Book Review: The End of Influence

Brad de Long and Stephen S. Cohen have a new book called The End of Influence: What Happens When Other Countries Have the Money.  It’s an interesting, informative, provocative and relevant read, providing context for the economic position the US finds itself in now. Perhaps of more direct interest, the issues of currency manipulation (done to the US), foreign policy, industrial (and defence) policy, trade deficits and long-term structural problems within an economy are definitely relevant to South Africa.

The rise of the Asian Tigers (and Japan and China included in the wider group) and the role government policies on both sides of the Pacific played there should hold lessons for South Africa.  Hell, even France and Britain are thrown in for good measure, demonstrating the successes and failures of neo-liberal market oriented policies.

This book must really be read in conjunction with This Time is Different as together they reinforce the unavoidable conclusion that overzealous reducing regulation, liberating markets and increasing financial complexity are almost guaranteed to lead to disaster. The Anglo-Saxon mantra for a couple of decades at least now has been that those very things were the answer to our problems, not the cause.

I read the book on holiday. It’s not the traditional rip-roaring holiday read, but the style is light enough to enjoy and doesn’t have the density of statistics and numerical proof offered by This Time is Different. The explanation of how we got to where we are are fascinating and definitely food for thought for South Africa and other emerging markets, but their prognosis of how the US’s power will fade dramatically now that they no longer have The Money is even more evocative. I spent as much time holding my kindle to one side while thinking about the implications as I did reading the words and frantically clicking the next page button to get to the next page.

Buy it, read it and join the conversation on economic policies for South Africa and emerging markets.

Brad de Long has an economics (and a few others things) blog that I read from time to time. I’ve also watched several of his economic lecture videos available freely on iTunes University.  He’s worth paying attention to. I haven’t had contact with his co-author before, but if de Long likes writing with him he’s probably smarter than most people you or I have heard of before.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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