5 comments about Redefining Health Care: Creating Value-Based Competition on Results.

1. Book Review
   Redefining Health Care by Michael Porter
   
   I am writing this review to help share some excellent ideas on the availability and quality of medical treatment in the United States and on the U.S. economy which is being dragged down by ever-increasing medical costs. The economic impact is not just on corporate profits and stock prices but also on U.S. employment because everything that raises costs makes it harder for U.S. manufacturers to compete with foreign suppliers and makes it harder for U.S. manufacturers to sell in foreign markets.
   Unfortunately, the book is long, turgid, and full of details, which help to substantiate his conclusions and also provide guidance on implementing improved policies. I am afraid the book does not appeal to executives, politicians, or doctors. It also proposes radical changes in all aspects of the medical system and its financing and operation. Dr. Porter proposes major changes on the part of all parties involved in delivering and paying for health care.
   The book begins with a review of health indexes and health care throughout the world and shows, while the U.S. has the greatest expenditures by any set of measurements, it does not have the best results.
   Then, Dr. Porter introduces his most important concept: that any medical treatment should be measured by its results; how much lost time and discomfort did the patient have, is he or she completely cured, or how much disability measured over the entire span of the illness or even the life of the patient. We tend to think of an operation as being successful if the patient left the hospital in good condition. But how much additional recovery time, disability, or reoccurrence was there? If the patient doesn't come back to see him, a doctor doesn't know whether he was cured by the treatment or if the patient was so dissatisfied he went to another doctor or simply gave up on a series of treatments. The goal is to develop a scoring system for each group of illnesses that can be compared with the cost of each individual's treatment and their results to determine what is the best set of procedures and the best doctor or group of doctors to do the work can be used to guide providers and treatments. Porter has some reason to believe that the best treatments are generally less costly even though the individual item costs may be more, the greater effectiveness and the less chance of complications reduces overall cost. Included in the overall cost should be lost wages, which is a reasonable proxy for the patient's time.
   The goal is to develop a health plan that pays for results not for treatments. In many cases, that would be a single payment to the provider for a whole series of treatments from diagnosis on through operations, post-operative care, and follow ups which could extend over a long period of time. This is a radical change from the present system which pays for treatments and tends to produce more treatments and does not have any effective means for either the insurers, or the employers, or the patients even to compare one treatment option with another. This is an extreme, radical change and would take a long time to implement, but there are pieces of the program in operation. A number of these are explained at length. Health insurance companies could hire these firms for their specialized expertise and would not have to do the work on their own. An example of what is done is how the firm studies the history of heart transplant patients and will give an insurance company a single payment for the entire course of treatment providing it is done in the manner and by people they specify. They would particularly focus on caregivers who have an outstanding record of success. It appears that for most illnesses, there are organizations that are substantially better than others and this program could be extended broadly.
   Another area of development would be to have counselors which would be part of the function of the insurer to advise a company's employees with a list of particularly well qualified doctors and suggest treatment elements.
   Government would seem to be poorly adapted to facilitating these changes because they are radically different from Medicare. Medicare seems to promote cheap, but not necessarily effective treatments and set arbitrary pay scales which do not allow the better providers to charge more for their services and thus encourage more providers to be in the high performance category. Companies that pay for the insurance are the ones that have to put pressure on the insurers to implement the above changes. This could not be done over a short period of time but would eliminate a lot of the wasted time that is now involved in the payments for each little step of the process and for each treatment step.
   Chapter 8 is a detailed discussion of how to implement the aforementioned concepts using modifications of Medicare and other laws. This is too complex to summarize here but it appears doable if Congress and the Executive are sufficiently motivated. It is likely that few people would understand what is happening, but the benefits to cost ratio is sufficiently great that the changes would probably be supported and accepted. On the other hand, the situation is so complex, it is questionable whether lawmakers and administrators would be willing to undertake the many complex tasks required. On the other hand, the downside risk appears quite small.
   Porter approaches the whole subject from the points of view of business strategy and the problems of decisions with very imperfect information. While the government frequently acts with very imperfect information, its strategy for doing so is not well developed and poorly applied.
   
   Redefining Health Care: Creating Value-Based Competition on Results



2. This book has received probably disproportionate attention due to Prof. Porter's notoriety as a strategic thinking theorist. There are better overall books on healthcare policy available. In particular I recommend the Bodenheimer/Grumbach books, one on healthcare policy and one on primary care, Dr. Arnold Relman's book, A Second Opinion, Strained Mercy, an outstanding and thorough analysis of healthcare economics with particular regard to Canada's healthcare system and Pricing the Priceless a more technically-oriented economic analysis by Prof. Joseph Newhouse, among other books.
   
   I find the analysis of the USA healthcare system by Profs. Porter and Teisberg to generally be excellent, although I find it wanting in regard to their disparagement of a single-payer/single-insurer system and to their description and analysis of healthcare systems outside the USA. From my perspective private health plans play only a net negative role in the system. The authors' analysis of how the health insurance market works is quite good. However their recommendation that a system of private insurers should persist is refuted by their own analysis! A single payer/insurer system will not cure many problems of the USA system, as they clearly point out, but it does remove the inherently dysfunctional characteristics of private insurance, not least of which is its failure to meet the needs of the uninsured - a very large number - and its inherent propensity to exclude the very people who need coverage and care. The authors rightly point out that mandatory health insurance along with risk-pooling among insurers to spread the costs of those insured individuals who generate the highest costs is a "solution" to the current non-functioning system, but the same result, at lower cost and with much greater simplicity, can be achieved through a single payer/insurer.
   
   The other key aspect of healthcare - how it is delivered - is ultimately more important than the financing/insurance side. The authors provide excellent analysis and recommendations in this regard. They correctly address the aspects of the healthcare market that prevent its functioning as a "competitive" market, specifically the abysmal lack of patient information on prices for services, on outcomes of actions by providers, comparative statistics on provider performance and similar. They also provide an interesting report by the Cleveland Clinic on outcomes, i.e. results, of the Clinic's heart surgery activity. They appropriately use this as an example of the kind of reporting that is needed.
   
   The authors' analysis of healthcare systems outside the USA is skimpy and inaccurate in my opinion. The authors underplay the demonstrated efficacy of government-funded systems that outperform the USA system almost across the board in gross measures of outcomes (infant mortality and longevity) and vastly outperform the US system in regard to cost. They gloss over the fact that per capita costs in the USA are 2.5 times! the average per capita costs in other OECD countries. It is not as though the costs are say 10% above the average with comparable outcomes. They are 150% higher with worse outcomes. Instead of noting this and analyzing it thoroughly, the authors assert that waiting times and rationing of care are significant problems in those countries, assertions which are simply not borne out by the facts. Also the fact that (mostly) single-payer/insurer systems function well universally does not fit the authors' main thesis, so rather than revise the thesis based on this evidence they choose to ignore the evidence.
   
   As a consequence of these limitations I rate the book with 4 stars rather than 5. Too bad, because most of the book is excellent.



3. Interesting view on the actual US healthcare and a challenging way to solve the mailaise



4. This a great book for physicians that likes strategic administration. Porter and Teisberg provides a major contribuition for the health care.This book will enable dramatic improvement in the efficacy and quality of patient care in the USA and other countries.



5. I am taking a Health Care Management Strategy class and this book was recommended by our professor.
   
   Very well thought and comprehensive book.
   
