False Economy: A Surprising Economic History of the World

In This Review

False Economy: A Surprising Economic History of the World
By Alan Beattie
Riverhead Books, 2009
336 pp. $26.95

This lively book is a quirky, selective history of the world emphasizing economic endowments and incentives. It thrives on paradoxes, such as why Argentina, one of the world's richest and most promising countries in 1900, is now considered a mediocre developing country; why Indonesia under the corrupt Suharto showed much economic progress after 1970, whereas Tanzania under the honest Julius Nyerere showed none; and why Egypt, once the granary of the Roman Empire, now imports half of its staple food. The book stresses the importance of initial conditions and path dependence -- history and tradition -- while insisting that people are in charge of their subsequent fates through the choices they make, especially with respect to policies, which can either promote or inhibit progress. Vested interests resist change in every society; crises, which reveal failures in existing arrangements, may be necessary to overcome them, but they need to be exploited.