24 of 35 people found the following review helpful
Keynes on steroids.,
This review is from: Freefall: Free Markets and the Sinking of the Global Economy (Hardcover)Stiglitz is a Keynesian, and he makes no attempt to hide it. Not only does he support stimulus spending, in fact he thinks the current round is insufficient. Not at any time does he consider the possibility of saddling future generations with too much debt. But then perhaps his plan is to inflate the debts away, seeing how he dedicated a substantial part of this book to defuse the debate on inflation.
Although he has good points with regards to gutted regulation, his solution besides improving regulation is essentially more of the same: lots of cheap credit - ignoring that this was what caused a large part of the issues we see around us at present.
At times, his solutions become rather confusing - he wants high interest rates on savings accounts, yet low interest rates on mortgages. According to the Austrian School of Economics, this separation is impossible; money will flow between sectors. He also argues against cutting wages during a recession, ignoring that this itself might very well cause an increase in unemployment, and during periods of deflation, a real-rate wage hike for those still with jobs and a decrease in competitiveness for the company in question. He furthermore recognizes the UK and the US might have to accept a 10% cut in consumption - but doesn't mention how this might be implemented, or even the basis of this assumption.
His historical perspective is debatable as well - he argues Hoover was a Laissez-Faire supporter, and what was needed during the Great Depression was even more stimulus (spot a pattern here?). He also claims no-one knows why the 1987 crash took place, despite significant indications this was caused by stop-loss triggers.
The book is very politically motivated, to the extent that he has no qualms with regards to criticising the US, but not a single bad word about China or Japan is mentioned, despite there being plenty of controversies. Issues such as differences in regulation favouring the East Asian economies are left out, but when regulation favours the US, it's branded "exploitation". He also states he foresaw the collapse, yet he sees no bubble brewing in China. Time will tell on that one, obviously.
I do want to point out he does a good job at summing up the current crisis. He does propose solutions, although they seem a bit far-fetched at times. For instance, a gross domestic "happiness" indicator would be virtually impossible to quantify.
All in all, a pretty good book. But I can't agree with his ultra-lax Keynesian outlook - especially not considering Keynes himself advocated running a surplus at the top of the cycle, which this new brand of Keynesians seem to conveniently ignore - and hence give it a 3/5.
Tracked by 1 customer
Sort: Oldest first | Newest first
Showing 1-4 of 4 posts in this discussion
Initial post: 11 Dec 2010 06:17:21 GMT
Christopher Wallis says:
I would just like to praise this thoughtful and well worded review. Too often I see reviews for books (like the recent one by Gordon Brown) as nothing more than attacks on the authors and their ideologies. While you do make clear that you do not agree with Stiglitz's ideas for solutions, you nevertheless point out why in a calm, measured manner with no ad homeniem, instead poitning out what you feel he has 'left out' of the argument or failed to address, a prefectly legitimate critique for an economics book. Not being an economics student, but having recently become interested thanks to the present crisis I have been starved of useful information about where to start reading up on economics, something which fascinates me but is hard to understand at first. Your review is the most helpful critical review I've read on this site. Thank you.
Posted on 4 Mar 2011 13:37:52 GMT
[Deleted by the author on 4 Mar 2011 13:39:06 GMT]
Posted on 12 Oct 2011 18:30:17 BDT
I agree with Christopher Wallis. Thank you for an all too rare balanced, critical review.
Posted on 29 Apr 2012 19:31:37 BDT
Rob Julian says:
John Maynard Keynes made a very interesting radio broadcast on the subject of free trade and protectionism called; "Pros and Cons of Tariffs". Back then tariffs were a big issue, and what Keynes had to say was characteristically insightful. If you are interested in reading most of this 1932 BBC broadcast, (approx 1000 words) please follow this link and find it written in my Amazon book review.Competition Friendly Protectionism - How a Certain Kind of Protectionism Could Temper and Improve Globalisation
‹ Previous 1 Next ›