Saipan and everywhere: Four essential books

The economic discourse in the CNMI has always run at two levels. Publicly, it’s often the same bureaucratic stuff you’d hear in the underdeveloped world, as the patronage players and their feckless courtiers talk the same, self-aggrandizing gibberish. There is no valid economic discourse in this context, only local politics, which is the exclusive point of reference for so many people.

Fortunately for the CNMI, however, its Asian crossroads status, and the residual momentum from its economic glory days, plus a local inventory of business-minded folks, has created an invisible network of truly capable people. They’re not on soapboxes selling schemes and scams, or venting their spleens in righteous spasms, so they’re largely invisible. They are the doers, not the talkers, and they’re doing remarkably exciting projects on both sides of the Pacific. And, these same folks are remarkably worried these days; Saipan is a given, but they recognize that the U.S. economy, and its sprawling credit and securities markets, is probably about to take a one-way plunge into the abyss. This is no mere cycle, this is the capitulation of the U.S. economy.

So today, we will take the high road of discourse. Well, as high as you can get when you slum in my column here.

Based on the requests from a few folks over the past week, I will recommend four different books that are related to economics, since I think they provide the best, non-technical way to understand what the future holds for the U.S. sphere, which has worldwide implications. Whether you’re in Saipan, or anywhere else in the world, you’ll be interested in these books:

[B]1. Capitalism, Socialism and Democracy[/B]

Penned by Joseph A. Schumpeter, an economist, this work, in the context of democracy, poses the following question: “Can capitalism survive?”

The answer? “No.”

Schumpeter shows how a free society, and the free markets it allows, creates the soil in which entrepreneurs thrive and create wealth. As a growing economy becomes richer, more bureaucratic, and more institutional, an entire class of people, who have lived off the fat of the free economy, but who didn’t really produce the wealth, turn hostile to its underpinnings of freedom, and salt the soil with socialism. That’s my off the cuff summary; better summaries have surely been written.

[B]2. The Road to Serfdom[/B]

The author, F.A. Hayek, was a co-winner of a Nobel Memorial Prize in economics. He was also a professor at the University of Chicago, which is pretty much the modern center of the economics world. This book is easier to read than Schumpeter’s above-mentioned work, and the two cover roughly (roughly, I say) the same ground, and you can’t go wrong with it.

[B]3. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets[/B]

If you, like me, wonder at the abject gullibility of the small “investors” who start complaining when they figure out who the rubes are (they need a mirror for that), or you laugh at the mooks who say “the markets have to bounce back,” then you’ll love this work. Heck, you’ll love it no matter what. The author, Nassim Nicholas Taleb, is a mathematician and financial speculation guru. He’s got rock star status in my circle of friends. Ignore him at your peril. (Funny thing, I got an e-mail an hour ago saying that Taleb is now predicting a dire future for the U.S. economy; I haven’t bothered to investigate that further, but I will: When Taleb speaks, I listen.)

[B]4. The True Believer: Thoughts on the Nature of Mass Movements[/B]

In contrast to the three above authors, all of whom hold Ph.D’s in technical subjects, Eric Hoffer has no such fancy credentials. He was salt of the earth, working as a migrant laborer and longshoreman. He was entirely self-educated, a really smart guy, and a great writer. In this, his most famous work, he outlines the mentality of people and societies that turn away from thinking for themselves, and get swept up in mass movements. How does this apply to economics? It provides a good insight in to the minds of the frustrated, the morally weak, and the unaccomplished, and how their dark urges can manifest. Human behavior is the basis for economics, so it’s important to have an insight into mass psychology, and Hoffer really has it pegged.

As far as I know, all of these books are still in print, and are available in affordable paperback editions.

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[I]Ed is a pilot, economist, and writer. He holds a degree in economics from UCLA and is a former U.S. naval officer. His column runs every Friday. Visit Ed at TropicalEd.com and SaipanBlog.com.[/I]