Aftershock

The Times recommends Aftershock

In The Times‘ Christmas review of books about money, Oliver Kamm writes:

The Times recommends Aftershock: “The crash of 2007-09 did not turn into a reprise of the 1930s mainly because policymakers had learnt from the mistakes of that era. They rescued the banks, slashed interest rates, and injected money into the economy to support demand. Philippe Legrain, in Aftershock: Reshaping the World Economy After the Crisis (Little, Brown, £12.99), lucidly discusses the policies that have (so far) prevented disaster and the route back to prosperity. Legrain knows his subject and is a commendably clear exponent of economic concepts. He argues, in my view incontrovertibly, that openness to trade and immigration has big welfare benefits.

Thank you.

Fantastic review of Aftershock by the Society of Business Economists

Highlights:

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.
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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.
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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.
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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.

Read the review in full here.

If you’ve got it, spend it

Is my money safe? Will my wages get paid? Will I even have a job? What about my pension? What is my home really worth?

Such questions had never even crossed the minds of most people in rich countries until the recent financial crisis. Economic meltdown might strike poorer places such as Argentina, Asia or Africa. It may feature in the history books: Remember the soup kitchens and welfare lines of the Great Depression in the 1930s. But it did not happen—surely could not happen—nowadays in supposedly advanced economies.

Or so we thought—until September 2008, when banks were suddenly falling like ninepins, markets were plummeting and governments seemed overwhelmed. Was everything we took for granted falling apart around us.

Now that the recovery has begun, powerful voices argue that little needs to change, really. The financial system may need a few tweaks here and there, but otherwise the world should go back to business as usual. The faster economies recover, the stronger such siren voices will grow.

Others feel that everything must change. Global capitalism is a giant wrecking ball that crushes the poor, destroys jobs and is killing the planet; such a dangerously unstable and destructive force needs to be tamed, they argue.

Meanwhile, many people aren’t quite sure what to make of it all. Angry but confused, they lash out at all and sundry: greedy bankers, conniving politicians, dastardly foreigners. Unfortunately, this debate is generating more heat than light and too little action where it is needed, too much where it is not.

Contrary to those who argue that global finance should be left largely intact, it requires radical reform. Yet the changes that policymakers are considering are too timid; some are irrelevant, others wrong-headed. The understandable furor about bankers’ bonuses is diverting attention from much more important issues, not least the unacceptable notion that some banks are “too big to fail” and so have a license to gamble at public expense—heads they win, tails taxpayers lose. Economists call this “moral hazard.” But that is a huge understatement—it is a racket. Capitalism without risk of failure is like power without accountability—it corrupts absolutely.

But while finance needs radical reform, the global economy still offers huge opportunities for progress.

Help homegrown consumers

Westerners often wonder gloomily where tomorrow’s jobs will come from these days. Increasingly, they will come from selling to China and other emerging economies. So instead of worrying that China is going to take everyone’s jobs, people should be looking to the huge opportunities that its growth offers—and going out and grabbing them.

But while emerging economies’ imports will almost certainly continue to grow quickly in the years ahead, will they expand fast enough to fill the gap left by Americans and others tightening their belts? That is the trillion-dollar question on which the world economy’s prospects for recovery rest. The answer depends in large part on whether politicians try to resist the necessary changes to the global economy or embrace them.

It is deeply unfashionable—almost blasphemous—to say so now that the Era of Excess is over and we live in an Age of Austerity, but consumption is wonderful. It’s what makes the world economy whir round. Without consumption there is no production, no income and no jobs. While some people have spent too much and have no immediate desire for more, plenty of people in the world have unmet needs.

People in countries like Germany and Japan pat themselves on the back for being prudent—for squirreling away surplus savings while others spent—yet now that their customers in English-speaking (and many Mediterranean) countries are no longer spending, their production has slumped. Now is their time to be profligate.

Emerging economies are also bursting with people who would love to go on spending sprees.

The world (and your own) economy needs you.

If you’ve got it, spend it.

Now policymakers have to make it possible. But for countries such as Germany, Japan and China that have long focused on exporting, it may be trickier than it seems to stimulate domestic spending and restructure the economy to cater more to homegrown consumers.

