False Economy
A Surprising Economic History of the World
Alan Beattie
Riverhead Books
a member of Penguin Group (USA) Inc.
New York 2009
Riverhead Books
Published by the Penguin Group Penguin Group (USA) Inc., 375 Hudson Street, New York, New York 10014, USA • Penguin Group (Canada), 90 Egiinton Avenue East, Suite 700, Toronto, Ontario M4P 2Y3, Canada (a division of Pearson Canada Inc.) • Penguin Books Ltd, 80 Strand, London WC2R 0RL, England • Penguin Ireland, 25 St Stephen's Green, Dublin 2, Ireland (a division of Penguin Books Ltd) • Penguin Group (Australia), 250 Camberwell Road, Camberwell, Victoria 3124, Australia (a division of Pearson Australia Group Pty Ltd) • Penguin Books India Pvt Ltd, 11 Community Center, Panchsheel Park, New Delhi-110 017, India • Penguin Group (NZ), 67 Apollo Drive, Rosedale, North Shore 0632, New Zealand (a division of Pearson New Zealand Ltd) • Penguin Books (South Africa) (Pty) Ltd, 24 Sturdee Avenue, Rosebank, Johannesburg 2196, South Africa
Penguin Books Ltd, Registered Offices: 80 Strand, London WC2R 0RL, England
Copyright © 2009 by Alan Beattie All rights reserved. No part of this book may be reproduced, scanned, or distributed in any printed or electronic form without permission. Please do not participate in or encourage piracy of copyrighted materials in violation of the author's rights. Purchase only authorized editions. Published simultaneously in Canada The lines from Tony Harrison's The Blasphemers' Banquet are quoted from Collected Film Poetry (Faber & Faber, 2007).
Library of Congress Cataloging-in-Publication Data
Beattie, Alan.
False economy / Alan Beattie.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-59448-866-5 1.
Economic history. 2. Economics. I. Title.
HC51.B377 2009 2009005885
330.9—dc22
Book design by Meighan Cavanaugh
Reformatted for Kindle/Epub by Sayurjengkol (April 2011)
While the author has made every effort to provide accurate telephone numbers and Internet addresses at the time of publication, neither the publisher nor the author assumes any responsibility for errors, or for changes that occur after publication. Further, the publisher does not have any control over and does not assume any responsibility for author or third-party websites or their content.
Synopsis
Why do some economies and societies crash and burn, while others ore buffeted by storms and yet still recover?
Can we analyze the fates of countries in a way that will help us analyze the fault lines and successes that can make or break a civilization, a city, or a culture? In False Economy, Alan Reattie weaves together n, elements of economics, history, politics, and human stories, revealing that governments and countries make concrete choices that determine their destinies. He opens larger questions about the choices countries make, why they make them or are driven to make them, and what these choices can mean for the future of our global economy as we go forward into uncharted territory.
Economic historv involves forcing together disciplines that fall naturally in different directions, the universal explanation versus the individual narrative. But Beattie has written a lively and lucid book that engagingly and thought-provokingly marries the two disciplines and reveals their interdependence. Along the way, you'll discover why Africa doesn't grow cocaine, why our asparagus comes from Peru, why your keyboard spells QWERTY, and why giant pandas are living on borrowed time…
Beattie uses extraordinary stories of economic triumph and disaster to explain how some countries have gone wrong while others have gone right, and why it's so difficult to change course once you're on the path to ruin.
About the Author
Alan Beattie graduated from Balliol College, Oxford, with a degree in history. After taking a master's degree in economics at Cambridge, he worked as an economist at the Bank of England and then joined the Financial Times in 1998. Currently the paper's world trade editor, he writes about economics, globalization, and development.
To my parents.
Time, that gives and takes our fame and fate
and puts say, Shakespeare's features on a plate
or a Persian poet's name on a Tandoori
can cast aside all we commemorate
and make Lot 86 or Lot 14
even out of Cardinal and Queen
and bring the holy and the high and mighty
to the falling gavel, or the guillotine.
Tony Harrison
The Blasphemers' Banquet
Preface
Franklin Delano Roosevelt, perhaps the greatest of all of America’s presidents, loved stories about himself. One of his favorites went like this: During the Great Depression of the 1930s, one Wall Street commuter had a daily morning ritual. He would buy the newspaper on the way into the train station. He would glance only at the front page and then, without taking another look, hand it back to the newsboy and board the train. Eventually, the boy got up the courage to ask him why he read only the front page. The commuter explained that he bought it solely for the obituaries. The newsboy pointed out that the obituaries were at the back. "Boy," the man said, "the son of a bitch I'm interested in will be on page one."
At the time, Roosevelt was busy trying to save the U.S. economy in the face of a colossal global dislocation. He was working to preserve the most powerful engine for creating wealth in the history of the world. To do so, he expanded radically the frontiers of American government. And a decade later, at the end of his presidency—and his life—he would help to create the institutions thn tat led a global economy shattered by war and by misguided isolationism back on the road to openness and prosperity.
And yet he was vilified by some, like that New York commuter, who would continue to benefit from the success that FDR helped to restore. Roosevelt was trying to save capitalism from itself, and some of the capitalists were resisting. Knowing the right thing to do to enrich your nation and the world is hard enough. Bringing people with you to get it done is even harder.
The financial crisis that started in 2007 and exploded around the world in 2008 was a reminder of how fragile and reversible is the history of human progress. But it should also remind us that our future is in our own hands. We created this mess and we can get ourselves out of it.
To do so involves confronting a false economy of thought—namely, that our economic future is predestined and that we are helplessly borne along by huge, uncontrollable, impersonal forces. To explain the vast complexity of the economic history of the world, there is a rich variety of fatalistic myths on hand: that some economies (the United States, Western Europe) were always going to get rich and that others (Africa) were always going to stay poor; that certain religions are intrinsically bad for growth; that market forces are unstoppable; that the strutting vanguard of globalization cannot be routed and driven into retreat.
The aim of this book is to explain how and why countries and societies and economies got to where they are today—what made cities the way they are; why corruption destroyed some nations but not others; why the economy that fed the Roman empire is now the world's biggest importer of grain. But it will reject the idea ......