Monday, April 21, 2008

Loretta Napoleoni Rogue Economics

Book Cover

I became interested in Rogue Economics by Loretta Napoleoni when researching an article on obesity. She covered the issue in just a couple of pages but it provided some key statistics and interesting ideas on the causes of obesity.

The thing I like about the book is that it covers many of the new economic issues not covered in textbooks. She deals extensively with the economic impact of the internet, new technologies and the rise of China's economy.

The chapters on China are interesting in explaining how the Chinese economy is based partly on a fanatical work effort which has its base in the ideology of Mao.

Another feature of the book is its ability to debunk widely held beliefs. This doesn't just include myths held by Chinese people, but also explaining the new source of power and influence and why there are so many Russian Oligarchs living in suburbs of London like Chelsea.

It is not dogmatic or highly ideological, but tries to understand the essence of economic problems. For example, in society there is a tendency to label 'globalisation' as good or bad. However, this simplistic understanding fails to account for the intricacies of individual issues.

There is a good chapter on the recent credit crisis. For example, by 2006, US mortgage lending had reached $7trillion or 10% of the world's economy. American debt (40% of these mortgages required no downpayment. The big losers of this crisis are likely to be middle class couples with children.

Yet, for every problem there are also some who win. In this case it is those companies specialising in dealing with bankruptcies and credit collection. This is a theme of the book, highlighting those who have benefited from the new economy. The winners don't particularly make for encouraging reading. Those who are benefiting from the modern economy include: internet gambling and prostitution sites, Russian Oligarchy, and debt collection agencies. It provides little comfort for the average worker, but, it is an interesting take on Economics.

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