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False Economy

A Surprising Economic History of the World

By Alan Beattie
13-minute read
Audio available
False Economy: A Surprising Economic History of the World by Alan Beattie

False Economy (2009) offers a fresh perspective on how and why some nations of the world have become economic powerhouses and others have ended up as financial disasters. You’ll see that nations aren’t handcuffed by fate. Rather, their economic success or failure is based on the choices they make.

  • Anyone interested in economics
  • Readers who want to learn about the politics of money
  • People interested in international business

Alan Beattie has a master’s degree in economics from Cambridge University. After working as an economist for the Bank of England, he joined the Financial Times in 1998, and became the newspaper’s world trade editor in 2004.

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False Economy

A Surprising Economic History of the World

By Alan Beattie
  • Read in 13 minutes
  • Audio & text available
  • Contains 8 key ideas
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False Economy: A Surprising Economic History of the World by Alan Beattie
Synopsis

False Economy (2009) offers a fresh perspective on how and why some nations of the world have become economic powerhouses and others have ended up as financial disasters. You’ll see that nations aren’t handcuffed by fate. Rather, their economic success or failure is based on the choices they make.

Key idea 1 of 8

Important choices, not fate, determined the economic state of Argentina and the United States.

Have you ever wondered why a country like the United States is a giant in the world economy, while a country like Argentina has continually struggled? As we’ll see, this was not something that happened by chance.

As a matter of fact, Argentina and the United States started out in very similar situations.

The United States officially became an independent nation when its constitution came into effect in 1789. Argentina was particularly inspired by the American revolution, and in 1816 Argentinian rebels took control of their government to establish their own independence. And as these two countries started out, both nations had similar economic outlooks based on rich agricultural promise and plenty of fertile land.

But the two paths diverged when the countries made different choices on how to develop their land.

America chose to divide their land up between skilled individuals and families. Capable farmers from Europe arrived to make the most of the opportunity, and they helped expand and settle America’s western frontier.

Conversely, Argentina decided to divide its land among a select few rich and powerful landlords. As a result, its agricultural potential was stunted because the policy failed to attract skilled laborers and farmers to develop the land.

The two nation’s paths continued to diverge following twentieth-century industrialization.

While the United States embraced the manufacturing industries and the foreign trade possibilities they presented, Argentina shut itself off in an effort to become self-sufficient. Argentina rejected the interests of foreign investors and the risky business of globalization, preferring instead to protect its government monopolies.

So, as the US economy flourished in the twentieth century, Argentina continued to seal off its manufacturing businesses by keeping out imports and heavily taxing exports. In 2001, in its efforts to be self-reliant, Argentina was forced into one of the largest government bankruptcies in history.

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