   Some comclusions can be challenged, but the book bringing a new look on Health Care and provide solutions for improvements.

5 comments about The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton School Publishing Paperbacks).

1. The author has noble intentions and some of the arguments are persuasive. But something does not quite add for me:
   
   Solve third world poverty by making everyone consumers? Buy more plastic goods?
   
   Some of the cases are good stories and I am not against the idea...but something is missing here. What about the mass environmental impact?
   What about eradicating poverty but increasing impoverishment? Make everyone a consumer, eradicate their customs and culture, Americanize every Third World country by turning its native peoples into consumers. Sounds like a profitable enterprise for the MNCs--but not sure how much "Fortune" will be redistributed to the native peoples. I doubt much.



2. This is a great book for anyone serious about expanding their business, or starting their own business. It gives a real look at the world's poor. Every stereotype is wrong.



3. I learned about CK Prahalad and the BOP about two years ago doing a school project. I'm a graphic designer, so my approach is far removed from the typical business person's. After this project, I used this book to guide my senior project (design equivalent of a thesis), in which I made up a company that served the BOP in Venezuela and created a brand and packaging system for it. As a non-business person, it was sometimes challenging to follow the book, but it was not overwhelming. I agree with other comments that say that it was a bit technical (especially with all the abbreviations), but it was still approachable.
   
   I'd recommend this not just for business people and entrepreneurs. Poverty is a world-wide issue and this book shows new and innovative ways of dealing with it. We can find uses for this theory in many different realms and disciplines and the theory forces us to think outside of the box. I was especially appreciative of the non-subsidies and the notion that poverty alleviation can come from sustainably profitable operations. I also like the idea of environmental sustainability as a must when dealing with the vast majority of the world as consumers.
   
   I would also recommend "Out of Poverty" by Paul Polack. I liked Prahalad's position better, as Polack falls short in addressing exclusively money as a poverty factor and disregards life quality as something we should address; something that Prahalad does address. But Polack addresses an even poorer segment of the world and we can learn from both theories.



4. Rather than teaching the poor how to fish you should provide them with the information they need to reach a life beyond fish and rice. That goal is nicely laid out by author C.K. Prahalad in his wonderful volume "The Fortune at the Bottom of the Pyramid."
   
   Prahalad correctly points out that it is the poor who stand most to profit from free, global markets. While that is true, the goal cannot be reached without a government being willing to assume a leadership role in making transactions easier for customers and accepting the responsibility of helping to create wealth rather than merely taxing wealth.
   
   Prahalad shares the belief of many that poverty and non-functional economies are not caused by Western dominance but by the inattention of the West. The author issues a call to change, insisting that business no longer can afford to neglect a market of 5 billion people who already are consumers and will help business generate even more profits once these 5 billion become more highly-informed consumers. It is information, not charity, that provides meaningful relief, stresses Prahalad, who calls upon business leaders to make meaningful and sustained improvements in the lives of billions of people.
   
   In case study after case study the author provides evidence for his premise that the win-win formula of innovation offers the dual function of helping the poorest of the poor while at the same time generating corporate profits.
   
   When you take a close look at India and its opportunities for successful business intervention, you see further evidence for Prahalad's assertion that the greatest potential for economic growth is in the billions of people living at the bottom of the economic pyramid.
   
   By Gunjan Bagla
   Author of Doing Business in 21st Century India



5. I thoroughly enjoyed this book and found the information eye-opening. I was thrilled to read about so many creative and resourceful people (actual case studies) who are truly commited to serving those who live on $1-$2 a day around the world. Their needs are real and the heros are those creative individuals who are 'pushing the envelop' in serving them while still making an honest profit. The case studies are also available either via a CD in the back of the book or via the website in the paperback edition. This is an EXCELLENT read.

5 comments about America's Great Depression.

1. The definitive scholarly analysis of why the Great Depression happened and the policy failures which tried to allievate its tragic consequences.
   
   This is the seminal volume that launched Rothbard's reputation as the world-class expert on this issue.
   
   His subsequent work related to the history of the Federal Reserve and its destructive monetary policy which formented the Depression cemented this important assessment.



2. Murray Rothbard's book, America's Great Depression, is really two books in one. One is a very bad book. It purports to use economic tools to explain how the Great Depression came to be. The other is a potentially very good book. What is suggests is that Herbert Hoover, although well intended, engineered a bad situation into a catastrophe. Overall, I do not recommend the book to the general public as having a good explanation of why events of the 1920s led to the Great Depression, nor would I recommend it to the general public as an exemplar of good economic thinking. But I do recommend it to my fellow economists as an exemplar of how not to do economics.
   
   The bad book occupies the introductions to each of Rothbard's five editions of the book (the last published posthumously, and with an introduction by Paul Johnson), and then the first six chapters. From those introductions, it is apparent that Rothbard was a follower of Ludwig von Mises' Austrian school of economic "thinking," a school that apparently believes, economics can be a fact-free science. That can be seen in Rothbard's Introduction to the First Edition where he wrote (xxxix f.): "... I make no pretense of using the historical facts to "test" the theory. On the contrary, I contend that economic theories cannot be 'tested' by historical or statistical fact. ... The only test of a theory is the correctness of the premises and the logical chain of reasoning." If that is indeed the Misesian-school's thinking, I question what kind of theory and what kind of economics can be produced by its fact-free science. Unlike Athena and Zeus, truth cannot spring from von Mises' head unvarnished by observation, and it cannot do so from anyone else's head for that matter. After all, how did von Mises first get to the theory he proposed, and Rothbard used, without actually having observed facts on the ground. In the end, truth needs recourse to facts and observations, and to refutable hypotheses. It is the scientist's task to tease the evidence, or lack thereof, from recalcitrant facts and observations for the hypothesis or theory being proposed. Absent that, all one is left with is fact-free science, which is no science at all. It is simply assertion papered over by an ideological just-so story. In that regard, the Misesian-school appears to be no better than the Marxian school (although ideologically, the polar opposite). If Rothbard represented the Misesian-school accurately, I would dismiss that school's approach as being theory without measurement, in the same way, as in my graduate days, that we dismissed measurement without theory.
   
   To show how misleading fact-free science can be, I recall a famous story about Albert Einstein and quantum mechanics. Einstein, using a thought experiment in 1935 (the so-called EPR paradox) had proposed a seemingly irrefutable test about particles in quantum mechanics. The paradox was impossible to test with the equipment available at the time, and so stood for quite a while. Only in the 1970s and later, with the advent of high-energy cyclotrons, did the paradox become testable and indeed was refuted.
   
   Of course, Rothbard's book is not entirely fact-free. He did use some historical facts to 'test' the theory, or at a minimum, to demonstrate its validity. He did that despite his contention that economic theories cannot be "tested" by historical or statistical fact. I find the difference between what he said he would not do and what he did to be most puzzling.
   
   Rothbard's book, in its first part, contains much that was ill defined, seemingly inconsistently defined, or downright misleading. Also, there seems to have been too narrow a focus on component parts, coupled with a unwillingness to look at larger and possibly more pertinent aggregates. The book has other areas of confusion as well, but those are of less import, and I will skip them in the interest of brevity.
   
