5 comments about Economic Growth, 2nd Edition.

1. Prior to having used this book, Macroeconomics was the bain of my life. A short sweater wearing Frenchman assigned it as the set text of his course and everything changed. The models are clear, lucid and stimulating. The exposition is first rate and the mix of theory with empirics is frankly breathtaking.

   I used to turn up 20 minutes late to macro lectures out of fear, now I wake up early asking myself "How can I make Peru grow faster". Is Economic Growth dull? Now, not so much as not at all...




2. By David Guy Atkin
   As somewhat of a social insomniac, I have an exorbitant amount of time laying in bed doddling. While playing games with myself is somewhat amusing, I have found the most amazing solution. THIS BOOK! A stimulating read...perfect for rest, relaxation, and casually flipping thru during spare time...especially, the rigorous development of the dynamics of the Uzawa-Lucas model...the illustrations are captivating and encapsulate all I love about Economics and New Jersey.



3. This is a must read for graduate macro. class and economic growth. The ordinary differential equations discussion at the appendix is concise and intuitive. Derivation of equations is very clearly presented in this book. But you must read the appendix before you read the first chapter. Like how to derive the growth convergence rate in ch.2 and the numerical procedures in the book. This book exhibits a perfect blend of theory, econometric work and even numerical method. Of course, for log linearization, you definitely want to look for elsewhere. The last few chapters are good for choosing dissertation topics.
   I tried to read Aghion and Howitt's 1992 seminal paper of endogenous growth, but found it inscrutible. After reading this book, I find it much easier.
   The only reason that it does not deserve 5 stars is huge number of typos, especially the numbering of equations. For example, pp.109, the description of fig 2.3 does not match the figure.



4. The price was good but the book's cover had loose colour and the corners were bended.



5. Economic Growth, by Sala-i-Martin anb Barro, has already become a classic. I can't think of anything better on the subject. Excellent book and carefully written!

5 comments about Outrage: How Illegal Immigration, the United Nations, Congressional Ripoffs, Student Loan Overcharges, Tobacco Companies, Trade Protection, and Drug Companies Are Ripping Us Off . . . And.

1. The book makes good and valid points, however much of it is filled with statistics, graphs, and long lists not many would be willing to wade through. It is very simply written, easy to read, but unfortunately mixes fact with opinion. The annoying "action agendas" at the end of each chapter were seriously annoying just because they are all the same and involve nothing more than common sense exhortations. Really not much I did not know already in here, and I probably would not buy another Morris book, although I'll watch him on Hannity and Bill O.



2. 'Outrage' outlines a wide range of horrible conduct by Congress, corporations, and others.
   
   Dick Morris reveals treachery and incompetence by Congress (both Republicans and Democrats), the president, the United Nations, pharamaceutical companies, the teachers' unions, Fannie Mae, the news media, and others. In addition to pointing out the problems, he offers some solutions.
   
   Some of the most revealing sections include the following:
   
   Congress - The evils catalogued in this section are numerous and perpetrated by both parties. Some of the issues are corruption (selling votes for campaign contributions), automatic pay raises, inappropriate relationships (financial) with lobbyists, and more. He names names and several are very prominent including Senate Majority Leader Harry Reid, Former House Speaker Dennis Hastert, and many more. One of the outrages is the way that leaders of both parties circled the wagons to prevent an FBI investigation of bribery by a member of 'the club' (William Jefferson, D-LA).
   
   Illegal immigration is another outrage. Our inept federal government has no tracking of those who leave the country so there is no way to tell who has overstayed visa times. How pathetic is that! Another issue is that many visas are issued when they should not be (as in the case of 15 out of 19 of the 9/11 terrorists).
   
   There are many more of these abuses. Some of those exposed include: student loans, tobacco companies, insurance scams, and the ACLU.
   
   One section that is highly educational that needs to be understood by everyone is the chapter on trade protection. Morris does a superb job of schooling readers in the benefits of free trade and the damage done by protectionism.
   
   This book should be read by every American voter.



3. I have not finished this book yet but it is one I feel everyone should read before they vote in the November elections. I want to say---------WAKE UP AMERICANS----the lobbyist and special interest groups are in control of Congress and the laws that are made. Both parties are equally at fault over the lobbyist problem and earmarks inserted in bills. The economy will always have problems when our politicians make promises and vote to enhance their own power and wealth instead of voting for what is best for the majority of citizens in this country.



4. 
   If you follow Politics and Current Affairs,and more importantly if you watch Fox News,you are familiar with Dick Morris. Dick published this book a year ago and since that time he has published another blockbuster "Fleeced".
   Dick knows Politics as well as anyone else around;and he tells it like it is.Even Bill O'Reilly stops and listens to Dick, even when he disagrees with him.
   In this book, Dick addresses many of the "Outrages" that are being bantered around these days, as the Federal Election is in full swing.
   Last evening ,O'Reilly was ranting,along with many others,that nobody,either elected politicians,those charged with the responsiblity to oversee the financial markets,or the financial institutions themselves ;warned of the financial mess we were heading into.
   Well,O'Reilly was wrong,Morris,for one, warned us in spades, and it's all spelled out in this book in chapter 4,The 2006 Congress,chapter 8,Fannie Mae,and chapter 9 ,The Bankruptcy Bill.
   There is an old ,but wise adage,that has never been more true than today;
   
   "Never let the dog watch your food and never let the Government watch
   your money."
   
   If you really want to know what the real truth behind many of the issues,or as Morris calls them "OUTRAGES",read what he has to say on:
   
   Illegal Immigration
   
   United Nations
   
   Congressional Ripoffs
   
   Student Loan Overcharges
   
   Tobacco Companies
   
   ACLU
   
   Education and Teacher's Unions
   
   Katrina Ripoffs
   
   Special Interest Trade Protection
   
   This is a book that should be read by all Americans,Democrats,Republicans,Independents;and even Canadians. The reason I include Canadians is for the simple reason that the same issues are prevalent in Canada.Except for one thing,there is no TV Network in Canada that gives balanced reporting.The National TV network,CBC,is Government run and unargueably highly Left-Wing biased. Also,there is no writer publishing books anything nearly balanced as what we get from Dick Morris.
   One good example is a recent event with our Socialized Medical system that the Goverment and Media hold up as a great solution.
   Last week,in Winnipeg,Manitoba,a man without legs in a wheelchair,was dropped off in the Hospital Emergency Room. He was not given any attention until 34 hours later,when finally someone checked him.He was dead and rigormortis had already set in.Our Socialized Medicine is filled with stories like this,long waits for beds in hospitals,tens of thousands who cannot find a Family Doctor,and despite this ;there is no "OUTRAGE" --just promises from the Government and Politicians of all stripes ,that they are going to fix it. And that's what you get when you have Socialized Medicine and half of all the Government's Budget is spent on the system.



5. this author knows his principles.
   and it is refreshing to see someone speak on the bovine dung that we call a government.
   the same friend allowed me to borrow this tome as well.
   after reading it I suggested a violent action to bring down the government
   and to replace it with a community where all had a duty that contributed to the whole. and all were equal and there was no heirarchy.
   again, I cannot say whether or not every tidbit is factual, having not worked in the inner circles of the political machine myself, but from information I have researched and have been introduced to, this book seems on point.

5 comments about The Politics of Rich and Poor: Wealth and the American Electorate in the Reagan Aftermath.

