January 5, 2012

On "how markets fail"

Here's the thing... This is an interesting and good book, but the title mis-sells and mis-lables it. It is not in any way a specific look at market failure. If you want that, look here: This Time Is Different: Eight Centuries of Financial Folly

What it is is a history of financial markets through time, but focused on some of the intellectual ideas driving some policy. It suffers from recency bias and a short time frame. The history is shown through a left-leaning frame, and the great bogyman is an overwhelming adherence to Free-market Ideologies! They are scary, but it felt rather simplistic. It is a good starting point, but it lacks objectivity. The author didn't seem to even pretend towards objectivity. He was aware of his biases. I'm just afraid this is one of those books that is sold towards everyone but will sway no one.

To save you time, I will provide a summary here in a Q & A format.

Q: What causes market failure?

A: Neoliberalism

To define that term, look here: A Brief History of Neoliberalism.