Wednesday, April 12, 2017

Review: The New Confessions of an Economic Hitman

The New Confessions of an Economic Hit Man, rather than a sequel, is a revision of an earlier, existing work, so if you've read the previous version of this book I doubt if you'll get very much out of this one.

If you're a fan of Dani Rodrik, you're probably well aware of the so-called Washington Consensus and its failure to lift most 3rd world countries out of poverty. In effect, the Washington Consensus invites 3rd world countries to borrow heavily in order to build infrastructure, set up "market reforms", and run a so-called capitalistic economy. John Perkins claims that most of his career was to be one of the optimistic economic forecasters who paints an excessively optimistic view of the growth of such economies in order to persuade leadership to borrow heavily.

Economic forecasters have a poor track record: it's fair to say that they basically get paid to say whatever it might be profitable to say. I'll never forget walking out of a corporate meeting where some over-optimistic PM would bring out power-point charts to convince the head honchos that China would be a meaningful revenue market for a US-based internet company. As a naive engineer I thought the numbers were fishy at best and mendacious at worst, but I figured since senior management bought into it I might be wrong. Now, would I have called that PM an Economic Hit Man? He did benefit his own career (and his promotion opportunities, as well as additional stock) by effectively lying through his teeth, but I'm not sure there was a conspiracy in China to induce Google, Facebook, Microsoft, and Uber to dump huge amounts of capital into China. Greed and hubris need not get support from the Chinese government.

As a result, reading this book feels like reading the auto-biography of a self-important economic forecaster taking credit for producing results, and confessing that yes, he was unqualified to make those ridiculous forecasts, and that yes, he was recruited into doing so by some nefarious groups of government agencies and private contractors. The problem with all these claims is that he doesn't provide any evidence, and the Washington Consensus approach certainly didn't need the help of a vast conspiracy to keep pushing its agenda: greed and blind allegiance to capitalism would be sufficient to keep the momentum.

In any case, the book's entertaining, but I didn't learn very much from it (though I did learn more about various South American countries' political leadership). It's quite clear that attempts to lift most third world countries out of poverty via the Washington consensus have failed, while the Asian model has been more successful. But for better analysis you should probably look elsewhere than John Perkin's book.

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