A review by teagan821
How Markets Fail: The Logic of Economic Calamities by John Cassidy

4.0

Fantastic theoretical and critical account of the 2008 Financial Crisis by first backing up to economic theory since the 18th century and following how it progressed and shaped our fiscal and monetary policy in the U.S. (and perhaps the broader Western world). I can tell you I would have NOT understood this book had I not taken two economics courses in college, but I'm glad I did and I'm glad I chose to read this book. This should be required reading in all colleges teaching economics/financial crises. The 2008 Crisis was so much more complicated, even in just the mechanisms in which big banks failed, than simply subprime mortgages and The Big Short.

I agree with Cassidy's angle that the "idolatry of free market capitalism" doesn't capture the nuances of real life (rational irrationality, externalities, lack of full information, prisoner's dilemma, etc.) and ultimately fails us as a guiding economic principle. Highly recommend to anyone interested in economics or working in the financial sector.