1. This book is down right distortive of economic history and the 1980's... Overall, the poor did not get poorer in the 1980's, but quite the opposite. This book is essentially more tired and disproven Keynesian-Socialist views on economics, for people who want to go back to the policies of the 1970's-the era of double-digit inflation and 21% interest rates.

   If you want to narrow any imbalance of wealth- do away with the Federal Reserve system, which robs the poor and middle class of their purchasing power through the hidden tax of inflation. The rich are largely able to avoid the inflation crush, because they typically have the bulk of their assets in more 'inflation-proof' liquid assets like stocks, bonds, mutual funds and real estate. If you're not a bleeding heart, get something else like 'A Nation of Millionaires.'




2. Exploiting class envy is as old as civilization itself,and this book is another exercise in just that.I don't question the validity of Mr. Phillips arguments or stasistics.Sure the wealthier get wealthier or at least maintain their wealth from generation to generation(barring catastrophe)but that is because when you are talking in terms of millions of dollars money automatically makes itself grow.Someone worth $5,000,000 this year will with safe,predictable,long-term investments see an increase in their wealth till the day they die.Poor to middle class people on the other hand won't see a great buildup of wealth simply due to the fact that they don't have enough wealth to exponentially grow year after year.Even an idiot can stick $5,000,000 in the bank,leave it alone,and in five or six years have $6,000,000.Of course if you only have $20,000 in the bank it won't ever be much more than $20,000.All societies have an unequal concentration of wealth and always will.Most so-called economic booms do benefit mainly the upper classes while recessions hit the poorest the hardest.Phillips does a thorough job of exposing the boom of the 80's for the myth that it was, but all in all he has written nothing we didn't already know.



3. The myths (or many of them)of the right are given full exposure in this fine book. Well researched and well written, it is a good primer on the delusions of the privledged class (just read some of the other reviews on this page).
   Over all a significant contribution to the new analysis of conservative revisionism.



4. I was excited to find this book based on the tittle and book description, mainly because I felt I was going to get a book of facts to bolster my already formed opinions. Well the book did provide facts, lots of facts sometimes not in the best order, but facts none the less. What the author and publisher failed to realize is that in the method the book was written the average reader would find it almost impossible to plod through the text. I had a college statistics professor that was Asian with a very strong accent, and the ability to stand at the front of the room and drone on and on without every moving his body or using the black board (an interesting feat in a math class) that was more lively then this book. I am assuming that even economics professors aged 65 and over would think this book to be dry and dull.

   The net effect of the bone dry text and the overwhelming amount of facts, charts and lists of numbers is that a book I was excited to read turned out to be a downright pain to get through. It turned into a labor of love or some sick need to finish the book that finally got me through to the end. I feel like I deserved some medal for completing this thing. Overall the facts are interesting (in small doses) but the written was one that would bore the dead.




5. Phillips wrote this book in 1990.This allows a reader to compare it with later books that dealt with the same problem ,such as " Boiling Point " in 1993 and " Arrogant Capital " in 1994.The first point that Phillips demonstrates overwhelmingly was that the Reagan tax cuts were primarily aimed at increasing the wealth and political power of the Wall Street speculators and investment banks like Bear Stearns,Merrill Lynch,Goldman Sachs, Morgan Stanley,Lehman Brothers,J.P. Morgan,Credit Suisse,Deutsche Bank,etc. This was possible because Reagan was not able to differentiate between Wall Street speculators ,on the one hand ,and entrepreneurship and enterprise ,on the other hand. For instance,ALL of the supply side economists(Laffer,Wannsiki,etc.)and most of the University of Chicago economists advising President Reagan were tied in to the Wall Street crowd ,either directly or indirectly.Phillips covers this in chapter 3.It is here that he makes two serious mistakes in less than one half of a sentence that costs him one-half of a star.He states :" Most of the conservative theorists acknowledged their restatement of Adam Smith..."(Phillips,1990,p.65).First,none of the supply siders or University of Chicago economists are conservatives.They are Libertarians.This is a major confusion that is ubiquitous in America.Second,NONE of the policies recommended by these supply side and Chicago advisors follows from Smith.First ,Smith favored (a) an overall progressive tax system,not a flat or proportional system (Smith,1776,Modern Library(Cannan) edition,p.794),(b)retaliatory and revenue tariffs(Smith,pp.434-439),and (c)direct government intervention into the economy through the provision of universal religious instruction and education,provided for free by the government to all individuals who could not afford to pay,in order to counteract the massive undepletable ,negative externalities/spillover effects arising from the workings of the Invisible Hand of the Market(self interest plus the specialization and division of labor[Smith,pp.716-768,pp.734-741);Phillips does better on p.69 in recognizing Smith's opposition to the interactions of monopolies and government and their negative impact on the political sphere of life.]
   
   A major plus of Phillips exposition is not only the massive statistical support that he presents in this book about the increasing inequality of income between different income classes but a very clear cut example that can be understood by any reader : " Under Reagan,as under Coolidge,the clear evidence is that the net tax burden on rich Americans as a percentage of their total income shrank substantially because of the sweeping tax cuts.The surge in actual tax payments was the result of higher upper-bracket incomes.To measure the benefits,imagine a businessman who had made $333,000 in salary,dividends and capital gains in 1980,and paid $120,000 in federal income taxes.As prosperity returned in 1983,his income climbed to $ 500,000.Yet with the typical tax rates reduced,he might well have paid,say,$150,000 in taxes,more actual payment,of course,but less relative burden."(Phillips,1990,p.82;It is unfortunate that Phillips did not explicitly tie this example in to his Table 2 analysis on p.58 that showed the higher incomes going to providers of " financial services ",a.k.a.,Wall Street speculators).
   
   Phillips loses another one half of a star due to his failure to explicitly deal in this book with the negative impact of the rise of the Wall Street speculators under Reagan ,and their support from the Federal Reserve System under Volcker and/or Greenspan,as well as the support given to them by the Securities and Exchange Commission(SEC),the regulatory agency which is supposed to protect middle class American from the ravages of speculators and projectors. The topic " Speculation " is not included in the subject index at the back of the book wheras it figures prominently in the later books ,such as " Boiling Point" and " Arrogant Capital ".Phillips's Table 2 on pp.56-58 is a briliant historical summary of the negative impact of speculation on the economy;however,he needed to explicitly discuss this problem in the same way that Adam Smith did in The Wealth of Nations on pp.260-340,especially on pp.339-340,where Smith pinpointed,as did the Scholastic philosopher -theologians of the medieval Catholic Church in the 13th century,the dangers of speculation,especially where bankers and financial interests are involved.
   
   
   This leads us to the end of the book and Phillips' discussion of the political ramifications of this process of allowing more and more income to be siphoned off to the " financial services" sector of the economy,i.e.,securitization/speculation and the generation of imcome without production by attempting to manipulate the the income, balance, and cash flow accounts of American corporations and financial institutions.
   
   Phillips correctly identifies what the Wall Street crowd,which controls both political parties,more(Republican) or less(Democrat),regards as their biggest future challenge :" Our biggest fear is that the Democrats surface with a leader who is able to capitalize on the theme of economic populism".(Quotation from GOP Pollster V.Breglio;Phillips,1990,p.210).One need only look at the reliance of the Clinton's,Kerry's,and Obama's on Wall Street money to recognize that such a leader does nor exist.

5 comments about The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities.

