Wednesday, August 17, 2011

FOUR BOOKS: One Great, Two Good, One to Avoid

Objective Economics
By Dr. Northrup Buechner

Good to Great
By Jim Collins

Manias, Panics, and Crashes: A History of Financial Crises; 5th ed.
By Charles P. Kindleberger and Robert Aliber

This Time is Different
By Carman M. Reinhart & Kenneth S. Rogoff

Objective Economics is the triumphant entry of man, the rational, thinking man, into the study of economics. For the first time, man is the focus. This is in contrast to the “blind market forces”, “invisible hand” and disembodied supply and demand that has populated economics previously. Here, man makes choices by the use of his reasoning power based upon the facts of reality. Certainly, irrationality is recognized, but so are the consequences (i.e., failure). The book also presents a method of objective science, focusing on the facts of reality, and notes specifically where more information is needed. It does continue in the tradition of the best economists in that it is exhaustive, discussing the various important issues in detail and making note of the differences in this book vs. its predecessors. In this regard, Dr. Buechner’s consistent references to the three classifications of philosophy, i.e., the intrinsic, subjective, and objective, are important and helpful.

Good to Great has much to offer. It clearly presents what is actually a very objective (in the proper sense) look at the reasons why certain companies met a very high standard of greatness as businesses. The conclusions are very interesting and useful. The method and the clearness of the thinking are enjoyable and instructive. What is also interesting is that, clearly, the author and his research staff do not have the knowledge to understand and elucidate the character of the great businessmen they discuss (neither do the businessmen). People familiar with Objectivism will understand.

A facebook “friend”, someone who is considered an Objectivist by himself and others that I respect, referred to Charles Kindleberger as a good source to understand economics. I hadn’t really heard of Kindleberger, being as I left school before he began writing. So I looked around and the only book that I could easily access was Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger and Robert Aliber (Aliber does not seem to figure much in this, somehow). I was greatly surprised to see a glowing recommendation for the book on the cover by Paul Samuelson, the Keynesian author of one of the worst college texts ever forced on the innocent. Samuelson’s recommendation was well deserved. I haven’t discussed this book with the facebook friend, yet. But this indicates that he is sadly wrong. Kindleberger is strongly for government control of the economy, has no ability to distinguish between different economic events, is unable to understand the concept of causality in economics, and writes in a style designed to bore and obfuscate. I found one, accidental, modest idea in the book that might suggest some further thinking. One.

On the other hand, This Time is Different, although written by two economists who do not seem to have found anything in mainstream economic theory to question, do have some respect for facts, and wondrously, actually go and search for them. The detail and organization of the facts sometimes are a little difficult to get through, and much of what the two authors have to say is superficial. Yet, on some important points, they are very good and do provide some understanding that is important. The point of the book is that excesses in credit and money creation in every instance leads to disaster. This time is never different. I am not recommending this book to anyone who is not serious in their studying of economics and history. It certainly does have major significance to today, both here, in Europe, Japan, China, and most of the world.

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