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pitosalas's review against another edition
4.0
Best economics book i read in a while. I havent read many actually.
benrogerswpg's review against another edition
4.0
I really enjoyed this book.
I have been on a stint of financial crash and economics books, and this one was spectacular.
I enjoyed this book much more than [b:Crashed: How a Decade of Financial Crises Changed the World|36950522|Crashed How a Decade of Financial Crises Changed the World|Adam Tooze|https://i.gr-assets.com/images/S/compressed.photo.goodreads.com/books/1545193013l/36950522._SY75_.jpg|58749161]
Also, a very timely read, even though it is like 10 years old.
Would recommend!
4.1/5
I have been on a stint of financial crash and economics books, and this one was spectacular.
I enjoyed this book much more than [b:Crashed: How a Decade of Financial Crises Changed the World|36950522|Crashed How a Decade of Financial Crises Changed the World|Adam Tooze|https://i.gr-assets.com/images/S/compressed.photo.goodreads.com/books/1545193013l/36950522._SY75_.jpg|58749161]
Also, a very timely read, even though it is like 10 years old.
Would recommend!
4.1/5
holodoxa's review against another edition
2.0
How Markets Fail by John Cassidy (as many others here on GR have described) is roughly a two-part book, where the first portion provides a summary of the history of market economics and then dives into an analysis of the 2008 housing market crash/credit crunch. The animating argument for the work is that the U.S. need to abandon the "utopian economics" of extreme laissez-faire capitalism and embrace "reality-based economics" where smart government regulations and monetary policy moderate boom-and-bust cycles and promote general stability in capital markets.
Although I am an aggressive champion of the free market, there are things to admire in Cassidy's work. First, he is eminently clear about the failures of centrally planned economies (i.e. communism, socialism, etc) and the immense power of markets to drive growth and flourishing. In short, he still is an advocate of capitalism (of course regardless of anyone's advocacy markets are going to persist anyhow). He is simply some flavor of neo-Keynesian. Second, Cassidy's historical summary of market economics (i.e. classical -> neo-classical -> Keynesianism -> Monetarism/neoliberalism) and criticisms of various assumptions of free market models (e.g. perfect information, many small firms, rationality) were reasonable and partially persuasive. Though, these criticisms are completely familiar to most people with some amount of college-level exposure to economics, but at least Cassidy does a reasonable job of detailing these situations. Cassidy presents a lot of the textbook examples of "market failure," including the tragedy of the commons (overfishing of public waters), the prisoner's dilemma (i.e. imperfect information and destructive incentives), and network externalities (e.g. Microsoft Word). Overall, it is useful that How Markets Fail contributes to popularizing more sophisticated understandings of economics that one will usually find in mainstream public discourse today.
How Markets Fail is also beset by several important flaws, which outpace its bright spots. The largest flaw appears to be a generalized overconfidence in the ability of government to effectively and efficiently regulate financial markets (Cassidy's criticism are mostly focused on financial markets). Cassidy doesn't detail the long history of regulatory failures and blunders (e.g. price controls, rent-seeking, zoning laws, sludge, crowding out, corruption, waste). There is no discussion of the morass of incentives that face public officials and bureaucrats (i.e. public choice theory) and how they may guide policy. He also flippantly dismisses the role policy itself played in the 2008 financial crisis (i.e. the spike in home purchasing relative to historical norms wasn't the doing of private economic choices alone). Despite Cassidy's recommendations, which are minimal and relatively vague, it is unclear he could provide a persuasive narrative for how the crisis could have been averted. It would just be ***hand-waving*** Glass-Steagall Act ***hand-waving*** Alan Greenspan ***hand-waving***.
