky bases his assessment of Keynes's logical theory of probability on the error filled work of A. Carabelli and R.O'Donnell.Carabelli and O'Donnell base their assessments of the TP on four sources:1)Keynes's introductory guide to the measurement of probability in chapter III of the TP;2)F. Ramsey's 1922 book review of the TP in The Cambridge Magazine;3)F.Ramsey's 1926 book review of the TP in his article,"Truth and Probability",published in 1931 in a book of articles;and 4)Keynes's 4 page eulogy and very brief review of the book in 1931.In chapter III,Keynes had already made it clear to the alert reader,who had a mind of his/her own (and would not ape the preposterous ,nonsensical claims made by F. Ramsey that by nonnumerical and nonmeasurable Keynes meant that numbers could not be used in general to estimate probabilities,i.e.,that Keynesian probabilities were like a surveyor assigning nonnumerical heights to a mountain hidden in the mist)that the vast majority of Keynesian probabilities used in common discourse were/are interval estimates.John Maynard Keynes is the originator and founder of the interval estimate approach to probability.Keynes spells it out in a number of places in the TP:"...we judge that the probability of the actual argument lies between these two(numbers;reviewers note).Since our standards,therefore,are referred to numerical measures in many cases where actual measurement is impossible,and since the probability lies BETWEEN(Keynes's emphasis)two numerical measures..."(1921,p.32).After warning the reader not to reach any conclusions based on chapter III alone until after Part II of the TP was reached(p.37),Keynes gives his definition of nonnumerical in chapter 15 of Part II on p.160 of the TP.On pp.161-163 and pp.186-194(ch.17),Keynes presents his approximation approach .It has nothing to do with ordinal rankings(see Skidelsky's queer claims on pp.284-285,for instance).An upper bound and a lower bound are specified for some 13 worked out probability problems.One of these problems(a revision of Boole's problem 10)is then made the foundation for Part III of the TP.Part III is then made the logical foundation for Part V. Carabelli's and O'Donnell's "reading" of Keynes's TP is very poor,at best.Skidelsky's conclusions,based on their very poor reading,are very poor.Skidelsky also appears to have been misled by Richard Kahn and Joan Robinson into believing that Keynes was a strictly literary economist, who was a poor mathematician by 1927. Supposedly,Keynes had never taken the twenty minutes that was necessary to understand the theory of value(microeconomics).Based on these bizarre beliefs,Skidelsky comes to the queer conclusion that Keynes deliberately refused to present any formal mathematical model of his general theory in the General Theory(1936;GT).Any mathematically trained reader can find Keynes's completely worked out model,with the results presented in the form of elasticities so that a reader of the GT can compare Keynes's results with those of A C Pigou,in chapters 19,20,and 21 of the GT.Keynes then compares and contrasts his model with Pigou's model,who had also presented his results in the form of elasticities, in the appendix to chapter 19 of the GT.A technically trained economist should purchase a copy of the GT instead of this book.



2. Anyone who has taken a course in macroeconomics knows who Keynes is. Economics is full of camps, conflicting doctrines, feuds, rivalries, etc. Keynes was unique in that, unlike other economists who are indoctrinated or are in love with a theory, he was never scared of giving up an idea that did not work. If one was to read his "Tract on Monetary Reform" one might be fooled into thinking that it was Milton Friedman that was writing and not the J.M Keynes who revolutionized economic thought with his General Theory. This pragmatism is what sets Keynes apart from every other economist. But why Keynes was so different from others is something students never learn. This biography does an admirable job of tracing Keynes' upbringing, his education, career, and contributions in the light of circumstances that Keynes lived through and shaped his ideas. It is also full of nuggets about Keynes' idiosyncracies which humanizes the biography and shows the real person behind the aura. The book is long, but 63 years of action-packed life requires such detail. The Chinese say, May we live in interesting times. Keynes certainly lived in interesting times with the result that this book is just as interesting.



3. This tome (including more than 100 pages of notes and indices) is an abridgment of author Robert Skidelsky's original three-volume biography of John Maynard Keynes. It is in all respects an extraordinary work. The author offers a portrait of Keynes not only as an economist but also as a philosopher and a statesman. He does not segregate these three dimensions, but rather shows how they interpenetrate and inform each other. He sets Keynes in the context of his time and circumstances. Skidelsky is unsparing in his treatment of the inconsistencies and contradictions in Keynes' life and character, but he is fair and balanced; he avoids sensationalism even in the treatment of the sensational. getAbstract finds that this book merits multiple readings and should intrigue not only economists but also anyone interested in the ideas and events of the 20th century.



4. I have been looking forward to reading a bio of the great economist, philosopher and trader and bought this book after seeing many positive comments. Sorry to say, I got bogged down very quickly. The author never misses a chance to blow up to 2 pages what could have been said in a single paragraph. The book is a like sea-going ship so overgrown with barnacles that it can no longer move forward.

2 comments about The Race between Education and Technology.

1. I found this book fascinating and would recommend it although I found it frustratingly flawed, and therefore, without the authors' further comments, will eventually have to reduce my 4 star rating. The book's core thesis is that the rate of technological change in the 20th century has been constant, while the supply of skilled workers has been uneven, leading to expanding and contracting wage differentials between skilled and unskilled workers over the course of the century. The variation in supply and correlation to changes in relative wages seems large enough to be convincing. But while I find the case persuasive, I couldn't help but feel it was, in part, reserve engineered to reach its conclusion. It seemed to me that three critical issues remained either unwittingly or intentionally overlooked.
   
   In part, large part perhaps, I would guess, the "skill" of a worker transcends their education. So a high school drop out today, when most everyone graduates from high school, represents a much less skilled worker than a drop out at the turn of the century, when very few graduated. To suggest the ratio of wages between high school graduates and drop outs today can be compared to the past without some adjustment, or even mention of an adjustment, that take this into consideration, seems lacking. The same is true of college graduates, where the meaning of the term has been averaged down. The analysis seems to suggest that a college or high school graduate is equivalent no matter what (changing) percentile of the population it encompasses or, more complicated mathematically, that the relative curve across percentiles is such that any point is logarithmically proportional to any other. While perhaps this is a second order issue on the margin, over the large shifts that have occurred in the education of various percentiles of workers over the course of the 20th century, leaving it unmentioned is disappointing.
   