The problem starts with the fact that households get much smaller shares of the economic pie than in America or Britain, for example. They then save a bigger chunk of it. As a result, whereas consumption accounted for 71 percent of the U.S. economy in 2008 and 67 percent of Britain’s, it was only 55 percent of the total in Japan, 54 percent in Germany and a mere 37 percent in China.

Consumption in Britain and America is arguably too high. But if Japan and Germany raised theirs to Canadian rates—60 percent of the gross domestic product (GDP)—it would give a big boost to domestic as well as global demand.

Had Germans spent like Canadians in 2008, consumption would have been $220 billion higher. Had the Japanese done likewise, it would have added $246 billion. If China had emulated Hong Kong’s rate—53 per cent of GDP—consumer spending would have been $692 billion higher in 2008. This would have filled the shortfall left by a slump in American demand of nearly 5 percent of the GDP. Together with higher spending in Japan and Germany, that would be equivalent to nearly 2 percent of the global GDP.

Of course, this cannot happen overnight—and would require a currency appreciation (or a burst of inflation) to displace exports and encourage imports. But it could happen faster than people think, not least because China’s economy is growing like gangbusters. Even without much reform, China’s household consumption is growing by nearly 10 percent a year.

Put consumers first

In both Germany and Japan, the underlying problem is that leaders prioritize business interests over consumer ones. This reduces the share of the pie available for personal consumption—and because these domestic economies are so sluggish and inflexible, firms there naturally prioritize foreign markets.

It’s easier to sell Porsches or Lexuses to Wall Street traders than to set up a cleaning company employing Polish or Filipino workers to service domestic consumers’ needs. It’s also less difficult to cut costs by clamping down on wages than by shaking up the economy through real reform.

Germany and Japan should view the crisis as an opportunity for reform—not to embrace American-style casino capitalism, but to cater more to their own people’s needs. While Germany is right to be proud of its exporting prowess, it should recognize that the purpose of selling products to foreigners is to make Germans better off. A bonfire of regulations would allow thousands of service companies to spring up, offering everything from affordable Polish plumbers to nifty price-comparison sites.

It is much easier to start a business in Albania or Sierra Leone than in Germany, according to the World Bank’s Doing Business rankings for 2010. Strikingly, considering how Germany prides itself on corporate competitiveness, investment accounted for a smaller share of the economy in 2007 than in consumer-crazy America.

Why are German entrepreneurs in Silicon Valley rather than the Ruhr? What is so wrong with allowing foreigners to provide good care for elderly Germans? Were Germans really better served by stashing their savings in Ländesbanks that bought toxic American assets?

Even allowing for the financial bubble’s inflation of American and British growth, Germany has performed dismally in the past decade. Now that demand for its exports has collapsed, perhaps it should try its hand at something else, too.

Get the right kind of recovery

The problem is not just a lack of consumer demand. It is a distorted pattern of supply. The world economy remains geared toward resuming the old, unbalanced, u nsustainable pattern of growth.

Look around. Britain’s high streets are littered with banks, building societies, estate agents and other sharks that fed off the credit bubble. America is awash with empty houses, boarded-up shops and eerily quiet shopping malls. Wall Street and the City of London are crowded with bloated banks cranking up to generate often-unnecessary financial engineering. China’s coastal regions are cluttered with factories primed to churn out consumer goods for American homes. Germany is full of idle car factories tooled up to make gas-guzzlers for which there is no longer enough demand. Japan has still not worked off the excesses of its own bubble two decades ago.

For now, the focus is all on recovery, any recovery, at any cost. But unless the world economy shifts to a more balanced, more sustainable pattern of growth, the recovery is likely to be weak and lopsided, and pave the way for another crisis.
The bad old pattern of growth was driven by the seemingly insatiable debt-fueled demands of American consumers. In crude terms, Americans borrowed and spent, while the Chinese produced and lent.