   In Chapter 1 of the book, we come across the first of Rothbard's confusing and ill-defined terms. It is in the context of the hypothesis he sets as to the economic theory behind what caused the Great Depression. According to Rothbard, the hypothesis depends on von Mises' view that bank credit expansion will lead to a series of investment errors that turn out to be "malinvestment in higher-orders of production." One can ask, what are "higher-order of production"? Rothbard definition was: investment in capital-goods "most remote from the consumer"(10). What does that mean? Can one consider investment in farmland, a form of capital, as investment in a higher-order of production, insofar as farmland can be pretty remote from the consumer? I doubt that is what Rothbard had in mind. The next question is, what is "malinvestment," and how does it lead to a downturn in the economy? As to the question's first part, what is the definition of malinvestment, frankly, it was never clear to me, being based on the already ill-defined notion of "higher-orders of production." As to the question's second part, Rothbard's reasoning there seems to fail his "logical chain of reasoning." Rothbard's reasoning was that the decline in demand for higher-orders of production is accompanied by an increase in demand for lower-orders of production (whatever that means) and that is what leads to an economic downturn. But that is not logical. When one component of demand is increasing while another is decreasing, why should demand in the aggregate decline? Only a decline in aggregate demand will lead to an overall decline in profits and employment. Otherwise, all we are talking about is a change in the composition of demand, not a change in its total. Rothbard's focus on that component of demand he called, "malinvestment," to the exclusion of other components does not logically explain why the total should decline. If the Misesian hypothesis is that a single component's decline reduces total demand, the burden of proof is on Rothbard, or members of the Misesian-school, to provide first, a tight definitions of terms and then observable evidence to support the hypothesis. Otherwise, all they have done is engage in just-so fables.
   
   Another definition Rothbard used, one that I think is highly misleading, was his definition of "inflation." When I first skimmed through the book, I thought Rothbard had used it as it has been historically used, to mean price inflation. So, I then wondered, what inflation was he talking about? That's because the 1920s was a period of mild deflation in most prices, except for farm land prices, which declined significantly, and for stock prices, which increased significantly. Only upon reading the book carefully did I discover the peculiar meaning Rothbard attached to the term, "inflation." It can be found on p. 12, n.8: " 'Inflation' is here defined as an increase in the money supply not consisting of an increase in the money metal." So, any increase in non-metallic money was for Rothbard, by definition, "inflation." (Some of the reviewers, I observed, do not seem to have noticed Rothbard's odd definition of the term.) Rothbard's terminology was and is downright confusing. The term, inflation, first came into use in the US in the late 1830s when it meant what it means today. (The precise definition is in: Online Etymology Dictionary, © 2001 Douglas Harper: "Monetary sense of, enlargement of prices - originally by an increase in the amount of money in circulation.") In contemporary terminology, it means an increase in the price of good in services. In the 1920s and 1930s, it seemed to have meant an increase in stock prices. (See Amity Shlaes' The Forgotten Man, p. 4.) No twentieth-century economist I know of has ever used the term as Rothbard did.
   
   The meaning Rothbard assigned to the term "inflation" may have in part stemmed from the Misesian thought that bank credit expansion leads to business cycles. But I think the primary reason he used the term was his animus to fractional-reserve banking in general, and to central banks in particular. Specifically, Rothbard saw fractional-reserve banking as being "fraudulent" (25). He would have had the government outlaw fractional-reserve banking by imposing 100% gold reserves on deposits. I find it odd that Rothbard, who professed to be a libertarian, saw no contradiction here between his recommending the use of the heavy-hand of the government to override the people's own decision-making and his own libertarian principles. What I have to conclude is that he viewed depositors as incapable of making decisions in their own best interests. Of course, one can ask, why stop with having government imposing its will in this area? Go the whole hog and become a true Marxist. Have government impose its will in all areas by making all the decisions for the public. I, though, take the opposite view. People have to be considered as capable of making their own decisions and as having responsibility for them. In the field of banking, depositors have to be considered as knowing what's going on, and as being willing participants in fractional-reserve banking. That's because they benefit immensely from fractional reserve banking, with the primary benefit being the reduction in the costs of holding and using money. As a contrafactual, suppose depositors don't want to use fractional-reserve banking. They could always hold cash balances in a vault in their homes or offices or factories. For transactions needing checks, they could go to the bank for cashiers' checks. All that, though, is expensive and inconvenient, which is why depositors use banks whose reserves are just a fraction of deposits. I would also have to conclude here that, not only was Rothbard apparently an ideologue, he was an elitist. Because he thought he knew better, he wanted to make people toe the line for what is good for them. Again, that is not very different from Marxism wherein the leaders supposedly know just the right kind of goods and services to produce for the people (who, though, never seem to concur).
   
   Chapter 4, titled, "The Inflationary Factors," is the heart of the bad part of the book. Rothbard opened the chapter by describing what he thought would happen in the absence of fractional-reserve banking. Specifically, he said (86): "For a hallmark of the inflationary boom is that prices are higher than they would have been in a free and unhampered market." (He of course revealed there that he misunderstood the difference between the level, and the rate of increase of prices. Interpreting a free and unhampered market to mean a market with 100 percent gold reserves for deposits, prices would indeed be higher with fractional-reserve banking, but in an inflationary boom - meaning one where the money supply increases rapidly and relative to gold reserves - prices would not only be higher, they would be increasing faster than they otherwise would have.) But even before the advent of the US current central bank, the Federal Reserve, there never was a period in US history without fractional-reserve banking and with the market being totally free and unhampered. Below I will compare the period 1899-1912, when the market was more free and less hampered, with the period of the 1920s. That is because the first period was prior to the Federal Reserve's establishment, and the second was afterwards when the market was, supposedly, less free and more hampered.
   
   The inflation (of the money supply) of the 1920s on which Rothbard dwelled can be found in Table 1 of chapter 4 (p. 92). To measure inflation of the money supply, Rothbard used a very broad definition of money that included life insurance net policy reserves. While I have seen many definitions of money, I have never seen one like that. Of course, one is free to use any definition one wants, but it has to be grounded in some observable relationship. But Rothbard's approach, that hypotheses and definitions "cannot be 'tested' by historical or statistical fact," precluded his doing so. If we stick with the usual definitions of money for that period, either M2 or M2 + S&L deposits, we find that the money supply grew respectively by 45 to 43 percent in the 1920s. (Rothbard's inclusion of life insurance net policy reserves and S&L capital rather than deposits, increases that number to about 63 percent.) Of course, one could ask, what was the increase in the period 1899-1912, prior to the Federal Reserve's establishment? The respective increases turn out to be, 149 and 132 percent. At a compound annual rate, the numbers for the 1920s are respectively, 4.5 and 4.8 percent, while for the period 1899-1912, they are, respectively, 7.3 and 6.7 percent. (For consistency, I would have compared Rothbard's definition that included life insurance but I did not have data on life insurance for the earlier period; also, again, for purposes of consistency, the data I used were from Table A-1 pp. 704-711 of Friedman and Schwartz's, A Monetary History of the United States, 1867-1960.) Clearly, there is nothing outlandishly large about the money supply growth of the 1920s to get very exercised about. Again Rothbard's narrow focus on a particular datum for a short period turns out, on the surface, not to have any explanatory power.
   
