What I'm Reading Now

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	Thomas Sowell, Basic Economics: a citizen's guide to the economy. Basic Books, 2000. I have a mixed reaction to this book. On one hand, I think that there is a real need for a book that aims to provide citizens with economic literacy. College textbooks often teach tools and models more than concepts. And most of the "trade" economics books are really about ideology more than understandings. They are selling a point of view rather than a guide to understanding issues. Sowell's book fills this gap in many areas. His analysis of the price system and some issues of business in the market system are very good: clear, concise, and straightforward. On the other hand, however, I am unhappy with the topics that Sowell has chosen for the book. The key to writing an introductory book is deciding what to include, what to leave out, and what to treat superficially. Many of Sowell's choices are off the mark, in my view. There is an entire chapter on price controls, which discusses New York rent controls in considerable detail. Federal Reserve monetary policy, however, gets a superficial treatment. Exchange rates get even less attention. Interest rates are something that most citizens I know are concerned about and want to know more about, but they do not even rate an entry in the index. For a "citizen's guide," that's too much emphasis on my markets are good and socialism is bad and not enough coverage of other issues. Economics remains a puzzle for the average citizen, however, and as good as this book is it still doesn't complete the task.
	Raymond Vernon, In the Hurricane's Eye: the troubled prospects of multinational enterprises. Harvard University Press, 1998. Raymond Vernon invented globalization. That is, he coined the term to describe the economic patterns he saw emerging in his studies of multinational corporations in the 1970s. In the Hurricane's Eye is his final world on globalization; he died shortly after this book was published. Vernon here revisits many of the themes of his earlier book, Sovereignty at Bay: the multinational spread of U.S. enterprises (1971). For the most part, this book is an excellent summary of the history of multinational expansion since the 1970s and the many tensions that expansion has created both in states and in the multinationals themselves. Students who want to be well-informed about multinationals should begin here (too often they begin with outdated books or with authors who lack Vernon's independence of thought). What I find most interesting about In the Hurricane's Eye is Vernon's very accurate diagnosis of the "hurricane" we are experiencing right now (Seattle WTO talks, Genoa G-8, etc.). Here is Vernon's take (expressed a bit differently from his language): the hurricane formed as the global agenda moved from shallow globalization, which just asks nations to lower trade and investment barriers to deep globalization, which requires that states fundamentally alter domestic policies in areas such as the environment, the welfare state, competition policy, labor rights, etc. Shallow globalization was not much of a threat to state sovereignty, but deep globalization really is. The clash of global and domestic forces stirs the hurricane. Multinational corporations, of course, are creatures of globalization. They were strong advocates of liberal economic policies during the shallow globalization era. As globalization deepens, they are caught in the eye of the storm. Vernon thinks they will be unable to escape the clash of values that is around them. He seems here to be sincerely worried about the future of the liberal economic system.
	Walter LaFeber, Michael Jordan and the New Global Capitalism. W.W. Norton, 1999. Peter Dicken, Global Shift: Transforming the World Economy 3/e. The Guilford Press, 1998. Looking for a good book to help you understand the globalization debate? One of these is easy to read but not very useful. The other -- a textbook -- is kind of a chore to read, but is very useful. Can you guess which is which? I had high hopes for the Michael Jordan book, but it is a complete disappointment. LeFeber has written superficial biographies of Michael Jordan and the Nike company and then used them to construct a superficial argument about globalization. There is quite literally nothing new here. You would learn more from a subscription to Sports Illustrated. There are better books about Jordan, Nike, and globalization -- read them instead. (I don't mean to offend the author or readers of this book. I think it was originally conceived as a brief biography of Michael Jordan for use in schools. It is a work of synthesis, nor original research, and I must respect that since a lot of my own work is synthetic. But I think it doesn't shed any new light on Michael Jordan and Nike and doesn't contribute meaningfully to the globalization debate.) If you want to really understand globalization, for example, look at Global Shift. The author is a professor of economic geography at the University of Manchester and it is clear that he takes globalization seriously. His thesis is that globalization is driven by three forces: transnational corporations, state policies, and technological change. All three forces are powerful, all three are complex, and their interaction is is dynamic and transforming. What I really like about Dicken is that he makes you think. He will take a topic like transnational corporations and look at all of their effects and the arguments and evidence before telling you what he thinks are the most important elements. He thus educates the reader to be a critical consumer of opinions (even his!) about globalization. He avoids the distorting generalizations that so often characterize globalization discussions. Dicken does a great job analyzing the economic, political, and technological aspects of globalization, but he doesn't treat the cultural aspect. I was hoping that the Michael Jordan book would fill this gap, but as I said, I was disappointed. I still haven't found a book that analyzes cultural globalization to my satisfaction, although I think that Global Me (see last page of these book reviews) at least raises a number of interesting issues. The other books I have read seem to me to trivialize both globalization and culture to a greater or lesser degree. I will keep looking.