   While the mathematical logic of relative wages vs. relative supply (of skilled vs. unskilled workers) seems reasonable on the surface, it's not clear why expansion in the supply or demand of one would affect the ratio between them proportionally. It would seem, for example that the US has absorbed a large numbers of unskilled immigrants, it has offshored an unprecedented volume of "unskilled" goods, and it has accelerated productivity improvements and yet the unskilled wage has remained flat. That suggests that the marginal product of unskilled labor is largely flat over large shifts in volume. To argue that the expansion or contraction of supply drives (relative) wages up or down requires a downward sloping marginal product of labor, unskilled labor in this example. I don't see why that would necessarily be the case to the degree necessary to explain the data. Quite the contrary, it seems unlikely based on the prevailing flat wages. In that case, an expansion of unskilled workers would have no effect on the wages of unskilled or skilled workers and their subsequent ratio, whereas, in this example, the expansion of skilled workers could have such an effect. To assume they are wholly substitutable seems to be a stretch.
   
   Similarly, the book overlooks both productivity issues and hours worked in analyzing the supply of labor. We know the most productive workers are now working longer hours than the rest of the working population. And it's hard to believe that the information age hasn't, to a very large extent, affected the productivity of the most productive workers. This would suggest that their supply has expanded far more than their headcount. If that's true, then if supply has expanded and wages have expanded, exogenous technological breakthroughs are likely driving up wages and not merely reduced relative headcount as the book argues.
   
   Piecing these together, it seems easy to imagine significant changes in the relative productivity and resulting supply of skilled vs. unskilled labor, along with differing marginal product of labor, highly circumstantial substitutability, and varying rates of exogenous technological changes all significantly affecting these ratios in ways not considered by this analysis. Perhaps the authors' argument is better stated this way: if one assumes that the rate of technological change is constant, and that relative productivity changes between skilled and unskilled are similar (although the book argues that in the past that was not the case), and that substitutability is generally high, then relative headcount should drive relative wages; because it appears to be highly correlated, these assumptions are likely to be true. That's a pretty big leap of faith. And, if the authors are correct that it is merely a matter of relative supply, it's not at all clear to me why diminished relative supply of skilled workers has led to an increase in the percentage of overall income paid to skilled workers, as has been the case. Apparently there was previously far more of them than was optimal! I find that hard to believe and apparently so too the authors. And the recent 10 to 15 year growth in output per US worker relative to Europe and Japan, despite unfavorable demographic shifts in the US workforce (toward less educated Hispanic immigrants), seems greatly at odds with the book's analysis.
   
   Lastly, the book is very weak on recommendations and in many cases what recommendations it does offer, a steeper income tax for example, hardly stem from the 300 pages of analysis that comes before. In another example, it suggests that testing is bad because it may increase drop out rates. But, I sit on the board of a charter school that today has outstanding test scores where previous testing and low scores put enormous pressure on the school to make positive changes, changes that were made because of the demand for higher scores. Again, there is little in the analysis to warrant their suggestion that more forgiving testing would be a net positive. I find the simplistic solutions largely unsupported by their analysis to be disappointing.



2. This book's thesis is based upon overly simplified and therefore misleading educational and economic concepts and definitions. For instance, the authors' definition of "educational attainment", a critical measure supporting the authors' central argument, is simply the rate of growth in the number of years of schooling experienced by successive "cohorts" (people with the same birth years) throughout the past century. Declining "educational attainment" (which might be expected when a measure has an upper limit) is then correlated with wages. To establish their argument, the authors present this correlation as if it were causal. Another consideration is that the authors' supply and demand analysis (a declining rate of "educational attainment" has reduced the supply of valuable human capital and has thereby driven up the cost of that supply, resulting in vast wage disparity) is insupportable for reasons stated convincingly by other reviewers, and because wages are not currently determined by free market forces. The authors rely on the above as they argue (repeatedly) that a failing American public education system (as they have defined it, most deceptively in my opinion) is to blame for the growing disparity of wealth between the rich and everyone else in this country. I am certainly no fan of the wage and wealth disparity we see in the U.S. today, the myopic greed of the hyper-rich, the dehumanizing struggles of the poor, and the disappearance of the middle class. Unfortunately, the authors' argument is unconvincing and feels manipulative and ideological. For me, the authors lose all credibility by not acknowledging the limitations of their own research methodology and analysis. There is plenty of good educational research out there--interesting, informative, and important--I would suggest you keep shopping.

5 comments about The Real Price of Everything: Rediscovering the Six Classics of Economics.

1. Despite being an economics/finance geek, who is a fan of Michael Lewis' previous work, especially Moneyball, I was debating whether to buy this. I have already read The Wealth of Nations, which makes up half of this huge book. It is nice to have such a collection of great works together though, and although the vast majority of the writing is just old copyright expired material you can get on the Internet for free, Lewis' commentary does add to it. In addition to being an accomplished writer, the author does have a masters in economics from the London School of Economics, and does have a knowledge of and a passion for the subject. So on the whole this is really intended for people who have an academic interest in the subject, but at the very least you will have a really big book on your shelf to impress your friends.