1. This one-idea book by late professor Olson tries to explain why some countries did better than others in terms of economic growth after World War II - namely Germany and Japan, in contrast with Britain. His explanation is that World War II weakened many institutions in those two countries that, by trying to retain their usual privileges, were holding back economic progress. The weakening of those institutions, permitted the economic miracle in both Germany and Japan. In contrast, England's institutions were not as weakened, so they continue to slow England's progress. I suppose that there are grains of truth in Olson's explanation - though if it was true, then the required policy recommendation would be that is good to suffer a devastating war every once in a while. I think Olson omits another possible explanation: the fact that Germany and Japan had both a strong industrial base before the war, a base that was not completely destroyed by it. Britain was in the 1940s suffering a slow economic decline in its industrial base - which really come back from the late 19th century, when Germany overcome Britain as Europe's leading industrial and economic power. And how would Olson had explained that after he wrote the book (in 1982), Britain went through a much higher economic growth than Germany and Japan - without the intervention of a war. So, while the book is interesting to read, I think its thesis is way too simplistic.



2. I had always wanted to read this book and am glad that I did !
   
   On the one hand the argument is quite obvious and one is left wondering what is really novel in this work (virtues of competition, market flexibility etc.), but I found the last chapter to be an interesting perspective on the effect of imperfect competition on the impact of changes in nominal demand on employment and inflation.
   
   Olson explains social rigidities ,with all their negative collective effects, as the outcome of rational microeconomic behaviour and integrates these into macroeconomic theory (other mainstream macroeconomic theory attribute price rigidity to error or simply make ad hoc assumptions on wage rigidity).
   
   This is a very valuable and important contribution to macroeconomics and explains why some economies are more resiliant than others. The main message is that governments must either make their economies more flexible or have to rely on macroeconomic conditions not fluctuating too much for acceptable macroeconomic performance.



3. Olson seeks to explain why some nations achieve high rates of economic growth while others suffer bouts of stagflation. He contends that the number and strength of "distributional coalitions," coupled with the length of economic and political stability will influence a nation's rate of economic growth. As such, Olson's hypothesis is two fold. First, Olson argues that states with lower levels of "distributional coalitions" often have higher rates of economic growth. Second, states which have experienced prolonged periods of disorder or armed conflict will have lower numbers of interest-group, or collusion organizations.
   
   Olson's explanation builds upon his early work in The Logic of Collective Action, which holds that "...large groups, at least if they are composed of rational individuals, will not act in their group interest" (18). Rather, the rational actor will seek to further his or her self-interest, and will subsequently free-ride when possible. Olson expands the scope of this logic to encompass not only the rationality of the individual, but the rationality of the firm in explaining The Rise and Decline of Nations.
   
   As the power of the firm expands, the firm seeks to maximize its own utility at the expense of a societal common good. In order to simplify a complex argument, we can think of Olson's theory in this way. An organization or firm will not expend its energy to create a benefit to society writ large, as it, and its members, will only receive a fragment of that benefit in relation to the costs incurred. On the other hand, if the same firm seeks to maximize its utility, it will seek to obtain a larger slice of the social "pie." In so doing, it may lower the benefits of society as a whole, but will significantly expand its own gain and that of its members. Meanwhile the firm will only incur a fraction of the costs such action projects on society at large. As such, Olson writes, "The great majority of special-interest organizations redistribute income rather than create it and in the ways that reduce social efficiency and output" (47).
   
   Olson argues that a society with long-term stability - free from war, and economic and political turmoil - tend to accrue more special-interest and collusion groups. This occurs because it takes time and reasonable amount of stability for such interest-groups to organize, solidify, and begin to achieve some collective benefits for their members. Once collective benefits are seen as the result of organization, a host of other interests will begin to coalesce and seek to obtain gains for themselves. What emerges is a highly pluralistic society.
   
   This leads us to the second part of Olson's hypothesis, those nations with high numbers of special-interest or collusion groups have lower levels of economic growth. Olson writes, "Distributional coalitions slow down a society's capacity to adopt new technologies and reallocate resources in response to changing conditions, and they reduce the rate of economic growth" (65). First, distributional coalitions stymie technological adoption when such innovation stands to benefit a rival group. A present day illustration can be found in a labor unions vehement opposition to the implementation of labor saving machinery. Second, distributional coalitions will attempt to block policy initiatives that change the status quo. When policy needs to be developed to increase economic or social advancement, the special-interest groups are likely to feel a certain displacement and will act to prevent such policy. According to Olson, these actions, coupled with others, often lead to policies which promote policies which have the potential to stifle economic growth.



4. Olson's book is difficult to classify, since on the one hand, it's not for the general reader, but on the other hand not so forbiddingly dense that it should be classified as scholarly. Lemme put it this way: it's for economically literate people. It makes use of, say, the concepts describing steady-state growth, supply factors, and expeduture-approach identities that one learns about in a college econ class.
   
   If you don't know what I just said, I imagine much of this book will be opaque to you.
   
   But if you can handle such stuff (and don't let me scare you too much: the gist of this book is clear enough even if you can't), man, O man! Olson's thesis is so brilliant it will give you whiplash!
   
   In brief, great empires invariably collapse not because of cultural overstretch, internal discord, or military misfortune, but rather because the very process of building an empire gives rise to myriad vested interests that eventually claw their way so deeply into the neck of the government that they eventually choke it. In other words, empires collapse because they are invariably made sclerotic by special-interest groups.
   
   An idea that is truly, classically brilliant: not obvious, but once developed at length, undeniable and endlessly applicable.



5. Most people recognize that there is something wrong about special interest groups. While most people think of special interest groups in terms of fairness, Olson examines efficiency issues. Special interest groups, or distributional coalitions, hinder economic growth in industrialized nations. Special interest groups slow the pace of change in industry. We will reorganize production and adopt new technologies more slowly as more coalitions form for the purpose of transferring wealth.
   
   Distributional coalitions are mainly a problem of wealthy nations. Paradoxically, poor nations can experience strong growth due to the fact that they have little to redistribute. Poor nations can therefore develop rapidly. The examples of postwar Japan and Germany fit Olson's thesis well. Japan and West Germany were devastated and left poor by the War, but developed rapidly afterwards. As Japan and Germany became affluent, distributional coalitions formed to retard further economic development.
   
   Olson does not explain the stagnation of so called third world nations. Why is it that Japan and Germany were able to "take advantage" of their postwar poverty, while many other nations remain "too poor" to support extensive distributional coalitions? Distributional coalitions actually abound in poor nations. The Rise and Decline of Nations does not explain all of history, but this is definitely part of the formula. Its examples are a little dated, but there is some great stuff here.

5 comments about The Lords of Poverty: The Power, Prestige, and Corruption of the International Aid Business.

1. The first half of this short book is a relatively informative overview of the responsibilities and functions of major aid and development agencies, although the statistics are now well out of date. That said, little of any of this is primary research and the author relies fairly selectively on sensationalistic quotes and facts that tell the part of the story he wants to tell.

   The second half of the book, however, is little more than a rant during which the author mocks and insults aid and development workers for about 100 pages. The vitriolic quality of writing makes one wonder if an aid worker dumped him at some point. You could skip this whole part of the book and be better off for it.

   Maybe I take it personally since I'm an aid worker, but I can tell you with authority that Mr. Hancock really doesn't have any idea what he's writing about - he mischaracterizes the lives and personalities of most aid workers and oversimplifies the challenges and complexity of the work. He's angry and bitter about something and I don't think it's corruption or incompetence.

