FALSE ECONOMY ALAN BEATTIE $26.95 Why do some economies and societies crash and burn, while others are buffeted by storms and yet still recover? Can we analyze the fates of countries in a way that will help us analyze the fault lines and successes that can make or break a civiliza- tion, a city, or a culture? In False Economy, Alan Beattie weaves together elements of eco- nomics, history, politics, and human stories, revealing that governments and countries make concrete choices that determine their destinies. He opens larger questions about the choices countries make, why they make them or are driven to make them, and what these choices can mean for the future of our global economy as we go forward into uncharted territory. Economic history involves forcing together disciplines that fall naturally in different di- rections, the universal explanation versus the individual narrative. But Beattie has written a lively and lucid book that engagingly and thought-provokingly marries the two disciplines and reveals their interdependence. Along the way, you'll discover why Africa doesn't grow cocaine, why our asparagus comes from Peru, why your keyboard spells QWERTY, and why giant pandas are living on borrowed time. . . . Beattie uses extraordinary stories of eco- nomic triumph and disaster to explain how some countries have gone wrong while oth- ers have gone right, and why it's so difficult to change course once you're on the path to ruin. 0904 ALAN BEATTIE graduated from Balliol College, Oxford, with a degree in history. After taking a master's degree in economics at Cam- bridge, he worked as an economist at the Bank of England and then joined the Financial Times in 1998. Currently the paper's world trade edi- tor, he writes about economics, globalization, and development. RlVERHEAQ BOOKS 7 Jacket design O 2009 Keenan Photograph of the author O Financial Times/Charlie Bibby Visit our website at: www.riverheadbooks.com a member of Penguin Group (USA) Inc. www.penguin.com "In this fascinating and insightful hook. Alan Beattie brilliantly illustrates how countries* choices determine and. in some cases, sadly undermine their prospects for generations. This masterly global economic journey is a must read for all those keen to understand how today's surge in state activ- ism will impact national and international futures." —MOHAMED A. EL-ERIAN CEOofPIMCOand author of When Markets Collide "Beattie's analytics show facts can be a force for change. Give people the facts, and they'll do the right thing." — BONO lead singer of U2 and cofounder of the antipoverty organization ONE "This is a wonderfully liberating book. Alan Beattie flies in the face of one of the most dearly held ideas in the social sciences: that today's economic outcomes—which countries are rich, and which remain poor—have deep and largely immutable roots in history, geography, or culture. Beattie's narrative shows that there is plenty of room for choices, and that history rewards those governments that make the correct ones." — DAN! RODRTK professor of international political economy, John F. Kennedy School of Government, Harvard University ISBN 978-1-59448-866-5 FALSE ECONOMY [...]... states of the Northeast, came largely from Britain, Germany, and the Netherlands—all countries with a lot of people and not much land They brought with them the tradition of skilled farmers on small homesteads Argentina, by contrast, had a history of a few rich landowners on great estates left by the Spanish, and the aristocratic elit­ ism that came with it It also had a labor shortage Mass immigration... vast amounts of sparsely populated pasture Argentina's land conquests did little to change its nature Euro­ pean emigrants to Argentina had escaped a landowning aristocracy at home only to re-create it in the New World The similarities were more than superficial In the early decades of agricultural commercialization— the 1860s and 1870s the landowners regarded rural life and the actual practice of agriculture... disparities in the way the frontiers were settled Amer­ ica chose a path that parceled out new land to individuals and families; Argentina delivered it into the hands of a small elite From the founding of the colonies, America was fortunate enough to have imported many of the practices of northern European farming and the aspirations of its people The farmers of "New England," the densely populated states... Bibliography and Notes 305 Index 313 Time, that gives and takes our fame and fate and puts say, Shakespeare's features on a plate or a Persian poet's name on a Tandoori can cast aside all we commemorate and make Lot 86 or Lot 14 even out of Cardinal and Queen and bring the holy and the high and mighty to the falling gavel, or the guillotine TONY HARRISON The Blasphemers' Banquet FALSE ECONOMY PREFACE F ranklin... The massive westward move of America created a vacuum in the coastal east of the country, which soon filled up with new emigrants sucked in from the poverty and desperation of Europe By the 1850s, the United States was importing a quarter of a million immigrants a year Immigrants came to Argentina as well, and later made up a bigger proportion of the population there than in the United States But they... specifics and particularities—what the historian Arnold Toynbee (disapprovingly) called the study of "one damned thing after another." It stresses the importance of narrative in the way that countries develop, FALSE ECONOMY 3 the role played by chance and circumstance, and the influence of im­ portant characters and events Economics, by contrast, seeks to extract universal rules from the mess of data that the. .. much their export earnings would be worth It was a great time to be a New World farmer American and Argen­ tine farming had a big competitive advantage (relative to other coun­ tries) and a big comparative advantage (relative to other industries) A canning industry already existed, boosted by the American Civil War Soldiers, especially of the Southern armies, had had to fight a long way from reliable... to Argentina came later in the nineteenth century, but the country had to push forward its frontier with a skeleton staff Both countries expanded westward, the United States to the Pacific, and the Argentines to the Andes, but not in the same way They faced similar problems The vast distances and unfamiliar terrain were weapons of great value for the Native Americans in both halves of the continent The. .. the killing houses of La Plata and Buenos Aires, watch the ocean liners, with the Union Jack dangling over their stern, being loaded with many sides of beef, visit the grain elevators at the ports of Bahia Blanca and Rosario pouring streams of 16 ALAN BEATTIE wheat destined for European consumption into the holds of liners, without the imagination being stimulated when standing on the thresh­ old of. .. three Argentine players on its squad Since they were of Italian descent, Italy 14 ALAN BEATTIE considered them to be, essentially, Italians and simply poached them ahead of the tournament, to the fury of Argentina's football (soccer) fans It is hard to imagine England getting away with requisitioning American athletes of British descent Still, America's openness to immigration was not a given, any more . Time, that gives and takes our fame and fate and puts say, Shakespeare's features on a plate or a Persian poet's name on a Tandoori can cast aside all we commemorate and make Lot. in a way that will help us analyze the fault lines and successes that can make or break a civiliza- tion, a city, or a culture? In False Economy, Alan Beattie weaves together elements of. starting off from a particular point, they will end up a par- ticular way. Both approaches have risks. If history can become the undisciplined accumulation of a random heap of facts, economics