2. This is a complicated book because of its length and
   technical verbiage in economics. The outline includes
   lengthy dissertations by 5 or more writers in foundational
   economic literature and reporting. These are:
   
   1776: The Wealth of Nations by Adam Smith
   
   1798: An Essay on the Principle of Population
   by Thomas Malthus
   
   1817: Principles of Political Economy and Taxation
   by David Ricardo
   
   1899: The Theory of the Leisure Class: An Economic Study of Institutions by Thorstein Veblen
   
   1936: The General Theory of Employment, Interest, and Money
   by John Maynard Keynes
   
   There is an extensive development of macroeconomic theory
   dealing with the GNP, as well as the microeconomics pertinent
   to everything human beings do. The Wealth of Nations is the
   classic by Adam Smith. It espouses the theory that human
   beings are driven by self-interest & that they play a role
   in improving the market. The Mercantilists of the
   time believed that the wealth of a nation began with trade
   surpluses. The division of labor leads to greater improvement, dexterity, time saving and mechanization. These concepts
   permeate the modern patent laws around the world. The inherent
   difficulty in weighing metals leads to the utilization of coins
   and other money in the form of paper, bonds etc. Value is
   defined in terms of its use in exchange. The real price is
   a function of the toil involved in the manufacture or assembly
   of a product.
   
   Malthus believed that increasing the price of a stock
   necessarily increased the price of provisions.
   David Ricardo believed that population doubled every 25 years
   and that capital doubled in less than 25 years or it lagged behind. Therefore, wages increased because the demand for labor
   was greater than its supply. The value of a
   commodity was a function of the amount of labor expended in
   producing it. The quantity of labor with respect to commodity
   production is modified by the employment of machinery, fixed
   and durable capital.
   
   Thorstein Vebleu believed that wealth increments lead to a
   leisure class developing in structure and function.
   At some point, the leisure class matures and it becomes exempt
   from the idea of thrift and savings.
   
   Overall, the book explains many of the concepts behind money and
   wealth. The downside is the 1400 pages or so to accomplish this
   monumental task. This would be an excellent purchase for students
   of the economic sciences, government, politics, world history and
   news reporting. The $30 price tag is a solid value for the content contained within this massive text.



3. This book is the verbatim texts of several classics. That's sort of cool, but to be honest, reading 18th century prose is slow. Very, very slow...
   
   Michael Lewis adds some commentary. Unfortunately, that's only a few pages per book. What is there is generally quite good, but it is far too little. In particular, it would have been interesting to see comments on the actual texts, as opposed to general comments on the authors' lives.
   
   If you really want to read all the classics, it's convenient to have them all in one place. Otherwise, you should probably pass.



4. I spotted this book in the local Barnes and Noble and when I picked it up, it fell on my foot, causing a nearly permanent damage. I played with the book for two hours, pondering whether to buy it. Eventually, I didn't. The size of this tome is a serious drawback for me. It's hard to carry around; hard to flatten its pages; hard to read in bed. A second criticism I have in the selection of the "classics". I understand the three founders and Keynes for his relevance, but why Veblen? I would have either kept it to the neoclassical with the inclusion of the Theory of Moral Sentiments, or replaced Veblen with Marx' Capital Vol. I. The final drawback, and a nearly fatal one, is the lack of notes and commentary. It is very dangerous to read the classics out of context. Words take on different meanings, and are loaded differently. Smith, for example could safely assume that his readers were steeped in English empiricism. We are too, to some extent, but our understanding is less precise. There are good sides to the book to. Lewis is witty, concise and educated. And the price is unbeatable. I hope these two qualities close the deal for you.



5. Luckily Amazon has corrected the extremely misleading description of the book, but that does not correct the main issues with this book. When I bought the book, Amazon's description said "Michael Lewis introduces you to four classics of economics," which made me think, "I would follow Michael Lewis anywhere since he is a fantastic writer and I would like him to break down dense economic classics into easily digestible form." What I got was a 1472 page book with a paltry introduction by Michael Lewis.
   
   Once I got over that initial shock I was still left with a 1472 page book with little commentary. Who wants to own and potentially carry a 1472 page book?....Hercules? I heard that Hercules was practically illiterate so they might want to redefine the target demographic for this book.

5 comments about Microeconomics.

1. I think this book is terrible - it seems to be full of inconsistencies to me. When I was preparing for my lectures I felt like rewriting this book completely, or rather writing my own principals of micro book. Robert Frank's book is so much better, even though some would say that is an intermediate micro book. I am just emerging from my PhD program and planning to teach - this book is used by our department and I wonder why they use it and how come this book survived 6 editions? I am sure there should be a better book among hundreds of titles I can see. I can't believe all principal micro books are so bad and I don't believe that making it simple means making it inconsistent!



2. This is the best Intro to Microeconomics book you can buy... hands-down!!!



3. This book is probably the best econ. textbook that I have used so far. It is especially helpful for studying for the Micro & Macro AP exam combined with its workbook. Although he does try to use colloquial terms to describe basic economic theories I feel that this does not interfere with conveying the necessary information and may help some students with not as strong a understanding of the English language, learn from the book.



4. 
   I am very disappointed in this text. Am using it at a jr college for intro micro (also using same author for intro macro). The material is presented in a confusing way, often omitting important details, and I find the author's "conversational" tone to be condescending... especially when making references to "those of you who just don't get math" and similar phrases to the student...
   I bought and use Mankiw's texts to quickly and accurately learn the material taught in both of my classes, and only refer to Colander's texts to ensure I'm studying the corresponding Mankiw chapters for upcoming exams. I'm easily achieving 100% on graded Aplia assignments and averaging 95% on all exams so far in both classes, thanks to Mankiw's clear, precise, and accurate texts. Meanwhile, my classmates who are using only Colander's texts are really struggling to learn the material needed to be successful in both classes (micro & macro).
   I do not understand the popularity of this author - Mankiw's my author of choice to achieve an easy, excellent grade while actually learning the course material.



5. This book may be an introduction to macroeconomics but it lacks the necessary depth needed to be considered a quality textbook for college students. It does not give the level of detail I have seen in other textbooks for introduction economics courses.
   
   In addition, the author appears extremely bias in his description of various alternative views. This text is supposed to be geared for a principles in economics class and although alternative views should be discussed, the author spends too much time on these alternative views. Since the book is very short already, more time and attention should have been given to the basic principles of macroeconomics.
   
   Overall, I am very disappointed with the text.

5 comments about New Ideas from Dead Economists: An Introduction to Modern Economic Thought.