   And just for the record: Reviewer Viola P. Reyna doesn't have command of the facts either. Most foreign aid workers are required to pay taxes in their home countries while living abroad. Americans living abroad for more than 330 days a year, whether they are aid workers or oil drillers or whatever, are not required to pay taxes unless they make over $80,000. Everyone is still, however, required to report their incomes and file their tax returns. So contrary to what Viola says, the US Government knows exactly what everyone is making.




2. As an open-minded aid worker, I was interested to read about our faults (and there are many, nobody's perfect).
   But G.Hancock fails miserably to deliver. I have the same reaction with Michael Moore: I agree with his ideas, want to enajoyhis books, and then am extremley disappointed. A long litany of facts mostly correct, sometimnes distorted to fit the picture, and nothing else. No analysis of reasons why, no consideration of what the other side may have to say, no shades of gray, everything is black. Morevoer there does not seem to be any alternatives. Even conservatives can do better than that.
   
   One example of superficial analysis (page 171):
   1- a highway was (poorly) built in Somalia and started failing almost immediately. OK this happens too often
   2- Somalia will still be repaying the loan ($100M) after 40 years.
   NO: first of all with a soft loan they would pay at most a third of it, second even if the road is failing, the road built may be still worth more than that...
   And second of all Somalia's debt was cancelled in the meantime...SO they will not pay anything...
   
   I am not saying building a poor highway is OK, I am saying the the author criticizes in a simplistic manner. His ranting is really useless. I guess it is for non-aid workers, who will conclude that aid is to be stopped completely.
   
   WHAT DOES THE AUTHOR PRPOSE TO IMPROVE THE PERFORMANCE OF AID ?
   Nothing said about that.
   
   NB. One failing among others: why there is no mention of international journalists (such as the author). They also live (fatly) from poverty...



3. This sobering account of the truth about aid and the turth about what the 'lords of poverty' are doing to africa is wonderful. Let us first understand the thesis. The new NGOs and those who make their living on aiding 'Africa' are in it for the money and their racist idea that africans cant do anything without the white man has led to disaster in africa. THe one solution to africas problems would be for all the aid workers to leave. Let Africa walk on her own legs. This book tells the dirty details of the how the aid organizations lie to the western public to get massive amounts fo money so they can drive expensive cars and pray on teenage african prositutes and what is worse these aid organizations constitute a new colonization of Africa by the europeans, here we have entire countries who budgets are planned by the IMF and whose food is distributed by the WFO and whose schools are built by NGOs. Where is the African in all this? COlonization is alive and well in Africa and this book exposes it.
   
   Seth J. Frantzman



4. Hancock makes important points in this book: many aid projects do more harm than good, many aid officials are overpaid, too much aid money gets funneled to US companies (for more on this, see Confessions of an Economic Hit Man, by John Perkins), and publicly funded aid organizations are insufficiently accountable to the public. But his extreme rhetoric warns us that if there is a good side to aid, it certainly won't be represented here. Here's a sample of his accusations: "These lords of poverty are the druids of the modern era wielding enormous power that is accountable to no one."
   
   On the one hand, Hancock's anecdotal evidence is unconvincing. He tells us that his often-chilling anecdotes are representative, but we have no way of really knowing. That said, he provides so many anecdotes that - by the end - we start to feel like they are, if not representative of all aid, at least insightful into an uncomfortable proportion.
   
   But the litany of anecdotes is also tiring. The writing is not particularly great, and I felt that some of the analysis was flawed. (For example, in two places he argues that Western nations don't give nearly enough in aid, but most of the book argues that everything we give is wasted anyway. It's not clear how giving more would help, given his theses.)
   
   Eventually I tired of simply hearing one aid horror story after another. He also misses the fact that there have been some major successes in aid, particularly in the realm of public health, in which organizations like the World Bank and UNICEF have played a part. (To read about some of these successes, look at Millions Saved by Ruth Levine et al.)
   
   I'm glad I read the book, but I wish Hancock had made it a little less exhausting and a little more balanced. I also wish we'd gotten more solutions in the end. His only solution is to dissolve the aid industry (as it is "inherently bad, bad to the bone, and utterly beyond reform"), after which we have the vague promise that "it will become possible for people to rediscover ways to `help' one another directly."



5. Disclosure time- I work in the aid industry.
   
   While I agree with much of what Hancock has to say (see below), this book is somewhat one-sided. Aid can reasonably claim a share in some positive world developments, such as rising life expectancy rates, decreased infant mortality, increase in primary education and literacy, growth in per capita GDP, and others. Undoubtedly, success has been patchy, and some areas, such as Sub-Saharan Africa, are worse off than they were fifty years ago, before the advent of the international aid industry. But in detailing its extensive failures, one should not completely ignore its successes (even if they maybe much less than what the aid industry claims).
   
   With all that being said, I think a book of this sort is a must read for all aid workers, to bring us face to face with dark side of our work.
   
   Here is a list of criticisms Hancock has about the international aid industry, and my own impressions.
   
   1. International aid is a big bureaucracy more intent on keeping itself going than helping the poor.
   
   My response- true- International aid is a huge bureaucracy. I spend my time writing and reading memos, and trying to get them 'cleared' as fast as possible. I literally spend no time with the poor.
   
   2. International aid agencies spend money on big, wasteful projects that harm the poor and decimate indigenous societies.
   
   My response: True depending on the development agency/country mission. Agencies (and agency sub-divisions, such as country missions) with lots of funds go this route. The ones that don't have such large accounts hire 'technical experts' instead.
   
   3. Aid agencies hire expensive foreign 'technical experts' who lack local expertise; they bypass the concerns and wisdom of the local population.
   
   True to a large extent. Most experts do not even speak the language of those they are trying to help. Some of our experts do supposedly meet with the local population, and address them through means such as surveys, interviews and 'focus group discussions.' I have no idea how hard they really try, as I sit in the office writing and reading memos. In either case, nothing really innovative comes from these efforts. This is because these experts already have blanket solutions (which are the same throughout the world) and try to impose them on the local populace through 'behavior change and communication' and other similar methods. Thus, the surveys and interviews, to the extent they take place at all, are not really a means to partner with the local people; rather, they are means to learn about the 'barriers' to implementation of blanket solutions.
   
   4. International aid is actually a means for subsidizing western businesses.
   
   Undoubtedly true. As Hancock points out, this is one reason why development agencies go for big projects, and why they hire 'foreign experts.' If I am not spending my time writing and reading memos I am spending my time reading project proposals for my development agency's money. Most of these, of course, come from Western businesses and NGOs. I also spend my time enforcing or waiving regulations stating that organizations that receive our money can only buy goods (including but certainly not limited to automobiles and pharmaceuticals) produced in my nation.
   
   5. International aid has allowed wicked despots to make themselves richer, and allowed ruling thugs to escape responsibility.
   
   True- but I think there has been somewhat more of an emphasis today on funding being tied to concepts such as 'good governance,' controlling corruption, and so on, at least in theory. Of course, reality is sometimes different, in that nations of 'strategic importance' get large amounts of funds despite poor governance, incredible corruption and other failures.
   
   5. Development workers are lazy and mediocre. They are often under-educated, make lots of money, live in big houses, have conferences in the best hotels and eat gourmet cuisine.
   
