How Markets Fail
A Book Report
Professor: Derek Ware
Date April 20th 2012
Samer Hassan
How Markets Fail
The Logic of Economic Calamities
BY JOHN CASSIDY
In 2009, John Cassidy, noted journalist at The New Yorker published the book, How Markets Fail: The Logic of Economic Calamities. In How Markets Fail, John Cassidy describes what he calls utopian economics and how the utopian thinking has led to economic crisis such as job losses, bank bailouts, and corporate greed. Cassidy attempts to convince that utopian economics does not capture the true behaviors of humanity collectively leading to unanticipated and adverse economic outcomes. He presents the history of economics and contrasts the idea of utopian economics with reality based economics. Reality based economics encompass people’s behaviors and thinking identifying irrational self-interests (Cassidy, 9). Cassidy then explains in detail how economic theory and practice influenced the “Great Crunch” (i.e. collapse in sub-prime mortgage lending during last decade). The timeliness of Cassidy’s publication of a book to address how markets fail is certainly ideal in light of the recent crash in sub-prime mortgages. The financial impact of this economic crisis continues to dictate the pace of the current economy. Cassidy uses the history of economics over the last few decades to demonstrate that his idea of utopian economics versus reality based economics is not new, but has been forgotten and/or consciously overlooked in the interest of other gains causing historical cycles of economic crisis. Cassidy’s political views are evident and he does not give neutral opinions. It is clear that he believes that a strict practice of utopian economics relies on a rational self-interest that is just not actual reality. He believes in investment and corporate profits, but not absence of moderate government regulation. He is a pragmatic among many other scholars and has knowledge and opinions worthy of review.
Utopian Economics
Cassidy
Professor: Derek Ware
Date April 20th 2012
Samer Hassan
How Markets Fail
The Logic of Economic Calamities
BY JOHN CASSIDY
In 2009, John Cassidy, noted journalist at The New Yorker published the book, How Markets Fail: The Logic of Economic Calamities. In How Markets Fail, John Cassidy describes what he calls utopian economics and how the utopian thinking has led to economic crisis such as job losses, bank bailouts, and corporate greed. Cassidy attempts to convince that utopian economics does not capture the true behaviors of humanity collectively leading to unanticipated and adverse economic outcomes. He presents the history of economics and contrasts the idea of utopian economics with reality based economics. Reality based economics encompass people’s behaviors and thinking identifying irrational self-interests (Cassidy, 9). Cassidy then explains in detail how economic theory and practice influenced the “Great Crunch” (i.e. collapse in sub-prime mortgage lending during last decade). The timeliness of Cassidy’s publication of a book to address how markets fail is certainly ideal in light of the recent crash in sub-prime mortgages. The financial impact of this economic crisis continues to dictate the pace of the current economy. Cassidy uses the history of economics over the last few decades to demonstrate that his idea of utopian economics versus reality based economics is not new, but has been forgotten and/or consciously overlooked in the interest of other gains causing historical cycles of economic crisis. Cassidy’s political views are evident and he does not give neutral opinions. It is clear that he believes that a strict practice of utopian economics relies on a rational self-interest that is just not actual reality. He believes in investment and corporate profits, but not absence of moderate government regulation. He is a pragmatic among many other scholars and has knowledge and opinions worthy of review.
Utopian Economics
Cassidy
Cited: Cassidy, John. How Markets Fail. New York: Farrar, Straus & Giroux, 2009.