1. This book would make an excellent pre-100 level textbook for students interested in economics. Buchholz covers all major economic theories and their proponents from Adam Smith's Invisible Hand to the most currently vocal Rational Expectations theory. The detail never gets so deep as to actually present charts and diagrams, but is solid enough that the reader comes away with a general understanding of each theory.
   
   The book suffers a little in the beginning as Buchholz seems uncomfortable simply presenting the dry facts and ends up regaling the reader with anecdotes and economist in-jokes that may play in the classroom but fall flat in textual form.
   
   Buchholz really hits his stride when he starts talking about Keynes, though. Perhaps it is the benefit of having multiple economic theories at odds with each other by the early 20th century that make writing about it so easy. Whatever the case, his coverage from Keynes to the modern day is exceptionally well done. Focusing less on the character of the men and more on the value of their theories, Buchholz clearly describes Keynesian, Monetary, and Rational economic theories. He proceeds to play them off each other to the delight of the reader. Where the first part of the book failed to be dynamic, the latter half is exceedingly entertaining and informative.
   
   The problem is that I'm not interested to know that Smith was a klutz or that Malthus was well-polished. Those things are only used by Buchholz to bring life to these dead economists. He could have brought them more to life with more focus on what keeps them alive than the things buried with them.
   
   I recommend this book to anyone with an interest in getting an overview of economic thought. It will introduce you to just about all the important economic theories that have made an impact as well as the latest 'cutting edge' theories that present alternatives to the existing body of work. I hope to find a book that can replicate Buchholz's success with the modern era theories for those economists that I feel he short-shrifted in this one.



2. When I first saw this book, I thought this sounds really interesting. It is, if you like to read trivia about economists, most of whom are dead. There are loose connections made to miscellaneous events in modern times, but the bulk of the book combines jokes that have been around for decades (as dead as the economists) with mini-biographies more suited to a fan magazine, focusing on John Stuart Mill's dysfunctional childhood, John Maynard Keynes' marriage to a ballerina, John Kenneth Galbraith's height, Thorstein Veblen's odd mode of dress and his lecture on cannibalism, and similar delicacies.
   
   My impression is that the author found no use for this information when he was studying economics, but hated to throw out his boxes of notes. So he came up with a great, if dishonest, title and packaged the miscellany for sale. If you have no real interest in economics, but love gossip columns and want to sound like you know something about famous economists, this is the book for you.



3. This books generally delivers what it promises, a review of major thoughts from economists evaluated (somewhat) in a modern context. If that's what you are looking for, it's probably worth reading. However I had three problems with the book. First, he says some incredibly, bizarrely wrong things (quantum mechanics is not a hard science, the internet was invented by private industry, California may float away into the ocean). Even though they are topics outside of economics, they made me generally suspicious of his knowledge. Second, from some of his comments it is clear his writing has a political/philosophical bias but he never comes out and states what it is. Since I'm not an economist (after all, that's why I'm reading this book), it seems impossible to figure out what his bias is and how to correct for it. Third, perhaps a minor point, but he keeps drifting slightly off-topic in order to include a cute saying or clever remark. I mostly found this annoying, but other readers might find it helps keep the book light and fun.



4. Luckily, economics got that "dismal science" label a long time ago, because this book is quite the opposite. Written in both lively style and learned content, the reader will want to go through each chapter wondering "who's next on the chopping block?" And who would have expected to find this gem in a normally dry-sounding field (economics), or a self-serving field (biography). Lest anyone be turned off by the relatively un-recent publication date (1989), the author has updates covering fairly recent events.
   
   This book adds a nice thought just by itself: humor and economists. Marx and laughter. Adam Smith and mirth, etcetera. The story covers the really big names in the field in chronological order, and you just know that each personality coming up will get the same fair treatment: a description of the old economists' philosophies and systems, the good parts, the bad parts, the dumb parts, and what they said about each other. At the end, just as we figure out what the author REALLY thinks is the best economic structure, we find the answer is more along the line, "it depends." How can you not like a work like this!
   
   Dead economists. Some books are not that good, but have a great title (e.g., "Blink" or "Feel the Fear but Do It Anyway"). Many, many are the other way around, such as "Rise & Fall of the Roman Empire." "Dead Economists" is both. Do read it.



5. The book is so boring that I have to leave my first review on Amazon.com. I don't know economics. I'm expecting ideas from the famous economists and how to apply their ideas in the 21st century. I'm not interested in the their lives, their childhood, their education, their friends, their abilities, etc.
   
   For example, "Marshall also realized that facts teach nothing by themselves". I'm not interested in how he teaches, I'm interested in what he teaches. I'm already bored to death before the author put some economic ideas at the end of each chapter.

5 comments about The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron.

1. When one reads 'The Smartest Guys In The Room' there is one question that keeps recurring. How did no-one at Enron foresee the company's grizzly demise. The folly of mark to market accounting was reason enoough to expect certain problems, but the endless treadmill that Enron placed itself on concerning the stock price made those problems an inevitability.
   
   Although Elkind and Mclean portray the story well, they really don't have to do much with the material to make a fantastic story of the blistering story with which Enron rose and the calamitous pace at which it fell. The Enron tale is one of brash arrogance in almost every possible facet of a business, allied to a stubborn refusal to accept the economic reality even when it is staring you in the face. The real shame about the whole mess is that these were bright guys and this was potentially a great company. All they had to do was have a little common sense and regular business accumen and they could have been on to a real winner here.
   
   I would ultimately say to everyone that has an interest in business or the financial markets, however slight, that this book is a thumping good read and is worth some money ouot of anyone's pocket.



2. Very well researched account of the rise and downfall of Enron. It chronicles the start and the ultimate demise of this company, which never really had a great business model - (sorry Jeff Skilling). It is amazing that so many "smart" people did not understand basic business skills and the simple difference between economic and accounting gains. Jeff Skilling, a former McKinsey partner, should have stayed with the consulting firm where theory is safely differentiated from real world. Skillings' first mistake was not understanding his own limitations first and foremost. He breaks out a bottle of champagne to celebrate SEC's acceptance of a change in Enron's accounting system. Accounting does not create value - it does not appear that many Enron executives (especially Skillings who should have known better) understood this.
   