   Partly true. Most of the aid workers in my particular aid agency are highly educated- the minimum entry requirement is a master's degree, and many of us have PhDs or the equivalent. Our base salary is not very impressive compared to others of a similar educational background- certainly many of us could make much more outside of the official aid industry. That being said, the fringe benefits are quite lavish- one may even say over the top: I admit that I am a single woman living in a large 3-bedroom manor, I attend conferences at ritzy hotels and dine on great food- in an impoverished third world country, all at government, or should I say tax payer, expense.
   
   So, the aid industry has gone seriously wrong- what can we do about it? Unfortunately, while Hancock goes into great depths about the problems of aid, he gives us very few solutions. He believes we should dismantle the aid industry- but then what? How can we as citizens of our planet help our world become a better place? Some possible solutions suggested themselves to me when reading the book- one wonders why Hancock decided not to write an extra chapter with ideas such as these:
   
   1. Clarify and purify intentions. As Hancock points out, the mixed intentions of the aid industry (help the poor AND aid western businesses AND further political interests AND AND AND...) is responsible for many of the problems it has caused.
   
   2. Partner with local communities. I mean truly partner with them, listen to their concerns and ideas, and let them take the lead in coming up with solutions. Note, unlike Hancock, I do think there is a place, with careful thought, for some `Western' knowledge and technology. The best solutions maybe ones arrived at through our collective wisdom. However, don't just try to impose blanket solutions through means such as 'behavior change.'
   
   3. Keep things small as much as possible. Some big projects such as large-scale famine relief, refugee assistance, etc, maybe necessary, but these large-scale efforts are much more prone to corruption, and much more often bypass local communities.
   
   4. Speak the local language- this is the only way to effectively partner with local communities.
   
   Finally, as others have pointed out, the book was written in 1989, so its quite dated. While much of what it says still holds true, an updated version offering modern examples of aid failure would be much more powerful.

5 comments about China, Inc.: How the Rise of the Next Superpower Challenges America and the World.

1. Great service, the book came in perfect condition and just in time to use for my paper. Thanks :-) !!!



2. China has the world's most rapidly changing large economy, Fishman details how hundreds of millions of peasants have migrated from rural to urban areas to find manufacturing jobs, providing an unlimited, low-wage workforce to power China's economy. "No country has ever before made a better run at climbing every step of economic development all at once," he writes, in China, Inc. China invites large corporations to manufacture their products in their country--simply put, American companies can't compete with wages as low as 25 cents an hour and lack of regulation and oversight, so are forced to move their operations to China or completely change the focus of their business. Once the companies are in China, within a few months are the Chinese are copying and competing against the same companies they attracted.
   
   China is currently the largest maker of toys, clothing, and consumer electronics, and is swiftly moving up the ladder in car production, computer manufacturing, biotechnology, aerospace, telecommunications, and other sectors thanks to low-cost, high-tech factories. China is also where the world is investing. In 2004, for instance, the city of Shanghai alone attracted over $12 billion in direct foreign investment, roughly the same amount as all of Indonesia and Mexico received. In tracing China's ascendancy over the past 30 years (with annual growth of an astonishing 9.5 percent), Fishman presents a flood of facts, figures, forecasts, and anecdotes and examines the implications of this unprecedented growth for China, the U.S., and the rest of the world. A great read and again exposes some of the themes brought brilliantly by Fareed Zakaria's The Post-American World.



3. Fishman's book is aimed at people who have not closely followed China's recent economic miracle. It provides both statistical, eyewitness, and anecdotal information about the size, breadth, and seeming inevitability of the impact of China's booming manufacturing economy in the entire world. These impacts include everyone from rural Chinese who are engaged in an urban migration of unprecedented proportion to third-world businesses whose low wages and efficiency are not enough to stave off aggressive Chinese competitors to multinational business executives who are impelled to quickly get into the China game. The totality of all the facts is a bit overwhelming.
   
   While the waxing of economic might brings with it greater political power, the reader can only wonder how this power will be used. Certainly it will be used to continue to feed the economic machine, but what is left of the almost 60-year-old revolution? It seems it is only a latent Chinese nationalism, and no longer a Communist agenda. The author seems to suggest that America's and the world's greatest anxiety should be over getting out-hustled by Chinese entrepreneurs who at first worked around a government hostile to private enterprise and now work in concert with a government committed to build world-class prosperity by every means of fair and unfair competition. It raises the question of how we expect American companies to compete when they face burdensome regulations, high labor and benefit costs, indifferent employees, and costly consumer lawsuits.
   
   Fishman's work is thought-provoking, but does not go too far at suggesting where current trends may be taking us all. Perhaps no one really knows, since extrapolating trend lines indefinitely always leads to error. While free trade produces efficiencies that lift everyone's standard of living, it also is likely to levelize our incomes. While the Chinese will move to a more prosperous lifestyle in emulation of the West, our lifestyle may change to become more like that of the Chinese. In a few years an updated account by Mr. Fishman would be an interesting new snapshot.



4. Ted C. Fishman, author of China, Inc.: How the Rise of the Next Superpower Challenges America and the World, like Ted Plafker and James McGregor, is a journalist who spent valuable time in China and then wrote a very insightful book to share his findings.
   
   Fishman focuses in on China's shift from empire to poverty-stricken amongst third-world countries to an industrial super-power. The author also focuses on the threat to the Western world of China's emergence as a global economic power.
   
   He discusses the challenge of trying to compete with China on pricing because its enormous labor supply allows it to price its products 30% to 50% less than what they could be produced for in the U.S.
   
   Fishman also does a wonderful job describing the entrepreneurial spirit of the Chinese people - a quest for success and quick payoffs and determined pursuit of opportunities.
   
   The book also takes a tough look at such issues as the failure to adequately protect intellectual property, pollution, and limited currency conversion from the Yuan.
   
   China Inc. is multi-dimensional in content but yet very easy to read.
   
   By Gunjan Bagla
   Author of Doing Business in 21st Century India



5. China, Inc. is primarily a compendium of facts, figures, stories, and statements that give the reader a sense of the amazing and overwhelming growth and change that is taking place in China. It is worth absorbing all the information to better understand the economic forces that are changing our lives, and those of people throughout the world, in irreversible ways. And the reader is left with the correct impression that this is only the beginning. What product will NOT be made in China in a few years? In the long run, other than natural resources, what CAN we sell back to China so they don't use all those dollars to simply purchase large pieces of America? Political and economic realities aside, we have to be impressed with the accomplishments of the people of China. Motivated by a desire for a better life the Chinese people are creating a new society at warp speed using an almost-forgotten tool: Hard Work. Members of Western entitlement societies may want to sit up and take notice. The author points out that the jury is still out on how China's capitalist-like economic life ultimately will affect the monolithic political structure of the country. In the competitive international marketplace, there will be winners and losers. For now, the Chinese are on a winning streak, and our response should be more than complaints that they don't always play by the rules. Americans are losing high-paying manufacturing jobs to China, while "saving money" buying more goods imported from China. This book is worth reading.

5 comments about Critical Condition: How Health Care in America Became Big Business--and Bad Medicine.

1. I watched Sicko and loved it. I hated the reality it showed. The problem is I didn't want to jump on his bandwagon until I did some more reading on my own.
   
   On some website, someone wrote that they highly recommend this book. I borrowed it from the library.
   
   This takes Sicko and multiplies its intensity by 10. It's too bad the authors couldn't get the power of visuals and sound that movies, like Moore's enjoys. Otherwise this book would HAMMER this country so hard, it would tremble.
   