But for now, America’s anxious and over-indebted consumers are no longer willing or able to continue spending like there is no tomorrow. Their incomes are stagnant (or falling), their houses and shares are worth less, they are terrified of losing their jobs and in any case, banks won’t lend anymore. Dawn has broken, and it feels more like dusk.
The big fall in American consumer spending is the main reason why global demand has ultimately collapsed. Left unchecked, this would have caused a depression: Since one person’s spending is another’s income, if everyone tries to cut back at once, a vicious spiral ensues as falling production chases falling consumption downward. So governments had to step in to try to fill the gap.

Now the priorities should be maintaining employment (but not specific jobs), protecting the vulnerable and investing in healthier patterns of growth. Slashing payroll taxes would boost disposable incomes and support employment without protecting specific jobs at the expense of others. Cushioning the blow on the vulnerable is humane and supports spending.

The best way for governments to increase demand is through spending that encourages economic adjustment and boosts the potential for growth. Governments could provide subsidies to workers—those still in jobs, as well as the unemployed—to retrain and acquire new skills, as Denmark does. In Britain and America, increasing investment in crumbling infrastructures would put idle hands in construction to work, help shift the balance of the economy away from consumption toward investment and raise these economies’ growth potential. Better transport networks, in particular, would boost exports. It should also be a priority in emerging economies, where infrastructure is barely keeping pace with growing needs.

A sustainable recovery requires a thorough overhaul of the world economy to cater to more balanced, healthier patterns of growth. This involves a profound change in people’s behaviors, a restructuring of the corporate landscape and a shake-up of government policies.

Americans and Britons need to rediscover the virtues of living within their means, rather than wrongly viewing their homes as cash machines. Germans and Japanese need to give in more to the joys of consumption, rather than continually squirreling away nuts for a rainy day; storms don’t come much bigger than this.

Economies dominated by housing and finance need to invest in more productive sectors. Those in which exporters hold sway need to invest in sectors that service domestic consumers’ needs. Governments everywhere should tackle the obstacles that prevent businesses and people from adjusting—gummed-up labor markets, entrenched producer interests, barriers to innovation and enterprise.

Opening up further to international trade, investment and human flows would also help. At the same time, governments must intervene when markets fail—shake up finance, encourage greener technologies, help people retrain and find new jobs, and make it safe for emerging economies to tap global capital markets.

The new opportunities are huge. But when people and countries are set in their ways, change can be difficult and slow. The bubble mentality is hard to overcome, as are deeply ingrained saving habits. Dominant financial interests in the Anglo-Saxon world and export ones in Germany, Japan and Asia will fight reform tooth and nail. Governments may duck difficult reforms and pander to powerful lobbies.

Invest in clean technology

To make the shift to a low-carbon future, the world needs a mixture of four things: greater energy efficiency, smart national policies, new technologies and lots of capital. But all too often, public debate overemphasizes the first two at the expense of the latter two. In the ultra-green view, the prescription morphs into abstinence by social pressure and government diktat. Policymakers, naturally, place themselves center stage, imagining that a blizzard of meetings, plans, initiatives, standards, regulations and so on will do the trick. They are also prone to trying to micromanage people’s lives in ways that are extremely costly to the economy and to individual freedom.

But while governments’ roles are central—after all, only they can enforce a price for carbon—they should concentrate on helping the poor adjust and setting a framework that attracts bundles of finance into the clean tech sector and enables technology entrepreneurs to experiment and find new solutions.

Given the complexities of climate change and global politics, the best we can hope for may be an imperfect global deal. Enforcing it and ensuring any transfers between countries are well spent will be huge challenges. But that need not be a reason for pessimism. As long as governments provide sufficient incentives in the short term and a credible enough commitment for the medium term, clean technologies are likely to make huge progress over the next 10 to 20 years.

If investment continues to pour into clean tech research, with some of the world’s brightest minds and sharpest businesspeople competing to clean up and save the planet, new and better solutions are likely to be found. Existing technologies can become much cheaper and new ones will emerge. The seemingly impractical or implausible can suddenly become possible, then probable. And as the market expands, individual companies and the industry as a whole will reap huge economies of scale.