   McLean and Elkind do a nice job presenting some of the schemes and scams that Enron executives used to make themselves look good to investors, analysts, bankers and the general public. There are some scams that I had a hard time following, but the reader will grasp the general idea behind them. In light of recent accounting scandals, this is an important book to read for any investors and the public in general. Unfortunately the book ends around summer of 2002 and we do not find out what happens to some of the key characters. My interest was sparked enough that I researched some of the more recent findings after reading the book. Despite its difficulty to read at times I highly recommend it.



3. Actually read this a few months back but thought I'd pen this short review on the day Lehman brothers filed for Chapt 11, Merril Lynch bought for a bargain by BOA, and AIG "restructuring" (ie throwing everything it can overboard). But, I hear you cry, what does Enron have to do with merchant banks? Well if you read this excellent book, you'll find that by the end of its existence Enron was essentially a merchant bank. It traded risk (and made some handsome profits doing so). The original hard infrastructure (real things that make real money in real, steady time) based pipeline and energy distribution business having being stripped, sold or just neglected. It wasn't the byzantine, dishonest finest pyramids, that really led to the fall, although they greatly speeded it up. It was the out of control trading floors. Live by the sword, die by the sword. Making your core business the trading of risk, is, well, a risky business. Add to this a complete lack of any moral compass, plus the attitude that you are always smarter than the other guy and this is what you get in the end - a dime sale of your computers, carpets and inspiring front lobby art.



4. This book is about a reality so different from my own, I use it as escapism. Although the transactions described are Byzantine, the book nevertheless holds the reader's attention for over 400 pp. Events are presented roughly chronologically; the characters and information accrue like an approaching balloon note; some questions are answered only after the reader has had time to stew. Tension mounts as the house of cards gets impossibly higher!



5. Agree with previous reviews of this book and no doubt: must read before you do any more investments. Very well researched and exciting read. Describes things they don't teach you on MBA/CFA etc. Looking forward to a similar book on credit crunch!
   Have to say though, I'm about half-way through the book (sorry if it changes) but what's a bit disturbing is that all written from "it was all so obvious why didn't everybody see this coming" retrospective perspective. Fair enough, the authors wrote the article "Is Enron overvalued" but did they predict bankruptcy? Did they know about all the accounting tricks before the post-bankruptcy analysis became available? I doubt it. We're all smarter after the fact!
   Nevertheless, must read!

5 comments about The Rise and Fall of the Great Powers.

1. An absolutely indispensible source book to understand the deline of America to a second rate ex empire. Well written, and loaded with facts of production and distributiion, this is a somewhat "heavy text". Although America's future is not discussed per se, you reach the unavoidable conclusion that our nation, like all failed states in the past, declines and falls when it wastes its production of wealth on war. So it has ever been.



2. A very well written and thought out book about how countries become powerful and what happens to affect their power



3. Kennedy's book chronicles the decline of the British empire, and argues that the American empire is next. This is because, he says, both empires suffered or currently suffer from "imperial overstretch," that unhappy state of affairs where military and defense obligations outweigh the benefits accrued from the subject territories. This is a seriously flawed premise which, at best, fits the British empire only loosely, and the United States not at all.
   
   The British empire did spend heavily in the years leading up to WW I (which Kennedy argues led to its decline) but Britain actually spent less on defense, as a percentage of GDP, than the other great powers at the time.
   
   The "overstretch" thesis is even less apposite in the context of the United States. First, the U.S. is not an "empire" as Kennedy defines it. Second, U.S. military obligations have not risen in proportion to its GDP to the height of the Vietnam War. Third, Kennedy fails to adequately explain a logical link between military expenditures and economic decline. He does attempt to explain the link in purely economic terms, i.e., the massive amounts spent to sustain a military force, but he does not explain how military spending, which declined relative to GDP, is somehow different than social welfare spending, which has taken an increasingly large share of GDP.
   
   What appears to suffer most from "overstretch" is Kennedy's thesis itself.



4. a seminal work and a must read for anyone in the military with an interest in world history and in events that caused the political, economic and military changes.



5. In this groundbreaking book, British author and historian Paul Kennedy looks at the history of the modern world, and examines why it is that some nations gained power while others lost it. Among the many factors examined are geographic location, national cohesion, technological advancement, military spending, economic development, and other economic factors. All of these factors influenced a nation's power, but with the rise of nationalism, and the movement towards coalitional conflicts, the various economic factors moved to the forefront, with the economically strongest coalitions being able to out-spend and out-last rival coalitions. As the book moves through the history of the world (with the earliest chapters focusing primarily on Europe), the reader is treated to a very interesting narrative of what happened and why.
   
   There is a small group of books that strongly influenced me when I was a young adult, and I have kept them close by, reading them again and again over the years. One of those book is Paul Kennedy's The Rise and Fall of the Great Powers. I find the analysis in this book to be penetrating, and exceptionally on target. I think that the author's linking of national power to national economic strength is right on target.
   
   Now, it is true that this book is in desperate need of updating. A great deal has happened since the book was first published in 1987. I would be interested to see what he would have to say about China's remarkable rise in power (which he predicted in the final chapter of this book), and the United States slow erosion of power, vis-à-vis the other great powers. But, nonetheless, this book is an excellent examination of the history of national power, with many lessons for modern and future world leaders.
   
   If I could have one small wish granted, it would be that the top echelon of the next American administration would all read this excellent and highly informative book. This is one of the greatest books that I have ever read, and I highly recommend it to everyone!

5 comments about China Shakes the World: A Titan's Rise and Troubled Future -- and the Challenge for America (Edition 001).

1. China Shakes the World is a well documented panorama of what China is moving to be in the near future. Yet the author writes in a spirit that is as entertaining in its irony as it is instructive. He uses statistics, particularly, that rock the reader, i.e., the number of young Chinese girls who commit suicide each day out of sheer hopelessness. (500+) Many of his figures demonstrate the impact of the sheer size of China's population, now more than 1.3 billion.
   I recommend China Shakes the World as a resource book to keep on hand, a program of events that is already unfolding whether we in the West like it or not.