   In both periods, one contributing factor to money supply growth was that both banks and depositors chose to increase the ratio of deposits to reserve money each held (currency plus bank reserves, also called, high-powered money or the monetary base). The difference in the two periods is that reserve money grew more rapidly in the first period than in the second period. In the first period, reserve money grew at a 4.8% annual compound rate while in the second period, it grew at a compound annual rate of slightly more than 1%. Not surprisingly, prices in the first period rose faster in than in the 1920s. (Specifically, from 1899 to 1912 wholesale prices rose 32 percent while from 1921 through 1929 they fell 2.5%!) What we see here is that the 1920s, being less free and more hampered can, sometimes bring about a modest deflation compared to a period that was more free and less hampered. One can see what happens when fact-free science comes to face to face with pesky little facts.
   
   If chapter 4 is the heart of the bad book, Table 7 on p. 109 is the heart of chapter 4. It was from the data in that table, that Rothbard argued (108): "...the inflation [in money] was clearly precipitated deliberately by the Federal Reserve. The plea that the 1920s was simply a 'gold inflation' that the Federal Reserve did not counter actively is finally exploded." His reasoning was that "controlled reserves increased by $1.79 billion for the entire period and that exceeded the monetary gold stock's increase of $1 billion." The problematic aspect with the 'controlled reserves' in Table 7 is that Rothbard's never provided a definition for controlled reserves. While he did provide some computations pertinent to controlled reserves on p. 113, when those computations are applied consistently throughout Table 7, the figures do not add to the amounts he termed there, controlled reserves.
   
   Another way of looking at what Rothbard was describing can be found Chart 25 on p. 282 of Friedman and Schwartz's Monetary History. The chart demonstrates the opposite of Rothbard's claim. It makes it quite clear that what the Fed was attempting to do was to use Federal Reserve credit to offset changes in monetary gold stocks that were occurring at the time. Based on the modest growth of reserve money, we would have to say they were somewhat successful.
   
   Another problematic aspect raised by Table 7 is its narrow focus on reserves held at the Federal Reserve by banks that are members of the Federal Reserve system. He did not account for the vault cash of the members or the reserves of the non-members. By focusing just on those reserves, he gave a skewed accounting of the increase in bank reserves. By Rothbard's accounting, reserves increased by 47.5 percent from June 1921 through June 1929. (See his Table 6, 102.) When all bank reserves are taken into account, though, the increase comes to 27.5%; and when all reserve money is taken into account, the increase is just 8.4 percent. (See, respectively, Table A-2, 738f., and Table B-3, 802f., of the Monetary History.) Again Rothbard's focus on a specific component, rather than on the total, presents results that can be viewed as misleading.
   
   A slightly different explanation of what happened is that individuals had a greater preference for bank money than currency in the 1920s, and so they converted their currency into bank money. Comparably, the banks had a greater preference for reserves at the Federal Reserve then they did for vault cash, so they, in effect, transferred any new funds received from the public into reserves at the Federal Reserve. The increase, than, in reserves held at the Federal Reserve was not so much an increase engendered by the Federal Reserve, but simply the workings of banks and depositors preferring one form of money to another.
   
   After chapter 6, we enter into Rothbard's discussion of Hoover's actions. Although he did occasionally discuss actions by the Federal Reserve in those chapters, his primary focus was on Hoover. This part of the book is potentially very good. It provided me with a good deal more insight into what could have made the Great Depression, great. Unfortunately, Rothbard, in accordance with his school's thinking, did not do a full analysis of Hoover. More statistical work would have been necessary, and that is why this part remains only potentially very good.
   
   Rothbard's description of Hoover painted him as an interventionist, a Roosevelt-lite character. According to Rothbard, Hoover attempted to prevent prices and wages from falling. When demand declines, though, both attempts are futile and just stave off the day of reckoning. Hoover may have been partially successful in preventing prices from falling far enough and fast enough. From 1929 to 1933, wholesale prices fell by about 25%. By comparison, in the previous recession in 1920, wholesale prices fell by 37% in the course of one year. Hoover's success on keeping wages from declining is less clear (especially because good wage indexes do not exist for that time). From 1929 to 1933, average hourly earnings in all industries fell by 25% while in the two years from 1920 to 1922 they fell by 15%. For both periods, the compound annual decline is amazingly close, about 7% per year. Hoover's intentions may have been noble, but all he did was to engineer the economy so it could not adjust to the decline in demand
   
   What about the Smoot-Hawley tariff, which many today blame for the Great Depression? The ostensible reason for the tariff was to help farmers, but if US imports are reduced, it becomes harder for farmers to sell products overseas. (Foreign importers won't have the foreign exchange available to buy the farm products.) Rothbard thought it contributed mightily to the Depression. His evidence was the opposition of almost all the economists and the fact that the market broke after the tariff was signed into law (241f.). That though does not constitute evidence. The market's having sunk is by itself not evidence. The old saw of, correlation is not causation is at work here. The fact that many economists opposed the tariff is also not evidence. Indeed, Rothbard did not accept stable prices as being a beneficial goal of monetary policy despite many economists having recommended it as policy. Moreover, there was an earlier tariff, the Fordney-McCumber Tariff, which went into effect in 1922, and was just as onerous as Smoot-Hawley. Yet, it seems not to have caused any lasting real effects. Rothbard, without having done any of the heavy lifting with regard to analyzing the costs of the Smoot-Hawley, then stated (241)" ... it was at a precarious time of depression that the Hoover administration chose to hobble international trade, injure the American consumer, and cripple the American farmers' export markets by raising tariffs higher than their already high levels." This is economics by assertion. It proves nothing.



3. If we are talking about collectivist government privileges interfering with the sound functioning of a prosperous economy, Rothbard knows we can't start researching the Great Depression with Roosevelt's response to an economic collapse. Rather, there's not much to be said about him in this book.
   
   Rather we look to some pretty non-traditional trends in government power. We go before WWI and the ensuing debt, and the resulting advantages in the world economy. Rothbard even goes into a history of America's previous depressions, which we don't hear about, and were all treated with an increased laissez-faire attitude. So we aren't given a "The Great Depression changed everything" theory of unsound economics, just like in foreign policy "9/11 changed everything". In the 1900's, we get a slew of "progressive" government interference with markets. This is not only the FED, but the income tax (reaching 79% in the middle of the depression), union privilege, increased government spending, removing domestic links between the dollar and gold, "protectionist" tariff hikes, price controls, and eventually a mix of fascism and socialism.
   
   Part of what Democrats don't like to hear is that Roosevelt was personally complemented by Hitler and Mussolini on his fascist economic system. Eventually America would "solve" its depression the same way Italy and Germany did - nationalism for war and increased military spending.
   
   But part of what Republican's don't like to hear is that Hoover started the New Deal, which Rothbard shows is what prevents the economy from recovering as it did in all previous depressions. Hoover supported wage controls in a deflating economy, forcing unemployment, which many people believe WAS the defining characteristic of the depression. Others believe it was the stock market crash. But any quick glance at the changes of money supply shows why prices had to do what they did. In an environment of artificially loose credit created by expanding the money supply, the ability to pay loans and make profitable loans, or even any long-term fixed rate contract, depends upon prediction of the central figures who determine how loose credit will be. Even a small change at the government and FED level can cause a sizeable bust.
   
   Many hold "speculation" accountable, saying that the rampant gains of capitalism spurred this reckless speculation. Well, what could be more recklessly speculative than a small group of men trying to set a monetary policy that would simultaneously create massive credit and consumerism? To function properly, the market would have to speculate the decisions of these people, who were trying to speculate the market. There's your excess speculation, which doesn't happen with sound money.
   