Already, wind power can compete with fossil fuels in some areas, as can solar. Tesla’s Model S, a state-of-the-art electric vehicle, is predicted to be cheaper to run than a top-of-the-range Honda Accord in the U.S.—and will look even more attractive in Europe, where gas prices are much higher. Rising oil and gas prices could help accelerate this switch. The spike in oil prices in 2008 had Americans dashing to ditch their Hummers. Pretty soon, the switch to low-carbon technologies might be achieved even without a complex global climate change deal. After all, it would be easy for countries, companies and people to jettison fossil fuels if clean tech were greener and cheaper. Self-interest, not political bargaining—and still less abstinence—is our best hope.

We should treat the threat of catastrophic climate change as an opportunity to reshape the world economy in a cleaner, more secure, fairer and more efficient way. Carbon-based energy has been a fantastic engine for human progress. But it has always had big downsides—smog, war and dependence on nasty dictatorships—and now it endangers the planet. We should welcome the pressing need to accelerate the leap to better ways of life.

Oil, gas and coal are just means to an end. What is valuable are the unprecedented opportunities of modern living—an escape from drudgery in the home, the mind-broadening delights of foreign travel, cool buildings in hot countries, the freedom to drive where we please. Their extension from a rich minority to the rest of the world is a cause for celebration, not despair. Don’t campaigners for global justice really want poor people to be rich?

So the priority must be to find new sources of energy, not to reject modern lifestyles or try to deny them to others. Imagine: breathable air, solar-powered electricity for rural Africa, no more wars over oil in the Middle East, unlimited energy on tap. Progress indeed. But remember that clean tech is a global industry, powered by people, money and markets that cut across national lines. What would really wreck the world would be a closing of borders, societies and minds. Localism, not globalization, is the true enemy of the planet.

Use the power of positivity

The pain now is real and unavoidable—jobs lost, homes repossessed, mountains of debt remaining to pay off. A home that was once a cash machine is now a millstone. Pessimism is the order of the day.

This crisis of confidence is dangerous. When people feel threatened, they tend to hunker down and turn inward. But trying to shut out the world would make us all poorer. Far from making us safer, it would jeopardize our security. In particular, treating the rise of emerging economies as a threat could in part be a self-fulfilling prophecy. It could prompt nationalist and protectionist responses. It would encourage the development of new relationships and institutions that exclude the West. It would undermine chances of securing developing nations’ cooperation in tackling climate change.

The overarching challenge is to rediscover optimism about the future. It is still in our hands—and it need not be bleak. If companies are to invest in tomorrow’s technologies, people to embrace change and policymakers to make difficult reforms, a positive outlook is essential. Gloomy Americans and Europeans should visit Asia or Brazil and allow themselves to be carried away by their refreshingly positive vibe. Delight in their success and view their growing prosperity as an opportunity, not a threat.

The aftermath of the crisis opens up huge opportunities to reshape the world economy for the better. A fairer, richer, greener and more stable global economy is possible. But to achieve it, we need to rediscover the virtues of open markets, open societies and open minds that go hand in hand with progress: greater opportunities for everyone to chase their dreams and fulfill their potentials.

We must not allow another financial collapse, a debt crisis, a closing of borders, a climate catastrophe or a corrosive pessimism to destroy that huge promise.

Spiked review of Aftershock

Daniel Ben-Ami, author of Ferraris for All, has reviewed Aftershock in the latest Spiked review of books. Among other things he says:

Few writers feel comfortable either with developing a broad view of the global economy or relaying their arguments in accessible terms. Philippe Legrain’s skill at both helps make Aftershock one of the best books of its type.

Legrain has several advantages as an economics writer that make him well suited to the task. In terms of his writing style, the influence of his early job as a writer on international economics for The Economist is clear. As in that newspaper (The Economist prefers not to call itself a magazine), the emphasis in Legrain’s writing is on expressing difficult ideas as simply as possible.

Even more importantly, Legrain recognises that his readership is likely to be anxious about the state of the world: ‘Aftershock is aimed at a global audience, but in particular at people in rich countries who are fearful about the future’, he writes. Much of the thrust of the text is therefore aimed at showing the existence of practical solutions to pressing problems.

The global character of Legrain’s outlook is another central part of his work. He resolutely refuses to take a narrow nationalistic perspective on any question. Instead, his concern is to show how a flourishing of the world economy can benefit humanity as a whole.

