Just Finished Reading: The Consolations of Economics – Good News in the Wake of the Financial Crisis by Gerard Lyons (FP: 2014)

I picked this up (cheap) because I believed that I would disagree with the author. I did, but not nearly as much as I thought I would. This wasn’t because I agreed with him though – at least not very much. Written not too long after the financial crisis of 2008 this was very much a positive book looking towards the global recovery that was just beginning to show itself (rather ironically just a week or so ago the UK average monthly wage had just, by a matter of pennies, topped that in 2008). But he wasn’t just blindly optimistic about things. That would’ve made this book very difficult – if not impossible – the read. No, he backed up his ideas with facts and reasonable projections.

The bits I disagreed with were, to my mind, obvious. The author is a believer in the genius of markets – in the idea that all economic and a fair few other problems can be solved by just letting the Market do its thing and that a number of problems are caused by governments in particular meddling where they don’t belong. He did save himself though from being thrown in the nearest recycling bin by admitting more than once that the markets are far from perfect and that governments sometimes need to step in during ‘market corrections’. He also agreed that there are several areas where markets do not give the best outcome – infrastructure projects for instance or defence. Personally I would add schools, hospitals, prisons and utilities like water. He also mentioned, without a single sneer, that things after 2008 would have been a LOT worse if governments around the globe hadn’t stepped in to halt a total banking meltdown and even laid the blame where it belonged – investment bankers and the lack of sufficient regulation and control. So, points for him!

Much more interesting from my point of view was his analysis of the future prospects of Europe, Africa and China. He made a very strong case that the move to the Euro in the EU was far more a political decision that an economic one and that the difficulties in the Eurozone was, largely, of its own making and that countries on the periphery should not have been allowed to join in the way they did (and he praised the UK government for staying out). He was confident for Africa’s future despite everything we see in the News. Africa, he says, will surprise us in the not too distant future. I guess we’ll see. His detailed analysis of China was most intriguing – from their move to a more Capitalistic path to their internal problems and how they’re going to be solved. He was in the camp of ‘no future conflict’ with the US, either military or economic which has turned out to be more of a miss than a hit I think but he certainly didn’t see anyone like Trump coming or America’s slow slide into something akin to isolationism. Interestingly he expressed some disappointment with India which should be an economic powerhouse with its very large and very young population readily available. All in all a very interesting global analysis indeed.

Overall this wasn’t a bad book at all. A little too much on the Right for my liking but he made good points and may have shifted my appreciation of some subjects which is all to the good. As an introduction to future global economic trends I think this would be a good place to start for anyone new(ish) to economics. It certainly gave me a lot to think about and definitely deepened my appreciation of a subject I’m starting to find endlessly fascinating.