Thursday, December 03, 2015

Review: Phishing for Phools

I'm a big fan of Robert J. Shiller, even before he won his Nobel. Phishing for Phools is his book (in collaboration with George Akerlof) about cheating in the capitalistic market economy.

Akerlof & Shiller point out that the traditional market economy treatise goes something like this: in a market economy, producers are incentivized to produce better goods in competition, innovating and therefore improving the general good of mankind. This isn't a complete story, however. The problem is, the producers are also incentivized to prey on every weakness you have, from your desire for sugary drinks, to your inability to plan ahead for busy times, whereupon you're hit by "surge pricing." The net result is that far from the idealized view of markets where improvements are driven by technical advances, we have markets where phishing is the common order of the day.

The authors provide about 6 chapters worth of examples, from politics to pharmaceuticals, from finance to tobacco. They point out that the recent "market fundamentalism" pushers are creating an economy with such weak regulation that pretty much any weakness or lack of sophistication on the part of consumers (or even existing regulatory agencies) will be taken advantage of.  By the time you're done with this book, I'm sure you can think of several other examples which the authors did not list.

If all voters read this book, we might end up living in a better world. But of course, that's not going to be true. However, even as an individual you have an incentive to read this book: once you get into the mindset of phishing as the normal operational mode of a market economy, you'll be much less subject to phishing yourself.

As such, for self-defense purposes if nothing else, this book comes highly recommended. Go find a copy and read it!

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