Protectionism and curbs on immigration are particularly abhorrent to him. Legrain, whose previous book was on migration, sees both measures, quite rightly, as standing in the way of generating a more prosperous economy for all.

There is always room for debate on exactly which topics a book on the current world economy should cover, but Aftershock tackles many of the key areas. These include the troubles of the financial system, the rise of emerging economies, green technology, and the backlash against Chinese investment. The book ends, unusually in these pessimistic times, with a chapter about embracing progress.

For its global perspective and embracing of progress alone, this book is highly recommended. It is a great starting point for anyone seeking to start grappling with the problems of the world economy.

Review of Aftershock in 3:AM magazine

Max Dunbar reviews Aftershock in 3:AM magazine

In his essential book Immigrants: Your Country Needs Them, the economist Philippe Legrain demolished the case against migration in both its economic and what he kindly terms its ‘cultural’ form. In that book he also made the argument for freedom of movement of labour to match the freedom of movement of capital. It’s an indispensable text, and Legrain’s is a voice of sanity that is badly needed. In Aftershock he returns to the theme. After the crash instincts tell us to pull up the drawbridge. Surely the devastated British economy can’t continue to absorb yet more foreigners?

Yet we are looking at an international issue through national blinkers. The word ‘immigration,’ Legrain points out, reflects the parochial nature of what passes for debate on this: we assume that everyone in the world wants to live in the UK. Remember the neuralgics over Eastern Europe’s entry into the EU. This was marked by apocalyptic warnings of Britain being stormed by battalions of Polish layabouts and Lithuanian cowboys. About seventy-five million Eastern Europeans became eligible to migrate into the UK. In the end we received about one million, many of whom have gone.

After all, how many people do you know who are willing to completely uproot their lives and settle in another country? Most people live and die within a few miles of the town they grew up in. Yet anti-migration demagogues would have us believe that people all over the developing world weigh up various nations’ welfare states the way British consumers compare prices when buying online.

Immigration, Legrain emphasises, is not a one-way street. There are more British people living abroad than there are foreigners in Britain. He travels to the buzzing British expat community in Shanghai and the buzzing Chinese migrant community in Canada. Often, migration is simply a temporary thing. People work in rich countries for a few years and return when they have saved enough money to start businesses in their homelands.

It will be said that the capitalist crisis makes Legrain’s argument irrelevant: in fact it is more pressing than ever. With a rising pension bill and an understimulated economy we are more in need of bright young workers and entrepreneurs than ever. The child refugee Sergey Brin co-invented Google: how many Brins are we turning away? It would be a mistake of cataclysmic proportions to slam the barriers down – and yet that is what we are doing.

Read the full review here.

The Economist reviews Aftershock

As the world economy tiptoes back from the precipice, there is a growing appetite for books that try to read the future. Two thoughtful studies—one by a former Economist journalist and commentator on globalisation, Philippe Legrain, and the other by Raghuram Rajan, once the chief economist at the IMF and now at the University of Chicago—aim at giving readers a deeper understanding of the forces that brought about the worst financial and economic crisis in at least half a century and look at what can be done to prevent the next one.

Mr Legrain’s book is the zippier read. In just a few chapters, he outlines the forces that brought the world to the brink of a bust: a house-price bubble boosted by runaway mortgage lending in the rich world, particularly America, a lightly regulated global financial system that found ever-more creative ways to speculate on rising house prices, and macroeconomic policymaking that was far too laid back about the dangers posed by asset-price bubbles.

None of this is new. But Mr Legrain has a gift for combining big numbers that offer a sense of the scale of the global build-up in things like household debt while zeroing in on what all this means for people like Thorvaldur Thorvaldsson, a proudly left-wing Icelandic carpenter and unlikely sometime property speculator. This makes his book a particularly good survey of what made up the unpleasant cocktail which the world has yet to digest…

Both books say it would be folly to eliminate the benefits of a more open, globalised world—including vastly improved standards of living for millions in the emerging world—because of disgust with the depredations of the financial sector. Mr Legrain cites innovative, entrepreneurial and peripatetic Swedes and Indians to drive home his central thesis that both rich and emerging countries stand to gain from the latter’s increasing economic dynamism. In particular, he makes a strong pitch for the freer movement of people across borders. Both authors would also like institutions like the IMF to be reformed in such a way that would allow them to play a greater role in sorting out the macroeconomic imbalances that underlay the crisis.

