Tuesday, August 1, 2017

Not Exactly A Book Review: Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics by John Tamny

I dislike traditional book reviews, Books are too enchanting to be treated with the formal formulistic formalities the New York This And That imposes on them.

I ramble when I discuss books because a good book is thought provoking. Tamny has given us a five star fiesta. Milton Friedman made that which seemed complicated, simple to understand. Thomas Sowell would later surpass Friedman in this talent. Sowell was a teacher by trade btw, and that might account for his ability to teach. It is high praise to compare Tamny to Friedman and Sowell and that is exactly what I am doing. 

Tamny uses icons of popular culture to illustrate his points and this is highly effective. The Rolling Stones were chased out of the UK by the taxman and they took hundreds of jobs with them. An onerous inheritance tax nearly destroyed the livelihood of an entire estate-village that is the fictitious Downton Abbey. Tamny's example of Lebron James is not quite as persuasive but I will put that subject on the shelf for now,

Tamny reminds us just how simple the subject of economics really is. The four pillars of macroeconomics are:
1. Trade
2. Taxes.
       3. Regulation.
   4. Currency

History provides abundant examples of how to do these things right, that is, to promote maximum prosperity. Yet, the experts usually do the wrong thing. The blueprint is available but the smart guys ignore it.

The single most important takeaway from "Popular Economics..." is the importance of a strong currency. Tamny reinforces my viewpoint that Richard Nixon was a disastrous president and that his shotgun divorce of dollar and gold had inflicted turmoil that is felt to this very day. The populace might understand the results of bad trade policy, bad tax policy, and bad regulatory policy but bad monetary policy....not so much.

Tamny lays it out. Strong dollar good. Weak dollar bad. A president who strengthens the dollar is a good president. A president who weakens the dollar is a bad president. Reagan, Clinton good. Bush II, Obama bad. Coolidge good. Hoover, Roosevelt bad. 

Tamny does not stop there. He asks the reader to imagine a world where standardized measurements--the inch, the second, a degree of Celsius--were constantly changing. Chaos would ensue and would affect every aspect of daily life. Cooking, baking, home repair, auto maintenance would be all but impossible during periods of extreme volatility. Tamny reminds us that money is primarily a means of measuring wealth, not unlike the gram, the ounce or the cup. It is as absurd for leaders to manipulate the value of a currency as it is to change the sizes of measuring spoons.

For a short book, Tamny covers a lot of ground. He believes, as many of do, that the 2008 financial fiasco brought us a cure far worse than the illness. With that stated, he blames the housing collapse not on social engineers, credit default swaps or the usual scapegoats. Tamny posits that it was the declining dollar that eclipsed everything and only when the dollar was reinvigorated did the economy start to recover.

This blogger's biggest fear of Donald Trump is not that he has a bad temperament that will ultimately trigger a nuclear war or that our enemies won't like us or that he will say bad things about Rosie O'Donnell. My biggest fear, and I have felt this early on in the primaries, is that Trump will not appreciate the importance of a strong dollar. Let's hope the president reads John Tamny.

Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics by John Tamny. 5 Stars!

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