   Rothbard gives a lengthy and powerful description of the Austrian Theory of the Business Cycle, which Hayek would eventually win a Nobel Prize for. Also, Higgs shows how the depression could have been considered to last until 1946, if you don't believe that military production bought with debt indicates a good economy. Keynesian and military-keynesian approaches to solving depressions took almost 20 years to fix after an inflationary boom of 8 years.
   
   I recommend this book to anyone interested in a mixture of government policy and the economics behind the Great Depression. It contains well-written arguments and factual numbers to support them. It is not hard to read, although it will read easier if you know a thing or two about economics. Rothbard shines in being able to speak in clear and simple terms while delivering powerful arguments that anyone should be able to grasp.
   
   I do not recommend this book to anyone who is dead-set upon socialism or fascism; however, if you haven't heard of the Austrian Business Cycle Theory to explain the Great Depression, you cannot be dead-set upon those principles. Take the time to read this book. Rational debate requires complete knowledge of opposition viewpoints.
   
   I would supplement this book with other literature from Mises, as well as study the financial situation of Japan in the 90's.



4. We all understand that particular industries and markets may go through hard times at one point or another. But what causes an entire economy to flourish, only to contract at a later date? What causes the entire economy to misread the economic signs? What causes the entire economy to misforecast and make bad investments? What causes a "Cluster of Errors"?
   
   It is hard to believe that anyone could casually discount Rothbard's analysis of the business cycle and the Great Depression given America's current struggle with a depressed housing market caused by the villian that Rothbard goes to great lengths to describe: Credit Expansion.
   
   The fact that this book was written 40 years ago, and that it is just as applicable to today's market as it is to the market in 1929, adds to the intellectual weight and veracity of this work.
   
   This is not a historical narrative, this is a book on economics. It first explains Ludwig Von Mises theory concerning boom-bust business cycles as they are caused by loose Federal monetary policy and loose lending by banks. It then delves into the history of the Great Depression, applying the theory to the history. In terms of readability, I found the book very easy to read and very compelling. In terms of economic analysis I found Rothbard's arguments in favor of Mise's theories regarding the business cycle to be very thorough and convincing.
   
   The Austrian School of Economics is not mainstream. Rothbard is not Friedman, and he is not Keynes. It is unfortunate that some reviewers were hoping to read an echo-chamber for Lord Keynes or Milton Friedman, and seemed to rate Rothbard based on how close Rothbard's theories and conclusions were to the theories and conclusions of their favorite economist.
   
   It is also unfortunate that some of the reviewers were not expecting an economic analysis, but their false expectations should not reflect poorly on the author or his work.



5. In his 1982 introduction to the third edition, Rothbard wrote: "A Democratic administration may be expected to inflate with even more enthusiasm (than the Reagan administration was then engaged in doing). We can look forward, therefore, not precisely to a 1929-type depression, but to an inflationary depression of massive proportions." Although premature in this prognosis, the state of the economy in October 2008 makes Rothbard's remark sound prescient. Anyone wondering whether or not the economic rescue plan of Congress and the Bush administration, or those of the two main presidential candidates, can cure the current depression must read Rothbard's analysis of the 1929 version.
   
   Certainly the current depression vindicates Rothbard of the charges against him (as well as against Ludwig von Mises and the entire Austrian-school of economics) leveled by Amazon critic Jack L. Rutner. Mr. Rutner purports to be an economist himself, yet demonstrates in his review that he fails to comprehend the methodology of economics. Every one of the charges Rutner makes against Rothbard, von Mises and the Austrian school were considered and incisively refuted by von Mises in a 150-page, 1962 essay entitled, which is also available from Amazon (The Ultimate Foundation of Economic Science: An Essay on Method). Rutner obviously suffers from a weakness described by von Mises therein: "The epistemologist who starts his lucubrations from the analysis of the methods of the natural sciences and whom blinkers prevent from perceiving anything beyond this field tells us merely that the natural sciences are the natural sciences and that what is not natural science is not natural science. About the sciences of human action he does not know anything, and therefore all that he utters is of no consequence."

5 comments about Unequal Democracy: The Political Economy of the New Gilded Age.

1. "Unequal Democracy" presents the results of a six-year exploration of the political causes and consequences of economic inequality in America. It was inspired by the substantial escalation of this inequality in recent years. Total income going to the top 0.1% of income earners has more than tripled, from 3.2% in the late 1950s to 10.9% in 2005; that going to the top 1% rose from 10.2% to 21.8%. Further, this widening is accelerating. Despite this trend, 80% believe that though you may start out poor, if you work hard you can make lots of money - more than any other developed nation. This belief undermines motivation for change.
   
   Bartels believes that the most significant domestic policy initiative of the past decade has been a massive government-engineered transfer of additional wealth from the lower and middle classes to the rich via substantial reduction in federal income taxes for the rich.
   
   Economists have found little evidence that large disparities promote growth, or that progressive tax rates retard growth by discouraging economic effort.
   
   Meanwhile, political campaigns have become dramatically more expensive, increasing the reliance of elected officials on those who can afford to help finance their re-election bids. At the same time, membership in labor groups, a previously countervailing force, has substantially declined.
   
   On average over the past half century, real incomes of middle-class families grew 2X under Democrats vs. Republicans, and working poor families grew 6X faster under Democrats - even after allowing for differences in economic circumstances.
   
   So why do those with lower incomes vote for Republicans? Bartels tells us that contrary to the theme of "What Happened to Kansas," moral values do not trump economics as a basis for lower-income voting behavior. Bartels offers evidence that the contradiction is explained by confusion generated by mixing "working class" (defined often as those w/o a college education) with lower-income. The working class has a lot of relatively high earners that are influenced by the moral values issues.
   
   Bartels then contends that Republican success in presidential races is due to voters' overemphasis on election-year economic growth, vs. the superior longer-term performance of Democratic presidents, but lesser achievement during the last year of their terms.
   
   Finally, its on to the estate ("death") tax. Actions to reduce and eliminate it during the early Bush II years represent about 15% of the impact of the overall tax reduction package. Bartels asserts that there is enormous misunderstanding about this tax regarding the wideness of its applicability. As a result, it is a wonder that it still exists.
   
   Bottom Line: "Unequal Democracy" presents a carefully documented set of conclusions about an important and timely topic; its only drawback is that sometimes the statistics get too deep.



2. The facts stand for themselves outside the realm of Partisan politics. Idealists hate facts. Fanatics hate facts. I Love facts. Whose ideas work the best is what I want. Most Americans would Love to make more money and do better each and every year. Who can argue against that except a suicidal maniac.



3. It's no coincidence that Larry Bartels is a political scientist -- not an economist. His book purports to show that American economic performance under Democratic administrations has been superior to performance under Republicans, across all income categories.
   
   Apparently, this chart has a lot of liberals very excited. Too bad that it is complete nonsense.
   
   Bartels grossly oversimplifiwa how economic policy actually impacts economic performance. The root of its problem lies in the inane assumption that the effect of policy on economic growth manifests itself with a one year lag. In other words, Bartels gives a political party credit for economic performance starting the year following it takes over the Presidency.
   
   Let's explore this assumption. A president comes into power. By the time his first budget goes into effect, it is already October of that year. Does anyone really think that that initial budget has any signifiant impact on economic performance of the following year? And that only the budget is responsible for that economic performance?
   