	Lester C. Thurow, Building Wealth: the new rules for individual, companies, and nations in a knowledge-based economy. HarperCollins, 1999. I have finally got around to reading Lester Thurow's latest book and I am glad that I waited. I didn't read it when it first came out because, on scanning the contents and reading the reviews, I concluded that it, despite the title, there wasn't much new to be found here. And that's true -- to a certain extent Thurow repeats some of the same points and themes he has been writing about for 30 years. But reading the book now, a couple of years later, is pretty revealing in ways I want to briefly explain. First, this book is revealing in that some parts clearly show the impact of intellectual fashions, even in economics. When Thurow diagnoses the then-current economic problems, his analysis reflects the prevailing conventional wisdom -- the problem is over-capacity and falling prices. It is interesting to reconsider this view today. This morning's New York Times talks about stagflation -- inflation plus recession -- not falling prices. While we were worrying about deflation a whole lot else happened to change the situation. Economic fashions have a pretty short half-life. This book came out during the Internet boom and the title and framework were meant to appeal to then-current fashions in business books -- the lust for wealth, the idea that there are "new rules," and the focus on knowledge, etc. In the aftermath of the dot-com collapse, these are no longer the hot buttons. So the book's title is passé. But the ideas in the book are in fact more relevant than ever. They are relevant precisely because they are not now (and really never were) really new. At the end of the day, Thurow's message is an old one. To really build wealth you have to invest in social capital, foster innovation, develop human capital, save and invest. Read in the aftermath of the collapse of the Internet bubble (and taking into account the nuances that I don't have room to explain here), this is a very important book because it stresses what is really important if society is to build wealth that will last.
	Paul Krugman, Fuzzy Math: the essential guide to the Bush tax cut. W.W. Norton, 2001. When "civilians" (that is, people who aren't professional economists) ask me for book recommendations, I often end up suggesting something by Paul Krugman. Fuzzy Math, his newest contribution, goes right to the top of my required reading list. If you want to understand the most important domestic economic issues of our time, you should read this book. I must admit that I had reservations about Fuzzy Math before I finally bought and read it. Reservation #1: was it already out of date? Krugman seems to have finished in in April 2001, when the Bush tax cut was still a hot button issue. It didn't appear in print until weeks later, by which time the deed was done. Reservation #2: was it just an assemblage of New York Times op-ed pieces that I had already read? Was there anything new? And Reservation #3: was he just going to repeat again and again (as he did in the Times) that Bush and his economic advisers were just lying about the "fuzzy math" of the budget surplus and tax cut?