   If you liked Sicko, but want more, READ THIS BOOK! If you hated Sicko, READ THIS BOOK, to get a dose of reality. Anti-moore fans can't say much after reading this book because Moore has nothing to do with this.
   
   While I would have liked some graphs/charts or some another illustrative, visual way to reinforce the facts, this book is GREAT! Please read it!



2. Everybody who is fed up with the current U.S. health care situation needs to take the time to read this book. It is written for the masses who need a general understanding of how this for-profit system is ruining the quality of life of millions of Americans. Especially with the 2008 presidential election in full gear, this book will give you enough basic information about our existing health care system to put the pressure on all of the 2008 presidential candidates to endorse a national single-payer health care system covering all Americans. Finally, putting us on par with every other "developed" and "civilized" nation on Earth. Excellent work by Barrett.



3. I won't give an exhaustive review as others have done so well. I just wanted to add my voice to those that note this book contains many well-researched examples of just how bad things have become. What the book does not do, however, is give a thorough and balanced look at possible solutions. One must wait until the last chapter, which is quite short, to read about one possible solution - and even this one possibility is not covered in great detail. So, I would recommend you read the book just so you see that, even if your experience has not been bad, it definitely has been very much so for others. But you really will not find "what we should do about it."



4. Boy! Do I wish I'd had this book and the information inside in 2003! My father was stuck very deep in the mud of the HMO system and trying to fight lung cancer. The doctors were overworked and understaffed, and we had to be his advocate every step of the way. We asked a lot of questions much to their obvious consternation. This book would have helped us to aim our questions with precision, to the appropriate topics, which is hard to do when you're overwelmed with emotions.
   So much was explained in this must have handbook, that I have a new clarity of the situation in hindsite.
   Thank you Ms. Ehrenclou for your insight! Brillant!
   
   J. Bertolus, Los Angeles



5. Yep, I thought so--pharmaceutical advertising and the corporatization of our health system aren't helping any. This book covers those aspects plus many more. The authors draw numbers and statistics from many different agencies, from the WHO to the AMA, to paint a vivid history of health care in America. As a person who has gone without insurance, I knew that I paid more for the same services as someone who did have insurance, but I wasn't aware of the full range of the insured/uninsured pricing scale. When you start getting into the actual numbers, it's pretty amazing. And when you look at the basic stats--average life expectancy per country and how much individual countries spend on health care per year--you'll be (to paraphrase our erstwhile Michigan governor) blown away. Seriously. I had fallen prey to that "but we have the best health care in the world!" syndrome, but I can't see how that's the case when we spend SO much more on it, yet don't live as long as other countries who spend much, much less. The numbers say it all.

5 comments about Your Money or Your Life: Strong Medicine for America's Health Care System.

1. Forty million Americans lack health care insurance and costs leap three and four times the inflation rate yet few Americans feel the system provides adequate care. Harvard economics professor and health-care expert Dr. David M. Cutler believes that the problem lies with the inability for most people to understand opportunity costs based on choices that may not lead to an improved life quality. The government and medical leadership exacerbate the problem with saving money as their solution, ignoring effectiveness. He makes a strong case on how much health care has dramatically improved over the past five decades as dramatized by longer productive life spans. Dr. Cutler believes that more money should be spent on further medical advances and that universal coverage for all needs should be implemented so that the present day uninsured can afford care rather than drain at a more costly rate the system. The key is to change from a system that economically encourages doctors to choose techniques that are not always the best for the patient factoring in cost and life quality to a system that reimburses doctors for quality service (not as hard as it first sounds).

   Though at times the medical supply and demand is difficult to grasp, YOUR MONEY OR YOUR LIFE makes a powerful well written argument to reengineer a system in which political band aids fail everyone. The case for quality and the explanation of choices are well done and surprisingly easy to follow while offering a seemingly radical but compellingly logical approach to fixing the broken American health system.

   Harriet Klausner




2. While I found Dr Cutler's analysis penetrating, I was disappointed that he did not discuss in any detail the large impact on medical costs of medical malpractice lawsuits. Not only do these lawsuits increase malpractice insurance premiums of physicians and health insurance premiums of patients, they lead to wasteful defensive medicine, as physicians do unnecessary tests and procedures in order to reduce the risk of malpractice suits. Tort reform is essential to control rising medical costs.



3. 
   This book is probably an important addition to the literature on healthcare economics. It offers a good corrective to the politics out there. It reminds us that healthcare spending is not wasted spending, in the sense that it almost always adds value. It also points out that in many ways the costs of healthcare are FALLING.
   
   The real question is how can we continue to improve the value of our healthcare dollar? Cutler concurs with many conservative healthcare analysts that the real problem is that the incentives in the American healthcare system are wrong. The incentives are aligned in favor of healthcare interventions rather than health. He proposes to address this incentive problem by having the government intervene in the market by providing the right incentives. In essence, the government would post-hoc realign the incentives by rewarding quality after-the-fact and beyond fees for services. In addition, he would subsidize insurance to create universal coverage.
   
   This is an interesting idea. At the very least, it makes the important observations that the current system is rife with market failures due to the government-imposed structure of the market.
   
   He does not seriously investigate other options. Both single-payer and conservative proposals are rejected with a single paragraph each. This probably misses some significant arguments from each. My sense is that he only sees one kind of market failure when there are at least two. The first problem has to do with incentives, which he sees.
   
   The second problem has to do with information that is not efficiently used. Many of the conservative thinkers on this have argued that IT ought to provide significant cost-savings. In essence, 13% of our economy is still operating without the information processing that has revolutionalized the information economy.



4. since nothing is perfect.
   
   Authoritative, clearly written, and quite interesting; I recommend to anyone -- professionals, academics, laypersons -- interested in these issues.
   
   Specifics:
   1) The first 5 chapters convincingly argue that the enormous increases in health care spending are first attributable to new technology and treatments, and well justified, benefits substantially exceed the costs. The arguments are based in substantial part on Cutler's own academic research. By themselves, these chapters are sufficient to justify the book. Cutler does a good job of explaining both the technical economic concepts and the medical issues, and I suspect anyone interested in the topic will find the chapters fascinating, eye-opening.
   
   He reaches a very important conclusion: we ought to spend MORE, not less.
   
   2) Subsequent chapters survey sources of waste and problems of distribution. I found these helpful in outlining some important problems, and well worth reading, but incomplete (see below). In part these explore the incentives created by different systems of paying for health care; this helps explain why some sorts of technologies and procedures are favored over others in any particular case.
   
   3) The concluding chapter contains his solution to the problems, a system of universal insurance (mostly private) coverage, subsidized and supervised by the federal gov't; worth reading, but inadequate. Cutler focuses on a subset of problems & proposes a solution, with little consideration for other problems or possible solutions.
   
   For example, he ignores 'public choice' issues: how would his proposal work in a world of self-interested government official, bureaucrats, insurers, medical professionals, patients, etc.? The system he proposes might work on paper, but is quite susceptible to "gaming." USDA crop insurance is a real world example, and its poor performance should make us hesitant to expand this approach to health care.
   
   Similarly, Cutler argues that gov't and insurers should develop a payment system that rewards providers for measurable health improvements. Cutler greatly underestimates the difficulty. Soviet planners wrestled this problem for 75 years and were unable to solve it, how to specify a set of desired production outcomes from above and then have them realized as one envisions. It's a very difficult problem, I think unsolvable. Cutler underestimates it, and devotes essentially no attention to possible solutions which would make the individual consumer directly responsible for payment, and evaluation, of health care services.
   
