Rob Larson’s brilliant new book, Bleakonomics: A Heartwarming Introduction to Financial Catastrophe, the Jobs Crisis and Environmental Destruction (Pluto, 2012) has been reviewed in Times Higher Education over the weekend.
Stewart Lansley writes a concise, favourable summary of Larson’s argument, stating that “it is not necessary to endorse all of Larson’s examples to accept his broad thesis.” Here’s an extract of the article reproduced:
Memorably described as the “dismal science” by Thomas Carlyle, economics is now the “failed science”. According to Rob Larson’s Bleakonomics, today’s belief in the virtues of the “invisible hand” of free markets has wrought environmental, social and financial havoc. Why? Because the economic orthodoxy of the past 30 years has ignored something rather basic: the collateral damage – the multiple externalities or side-effects – of economic activity.
By way of illustration, Larson begins this extended essay with a summary of the “plutonomy papers” prepared by Citigroup, the US mega-bank, in the mid-2000s. These confidential (but subsequently leaked) strategy documents describe the US’ return to 19th-century levels of inequality as “the economic disenfranchisement of the masses for the benefit of the few”. Far from condemning this trend, the reports outline ways that multimillionaire clients could gain from the rebirth of an American plutonomy. Indeed, the related client seminars were titled Rising Tides Lifting Yachts.
According to Larson, super-sized inequality is a classic example of market failure. The growing income gap (described by the Financial Times in 2008 as a “Grand Canyon”), caused by concentrating the gains from growth in fewer and fewer hands, has destabilised national economies.
Bleakonomics is full of similar examples, mostly from the US, of the effect of ignoring externalities. The BP oil-rig explosion in the Gulf of Mexico in 2010 arose, Larson argues, from “a consistent pattern of cost- and corner-cutting by BP” and a massive “corporate undervaluation of risk”. The rise of antibiotic resistance in hospitals has been traced to the US healthcare industry’s push to boost profits by using fewer (and more poorly trained) nurses.
To read the entirety of this THE review, click here.
A Heartwarming Introduction to Financial Catastrophe, the Jobs Crisis and Environmental Destruction
Short and darkly humorous guide to the three great crises plaguing today’s world: climate change, inequality and financial crisis.
“I have been reading Rob Larson’s columns for some time, with great profit and appreciation. His work is not only solidly grounded but also lucid and accessible, a most valuable contribution to public understanding and vitally needed action.” – Noam Chomsky
“Larson adds a critical component to the policy debate about financial reform by explaining why the systemically dangerous institutions (SDIs) — the “too big to fail” banks — imperil our democracy as well as our economy. They are ticking time bombs certain to cause great damage unless we follow Larson’s advice.” – William Black, Associate Professor of Economics and Law, University of Missouri-Kansas City, author of The Best Way to Rob a Bank is to Own One