2. Kynge recounts the rise of China as an economic and resource-sucking giant on the world scene in the last 20 years. The story, as usual with China and its 1.3 billion people, hinges on the massive markets and demand that even fractions of that enormity can generate.
   
   The good news is that the shift of manufacturing to China, with its extremely (and artificially, Kynge points out) low production costs, has resulted in a flood of cheaper goods in the US and Europe, and that China has been buying billions of US treasury notes which of kept mortgage rates low. The bad news is these trends may not be sustainable, that any manufacturing still outside of China may be completely sucked into the Eastern giant, and that world resource demand (oil, steel, water, environment as a resource) by the Chinese giant may suck the world dry and create massive price and allocation problems.
   
   Whether the reader is optimistic or pessimistic, in either case it is a troubled future, as the subtitle says, that awaits.



3. Good stories that give an understanding of what's been happening in China since the Tiananmen Square Massacre in 1989.



4. I picked this book up while doing quite a bit of reading on East Asia, and it's by far the best I chose. Telling the tale of China through experiences and interviews was a brilliant way to make a lot of information easily digestible. This book wasn't written to tell the scholarly what they already know, it was written so that those interested could begin to grasp this complicated country. After reading, be ready to convince yourself that you shouldn't buy a ticket over (unless you can afford it, then get out of here) because this book will likely do for you what it did for me, create the beginnings of understanding with an insatiable hunger for everything Chinese.



5. If you read only one book in 2009, James Kynge's China Shakes the World is the one to read. This is so first of all because the impact of China on the world and your life is something you need to understand, no matter who you are. Secondly, Kynge has lived in China since 1982, is fluent in Mandarin and thus has both a deep understanding of the country and the ability to communicate with people there. Finally, as the former bureau chief of the Financial Times in Beijing, Kynge has the knowledge to write about this topic.
   
   What was remarkable to me as I started to read the book is Kynge's attention to small details that tell a major story. For example he tells about the disappearance of large numbers of manhole covers from many parts of the world starting in mid-February, 2004. The reason, Kynge points out, is that they were stolen and shipped to China to help sate China's voracious appetite for iron. It is this eye for detail and its larger meaning that gives the book much of its value. Furthermore, my initial expectation was that the book would be dry and statistically oriented given the writer's background. But Kynge is really an excellent writer who uses words much as a world-class novelist might.
   
   While clearly delineating the upside of China's economic miracle, Kynge also demonstrates the downside: the displacement of people and disruption of social values, the enormous destruction to the environment, the tension between an authoritarian political system and a capitalist economy, etc. He does this effectively with stories about people, not just by listing facts. For example on page 83 he describes the success story of Wang Yihua, a young woman who left China to find success as a fashion designer in Italy. Many of the examples come from his ability to communicate in Mandarin and his tenacity as a reporter, such as his description of the life of Shen Wenrong and his efforts, finally successful, to obtain an interview with him.
   
   There are some minor flaws in the book. One is that it is now five years old and some of the information is out of date. Given the rapid pace of change in China an updated edition would not be out of the question. Another, in my view, is his use of the word "value" when he really means "price."
   
   But all in all reading this book will open your eyes on the development of China and its real and potential impact on the world.

5 comments about Global Capitalism: Its Fall and Rise in the Twentieth Century.

1. 
   I read books in groups, and bought this one along with David Walsh's "Knowledge and the Wealth of Nations" which I recommend above this one is you are only buying one book. I also read and have reviewed "Global Class Wars" as well as all other books I recommend below.
   
   Although I was less interested in the history, which is very well documented and clearly explained, and more in the lessons for the future, I found two clear bottom lines in this book that are supported by its extensive research:
   
   1) Open societies and open democracies generate more money and more opportunity and more innovation than closed or failed societies; and
   
   2) Keynes was right, there is an urgent vital role for government to play in addressing the social networks, including education, transportation, rules of commerce, and so on, that allow capitalism to work.
   
   The author distinguishes between individual, cooperative, and competitive capitalism, and I found validation in this book for my concept of communal capitalism, a capitalism that is guided by government in avoiding the exportation of jobs, the importation of poverty, and the impoverishment of the middle class.
   
   Unlike David Walsh's book, this book has more of a focus on what is moral and pragmatic, and so I recommend William Greider's "The Soul of Capitalism" as well as John Perkins "Confessions of an Economic Hit Man."
   
   I have a very strong feeling from this book and others, that the era of "out of control" capitalism is drawing to an end. We may even see the end of the corporation as a separate legal personality in the next 12 years. The transparency of information that is available when people attach themselves leech-like to a corporation and hold it accountable (see my review of "No Logo") is creating a powerful antidote against the Enrons and Exxons and Wal-Marts of the world who bribe elites and screw over the publics on both ends. I also see Wall Street losing its ability to "explode the client" (see my review of "Liar's Poker"). A great deal of good will be done in the next quarter century, and it will come from a combination of good government and educated engaged citizens working together across all boundaries.



2. Jeffrey Frieden, a Harvard professor specializing in international trade and finance, has written a masterly and comprehensive history of capitalism from 1870 to the present. His history of globalization reminds us that it is not a recent develpment and that its current success is not guaranteed.
   
   The first era of globalization (1870 to 1914) had many of the same characteristics as today's. There was an unprecedented cross-border movement of goods, capital, and labor. (Labor more so in the first era.) During these years huge amounts of capital moved overseas to America, Canada, and Argentina mainly due to the reduced costs of communication and transportation. The technologies driving this globalization were the telegraph and railroads. It was also facilitated by the fact that most currencies were convertible to gold. The investment in the Americas was also followed by a huge immigrant population. In these years, America, Canada, and Argentina had much larger immmigrant populations at the turn of the 20th century than today.
   