   4) Cutler provides a lengthy set of citations from the scholarly literature, excellent for further study. He also features, on his website, a technical appendix. It's clear he's trying to spread light, not heat, in the health care debate. Good on him!
   
   5) Despite any weaknesses, Cutler does a fine job of framing the issues. The book is accessible and a good read. OK, OK, 4.9 stars.
   
   C.N. Steele Ph.D.



5. The first part of the book is probably informative for a novice reader on the topic, but hardly original. There are many other sources about how medical care has improved over the years due to surgical techniques, diagnostics, and drug therapies. There are many other sources about some of the economic aspects, like fee-for-service and HMOs. He skips the part about government intrusion.
   
   When the author gets around to advocacy, his politics shows. His "strong medicine" is more government controls by politicians and bureaucrats. He is apparently blind to the consequences, which have put America's health care system in its current state. Those with political power and influence, like general hospitals and huge "nonprofit" insurers, control the system in their way.
   
   He says the present system lacks incentives for quality of care. Yet he offers no workable solutions that would survive political infighting, not be manipulable, or how much more they would cost. He advocates pay-for-performance, which in the hands of bureaucrats becomes pay-for-conformance. Private insurers have experimented with it for several years, with no clear results.
   
   He says little about consumer choice. You can easily guess the author's politics and outlook. He is a Harvard econ professor, worked on the HillaryCare plan -- a fiasco -- and is now a health care advisor to Barack Obama. Technocrats are bent on rationing. They lack innovative medical knowledge and skills. The rules they want stifle innovation and individual consumer choice. Consumers are simply numbers or like cattle.

5 comments about Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics.

1. I would recommend this book to anyone with an interest in human society and social evolution. The book discusses a lot of interesting aspects from an analytic viewpoint.
   
   Despite the title which portrays the book as an economics text, this book isn't about making money - it's more about analysing how our economic society works (or doesn't as the case may be).



2. Don't be put off by the lengthy critiques found here. You may get the feeling that these reviewers should be writing their own books. If they actually did so, I'd bet they would find that one can't cite every sentence, can't reference every economist who ever contributed to the field, can't explain every generalization at every opportunity. Ignore them and don't miss this great synthesis that pulls from many disciplines to form a wonderful construct that shows how economics is part and parcel of the main drivers of organic life - evolutionary processes.
   
   Btw, Publisher's Weekly also blows their summary. Beinhocker does not use this synthesis as a "panacea." For we humans, his ideas are potentially a more accurate worldview, not a global cure for disease. Beinhocker writes with the aim that we might construct better approximations of reality using this line of thought. Worldviews are big, but that is not the same as a panacea that will cure all that ails you. This is a brilliant work that all thinking members of homo economicus should read.



3. A must read for anyone trying to figure out the future of finance, economics and risk management.



4. The provocative theory of this book, that economic theory is all wet and that economies evolve according to social and technological intervention, is presented well early in the book but then suffers from the presentation of too much information much of which does not appear relevant to the theory itself. Still, necessary reading for those interested in how and why the world works the way it does.



5. The author probably learnt a lot by writing this review of the complexity theory as it applies to microeconomics and strategic management. Not sure the reader will have the same experience.
   
   If you already have read a little bit in this area this book is just too general and unfocused to sustain interest. If you haven't read anything then I guess the book is a fair overview but still long and unfocused.
   
   The writing is okay, but not as smooth and interesting as some other pop-science writers. Sometimes the author comes across as an angry outsider who thinks he has all the answers (compare the pompous title!) and that doesn't make for a pleasant reading experience.

5 comments about Falling Behind: How Rising Inequality Harms the Middle Class (The Aaron Wildavsky Forum for Public Policy).

1. Thorstein Veblen in his Theory of The Leisure Class coined the term conspicuous consumption. In many respects the last 10 year has been a veritable explosion in obnoxious displays of my car is bigger and better than your car, and house, etc...
   The real threat to the middle class is in housing. Particularly in the Bay Area of California the cost of housing, both rental and purchased, has become prohibitive for all but a small percentage of the population. I include rental housing because the costs are exceedingly high, forcing most people to pay well over 50% of their salary in rent, leading to ruinous financial suicide when you are not able to save each month because the greed factor of housing has such a crushing effect on people's mental and emotional well-being. Housing has skyrocketed to present levels principally as a result of the mania of believing that everyone in the area makes $100,000 a year which is what any other community would require to sustain such high housing costs. The pay rates certainly are not commensurate with the increasing costs of renting and buying homes.



2. The dictum "context is everything" is certainly true when it comes to assessing the value of material goods.
   
   In Falling Behind, economist Robert H. Frank shows that what we consider "average" or "good enough" in a home or car is determined by context: what are others around us driving? where are they living? Is a `79 Chevy Nova is adequate (or even luxuriant)? The answer to this depends on the cars driven by others around us. This context varies between Cuba and the snazzier parts of L.A. Context matters in assessing the value of many things: cars, real estate, appliances, clothing. Not all goods are evaluated in this way: Frank categorizes those that are as positional goods.
   
   Frank lays to rest the notion that wanting what others have is greed or envy, or that we are duped by snazzy advertising. Rather, it is natural to judge one's own assets in terms of local context. Having less than the "norm" has tangible consequences for professionals: Doctors or lawyers who fail to keep up appearances will be judged as incompetent. People who choose to buy smaller homes will end up in poorer neighborhoods, and suffer their attendant problems.
   
   The inflation of positional goods is driven by income inequality. Since the 1970's, the incomes of those at the very top has risen dramatically, while those at the bottom are now earning about the same or less. (If you want clear graphics and elucidated statistics on rising income inequality, look no further than chapter 2.) However, changing standards for what constitutes a luxury home or car have "trickled down" so that middle-income Americans now need to spend more to achieve average.
   
   Frank likens the arms-race style inflation of positional goods to the metaphor of the stadium. If one spectator stands up, he/she will get a better view. But if everyone stands, they will all have the same view as before, except they will have given up their comfy seats. The author calls this behavior "smart for one, dumb for all."
   
   Frank outlines what working and middle class families have had to sacrifice to achieve the new average: time, equity, and investment in public works. Workers must live farther from work to afford average, and have longer commutes. They work longer hours, and sleep less. Families don't save as much, and they go into debt. People who feel strapped for cash are less willing to pay the taxes necessary to maintain roads and schools, so these services get cut.
   
   For all that I enjoyed this book, I cannot rate it a 5. While the tone through most of the book was jargon-free and accessible to the non-economist, Frank lapses into dense econo-speak in places (notably chapters 6 and 7). Frank also delves into "Darwinian" hypotheses in chapter 6, which only detracted from his larger point. After all, he had already made the case for the positional judgement of goods. The evo-psych explanation lacks any evidential support, and merely stating that it is the "biological," or, worse yet, "Darwinian" point of view is not sufficient for it to be taken seriously.
   
   The final chapters redeemed this book for me, as the author proposes a novel, progressive tax solution: taxing consumption while exempting savings. A progressive marginal tax rate on consumption would reward those who save rather than spend, limiting the inflation of positional goods as people opt for smaller mansions and more utilitarian vehicles. The tax is not regressive: People earning modest salaries can apply their deduction to their taxable consumption, so that they are not penalized for being unable to save.
   
   If you want to know why the rich get richer, the poor and middle class can't get ahead, and houses and cars seem to have doped up on steroids since 1970, give this book a read.