Mr Rajan, however, was the fund’s chief economist when it tried, with little success, to get a serious conversation going on this matter. For that reason, perhaps, his book, excellent though it is, has less of a “can do” feeling about it than Mr Legrain’s. Despite that, both deserve to be widely read in a time when the tendency to blame everything on catch-all terms like “globalisation” is gaining ground.

Read the full review on The Economist’s website.

Why Paul Krugman is wrong

In his blog post, Dealing with Chermany, Paul Krugman advocates threatening China (and, indirectly, Germany) with an anti-dumping duty to get them to boost domestic demand.

China has done nothing to change its policy of massive currency manipulation...  Europe is going wild for fiscal austerity… everyone is counting on the US to become the consumer of last resort, sucking in imports thanks to a weak euro and a manipulated renminbi. Oh, and while they rely on US demand to make up for their own contractionary policies, they’ll lecture us on how irresponsible we’re being, running those budget and current account deficits.

This is not going to work — and the United States has to take steps to protect itself….

Nicely, nicely isn’t working. Time to get tough.

Yet his proposal would make matters far worse. This is my reply:

You are forever warning politicians to avoid the mistakes of the 1930s in macroeconomic policy and yet in the same breath you advocate that America should threaten Europe and China with protectionism. This risks far more than a “diplomatic tiff”: it could easily cause a tit-for-tat cycle of protectionism akin to that which caused global trade to collapse during the Depression years. Have you taken leave of your senses?

In the case of Europe, the notion that it is going “wild for fiscal austerity” because it is counting on American demand to save the day is blinkered and self-centred. Most European governments are being forced into austerity by the threat that markets will stop funding their deficits. The euro’s fall is hardly under their control either. America might be in a similar position were it not for the privileged – and deflationary – role of the US dollar in the international monetary system. Count your blessings that there isn’t a run on US Treasuries when America’s deficit and debt are higher than most EU countries’.

The main reason why the pattern of supply and demand in the global economy is so distorted is because of America’s unprecedented housing and financial bubble. You are right that now that the bubble has burst, surplus countries ought to do more to boost demand. But threatening protectionism is hardly the answer. And America should put its own house in order before lashing out at foreigners. The Fed’s monetary policy would be more effective if the banking system’s balance sheet had been cleaned up. Fiscal policy would be more effective if it was directed at investment in future growth – improving America’s crumbling infrastructure, for instance – and supporting the incomes of the poor, who by necessity are spenders rather than savers. It seems instead as if Ben Bernanke is intent on doing a Greenspan: inflating another bubble to rescue America from the previous bust. Don’t blame the rest of the world for that.

Bill Emmott reviews Aftershock

Bill Emmott, a distinguished author and former editor of The Economist, has reviewed Aftershock in Survival, the magazine of The International Institute for Strategic Studies (IISS).

He says:

Many of the books about the economic crisis have been descriptions of the dramatic events at Lehman Brothers, say, or of what it was like to be the US treasury secretary at the time of the crash; others have consisted mainly of recriminations about the folly of the capitalist system and open global markets, or of how macroeconomic policy was mismanaged. Rarer have been books that take a constructive approach, proposing an agenda for how things could be improved in the future. Philippe Legrain’s is one of these rare few.

He supports my proposal for a land tax:

Legrain’s second proposal is less familiar and more radical: that governments desperate to reduce their budget deficits and get their debts under control should not raise taxes on income and employment, as many are wont to do, but rather on land values. This is an old idea, of which even Winston Churchill was fond, but one that has been too easily pushed aside by property-owning lobbies and, in the post-1945 era, by farmers. Unlike taxes on income and employment, land taxes do not deter hard work, and given that land is immobile, it cannot emigrate to Switzerland. The trick is to set a rate low enough to avoid mass land sales but high enough to generate sufficient revenue. Given that one of the main causes of this crisis has been excessive investment in property, in scores of countries, this ought surely to be an appealing idea.

