Last month I got an email from economist and freelance writer Paul McDonnold. He was contacting "leading economics bloggers" (his words, not mine) to see if they would read and review his new book, The Economics of Ego Surplus: A Novel of Economic Terrorism. I happily agreed.
The sub-genre of economics fiction is small to say the least. This novel takes a couple of its sections (it doesn't really have chapters) and devotes them to a little economic history. Intermixed with meeting the main character, grad student Kyle Linwood, is a short history of Adam Smith (and later Keynes and Marx). Instead of teaching the economic way of thinking, instead this book shows what it's like to be a person who thinks like that. Everything from debates about free trade at dinner parties to the idea that teaching is on a reverse farming schedule, which means during the best weather you have the time off. Rarely do I meant a person, or especially a character, who's economic presuppositions are similar to mine.
It tells a story of financial manipulation, with short economic summaries along the way. Mention the Federal Reserve? Well you also get a little bit of history about it. Rationality? Behavior economics? Same thing. I even learned about a type of financial fraud called spamming. It's where a spammers buy a lot of cheap stock, driving the price up. Then email people telling them the stock will continue doing well, and as the price rises, the spammers sell. The plot moves fast. One minute he's simply a college instructor, next he's recalling his own kidnapping by terrorists, then not to much longer he's stealing a car in Dubai and setting himself up for another terrorist kidnapping. The book really takes off when the plot (that is the terrorist plot) is revealed. The idea of economic terrorism is fascinating. Why blow up a building or a bus when you can shut down the gears of the economy? Hopefully I'm not spoiling anything, but here's the ingenious terrorist plot:
Raise a huge amount of capital. Enough to influence a $60 trillion global market. The main villain is a terrorist who runs a hugely profitable bank, in part, by bank rolling and investing for the world's huge black market (another reason to legalize drugs). The plan is to use an advanced computer system and wait for an economic bubble to rise. Put your own money in, furthering the problem. Then, right before the bubble pops, you sell all of your assets making it crash faster and farther. Finally, begin rumor that trillions of counterfeit US dollars are about to be released into the world market, causing a worldwide fear of inflation and abandonment of the dollar. US banks are abandoned and fail. While the more stable Islamic banks, that is, loans without interest, survive. All with the goal of bringing the Middle East back to the prestige it once had while Europe was in the Dark Ages. The appreciatively not-that-evil bad guy interestingly claims that "the West's problems aren't policy, their culture".
At some level the market economy is based on faith. Faith that I can specialize on one thing and get everything else through trade. If that faith is shattered, it can have huge implications. The&historical skepticism surrounding capitalism is also it's greatest weakness. The reason an attack like this could work, is because people have such a hard time understanding economics in the first place. That's one of the main things economists are trying to do, increase faith in the market.
Full of nice snippet of wisdom, like "you can't study something without changing it" or "the stock market is a rational reflection of all publicly available information". The villain even describes the fallacy of voting in American culture, something I've done myself. If you want to understand how economists talk to each other, this is a great book. This quote, from one economist to another, is just like something you might hear in a Econ101 class: "economists want to understand the economic universe like physics wants to understand the physical universe." In fact, I may add that to my first day lecture.
Interestingly, the main character has a similar ideological change that I have experienced over the last couple of years. Though I am certainly still a "hard-core libertarian", I've grown to understand the many irrationalities we all have. Though I came to that conclusion with a lot less trauma than the main character of the novel. Perhaps there are two ways to change our worldview, slowly over time through deliberate thought or quickly through traumatic experience. In many ways that seems to be the lesson of the book. Beware of the confidence to which you hold your beliefs, large egos can be dangerous. It's doesn't really have a happy ending, just an introspective one.
Not sure if I would recommend it, because I don't really recommend any books. Though I believe there is a place for fiction in convincing people of truths. It's just been so long since I've read fiction, so the dialogue felt a little awkward. Just seemed unnatural. All these adjectives describing things that didn't really happen. Perhaps it's my own lack of attention to detail that makes me weary of descriptive novels. Or perhaps my weariness of the power of fiction has my brain pulling some Inception security to ensure I'm not unduly influenced. However, the extensive details have convinced me that if I ever have to write a novel I will visit the places in the story and just describe what I see.
Though with the main character as an economics instructor and short little chapterettes, I couldn't ask for much more. In end it didn't really raise my concern for economic terrorism, though I don't think it was trying to. After all, with the estimated assets of $4 trillion the terrorists had, I wonder if they could have done more damage by setting off nuclear bombs in major American industrial cities. I guess I'm not setting myself up very well for another chance at a complimentary book.