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Filthy Lucre: Economics for People Who Hate…

Filthy Lucre: Economics for People Who Hate Capitalism

by Joseph Heath

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There's a saying in Swiss folklore that if you get lost in the mountains, don't try to find a new trail. Retrace your steps until you find something familiar.

The author tries to do something similar with regard economics, looking at basic assumptions rather than fishing around in current theory.

He sees a big problem in Left / Right polarization but still concludes that at a basic level they are both right. The Left is correct in that a united society has to respect its sick and old, and give children from every background the best opportunities. The Right is correct in that America was founded on personal responsibility with the rejection of a bloated and dangerous central government.

In reality Heath shows that the US and most other Western countries have developed a malignant form of both ideologies. The Left has extended costly government "care" to whole sections of the adult population that like it but shouldn't receive it. The Right tries to dispense with government all together and doesn't recognize that government provides a framework for growth. Just because it's corrupt and inefficient doesn't mean that it isn't necessary.

The author is following the theme of his excellent earlier book, "Efficient Society: Why Canada is as Close to Utopia as It Gets" where he argues that societal/economic efficiency is not a Left/Right concept and is basically non-political. Your chosen system either gives you good value health care or it doesn't.

However there are some problems with the book:

Any known trail in economics leads to Comparative Advantage which the author supports, although probably a more valid view is expressed by Harvard professor Stephen Marglin (quoted in Paul Streitz's book "America First"): "First, we don't live in Ricardo's world, where trade is determined by fixed natural resources. In this world technology and capital are immobile: You can't move Portuguese vineyards to England, nor can England's lush sheep pastures survive in Portugal's climate. Today, technology and capital move almost as easily across international borders as within a country."

In a world where new international competitors are quickly able to scale up technology, capital and skilled labour ,Comparative Advantage starts to look like an intellectual refuge for outsourcers. The reality is that the required average skill level for American labour is falling fast with 80% of new employment in very low paying service work.

Another obligatory stop on the trail is Keynesianism, where (in the opinion of this reviewer) he also gets it wrong. He says that Keynes has taught us that recessions/ depressions are just a glitch in the system that can now be corrected by pumping up demand. However, speaking from personal experience of a complete boom/ bust cycle covering decades in a small Spanish town, I can see a whole range of boom time businesses being tested with regards to efficiency (financing, skills, organization, costs, market adaption, technological adaption, suppliers etc.) with many failing but a core of efficient ones remaining profitable. They have raised average efficiency and will presumably do well when the good times return.

In this view, recessions force efficiency onto a free market. If a high level of demand is artificially maintained then maybe inefficiencies continue undisturbed.

Heath also states that, "Technological innovation has no tendency to generate either over production or unemployment." which is doubtful as we see the first example of cashierless checkouts, driverless cars, teacherless online schools etc. (see Martin Ford's interesting book, "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future").

Nevertheless, I have no hesitation in recommending the book. ( )
1 vote Miro | Jan 25, 2014 |
I've been recommending this to everybody I've talked to for weeks now, but just finished it today. It is well written, sometimes quite amusing, but as a serious work of non-fiction it still takes a while to get through it. But time and effort well spent! I found it gave me a lot of new insights and a new respect for economics. [Mind you, Heath is a philosopher, not an economist, so I now have greater respects for philosophers too!] The book is organized around debunking a number of common fallacies of both the right and of the left. A fallacy, he explains in the epilogue, is an argument that, while starting from a reasonable place and sounding pretty good - ends up in the wrong place because of some error - for example forgetting that for every buyer there has to be a seller. ( )
1 vote xlsg | May 17, 2010 |
A highly interesting book on economic fallacies. Heath explores economic fallacies perpetuated by left and right wing media and politicians. The aim of the book, according to Heath, is to correct economic illiteracy.

Heath does a decent job of correcting these fallacies. Heath is a philosophy professor, and as such has a good grasp of logic and how to effectively use it with his readers. (Though at times I wondered if his writing was more rhetoric than logic).The redeeming factor of the book is Heath's minimal bias towards any economic doctrine. Though more a supporter of government involvement than libertarianism, he does recognize that government involvement (ie setting prices) is detrimental.

Heath, though, has difficulty in fully explaining economic concepts. Economics was one of my minors in university, yet at times I had to pause to think through his theories and models. Unless other readers have a decent understanding of basic micro/macro economics (or logic) than I suspect many will have trouble understanding the book.This is a major flaw; the point of the book is to show fallacies in media and politics. It is to help normal people see through rhetoric. In this way, Heath fails.

Overall, I enjoyed the book but think that Heath needs to make his work more accessible. ( )
1 vote Libbybeens | May 30, 2009 |
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