Wednesday, July 24, 2019

Distiller: Doni Faber
Rating: 3/5 Stars
Good For: An easy read on economics

Talking to My Daughter About Economics or How Capitalism Works-- And How it Fails
by Yanis Varoufakis
Farrar, Straus, and Giroux
Oct. 1, 2018
(209 pages)

Yanis Varoufakis, the former finance minister of Greece, writes a book about economy to the projected audience of his daughter. He does a good job of formulating market economy concepts in fairly general, easy-to-understand terms. Still, his audience seems to be geared toward teenagers or young adults, not for younger readers.

I really liked how he used stories such as Faust or Frankenstein or the Matrix to explain economic concepts. These parts seemed quite original. Other parts of his explanation are stolen such as Jared Diamond’s explanation for why Eurasia had more rapid conquest than other areas of the world. He does give Diamond credit in his prologue, but as a book without any footnotes, it made me wonder how much of the rest of the book represents Varoufakis’ original thoughts.

The book helped expand my thinking about the antagonistic relationship between capitalism and protecting our environment. While I’ve long recognized that the two systems are necessarily at odds because capitalism requires continual growth and our world has physical limits, Varoufakis pushed this one step farther. As long as our natural resources are in the commons, like clean air, they do not factor into our economic equations. But natural disasters generate profit. A forest left to its own devices doesn’t generate profit for anyone. But a forest fire generates profit for the fire fighters, for the construction workers who rebuild destroyed houses, and so on. This struck me as an interesting insight.

Varoufakis concludes that there are only two ways to make capitalism and saving our world compatible: one is a market solution where the wealthy buy what have been the commons and protect their property. The other, which is what the author supports, is to make it more democratically controlled because at least in theory, in a democracy each person gets one vote, while in a market economy, each person gets as many votes as money can buy. While I agree with him, I would have appreciated him fleshing out his proposed solution more.

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