3. I liked this book. I will recommend it to anyone who is interested in reviewing social aspects of economic development in the US.



4. The first college I went to was a small community college out in the middle of nowhere. Most of its residents were extremely poor people fresh from the factory. In such an environment, I felt very wealthy and did not see the need to buy better clothes. I soon transferred to Michigan State University. Talk about a sea-change. Suddenly, I was the odd man out. My clothes were otiose, my habits slovenly and my look unkempt. It was extremely stressful (I am sure my HPA was going nuts pumping cortisol like crazy). I needed a new wardrobe. Not only that, but I need a conspicuously expensive and ridiculous one.
   
   If you take this experience and apply it across the middle class board, you have Mr. Frank's book. You see, all of the middle class is in a positional arms race over goods like cars, houses, clothes, watches, and other oddities, while skimping over public goods, insurance, and saftey.
   
   Frank compares this arms race to animals who constantly get bigger antlers to compete and get females. Soon the antlers are so big and cumbersome that they are a handicap in many ways. Yet, if a mutation 'attempts' to take over the population and make smaller antlers, the bigger antlers will win because animals that possess them can fight better and monopolize the females. Frank calls this the "smart for one, dumb for all" principle. I think the reasons are fairly obvious. Similarly, if we would all agree to limit the size of our house and cars and pay more for roads and parks, we would all benefit. However, there is always going to be that one idiot who gets the bigger house and the SUV. Now he is rolling in attention, going to the best school, and safer than ever in his huge SUV. All it takes is this small spark to ignite an all out war for position. But, remember, since position is relative, we end up in the same spot anyway! Except, we are now skimming on the important, non-positional public goods.
   
   Frank's book is a short, lucid, and compelling account of what is going on with the middle class. I think he gives short shrift to role of the media and corporations, but his theories and ideas do have the benefit of being parsimonious and logical.
   Great book.



5. I have never read any of Frank's other books before reading this one. I have read over 200 books on investing, and this book piqued my interest because I have always been interested in income inequality.
   
   Wilfred Pareto, the Italian economist, found interesting phenomena when he researched who had most of the income and wealth in Italy in the early 1900's. He was surprised to find that 20% of the population had 80% of the income or 80% of the wealth. He found the same phenomena when he researched England in the late 1800's. This phenomenon has come to be called the Pareto Rule...or the 80:20 Rule.
   
   If you check the USA today, you will find Pareto's Rule is still alive and well. 20% of the population has about 80% of the income and about 90% of the financial wealth.
   
   I have been interested in finding out why this phenomenon has held across 3 countries for over 100 years.
   
   The author conveniently forgot to show the actual income distribution of the U.S. in his charts. He chose to only show the percentage change in income for each of the 5 deciles groups.
   
   The whole premise of this book can be summed up as follows:
   
   -Income inequality has increased in the US the last 40 years
   -Rising income inequality is a bad thing
   -One reason for the rising inequality is technological changes and the George Bush tax cuts for the wealthy
   -The other reason for the rising inequality is that an "arms race" is created when the middle class sees the wealthy have more toys....and therefore the middle class must spend more on bigger houses and fancier cars
   -The recommended fix is to switch from a progressive income based federal tax to a consumption based tax system (where savings are not taxed) and taxes would be increased for the wealthy
   -The additional tax revenue would be used to provide more needed Federal Government services
   
   One key assumption of this book is that US income inequality has increased the last 40 years. According to Wikipedia.....the Gini Coefficient for the US in 1967 was 39.7 and it increased to 46.3 in 2007. I'm not sure it is appropriate to ratio these two Gini numbers.........but if it is....this is a 17% increase in income inequality (the Gini Coefficient is supposed to be a metric for assessing income inequality).
   
   A 17% increase over 40 years doesn't seem that dramatic to me. Given the large number of data sources required to calculate the Gini Coefficient......I doubt a 17% increase is even statistically significant at the 95% confidence level.
   
   Another challenge to this key assumption is that Pareto's findings (20% of the population have 80% of the wealth) have held up over 100 years across three different countries and the 80:20 ratio has not changed significantly.
   
   Based upon these 2 factors, I have my doubts that income inequality has really increased in the US the last 40 years.
   
   Another premise of this book is that middle class citizens have no recourse except to go into debt and spend more to keep up with the Jones's.
   
   Way back in 1849 when Charles Dickens wrote David Copperfield, Mr. Macawber says, with respect to money:
   
   "Income 6 pence a week, expenditure 5 pence a week, result happiness: Income 6 pence a week, expenditure 7 pence a week, result misery."
   
   In Stanley's Millionaire Next Door, he found that most millionaires chose to live below their means so they could save money....invest the savings......and eventually be millionaires. Many people intentionally stayed in homes in middle class neighborhoods with decent school systems.....versus neighborhoods with big houses and the expectation (and expense) of sending your kids to private school. These Millionaires were frugal on their expenses for clothes, watches, vehicles, and houses. In fact, many bought vehicles using the $ per pound ratio to get the best value (Ford F150's rank high on the $ per pound ratio). I would contend that many people are free to choose to their lifestyle.......so as Stanley says.........they can choose to own a lot of cattle......or be all hat and no cattle. The author seems to contend that 100% of the people have no choice but to participate in the arms race.
   
   The author also suggests the current public school system is a well designed one because it caps educational costs versus the arms race which would result if vouchers could be used to attend any school. One wonders if vouchers could be used to attend any school...including the amount of property tax paid.....would this encourage some free market competition and possibly lower total educational costs?
   
   I have often wondered why our current U.S. system penalizes savers. Taxes are delayed if you save in a defined contribution retirement plan.....savings beyond these plans is almost penalized. First, the money is taxed as federal, state, and social security taxes. Once you invest it, another government tax of inflation must be paid........ plus federal, state, and income taxes on any interest or capital gains. With inflation currently running higher than interest rates on savings accounts........there is not much incentive to save.
   
   I might be in favor of switching our tax system to a consumption based system like the author advocates, but with some additional caveats. The caveats would be a 40-year transition of switching Social Security from pay-as-you-go to an individual account in low cost index funds like the current Thrift savings plan for government employees. I would also like to see total taxation capped at 15% of gross earnings (including local, state, and federal taxes)......unless during a Congressional declared state of war. I am also concerned about the "law of unintended consequences" if we change our tax system.
   
   I do not agree with the author's plan to increase taxes on higher income earners.......giving the government more of our dollars to spend.......and waste.
   
   I tend to side with Milton Friedman who believed that if government action is taken in pursuit of economic equality that our political freedom will suffer. In a famous quote, he said:
   
   "A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both."
   
   
   Although you may not agree with the author's recommended fix, his book does cause one to think about how our US economic system is designed. At some point of high enough income inequality......the 80% of the population who does not have the income and wealth will vote themselves a share of the income from the 20% who take all the risk and generate all of the jobs (unless you believe the 20% with the money donate enough money to control our political system).
   
   If you want to become one of the 20% who have all the income and wealth, you might want to read some of the books noted below. They may help you eventually enter the top 20% group.
   
   Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pro's
   The Richest Man in Babylon
   Bogle on Mutual Funds: New Perspectives for the Intelligent Investor
   The Millionaire Next Door
   The Four Pillars of Investing: Lessons for Building a Winning Portfolio
   A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing, Ninth Edition
   The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street, and Get On With Your Life
   The Bogleheads' Guide to Investing