The world won’t stop to let Britain get off

In his column in The Times today, David Aaronovitch uses Aftershock to buttress his arguments:

Legrain is looking at how to fashion policy after the crisis. And he reminds his readers that Britain exists in a world of constant change, one that demands that we keep up. For example, we speak all the time about “immigration” and whether there is too much of it. But the issue for Legrain is the mobility of people — out, as well as in. Many “immigrants” are in fact transitional, as are many “emigrants”, taking their skills and leaving Britain as well as entering it. Our debate is hopelessly out of date.

Legrain reminds us of a world in which the BEEs, the Big Emerging Economies such as China, India, Brazil and South Korea, are not in crisis and their new middle classes are shaping the future. So is this really the time to grumble about how “too many people are in higher education” as Nick Clegg seemed to at the weekend?

Great reviews of Aftershock

It’s Book of the Day in today’s Irish Times. Jim O’Leary, a senior fellow of the department of economics, finance and accounting at NUI Maynooth, concludes that:

This is a book that is big in its breadth of content and vision, and refreshingly hopeful about the possibility of harnessing globalisation to the betterment of all mankind.

Varun Chandra of Left Foot Forward reviews Aftershock in May’s edition of Progress.

Legrain’s occasionally radical proposals are sensible, provocative and intellectually sound.

He concludes that:

anyone who claims to have a view on the value or otherwise of globalisation, the need to punish bankers for causing the financial crisis, the problems of immigration, or indeed frankly anything to do with the global economy, simply must read these painstakingly crafted 395 pages. It is absolutely worth the effort.

The review isn’t available on Progress’s website, but you can read a scanned copy here.

In the Sunday Times, John Arlidge says that the prevailing gloom, epitomised by Nouriel Roubini, aka Dr Doom, makes Aftershock “all the more welcome”.

Legrain, a visiting research fellow at the LSE, has that rarest of qualities in these troubled times: he’s an optimist. With meticulous reporting and interviews from Iceland to Australia, he sets out a blueprint for a new economic world order… Reform the banks, resist protectionism, embrace immigration and develop green businesses and we might — just might — have a chance of proving Roubini wrong.

Tim Harford, the Undercover Economist, does a mini-review on his FT blog. He says:

It’s nicely reported (Legrain travels widely) and has the clarity and the self-confidence of an Economist editorial – sometimes a little unnerving from a named author.

He concludes:

There’s a huge amount of good sense, sharply conveyed here. If Legrain occasionally fails to tie up loose ends in his arguments, the compensation is that he can cover plenty of ground.

Overall: the book deserves to do well, and I think it will.

Thank you all.

First review of Aftershock in Ireland’s Sunday Business Post

We’ve already had a raft of books delineating the economic crisis, but it takes a brave soul to suggest ways to stop the rot. Enter Philippe Legrain, a visiting fellow at the London School of Economics’ European Institute, who sets out to determine how the global economy is changing, and what reforms are needed to make it work better for everyone.

Says Ireland’s Sunday Business Post.

Have we learned all the right lessons from the global financial meltdown?

Or are we destined for a repeat performance some time in the future, by making the same mistakes that got us into the mess of the past two years?

Philippe Legrain, globalisation expert, academic and former writer with the Economist magazine, uses his third book to drum into readers his ideas on how to solve the world’s problems. Readers already familiar with his first two efforts, Open World: the Truth about Globalisation and Immigrants: Your Country Needs Them, will know where he is coming from.

For those who are not, however, this will be their first exposure to Legrain’s ability to pack a book with huge detail, quality research and generous use of the soapbox. It is an ambitious effort.

Writes David Clerkin, the Post’s markets correspondent.

He concludes on a mixed note, though:

Perhaps conscious of the sheer density of the text and the likelihood that non economists will find this tough going, Legrain tries to lighten the load where possible.

‘‘Tourists love it,” he says of Iceland.

‘‘I did . . . Any visitor to Reykjavik can also confirm that it is bubbling with culture – music, art, fashion; personally, I love GusGus’s electro-house music.”

With unnecessary diversions like this, it is little wonder that the book swells to almost 400 dense pages. It is undoubtedly good work. But hard work.

I hope you will read Aftershock and judge for yourself.