   Just to show the arbitrary nature (and impact) of the one year lag assumption, I ran growth numbers for a *two* year lag based on Bureau of Economic Analysis data, from 1945 to 2007. In that time period, average economic growth (for all income categories, to keep it simple) resulting under Democratic adminstrations was 2.02%. From Republican administrations, 2.08%.
   
   The other major assumption that the study ignores is that it is Congress, not the Presidency, that holds the power of the budget. Asking who controlled Congress and what those policies were has just as much (or more) bearing on economic outcomes as who was in the White House. Similarly, the Fed controls monetary policy, which potentially has a greater economic impact that fiscal policy. Who has appointed the Federal Reserve Chairman and its Board of Governors? Are they employing a conservative or liberal ideological approach to monetary policy?
   
   Additionally, Bartels' "analysis" just completely ignores history, again by making foolish assumptions about the data lag. For example, it's pretty widely accepted that the economic downturn and stagflation of the early 1970s was proximately caused by the financial demands of the Great Society and the Vietnam War, coupled with exogenous shocks to oil prices. Both the Great Society and America's deep involvement in Vietnam came courtesy of LBJ. So you can'tgive Nixon credit for bad economic performanceon his watch - the causes of rampant inflation and low growth at the time weren't his fault.
   
   In the final analysis, the success of economic policy of respective Democratic and Republican administrations must be evaluated based on their long term impact. This is very difficult to measure because there are so many dfferent factors at work -- fiscla policy, monetary policy, technological innovation and impact on productivity, population and demographic change, commodities avilability, trade, etc.
   
   Behind this complexity, however, the fact remains that basic economics tells us smaller government, lower taxes, and less wealth redistribution results in a larger pie for everyone. Nothing in the Bartels' "analysis" as should cause a rational observer to doubt that simple fact. If there's any doubt of this, compare the long term growth rates of the US versus Europe. Freer markets, smaller government, and lower taxes inevitably produce higher growth, lower unemployment, and lower inflation in the long run. If there's any doubt, here's a fact from a recent speech from the President of the European Central Bank, Jean-Claude Trichet:
   
   "Since 1996, the annual growth rate for the euro area has averaged 2.1% per year compared to 3.3% in the US."
   
   The speech goes on to propose structural reforms in Europe to increase competition and promote innovation (including tax reform and labor market reform) -- the fundamentals of conservative economic doctrine.
   
   http://americangerontocracy.wordpress.com/2008/04/05/better-economic-growth-under-the-democrats/



4. A couple of things jumped out for me:
   
   "comparing average annual real pre-tax (1) income growth (%) for families at various points in the income distribution" from 1948-2005:
   
   -- First, everyone made more money under Democratic presidents, although the difference was small for the wealthiest (95th percentile).
   
   -- Under Republicans, the wealthy do a lot better (2.12% increase per year for the 95th percentile) than those with less (0.43% increase for the 20th percentile).
   
   -- Under Democrats the middle class, working class, and poor do a little better than the rich (2.38-2.64% increase compared to 2.12% for the 95th percentile).
   Because these are percent per year, they compound. Over time Democratic presidents have narrowed the income gap whilst making everyone wealthier. Republican presidents have significantly widened the income gap and even the wealthy make less than under Democrats.
   
   Bartels spends many pages showing that this is not a statistical fluke or the product of other factors. He also explains why each party's tax and fiscal policies lead to what we observe. This is a real effect of the party in power.
   
   [...]



5. In this study Princeton professor Larry Bartels makes the argument that lower- and middle-income groups consistently do better under Democratic administrations than under Republican. During the last sixty years (1948-present) the average annual growth of real GNP was 1.64 percent per capita under Republican presidents and 2.78 percent under Democratic presidents. He shows further that income inequality has gone sharply upward during Republican administrations and slightly downward during Democratic. Inequality has gone up significantly since 1980, years in which Republicans have won all but two presidential elections. He calls this the "new gilded age" because the top 1 percent now controls 20 percent of the wealth, a percentage not seen since the 1920's. Perhaps another sign that the economy is out of balance and heading for greater turbulence.
   
   Republican economists will argue that this is merely a statistical aberration. They claim that presidents have little influence over the economy, and other forces such as monetary policy, oil prices, and technology are more determinative. Republicans view the market as a force of nature, whereas Democrats see it as a political construct. Bartels, being a Democrat, makes a strong case for government intervention to achieve greater balance and greater income equality.
   
   Bartels shows that Democratic presidents have consistently produced their best results during their second year in office. This is because the spending programs put in place the first year usually produce their benfits the second. Not suprisingly income growth was virtually the same for both parties the first, third, and fourth years. The second year surge seems to have given Democrats the edge.
   
   The question that comes to mind is that if Democrats are producing higher income growth and greater equality why did Republicans win 5 of the last 7 presidential elections? Bartels' answer is that the benefits of the second year are no longer part of the voter's consideration by the time elections roll around. Also by the fourth year Republican presidential candidates are making populist election year promises that make them indistinguishable for Democratic candidates. (Which party now is not in favor of bailouts and stimulus packages?)
   
   Bartles makes an interseting argument. He argues that for those looking out for their economic interests it is not only important for Democrats to vote Democratic but Republicans - other than the top 1 percent - should also be voting Democratic. (Joe the Plumber included.) The upcoming presidential elections will probably prove Bartels theory correct.

5 comments about Development as Freedom.

1. Nobel Prize winner Amartya Sen strikes a beautiful balance here between socialists, who have their hearts in the right place but refuse to accept that the market is the best way to help people, and libertarians who believe in freedom but don't acknowledge that being poor limits your freedom as well. Hailing from India, Sen's focus is on development economics with a view on helping the world's poorest.
   
   At the centerpiece of Sen's philosophy is freedom: He believe that freedom of action and life is the most fundamental human right. His philosophy comes very close to the "Four Freedoms" articulation of FDR in that he believes both in active freedoms (of labor and exchange, for example) as well as freedom from want, which can be brought about by state assistance. In addition, he also believes that giving people freedom is the best way to bring about progress: hence the title, development as freedom.
   
   Some sections of the book read as economics, some read as political philosophy, and some read as a modern history. Sen explains why there has never been a famine in any functioning democracy, even though some of them have been among the poorest nations on Earth. He also advocates convincingly for the education and emancipation of women.
   
   So far I have only good things to say about this book, but I didn't really enjoy reading it and only got through it because I was on a transatlantic flight. Why? Simply put, the writing in the book is painful. Not second-language painful: Sen clearly masters the English language, has an extensive vocabulary and is comfortable with his subject matter. The problem is that the writing is too obtuse: adverbs and obscure words abound, phrases drag on and it's sometimes difficult even for an absorbed reader to figure out what exactly is being said. One simple example: "But while the causal relation is indeed significant, the vindication of freedoms and rights provided by the causal linkage is over and above the directly constitutive role of these freedoms in development." Such sentences abound.
   
   No argumentative book is perfect, and I sometime disagreed with Sen's arguments such as when he attacked utilitarianism. Overall, however, Sen has put together a coherent economic philosophy that focuses on results and seems to be in line with what works in the real world. If you can get through the heavy, opaque writing, then there are great insights to be gleaned from this book.



2. This is a good book by great economist. But, if you are not an economist, like me, you may suffer a bit through the general discussion on economic philosophies through the first few chapters. Once into the later part of the book where modern case studies and data illustrate his point, I found his argument very deep and interesting.
   