   The main thing that distinguishes the present globalization from the first is what happened in between. After the Great Depression and World War II remedies were put into place to mitigate the damaging effects of these economic and social catastrophes. Social benefits such as unions, minimum wage, healthcare and pensions were established as safety nets. In the era between the two globalizations when economies were mostly national the safety nets were part of the social contract between capital and labor.
   
   In 1980, when our current era of globalization begins, capital began to move overseas again in order to find countries with lower labor and social costs. This time, however, labor did not follow. The industrialized countries now have large middle classes with social benefits promised who are not certain about how they are going to be paid. This is causing many in the industrialized world to have second thoughts about our current phase of globalization.
   
   Frieden has a guarded optimism about global capitalism and thinks it is still the best system for distributing wealth. Yet, his last chapter "Global Capitalism Troubled" points to some more clouds on the horizon. There seems to be a growing gap between those who control capital and those who work for a living. People understand that globalization is inevitable but they want a new set of rules to address the growing inequalities.
   
   Frieden is a cheerleader for a more equitable capitalism that can deliver both social benefits and robust economic growth.



3. I was almost tempted to give the book a miss after seeing the high ratings that were given by reviewers that seemed to be anti-globalizationists (what an awkward term!)
   
   However, I came across the book at my library and gave it a chance, and I was not disappointed. It is a book that does a creditable job of summing up the ups and downs of the world economy over the past hundred years and more. And it also does a fairly good job of raising some issues and problems with the world economic system, and how the system had evolved to meet those issues and problems. On the whole, I think it's a balanced book, pointing out the critical need for free and integrated markets to raising millions in the world out of poverty, as well as some of the problems facing them.
   
   The only reason why I gave the book a four rather than a five is that it is not an easy read, and it is best read with some thought and analysis on the reader's part. Not necessarily a bad thing, but not something for everyone.
   
   By the way, do ignore those reviews that pretend to tell you what the author was saying in his book. I'm not sure that he's actually saying what they say he is saying.
   
   Read the book for yourself. It's worth the time and effort.



4. Of all the many books that have come out in recent years about global capitalism, finance and economics, this is certainly the worst. The author, a professor of government at Harvard, professes to specialize in international monetary history, but is really what his tenure title says he is, a professor of International Peace. He appears to be trying to reinvent his career by tackling the subject of capitalism but thoroughly lacks understanding of the subject matter, as made evident by his book.
   
   1. The author makes the same mistake that virtually all political science professors do when they write about capitalism: he glorifies the gold standard, he glorifies the Rothschilds and glorifies everything that had nothing to do with the emergence of twentieth century capitalism. The author is using his expertise in international relations to analyze a subject that is really never about governments, or grand alliances or fancy bankers. He thus fails to root the story in the advent of technology, or of business procedures or of the individual investor, but focuses instead of John Foster Dulles and Dean Acheson and Lord Halifax.
   
   2. Wherever the subject matter is strong, the book still fails badly. It does so because political economy is better analyzed by Robert Gilpin and others, whose books are mandatory reading and well written and which do not pretend to sell that subject matter as a study of capitalism.
   
   3. The book's sections are surprisingly badly arranged. Sometimes one feels the author may have a method to the madness but I doubt it after having read it. It is certainly not thematic, or designed to trigger thought or chronological.
   
   4. The book refers to a poem only twice in the 500 pages and it is about the King of Ghana! I mean a professor at Harvard should surely know how to maintain balance in his subject matter. Is that the one poem he could find worth including?
   
   5. Stunning is the lack of understanding of the issues. He describes Britain as fully supportive of free trade mid-19th century but fails to consider how colonialism could be a form of free trade. He describes China Turkey and India as the only failures of the early 20th century without making the same connection with colonialism.
   
   6. Worse is his understanding of the gold standard. He never mentions that that relic was responsible for more misery than anything other than world wars. He fails to consider that since the gold standard was weakened in the Forties, there have been NO PANICS RAVAGING SOCIETY. He is a gold bug.
   
   7. He repeats William Bryan's Cross of Gold speech twice in the narrative with no suggestion that he is even aware his haphazard narrative is repeating the same quote. He also fails to mention that William Bryan was not buried in the election of 1896 but actually came to dominate the 20th century, what with unionism, minimum wages, no gold standard, empowerment of the individual investor and every other idea that Bryan first espoused. TR's and FDR's reforms were nothing if not Bryanism.
   
   8. Why would a book mention so much about Rothschild's and their family in the US without mentioning Jacob Schiff, or detailing JP Morgan, or RObert Lehman or Albert Gordon. I mean the author simply has no balance on the subject matter because he knows so little about it.
   
   9. Finally, it is not clear what Jeffrey Frieden is doing at Harvard. Such poorly researched fare is common to COlumbia Business School and its Dean Glenn Hubbard, or to the Hoover Institution or some place like that. Harvard on the other hand puts out more balanced and far more thoughtful pieces.
   
   BAD BOOK THAT MUST BE AVOIDED.



5. This was one of the best business books that I have ever read. It provides a thorough overview of the history of business globalization, yet it is not academic at all. Although it is long and has a few, short dry spots, it is an easy read that is engaging from beginning to end. The lessons from history are very applicable today. I highly recommend the book to anyone that works for a global company or wants to understand the forces of globalization and the impacts on our economy today.

5 comments about A Short History of Financial Euphoria (Whittle).

1. The real value of this book is that it will hopefully serve as a reminder to the person who has read it when that person happens to find himself in a state of financial euphoria. In that sense, it's indespensible and could be life-saver. It's a usefule piece of wisdom. But in another sense, Galbraith's analyses of various financial run-ups and crashes is a bit too tidy. Obviously at the most general level, extreme market behavior can be thematicized, so to speak, so that genearl qualities can be shown to be shared by extreme markets. And this is where Galbraith makes his point and spreads it on thick, albeit in overly stuffy tone for an economist!



2. Yes, Galbraith predicted the '87 recession- but he did so throughout much of the 1980s, during a period of tremendous growth and wealth building. When the '87 recession did occur- and let us recall that it was exceptionally short and shallow, lasting only until April of 1988- he gleefully announced his vindication.
   
