19 of 22 people found the following review helpful
A star has risen,
This review is from: Capitalism for the People (Hardcover)
I have read both Stiglitz' book in this area (The Price of Inequality) and Zingales. Zingales may not have the brand name of a Nobel Prize winner, but he certainly has the product. Where I was slightly disappointed by Stiglitz, I was delighted by Zingales.
Zingales is clearly a very pro-market economist, as you would expect from a professor at Chicago's Booth Business School. This makes his critique of capitalism in America all the more compelling: this is an insider saying it is going awry, not an outsider. His main argument is big business is the enemy, not the friend of the market. This is crucial: big businesses make out that they are in favour of robust capitalism. Zingales argues that the capitalism which big businesses favour is crony capitalism. They use the power of lobbying (focused interest groups like producers tend to be more powerful than dispersed interest groups like consumers) to protect their interests: regulations to limit competition, entrench advantages, seek contracts, minimise taxes and generate subsidies. This is not a rant: Zingales is careful to back up each claim with specific data which goes beyond special pleading. The distinction between being pro-market but not pro-big business is crucial and one which I had not fully appreciated before.
Zingales is particularly strong on explaining American exceptionalism: why America has been such a strong economic power house in the past and why those advantages are now being eroded both by globalisation and by big business capturing the legislative and regulatory landscape for their own benefit. Zingales was born and brought up in Italy: this has given him an acute perspective on why America is different. Only when you understand why capitalism worked in the first place can you see what is going wrong now and what needs to be done to put it right again.
Zingales does not dwell excessively on problems (unlike Stiglitz' book). He has the courage to spend half of his book suggesting solutions. Inevitably, the solutions focus on America: he is very keen on limiting the baleful effect of lobbyists, and he makes a surprising defence of class action suits. Needless to say, you may not agree with all his solutions and not all of them can be transported to the UK. But he offers serious food for thought. Importantly, he offers a credible way forward for those of us who have some sympathy with the 1% movement, but believe that the market is the solution, not the problem.
This book takes some reading: only 257 pages long, but the ideas keep flowing and provoking. This is a seriously good book and it deserves to become influential in the debate about the market, business and the 1% movement. I suspect a star has been born.