   Amartya Sen chooses to describe poverty not as a lack of resources, but as a lack of freedoms. Those freedoms include choosing where to live and work, with whom to associate, freedom to choose our leaders and decide the rules we live by, and many others. This key point is useful in that it does not focus solely on maximization of wealth as a way out of poverty. The problem with poverty is not lack of money, but that lack of money means that people are not free to make their own way in life. They may be trapped being at the mercy of nature, an opressive government, or an economy cripled by bad policy. The conclusion therefore, is that money alone cannot fix the real problem. Government reform, economic liberalization, and the general increase of personal freedoms is the true end we are striving for. Increasing incomes is one of several necessary steps to be accomplished and not an end in and of itself.
   
   Sen's thesis in this work is often reduced by others to simple phrases like "democracies never have famines" or other simplistic phrases that are not entirely accurate with what Sen is actually arguing. You can find exceptions to some of these simple summaries, but the whole of Sen's argument remains very compelling describing the roles and responsibilities of individuals, institutions, and governments in achieving development and real progress.



3. If you only have a passing interest in development theory, you may find this book terribly boring and hard to read. Certainly, he doesn't go out of his way to be entertaining.
   
   But if you are looking for real innovation in thought and discussion on this issue, then this book is a must read. It really added a new voice to the discussion of international development, and is oft cited and referred to in papers on the topic.
   
   If you want to get up to speed on the modern debate on development theory, pick this up, read it, critique it in your own mind, really think about it, and move on.



4. Amartya Sen's book answers a question that current development practices beg: Development for the sake of what? He provides grounding for his claim that freedom is both the process to vibrant development, and the goal.
   
   Sen distinguishes his speculative new approach on economic development, from the most traditional:
   
   * Approaches that focus their attention in achieving some levels in development's proxy variables - per capita income; income distribution and poverty levels or health, education, and safety indexes-
   * Approaches based in levels of social satisfaction (levels of utility) based in individual/subjective "maps" of preferences.
   * And finally, others approaches focused in the capacity of a particular community to achieve what Sen calls substantive freedom -centralized welfare approach- or procedural freedom -libertarian approach-.
   
   
   Sen speculation seems to be relevant in many ways:
   
   1. First, there is no doubt we are in a moment of enormous changes and mayor crises. Our mass production, oil based civilization is coming to an end with all the resistance, violence and waste it implies. Our national democracies -and its institutions such as legislation, justice, presidency and other more decentralized as media, lobbyist networks, or intelligence- have showed significant weaknesses in addressing global issues, and a systematic tendency to favor elites' games. There are mayor power shift opening the space for extended cultural re-valuations of values based in the emerging preeminence of China and India.
   2. Second, there is an emerging new universe hold together by the internet and it capacity to sustain digital communities and digital worlds that have proved that is possible to create massive and sophisticated non-market value. These emerging universes embody a new culture of collaboration that is influencing and been influenced by the traditional forces of the molecular world. The technological force nurturing these changes has many resemblances with the historical opening produce by Gutenberg print press in 1450.
   3. Third, there is some resignation with the current technocratic approaches to development such as those represented by Jeffrey Sachs.
   4. Fourth, the collapse of the old order and the emergence of a new order may damage the possibilities to express the ethical ideals of the modern civilization -individual freedom- by enforcing control with new technologies and old institutions, or it may contribute to create a new Digital Renascence, or it may bring something new we are no able to see yet. A new understanding of freedom and human agency.
   5. Putting at the center of the economic development conversation -as Sen does- the notion of development as expanding freedom, the notion of freedom itself, and the expansion of freedom to non-human life it seems to be a powerful tribute from the best of the past to the emerging and unbirth future. Sen is bringing a new invigorating perspective to an old conversation.



5. Development as Freedom dives into the concept that both the result and mechanism of development is the growth of actual freedoms that people enjoy. It is no good to be rich slave.
   
   The book dives headfirst into various development theories that both support and oppose this idea and Amartya Sen navigates them all with ease. He does a great job explaining varying economic theories to someone like me who has no economic background. If you are interested in international development work this is a must-read.

No comments about Stabilizing an Unstable Economy.

5 comments about Obamanomics: How Bottom-Up Economic Prosperity Will Replace Trickle-Down Economics (Economics in the Obama Presidency).

1. As a non-economist there were many things about our current economic situation that are not explained in the press with any level of clarity. Talbert not only explains the current state of the economy but how we arrived at this point and how the Obama plan will return us to prosperity. Talbert offers an honest assessment of the Obama plan, including criticisms and insights for the return of our economy to health. He also identifies the consequences of not making dramatic changes now.



2. Quite simply the best explanation of our current financial crisis I have read. Especially if the markets confuse and frighten you. I wish the book was called something else. The subtitle perhaps would have been better. Anyway. READ THIS BOOK



3. I read this book with an open mind and a longing for the insights to Obama and while Talbott's writing was clear, it was a bit naive. His insistence on economic justice as the fix to our financial issues is nothing more than redistribution of wealth. His disdain for Americans who want a 12000 square foot house and a Hummer reveals a deep bias. Of course no one needs that much space, but in this country we value liberty and freedom to choose. It's not the governments place to decide what we need and/or want.
   One of Obamas campaign promises is to raise taxes on the wealthy, those making over $250K a year. Talbott says the current system 'gives money to top earners", when in fact the system allows top earners to keep more of the money they have earned. I think this basic difference in economic viewpoint is what irked me the most, being one of those 'lucky' few that Obama considers rich. He seems to know that the 'rich will not reinvest their extra money, they will put in a savings account. This is how it works. I have two kids in private college. They couldn't get into the UC system for their majors because they were impacted. I pay 40K a year, per student. I am too rich to qualify for any aid. So any and all extra money we get to keep is going to private colleges.
   Most people considered wealthy work just as hard as those who make less money, so it's very difficult to not see Obama's policies as nothing more than socialism wrapped in a pretty package and topped with a pinch of guilt.



4. This is perhaps the best summary of the issues facing America today - economic and political - that has ever been assembled in one place. The writing is concise, factual and well researched on a variety of topics - ranging from the current financial melt-down, to the cost and availability of healthcare, to the looming social security crunch. The analysis is crisp and logical, similar in style to "Freakonomics" by Levitt and Dubner. And while Obama's positions are indicated, the underlying text would stand on its own without it. To some extent, the "Obamanomics" title is a pretext for a work of much larger importance.
   While easy to digest, the simple fact that so many problems of immense proportions face the country is quite daunting and a little depressing.
   This book should be required reading for every student, politician and Republican. These problems have been addressed by other nations whose resources are far more limited - why not in America?



5. It sounds good, but if you really examine all the wonderful things Obama is going to do, it adds up to Socialism. All corporations are the bad guys and must be taxed and regulated, wealthy people demonized, economic justice that means taking away from one group to give to another. It's stealing--just like Obama and Talbott like to say that corporations are doing. If enough people are swayed by this pro-Obama propaganda, we will all have to live with the results. After he soaks the corporations and the so-called rich people and can't wring out any more blood, then he will come after you and soak you for the taxes he needs to fund his 'economic justice' and Socialist agenda.
   
   Seniors would do well to read this book and see what Talbott claims Obama's plan should include; withold medical care for people over 75 that may need end of life treatment. The reasoning? They are a drain on the "system" and productive people will have to pick up the tab. This goes beyond Socialism!
   