	I am happy to report my reservations were unfounded. Although the tax cut package has been signed into law, the economic issues that surrounded its discussion all still remain. Most important of these are the questions of the nature of the budget surplus and the fundamental logic of the social security (and Medicare) system. Krugman explains these important topics in clear terms. I was going to say clear and simple, but some aspects of the social security system cannot be simplified without distorting them, so clear is a good as it gets. Fuzzy Math offers a wonderful primer on the social security system and its future fiscal challenges. I think that everyone should read this book just so they can understand social security (and the coming debate about privatizing this program) more clearly. Although Krugman New York Times pieces have dealt with many of the issues he discusses here, the book is not just a collection of these columns. Although it is a short book (just 128 small pages), it still provides Krugman with miles more space to explain and persuade than his Times columns allow. So there's more depth here. Even if you've read all of columns, you should still read the book. This book is about a lot of things, but I have to admit that it is really all about truth and lies. Krugman waits until the very end to drive home his real message: the Bush team lied, they knew that the lied, and we can't let them get away with it. He seems angry and his anger seems very personal. Well, he is right, but you don't have to share his personal outrage to find this a most interesting and useful book. I think that even civilians who support Bush and his tax cut want to read this book for its clear outline of the basics of 21st century public finance. Come to think of it, those Bush supporters are exactly the folks who should read this book.
	Thomas Frank, One Market Under God: extreme capitalism, market populism, and the end of economic democracy. Doubleday 2000. John Mueller, Capitalism, Democracy, and Ralph's Pretty Good Grocery. Princeton University Press, 1999. One Market Under God is a book about hype and, ironically, I read it because it was so effectively hyped in the media. Welcome to the world of Thomas Frank, founding editor of The Baffler, a magazine of cultural criticism! This is one of those "the emperor has no clothes" books and I suppose it is better than most if only because it takes ideas seriously. Frank argues that the "new" economy/politics/culture is over-hyped and that a close reading of the most important authors in each area shows just how bankrupt their ideas really are. Frank is correct, of course, that these ideas are over-sold, or packaged up so as to be the stealth delivery systems of different ideas than they pretend to advocate. This was a theme that I developed in Selling Globalization. Frank's main theme, and most important one, is that the New Economy that digitally empowers workers and shareholders is really just capitalism after all. Anyone who thinks that the New Economy is more democratic because it is more individualistic has missed the point. Capitalism is about individualism and not at all about democracy. Point well taken. As I read Frank, however, I began to think that maybe he had fallen into a way of thinking about capitalism and democracy that was discussed a few years ago in a book by John Mueller. Anyone who reads One Market Under God should consider following up with John Mueller's book on the relationship between capitalism and democracy. Although capitalism and democracy are often associated in the public mind, they actually have surprisingly little to do with one another. Mueller's book, which is both serious and fun, argues that both capitalism and democracy really do work much better than we think. Our expectations of democracy are too high and our expectations of capitalism are too low. Democracy doesn't meet our high expectations, but it still works pretty well while capitalism actually works better than we realize. Both are "pretty good" and maybe we should settle for that. I especially like Mueller's "inventory of propositions" at the end of the book.
	Charles E. Lindblom, The Market System: What it is, How it works, and What to make of it. Yale University Press, 2001. Charles Lindblom has written an excellent book on the market system (not on market economics as you will see below). I recommend this book to readers at all levels -- you don't have to be an economist to appreciate the keen insights here. Lindblom in a political scientist who is famous for his characterization of the market as a prison that constrains democratic society from satisfying the demands of the people. Lindblom still believes this, but he recognizes that times have changed -- and so he has changed, too, at least in his approach.