Cassidy's work also completely lacks a discussion about what generates real productive growth in the economy. This is a huge omission, which I worry was intentional. I'm concerned that Cassidy chose to avoid this because it would compel a discussion of the trade off between stability and innovation/growth. Put overly simply, we can have a stable economy that doesn't really grow or we can have a dynamic economy that can explode in any direction. Cassidy decidedly chooses the former and much of American policy over the 20th and 21st century has steered us in that direction. However, Cassidy owes his audience a full discussion of what this means. Hint, there will be a lot more lose-win situations to navigate than win-win situations, which I think bodes less well for social tranquility and overall flourishing.
Of course, maybe it is too much to expect a serious but popular work of economics with an agenda to provide more sophistication and balance and to steelman arguments that conflict with the author's ostensible prior beliefs. But Cassidy's ideas should be subject to the same intense scrutiny he applies to the ideas of classical, neoclassical, neoliberal, Chicago school thinkers. This is a test his book fails.
Although I am an aggressive champion of the free market, there are things to admire in Cassidy's work. First, he is eminently clear about the failures of centrally planned economies (i.e. communism, socialism, etc) and the immense power of markets to drive growth and flourishing. In short, he still is an advocate of capitalism (of course regardless of anyone's advocacy markets are going to persist anyhow). He is simply some flavor of neo-Keynesian. Second, Cassidy's historical summary of market economics (i.e. classical -> neo-classical -> Keynesianism -> Monetarism/neoliberalism) and criticisms of various assumptions of free market models (e.g. perfect information, many small firms, rationality) were reasonable and partially persuasive. Though, these criticisms are completely familiar to most people with some amount of college-level exposure to economics, but at least Cassidy does a reasonable job of detailing these situations. Cassidy presents a lot of the textbook examples of "market failure," including the tragedy of the commons (overfishing of public waters), the prisoner's dilemma (i.e. imperfect information and destructive incentives), and network externalities (e.g. Microsoft Word). Overall, it is useful that How Markets Fail contributes to popularizing more sophisticated understandings of economics that one will usually find in mainstream public discourse today.
How Markets Fail is also beset by several important flaws, which outpace its bright spots. The largest flaw appears to be a generalized overconfidence in the ability of government to effectively and efficiently regulate financial markets (Cassidy's criticism are mostly focused on financial markets). Cassidy doesn't detail the long history of regulatory failures and blunders (e.g. price controls, rent-seeking, zoning laws, sludge, crowding out, corruption, waste). There is no discussion of the morass of incentives that face public officials and bureaucrats (i.e. public choice theory) and how they may guide policy. He also flippantly dismisses the role policy itself played in the 2008 financial crisis (i.e. the spike in home purchasing relative to historical norms wasn't the doing of private economic choices alone). Despite Cassidy's recommendations, which are minimal and relatively vague, it is unclear he could provide a persuasive narrative for how the crisis could have been averted. It would just be ***hand-waving*** Glass-Steagall Act ***hand-waving*** Alan Greenspan ***hand-waving***.
Cassidy's work also completely lacks a discussion about what generates real productive growth in the economy. This is a huge omission, which I worry was intentional. I'm concerned that Cassidy chose to avoid this because it would compel a discussion of the trade off between stability and innovation/growth. Put overly simply, we can have a stable economy that doesn't really grow or we can have a dynamic economy that can explode in any direction. Cassidy decidedly chooses the former and much of American policy over the 20th and 21st century has steered us in that direction. However, Cassidy owes his audience a full discussion of what this means. Hint, there will be a lot more lose-win situations to navigate than win-win situations, which I think bodes less well for social tranquility and overall flourishing.