   A quote comes to mind:
   
   "The long road of history is lined with the ruins of nations which bought the souls of their people with the lure of a granted security, and then led them to ruin by that mirage. Security that is real and enduring is attained only by people who will accept their responsibility as duties to themselves and their fellow, and ask only that the State guard the avenues of freedom and keep them open."
   ~ Dr. Russell J. Clinchy

5 comments about Natural Capitalism: Creating the Next Industrial Revolution.

1. Not a particularly easy read but well worth the effort. This book needs to be updated and revised for mass circulation with some degree of urgency. I have actually contacted two of its authors, indirectly, through their website at Rocky Mountain Institute and their associate has assured me that my concerns are being addressed. Apparently a new edition (same or different title?) is in the offing.



2. The seller was quick to respond to the order, and the book was shipped to me promptly. I would buy from this seller again.



3. I am about halfway through this now and I find the book very engaging and not difficult to read. I do agree that the current edition is dated.
   
   Kyoto costs too much? 80% reduction in carbon emissions by 2050 is a pipe dream? This book will go a long way to persuading you that we will meet that target and more before 2050 and *make* money. The compelling question is - why aren't we further along in making the changes needed?



4. Although one might not completely agree with all of the ideas and concepts discussed in the book, it is a wonderful read for those who are both environmentally conscious and business world-savvy. As a treehugging bean-counter, I absolutely enjoyed "Natural Capitalism".



5. I read Paul Hawken's book "The Ecology of Commerce" first. It was so good I decided to read this one too. It's just as good.
   
   The name of the book describes what it is about very well. In a sense capitalism is unnatural because it is unsustainable. In contrast Natural Capitalism is when business interests work in concert with social interests and natural systems so that all three sustain each other.
   
   Natural Capitalism is easy to read and is essentially optimistic. It discusses broad strategies for sustainability as it relates to the activities of businesses and their products and services. It also gives many examples of how these strategies can be implemented so we can see Natural Capitalism in action.
   
   By and large this book is even more relevant now as when it was first published in 1999. I applaud the writers for saying some tough things that need to be said and for showing real, proven solutions instead of just talking about problems and theories. Very refreshing!

5 comments about Rethinking the Great Depression (American Ways Series).

1. Based on new theories, Smiley has re-examined and re-assessed the forces that led to and prolonged the Great Depression. In clear non-technical prose, he shows what happened and why.

   This short book (163 pages plus sources and index) is divided into five chapters. Chapter 1 gives a brief overview of how the worldwide depression began and how it created a domino effect throughout Europe and the U.S. Nothing new here-- in fact, this is basic stuff any high schooler should know.

   Chapter 2 is a more detailed examination of the economic crisis and the forces which led to it. Smiley explains the situation in basic terms that anyone can understand, allowing us to see the tragedy unfolding step by step.

   Chapters 3 and 4 show how President Roosevelt (who had little knowledge or experience of economics) attempted to pull the country out of this deep economic slump. Though some programs were successful, some were not, and only serve to create a depression within a depression in the mid-30s.

   Chapter 5 examines the legacy of the governmental response, and how economic policies initiated during this period has affected this country for decades afterward, and how certain government programs still exist long after their usefulness has passed. An examination of post-war analysis shows how Keynesian economic theory and government studies have misinterpreted the factors which brought this country back to recovery. He also examines the question of whether such an event can happen again, concluding that-- based on subsequent economic downturns-- it probably won't, though it can happen again should future leaders ignore the warning signs and lessons of the past.

   A fascinating and rewarding book, even for those who have little or no knowledge of economics.




2. Smiley has done a fantastic job with this book. It is well organized and very easy to read. He makes a statement and then follows up with the data and information necessary to support that statement. The second chapter on the cause of the great depression is my favorite and after finishing the book I went through that chapter again to really drill the information in. This book should be required reading for all college students. I normally give books away after reading them but I won't be giving this one away.



3. This is a brief and relatively easy to read monetarist review of 'the great depression'. It is unclear to what the title calls 'rethinking' might refer. My guess is that the author is rethinking Keynes, but it might be FDR. Since the difference between Keynes and monetarists is subtle to all but Keynesians and monetarists, I wouldn't recommend this as a introduction to the subject, nor as a survey.
   
   The text presents a matter of fact narrative, starting in 1929 and ending with the war efforts of 1940. The author find the source of economic contractions (recessions and depressions) in monetary policy established on a country by country basis. These contractions were caused by a shrinking money supply which could be correlated to effort to maintain a fixed relationship between gold and the national currency. Unaware of the relationship between money supply and economic goals (full employment, growth, etc), both Hoover and FDR made the necessary economic correction prolonged and painful. According to the author, the misguided new deal programs started by FDR have taken on a life of their own. The problems posed by 'New Deal' government programs consumes most of the concluding remarks. To end the book, Smiley writes "What failed in the 1930s were governments, in their eagerness to direct activity to achieve political ends... Attempts to stop international financial markets from working through the gold standard brough on the depression. Government efforts to combat the depression ... made the depression much longer and more severe in the United States. Governemnt attempts to reshape American society ... helped create a depression with the depression.'
   
   Though one might think this come across as a polemic against FDR and what the author calls 'socialism', the author takes pains to show that everyone, including all the economists, misunderstood the 'depression'. Despite his confident narrative, the author doesn't exclude himself in this assessment. In a telling comment near the end of the book, Smiley states 'Still, our continued inability to develop econometric models that can accurately predict contractions means that we will not be free of them.' In other words, argues that no one knows what caused the depression. All he can do is point out the errors of various theories.



4. This book is simple, clear and accurate. I've turned to it over and over again and can't recommend it too highly. Smiley is especially good when he gets to the second half of the 1930s. I have one copy at the office, one copy at home and carry one around in my backpack when there's room. Also great: Jim Powell's "FDR's Folly," "The Great Depression" by Thomas E Hall and J David Ferguson, Allan Meltzer, and of course Friedman and Schwartz. Superb but hard to get: Lester V Chandler.



5. Considering the current economic environment, this book should be read by anyone who wants to understand the differences between what really happened during a very, very difficult time in history vs. the odious comparisons some have made to it in an attempt to describe our present crisis. I found this book by reading Amity Schlaes very good book, "The Forgotten Man." Her book drew some very interesting contrasts to Conrad Black's epic biography of FDR.
   
   Although an academic, Smiley writes so clearly and picks his themes so wisely that, like Amity's telling book, I now understand the Depression to have been unnecessarily prolonged by government intrusion and the unwise application of high taxes and tariffs.
   
   The book is brief enough and well researched so that I can hardly add more here other than to highly recommend it.

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

1. The book is not difficult and it is not complex, but it is dense in the sense it is packed with so much insight and value. I started out putting post-its on the pages I thought I would want to refer to again later, but had to stop when it became clear I was "post-itting" (if that is not a word, it certainly should be) just about every other page.
   
   This book is unsurpassed in analyzing China's impact on the world. Through real world examples, it captures just how different China is in its business conduct just how strange a trading partner China is, and how it resembles no other great power. Kynge beautifully weaves China's contradictions into a tapestry that allows us to understand it, as best as is possible.
   
   Though this book is in many ways a "big-think" book, it is nonetheless absolutely relevant to those doing business in or with China. It provides the best macroeconomic analysis of China I have yet seen and, by doing so, it provides invaluable knowledge of how to adjust/position your business to compete.



2. 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.



3. 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.



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



5. 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.