Juha's Reviews > False Economy: A Surprising Economic History of the World

False Economy by Alan Beattie
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's review
Jan 12, 2010

it was ok
bookshelves: history, social-science, politics
Recommended for: those wondering about how the world economy came to look like it does today.
Read in June, 2010 — I own a copy

Alan Beattie's theory is that countries historically choose different paths for development and the choices they make matter for a long time into the future. Furthermore, it is not easy to change path once a country has progressed far enough on it. He starts with the book with a hypothetical comparison between Argentina and USA. Both were large countries based on European immigration and their economies started basically at par. But the policy choices they made resulted in the United States becoming the world's leading economy, while Argentina was relegated to the status of a developing country. The author further makes the point that these results are not necessarily permanent and warns that embracing bad economic policies might still lead the United States on a path towards the fate of Argentina.

Beattie, an Oxford educated British economic historian, the Financial Times world trade editor. The book demonstrates his encyclopaedic knowledge of the world economic history and the current events alike. The book is fact-packed and Beattie bases his argument firmly on facts. This also makes it somewhat tedious reading. Although he is at times witty and ironic, his style is a bit dry. Therefore it took me a long time to get through the book. Luckily it doesn't matter that much, as each of the chapters on topics, such as cities, trade, natural resources, religion, supply chains, and corruption, reads fine as a stand-alone essay. Beattie brings it all together well in the final concluding chapter.

Although clearly an advocate of trade liberalization, limited economic regulation and the benefits of globalization, Beattie is far too nuanced in his analysis and argumentation to be doctrinaire. In fact, he sums up sensibly that (p. 298):

"...giving finely tuned advice on precisely what should be done with import tariffs, tax rates, or anything else is impossible. That way lie mistakes like the micro-management of the indonesian clove marketing board by the International Monetary Fund. I don't know what the exact answers are, and anyone who claims she does should not be trusted. In general, the more that development economists have looked at the questions, the less precise or doctrinaire their advice becomes."

He then does outline certain principles that do seem to make rather universal sense based on an historical analysis. This to me sounds like a sage conclusion. Alan Beattie's book is thoroughly researched and argued, thoughtful and providing new insight into why the world economy today looks like it does. It is well worth reading.

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