   Galbraith built his reputation on his 1955 book on the Great Depression, written at a time when Economics was in large part a historical and largely literary field, well before the econometrics explosion of the 70s, 80 and beyond. Modern economists are as much mathematicians as anything, and the sophistication of the tools they use today is far beyond anything Galbraith had at his disposal in 1955.
   
   In large part because of the sophistication of the tools available, the recessions of the past 20 years have been much shorter and milder than those of past years. One only has to look at the historical record to see the tremendous decrease. At the time Galbraith wrote this book, however, he was still writing in a very 19th-century, historical style of analysis and his arguments tend to reflect that. A large part of his argument is that psychology governs markets, which is true, but trivially so; markets are, after all, simply collective human behavior. But Galbraith thinks that bubbles can be explained entirely by "herd mentality." Of course, if that were so, the Fed could quit playing with the funds rate and just buy a lot of advertising space and time.
   
   We now know, for instance, that the "bubble" of the late 90s was caused in large part by companies bringing forward computer spending in order to deal with Y2K compliance. We also know that the brief '87 recession was caused in large part by a large tax increase. And we know that there is a political business cycle triggered by the actions of politicians in election years that often results in a dip the following year.
   
   None of this enters in to Galbraith's analysis, because he's still dealing with the same analytic tools he was taught in the 1920s. So read this book for the historical perspective, and for an insight into how a 19th Century economist would have viewed times of economic boom and bust- but don't think for a moment that it has anything to do with post-1960 economic analysis.



3. Galbraith has written an excellent little book on the negative impacts of speculation on the American economy.The speculative dangers to free enterprise restarted with the Reagan administration's deregulation and privatization of the financial sector of the economy in the early 1980's.Galbraith's analysis is completely applicable to the Michael Milkin-Ivan Boesky directed junk bond speculation of the mid to late 1980's that led to the collapse of so many banks and S and L's in the 1989-1991 time period,as well as the Dot com bombs and NASDAQ(DOW) meltdown of 2000-2002 period, and the subprime mortgage backed bonds folly of the 2003-? period that also witnessed the bankers' reflating of the DOW bubble(2003-2007) and Ben Bernanke's 1.2 trillion dollar attempted bailout of Wall Street that simply created another bubble in oil and commodoties while annihilating the value of the dollar.Galbraith, like Adam Smith,John Maynard Keynes,and Kindleberger before him,correctly identifies a pattern that emerges over and over again in capitalist economies-first,there is the banker financed and directed leveraging based on increased prices for some asset.It is claimed that this is a " new " economy and things will be different this time.This leads to the formation of the bubble .This is then followed by a mania featuring herd like " momentum " investing that is financed by the commercial banks.This leads to a panic ,which leads to a crash which leads to a recession or depression.
   
   I have given Galbraith 4.5 stars here because he is completely ignorant of the fact that Adam Smith provided a much more detailed exposition of this problem in his The Wealth of Nations (WN)in 1776(See the Modern Library Edition (Cannan)of WN,pp.250-340).Smith's conclusions,supplied on pp.339-340,include the solution-prevent the bankers from financing the leveraging that speculators MUST have in order to put their plans into action.This requires a policy of restricting credit to 3 categories of borrower-the prodigals,the imprudent risk takers,and the projectors(Keynes's speculators and rentiers).Of course,the forces of banking and finance,as pointed out by Keynes in 1938 in an article in the Eugenics Review, will resist mightily.
   
   It is unfortunate that Galbraith never read WN.Galbraith could have used the intellectual support provided from the analysis presented by the greatest economist of all time to buttress his position substantially.



4. "A Short History of Financial Euphoria: Financial Genius is Before the Fall" is a book that every financial manager must be required to read. Every financial company must have one copy in its library.
   
   The book is powerful in its explanation and predictions of financial speculative episodes. In eight brief chapters, (I wish I could do that), JK Galbraith describes the financial euphoria preceding major financial collapses starting with the Tulipomania in the Netherlands in the 1600s and ending with October 1987.
   
   All crashes have common features. First, and nearly always, is a reinvention of a financial instrument sold to investors as the blockbuster wealth-creator of all time. People buy into the instrument in herds, creating a speculative bubble, which in turn leads to "mass insanity." Two speculative behaviors characterize all financial euphoria. One involves investors who believe the bubble will last forever. The second relates to those who know the bubble will ultimately burst, but contend "they will get the maximum reward from the increase as it continues; they will be out before the eventual fall" (p. 4).
   
   The two behaviors reinforce one another in two different, but related ways. Because of euphoric "mass insanity", there is always a strong belief in the unfailing ingenuity of financial geniuses. Partly because of such a belief, a dogmatic theology has emerged that condemns to Hell anyone who dares to caution against excessive speculation and mass euphoria. Critics are generally put down as unpatriotic and against capitalism. The consequence is a crash that "always ends not with whimper but with a bang" (p.5).
   
   Here is the common sequence of speculative episodes: Bubble, then "mass insanity", then euphoria, then crash, and finally "mass memory loss". The latter guarantees that there will be another episode just as severe or even more so.
   
   Highly recommended!
   
   Amavilah, Author
   Modeling Determinants of Income in Embedded Economies
   ISBN: 1600210465



5. How appropriate this book is, given the recent real estate bubble burst. It is a short study of the historical bursting of bubbles. John Galbraith is a renowned economist, and admits he can't predict when bubbles will burst, just that they will. The language you hear during the upward trend of bubbles is exactly the same - that "it" will never go down. People get into a frenzy or euphoric state and ignore that fact that the bubble will ultimately burst, as it always does. This book was written prior to the Stock Market crash of 1987, the dot com era, the more recent real estate bubble, which ultimately is the root of our current economic woes. This was a very quick read and I enjoyed it tremendously. A friend of mine lent me his copy to read a few years ago, and the recent crash of the real estate market led me to remember how much I enjoyed the book that I bought it for myself to reread.