| Aftershock |
| Philippe Legrain, Little, Brown, 2010, 436 pages, £12.99. |
| Oh! No! Not another book about the global financial crisis. But Aftershock (ambitiously subtitled ‘Reshaping the world economy after the crisis’) is one of the best. Philippe Legrain is that rare combination of a fine journalist with a decent grasp of economics, or perhaps that should be a first class economist who can actually write. Either way, this is a good read. |
| Legrain’s analysis and conclusions are, however, a little more conventional than he appears to think (or his publicists would have us believe). He pins the crisis on much the same global economic imbalances and flaws in the financial system, such as excessive leverage and perverse incentives in bankers’ pay, that others have almost done to death. Sometimes his analysis (notably the discussion of property bubbles and of the valuation of the Chinese renminbi) is almost painfully familiar. And most of his policy recommendations are now thoroughly mainstream, at least among economists and even within institutions like the IMF. Examples include his support for greater fiscal activism, fundamental reform of the banks to encourage responsible lending, lower taxes on labour, and his warnings against a lurch towards protectionism. |
| But I would still recommend this book with enthusiasm, for three reasons. First, it is intelligently researched and packed with interesting detail. (It has a really good index to help the more casual reader too.) Legrain has pretty much toured the world in search of local colour. Maybe specialists in each country might be less impressed with what he has to say, but I gained a lot from his visits to Brazil and India in particular. He is also interesting on Australia – an economy which has embraced globalisation and the challenge of the rise of China more than most. Economic and financial statistics are used sparingly, but well. It would be a challenge, I think, to read this book and not learn something from it. |
| Second, Legrain is good on the bigger picture, including the social and environmental dimensions of the economic and financial crisis and its potential solutions – something typically missing from most analysis coming from the City. His defence of globalisation and free markets, including the labour market, is especially powerful because Legrain comes from the political Left, which otherwise is so often the source of much nonsense about the ‘evils’ of global capitalism. He manages to weave in climate change, poverty reduction and immigration (he is in favour of more, not less), without slipping into the ranting that so often undermines contributions from all sides of those debates. |
| Above all, the book is well-written. Some of the reportage is breathless and comes across as a bit naive (gushing descriptions of the buzz in Shanghai). But that is forgivable enthusiasm. This is an easy read for a train or plane journey and it ends on a refreshingly upbeat note. |
| Julian Jessop |
| Capital Economics |
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