Just Finished Reading: Zombie Economics – How Dead Ideas still Walk Among Us by John Quiggin (FP: 2010)

With my continuing, though still relatively new, interest in Economics how could I possibly resist a book like this! OK, I’m not exactly a huge fan of the Zombie genre – actually no fan at all – but I couldn’t help but chuckle at the author’s use of it to describe some of the ideas that helped destroy the world’s economy in 2007-2008 but that seem, like the metaphorical zombie almost impossible to kill. It also helped that the author had the native skill to describe some pretty convoluted ideas – and some of the ‘products’ created in the years up to the Crash are convoluted like you’ve never imagined – without either dumbing down or (mostly) going over my head. As a neophyte to Economics he did loose me from time to time but I kind of expected this with the almost non-existent knowledge base I’m starting from. But don’t let that put you off. This is definitely not the book that requires any great or deep understanding of the subject or any qualifications to speak of. If it did I would’ve quickly become lost. No, if you have been paying attention during the last 7-10 years and can give this fascinating volume the time and attention it deserves you’ll be OK.

So, saying all that, what was this all about? The author’s contention, which I agree with, is that the neo-liberal economic philosophy (or ideology) that emerged in the 1980’s and 90’s and grew to such astounding proportions with the Millennium was fully responsible for the Crash of 2008 (despite or maybe because of the belief that the new way of doing business had actually moved beyond the Boom-Bust cycle) and that through a mixture of denial, misinformation, propaganda and extremely short memories (to say nothing of blind greed) are coming back from the dead seemingly untouched and more than capable of doing it all again. It’s as in the financial markets have decided to hum really loud and hope that people simply forget that they were responsible for the mess we’re in today (which they seem to be doing). Some economists (amazingly or simply brazenly) are saying that the Crash of 2008 didn’t actually happen – that it was a temporary ‘blip’ on the road to profits continuing their upward spiral forever.

Concentrating on well known (and repeatedly discredited) ideas such as Trickle Down Economics and Efficient Markets, the quite bizarre idea that private companies are always more efficient than state run enterprises (who bailed out who by the way?) to less well known ideas as Dynamic Stochastic General Equilibrium (try saying that three times really fast) and ending with the killer idea of Expansionary Austerity – spend less and get more! – this is a journey through what went wrong 7 years ago, the wrongheaded ideas that seemed to underpin the whole thing, why they did nothing of the sort and what we can do about it to save the future generations from the Zombie hordes who want to destroy us all. This is well worth a read. It’s informative, mostly easy reading (though it will stretch you mind from time to time – I know it did mine) and even useful. It will help you understand some of the headlines and even given you an appreciation of the underlying ideas behind economic decisions. Recommended – just remember that you need to aim for the head….