Great Book!

Was at Kino today when I came across a book that I'd read about in the papers, Galbraith's The Economics of Innocent Fraud. At only 60 pages and costing 28 bucks, I resolved to finish it in the bookstore. Quite an interesting read, found his arguments convincing, but being totally untrained in economics, I probably should take everything with a grain of salt.

Galbraith writes of the innocent fraud - the chasm between perception popularised by economic theory and modern society, and reality in modern economic systems. I jotted down some notes in my trusty SAF notebook right after reading it:

• Market economics where consumer is king? Not true as corporations shape demand via advertising.
• Free market? Hardly, with the dominance of big businesses. Small timers get driven out or bought up. It's the age of the corporate bureaucracy.
• Management vs Shareholders / Board of Directors. The real power is in the hands of the self-serving management and appearances are kept up to keep the shareholders and board of directors appear relevant. As a result, remuneration for the management is high despite poor company performance.
  
• Work - everyone applauds good work ethic and scoffs people who don't make the effort to find employment. Curiously though, it is those who need to work to earn their living who find work dull and meaningless, while those who don't particularly need to work, find work enjoyable and fulfilling. This really reminds me a bit of this little essay I wrote a while ago.
  
• Public vs Private spheres are collapsing. Defense is seen to be part of the public sector, but increasingly corporations are driving up demand for arms by pulling their weight in the military and government to start wars.
• Tax cuts only benefit the rich, rather than increasing aggregate demand.
• The Fed, the interest rate and inflation - the Fed only appears to be able to mitigate the effects of the boom bust cycle via the control of the interest rate. The thing that motivates companies is profit, and if there is no business opportunity, decreasing the interest rate during a recession isn't going to result in borrowing and business expansion.
• Similarly, the financial markets are totally unpredictable, and the gurus only appear to be able to make predictions of their movements.
• The poor need more support - they are the ones with the greatest marginal tendency to spend, and can drive up aggregate demand.
• GDP is extremely misleading as measure of progress - measures output, which is largely determined by corporations. Civilization does not live by the GDP, we remember progress in culture, art, philosophy, not GDP.

And omg, The Structure and Interpretation of Computer Programs is available online!