	Lindblom starts with the idea of cooperation and coordination and how important these are to a successful society. Then he carefully and elegantly builds up the idea of a market system and its particular strengths in cooperation and coordination (making a stronger case for the market as a social institution than many economists have done). The key thing here is that he is writing about the market system not just the supply and demand in a single market. Most economics classes teach markets as supply and demand curves but perhaps fail to impart an appreciation of the market as a system, which is what we have here. Once the advantages of the market system are clearly established, he asks whether the market system can successfully solve all cooperation and coordination problems (or solve them as well as other social institutions, such as politics or the family). The answer, of course, is no. This leads into a creative examination of what markets can do best (more than you'd guess, but perhaps different than you suppose) and the areas where markets alone are not adequate. The usual "market failures" get discussed here as well as the "political failures" caused by the concentration of power among market elites. Advocates of market solutions generally privilege "efficiency" over other social criteria. Lindblom does a good job using the ideas of welfare economics to undermine this viewpoint. Market efficiency is not necessarily social efficiency. In the end Lindblom makes as much of a positive case for politics as a negative case against economics (see review of Gilpin's 2001 book below for another take on this). Although I was ultimately disappointed that the creative intensity of the early analysis, which frames the question of the market system, was not completely sustained, I still think that this is a book to read and re-read.
	Joseph E. Stiglitz, Whither Socialism. MIT Press, 1996. Although, as you can see, I admire Lindblom's new book very much, it is not the best book of its kind that I have read. For my money nothing is better than this little book by Joe Stiglitz, written just after the collapse of communism and reissued by the MIT Press in 1996. Just when socialism seemed to be completely discredited, Stiglitz amassed the tools of welfare economics to breathe some life back into it. This is a tougher book, written for people trained in economics (although several of my undergraduate students have gone through it successfully). If you are not afraid of trying something a bit harder, read this. It is pretty easy to see why someone like Lindblom, long a critic of capitalism, would write a book pointing out the flaws in the market system. But why would Stiglitz, who is generally associated with market-oriented policies (although not necessarily so-called neoliberal ones) do it? My answer at the time, which I still believe, is that Stiglitz appreciates that there is an ebb and flow in political economy. Just as you can have too much government, you can also have not enough of it. Stiglitz's book was an attempt to preserve the intellectual foundation for state intervention for a time when the pendulum swings back. Lindblom is doing the same thing, I suppose, and trying to give the pendulum a little push as the same time.
	Three by Robert Gilpin: Global Political Economy: understanding the international economic order. Princeton University Press, 2001. The Challenge of Global Capitalism: the world economy in the 21st century. Princeton University Press, 2000. The Political Economy of International Relations. Princeton University Press, 1987. Robert Gilpin's 1987 book pretty much defined the mainstream study of international political economy: it was the political analysis of economic issues, especially trade, finance, and multinational corporations. Gilpin featured the now familiar trinity of theoretical perspectives (economic nationalism, economic liberalism, and Marxism). His bottom line message was clear: the economy has grown and changed dramatically, but political institutions have not kept pace. This creates an unstable system, where governance cannot keep up with what needs to be governed. Renewed US hegemonic leadership is required. The 2001 trade book (meant for a popular and not just academic market) retains this theme and can now find a lot of evidence to back up the earlier thesis: the breakdown of the trade regime (Uruguay Round problems and the Battle in Seattle) and especially the increasing instability of global finance (see sterling crisis, lira crisis, peso crisis, baht crisis, ruble crisis, etc. etc.). Gilpin calls for US leadership (but doesn't see any) and fears that the rise of regional blocs will leave a hole in the center of international relations. Regional problems will be addressed, but global problems go unattended until it is too late. The 2001 volume is aimed at an academic audience and raises a different theme. This book is about ideas as much as the world. Gilpin is concerned about economics imperialism (the tendency of economics to set the intellectual and policy agenda) and where this might lead. He argues for a politics hegemony, citing recent advances in economic theory to suggest that the domain of markets (and economics) is limited and the role of the state (and politics) is broader than may be commonly supposed. Dynamic comparative advantage theory, for example, is cited as a rationale for industrial policy. The theory of increasing returns in cited (roll over Paul Krugman) for government subsidies to aerospace firms and others. You get the idea. Am I convinced? Not in every case. But I appreciate this book for the serious scholarship that went into it. If you want to know the state of the art (in theory) of the IPE problematique, it is all here from trade to finance to regionalism. A one-volume graduate program in IPE. I own two copies: one to mark up and one to save. That tells you what I think of it.

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