Would you like to know why we’ve lost millions of middle class jobs over the last 30 years and endured annual trade deficits of more than $500 billion for 15 years? Would you like to learn what we can do to right the ship? Then, buy, read, study and refer to “Free Trade Doesn’t Work: what should replace it and why” by Ian Fletcher. It ranks in my top five books on economics. It’s that good! The title makes bold claims; the content delivers.

In his effective 267 pages of text, Ian Fletcher dissects and often demolishes fundamental teachings about the benefits and risks of trade and replaces them with evidence based updates.  He then recommends a practical alternative based on clear objectives. He wastes no time on polemics or blame as he provides easily understood and well documented evidence sprinkled with stimulating analogies to support his thesis. He displays a refreshing and sensible appreciation of how we got ourselves into this unsustainable mess and why so few economists speak out against conventional wisdom, even though most of them probably know better.  His clear and simple explanations of complicated issues remind me of an old axiom: “The better you understand something, the more simply you can explain it.”

Free Trade Doesn’t Work has three sections: The Problem in which we are mired, The Real Economics of Trade in which evidence and history contradict the prevalent mythology and The Solution a relatively simple but politically controversial alternative to Free-Trade that has been successfully practiced in disguised forms by the Japanese and Chinese, among others.

The Problem section describes our stumbling embrace of free trade without a strategic objective. Its causes are multi-dimensional but include short-term gratifications and fallacious beliefs about the automatic benefits of trade and its natural corrective mechanisms. One of the most telling Continue reading →

In this election year, the majority of voters are split into two, irreconcilable political camps. Each camp is certain that its view of reality is right, logical and productive and that the other group is wrong, irrational and dangerous. These opposing dogmatic views inhibit cooperation for the common good at a time of national crisis. How have we come to this?

In his New York Times bestseller How We Decide, Jonah Lehrer describes how each person chooses what to believe and what to do. The bad news is that few of our beliefs or decisions are reasonable. Even worse, what we consider to be our rational beliefs are probably at odds with objective reality. Furthermore, our most logical decisions are likely to disappoint us. Continue reading →

(First posted October 2010)
Oliver Stone’s movie Wall Street: money never sleeps is a fictionalized version of the collapse of Lehman brothers and the subsequent Wall Street bailout of 2008 and 2009. It tells a chilling and realistic tale of a tribal culture isolated from the rest of humanity. It paints a picture of selfishness, greed and parochialism among investment bankers and fund managers which is consistent with my own experiences as a CEO.

The story― into which real events, pundits and journalists are woven and put on display, mentally destitute and trivial― is built around the character of Gordon Gekko, played with Oscar potential skills by Michael Douglas. It portrays his initial state of disgrace and ostracism from the Wall Street Tribe; not because if what he did in 1987―his actions were commonplace then and the actions of a piker by current standards― but because he lost his money. There is a clear parallel in the movie between Gordon’s fate in 1987 and the fate of Lehman Brothers in 2008. Both were sacrificial lambs successfully culled out by tribal enemies. Continue reading →

I struggled through Zen and the Art of Motorcycle Maintenance by Robert Pirsig nearly 40 years ago and recently reread it for a book discussion group. It was like revisiting an old and very influential friend; one that I had found irritating and rambling on first acquaintance, next obscure, then interesting, and ultimately inspiring and stimulating.

This semi-autobiographical book, written in the first person, weaves several journeys into a fabric that challenges western concepts and expands thinking. The surface story recounts the real trip of a father and his 11-year-old son, as they travel by motorcycle from St. Paul Minnesota through Bozeman Montana (and Bend Oregon!) to San Francisco California. This tale is a faithful and fascinating travelogue description of an actual 17-day trip taken by Robert Pirsig and his son Chris in 1968. However, it is also a vehicle―like the motorcycle― which Pirsig uses to describe several other journeys. One of them is his own passage through insanity and back. Another is the development of Western thought from the rhetoricians of Greece, through Aristotle and Newton, to modern science and its analytical techniques (perhaps a form of insanity when pursued without value!). Still others are trips from parts to wholes… in maintaining a motorcycle and within the human spirit. This is where Zen comes in.

Zen clashes with Western science. Zen teaches that everything is one; that apartness is an illusion partly learned in cultures. However, science thrives on apartness. It starts by isolating a scientist (the observer) from the objects he analyzes. Next the observer isolates one of these objects from the rest of the universe using a test tube, a laboratory, or a motorcycle repair shop. Then the observer dissects the object with physical tools and with the knife of analytic thought. He studies its pieces and learns how the pieces interrelate through a series of hypotheses (guesses). He follows this with experiments, which test the hypotheses. He prunes out mistaken ones and affirms others. Zen, on the other hand, focuses on the unity of observer and observed and learns from it. Zen assumes that analytic thought immediately kills something vital; something essential to accurate understandings and to harmonious lives. It kills quality.

For example: When biology students study frogs, they go to a pond, catch some frogs and bring them to the lab. Then they kill and dissect the frogs to study their limbs and organs.  They learn vital things about frogs, things we call facts.  However, to do so they have to Continue reading →

Kenneth Pomeranz and Steven Topik, professors of History at UC Irvine have authored a brilliant collection of vignettes in their book The World that Trade Created— society, culture and the world economy 1400 to the present. They use these brightly-colored threads to weave an impressionistic and painfully honest tapestry of our global economic system. The modern world which we know and love emerges brightly in the foreground with its prospering advanced societies, abundant and varied foods, and self-congratulatory cultural myths about how we earned it with open markets and free trade. However, the same threads create the much darker background of poverty, slavery, drug addiction, and desolation wrought by winners onto losers using government sponsored monopolies, force, and intimidation.

The World that Trade Created portrays a global civilization powered as much by drugs, greed, force of arms and dumb luck as by wind, water, coal and oil. It describes societies built by indentured servants and slaves; native slaves in the silver, gold and copper mines of Central and South America, and imported African slaves in cotton, sugar, rubber and coffee plantations around the globe. Ironically, the majority of slave holders and slave traders were members of Christian churches; Dutch Calvinists, Portuguese and Spanish Catholics, as well as British and American Protestants. These people and their church leaders rationalized their religious beliefs to support a pernicious practice that made them wealthy.

According to the authors: “Marco Polo claimed that public safety and commercial honesty were far better maintained in China than in Europe; without Christianity as the basis for morals.”  This claim destroyed his credibility in Catholic Europe. In Southeast Asia, women controlled businesses and inherited wealth until the European males Continue reading →