Economic study has always been the basis of civilization.
Without it, we’d probably still get what we want (didn’t the early hominids
manage to feed themselves?) but it would be impossible for governments to
regulate commerce. This fine book on economic theory is primarily on the role
that economics play in government function and vice versa, particularly on
regulations. As a former social studies teacher, I’ve always told my students
that civilization begins with money, not religion. If you want proof, look at
the cities of Sumer; they didn’t build walls out of mud brick because it was sacred,
they did it because they had no stone! Beginning with the section on analyzing
policies, we’re directed from the Laissez Faire theory on to tax setting and
globalization.
One of the best things about this book are the small
details, the things most would consider footnotes. One such detail is the ATM,
now commonplace worldwide. You might wonder what could possibly be the
significance of such a thing in serious economic study, but it is of great importance.
ATM’s are a way for banks to lure in customers, with the offer that one can use
his banking card anywhere. The incentive for the bank is that it can charge a
fee for withdrawals, offsetting the interest on accounts (and losses do to
defaulted loans.) The bank can even charge fees to pay whatever tax the country
charges.
Government intervention, another major issue in economics
(or nuisance, if you’re a follower of Thomas Sowell) is discussed heavily here
and well documented. We’re provided with a study of the different types of
intervention, such as direct analysis and non-government ratings. The book
doesn’t go into detail about specific ones, but I know of one, the famous Moody’s
Bond Rating. My former boss at Oppenheimer (during a failed attempt to become a
stockbroker) preferred Moody’s over any government-sponsored study. As time
went on so did I, keeping in mind my own advice to my students on how it’s
profit that builds civilization. But there are some positive measures taken by
governments, such as anti-poverty efforts, including welfare. Using a chart of
taxes in Britain, Denmark, Sweden, and Italy, it charts poverty levels to that
of the USA.
My only fault with this great book is that there are few
strong cases studies, which I always like to see in the texts. I would have
liked to see some of these wonderful theories in action, both in the USA and
abroad. I also have one small fault with the comparison of European welfare and
US poverty. The European states with successful welfare programs are relatively
small and homogenous, as were those of Japan, Taiwan, and South Korea. But keep
in mind that these countries had nowhere near the massive defense budget of the
USA, so they could spend a greater percentage of tax revenue on welfare. There’s
not enough study on how a country’s size dictates economic policy, nor is the
issue of geography given much weight. Britain, Ireland, Taiwan, and Japan are
island nations, and it’s easy for them to restrict imports and immigration.
Italy and South Korea are peninsular, so they have only a small border with
their neighbors.
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