Thursday, March 15, 2012

The Crisis of Capitalist Democracy

I received this book, written by Richard Posner, as a Christmas gift.

I'm not someone who was always interested in economics. I took an econ class in college and performed miserably - economics is not intuitive for me. I entered the job market for full-time work for the first time in the summer of 2009, after finishing graduate school. The news about the economy seemed to be on full-blast before that and ever since. As time has gone by, I've become ever more curious to understand what happened and why. I feel like I've read all the books about the collapses and bailouts of different institutions (though I know I haven't). I still didn't understand how, as a society including a huge number of people, banks, other businesses, and government units, this had come to pass.

Enter The Crisis of Capitalist Democracy. Judge Posner and I probably wouldn't agree on anything other than our skepticism about the government's actions regarding the economy, both before and after the crisis. The part of this book I found most fascinating was the description of the economy before 2008, especially Alan Greenspan's approach to the economy. I think Judge Posner does a good job of  describing Greenspan's philosophy with neutral tone, and then explaining why he disagrees rather than trying to explain and criticize at the same time. I think the book would have been almost impossible to understand without extensive background in the subject area had he taken that approach, which is too common, especially in subject areas that have a political component. For me, as a person born in 1984, this lead-up is crucial. The dot com bubble burst in 2000 - when I was 16 years old and much more concerned with going to summer camp and getting a driver's license. I think Posner correctly argues that much of what is going on now is the result of decisions made during my childhood and adolescence, if not before. Understanding what occurred then is crucial to understanding what is happening now and how we will move forward.

After explaining the lead-up, he devotes little detail to the crisis itself, and then offers some criticisms of the government's efforts to improve things. The book was published in March 2010, two years ago. Some of the criticisms were a bit premature, and now seem a little out-of-date. It seems to me that understanding the success (or lack thereof) of the government's efforts is probably years away. I can only hope that Posner will create another work at that point offering some historical analysis. He then goes on to make some suggestions about reforms. I thought this second portion was less interesting than the first part, but I would certainly recommend the book. Happy Reading!

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