Of course, maybe it is too much to expect a serious but popular work of economics with an agenda to provide more sophistication and balance and to steelman arguments that conflict with the author's ostensible prior beliefs. But Cassidy's ideas should be subject to the same intense scrutiny he applies to the ideas of classical, neoclassical, neoliberal, Chicago school thinkers. This is a test his book fails.
bradvansickle's review against another edition
3.0
Lots of lessons to take away, even for the average person, but this book is meant for a person much more versed in basic economic and financial principles than myself.
amygko's review against another edition
4.0
Unlike typical bestseller type of books on this field that repeatedly show numerous quotes, examples and personal observations to support the author's perspective(one of the good examples would be 'The Lexus and the Olive Tree' by Thomas Friedman), I really like this book that it covers the history of economic theories to provide the background of different kinds of economic system theories back from Adam Smith and analyze what would be the main cause of the economic crisis happened between 2007 and 2008. As a person with bachelor degree in statistics and economics, I agree with the author that Economics in American Universities is heavily geared toward Chicago School although my academical training has been involved with constructing quantitative economics modeling. In other words, we need more economics professionals who has perspective against "utopian economics" so they can also teach students majoring in economics to have less biased opinions.
bookwrapt's review against another edition
5.0
This was a great book. So impressed by how Cassidy broke down the complexities of economic theory into a really engrossing read. Ten years on it feels like we are working our way right back to the conditions that precipitated the recession in 2007. This book definitely left me feeling less adrift as I look to listen to candidate's economic plans in the coming elections.
inquiry_from_an_anti_library's review against another edition
informative
reflective
medium-paced
5.0
qaphsiel's review against another edition
5.0
Cassidy is an economist by education and did a lot of research for the book. If you've already know the basics of economic history you might want to skip that part of it. However, I did and I still found his non-denominational Brief History of Economics readable because he talks about a few lesser-known figures who figure into later parts of the book as well as more recent developments such as behavioral economics.
Likewise, the basics of why markets don't always operate as hoped or expected by one economic ideology or the other is well-presented. He labels the strong free market/rational econ thinking as utopian economics and advocates for non-ideological, pragmatic approach he calls reality-based economics.
When it comes to dealing with the 2007-2008 crisis, he carefully dissects the events, policies, and actions of the various players and shows how they created the incentives that led to the speculative bubble and then let it grow to gargantuan proportions. It was no one person or entity's fault, but rather the result of many entities acting together, most informed to one degree or another by utopian economic thinking.
Likewise, the basics of why markets don't always operate as hoped or expected by one economic ideology or the other is well-presented. He labels the strong free market/rational econ thinking as utopian economics and advocates for non-ideological, pragmatic approach he calls reality-based economics.
When it comes to dealing with the 2007-2008 crisis, he carefully dissects the events, policies, and actions of the various players and shows how they created the incentives that led to the speculative bubble and then let it grow to gargantuan proportions. It was no one person or entity's fault, but rather the result of many entities acting together, most informed to one degree or another by utopian economic thinking.
phouweling's review against another edition
4.0
It's like the author says himself in the Conclusion: "If the reader feels like he or she has read two books, or, possibly, three, ... " It definitely felt like two books to me. In the "first book" the author describes two competing streams of thought in economics: 'utopian economics' and 'reality-based economics'. It describes various well-known and influential economic thinkers and their theories, like Hayek, Smith, Keynes, Minsky, Friedman, Fama and many authors, and especially the debate between the two streams. I think this is the best part of the book. The "second book" is a description of the built-up and unfolding of the subprime crisis of 2008. This part of the book is more standard, containing a lot of facts and figures, and less interpretation by the author. If you haven't read anything on the subprime crisis yet, you'll probably find it worth your while. If you have, well, then you may be a bit disappointed by this part of the book, just like me.
amygko's review against another edition
4.0
Unlike typical bestseller type of books on this field that repeatedly show numerous quotes, examples and personal observations to support the author's perspective(one of the good examples would be 'The Lexus and the Olive Tree' by Thomas Friedman), I really like this book that it covers the history of economic theories to provide the background of different kinds of economic system theories back from Adam Smith and analyze what would be the main cause of the economic crisis happened between 2007 and 2008. As a person with bachelor degree in statistics and economics, I agree with the author that Economics in American Universities is heavily geared toward Chicago School although my academical training has been involved with constructing quantitative economics modeling. In other words, we need more economics professionals who has perspective against "utopian economics" so they can also teach students majoring in economics to have less biased opinions.