I recently read Alan Greenspan’s book, ‘The age of turbulence’. I would highly recommend this book for those who want to get a better understanding of the economy of the world. It is a bit dry in places, but on the whole very interesting. He is the sort of person, I can imagine, that is extremely interesting, has some amazing stories, but you wouldn’t want to sit next to him at a party.

Greenspan advised US presidents and guided the US economy since Nixon and has been involved with economy in general for over 60 years. He retired last year and wrote this book.

The first part of the book is about the history of the economy, especially the US and also about his earlier life. He then goes on to talk about the current state of the world and finishes with some predictions of where we might be in 2030.

During his time as Chairman at the Federal Reserve, he had access to more information and more top people than almost anyone else alive. As a result his insights are quite profound.

The main things I got from the book were:
That the key to a prosperous economy is the right to ownership of property, which relies on a non-selective legal system and the ability to enforce the law

That business is entirely based upon trust. The legal systems would not cope if even a fraction more people went to court to settle disputes.

The free market raises that standard of living for most people, but has a tendency to increase the gap between the rich and the poor
A centrally controlled economy has the tendency to lower the standard of living but keeps the gap small
The gap between the rich and poor can be closed by education

Capitalism and the free market is a self balancing and correcting system with built in resilience

Capitalism and the free market replaces the old with the ‘new and better’ at an ever increasing pace, this has two effects: a) to increase the standard of living, the scientific knowledge, decrease the amount of resource we use for a specific use and provide better gadgets etc, and b) increase people’s anxiety about jobs, and stability because everything changes so quickly
This results in a deliberate part of the capitalist system being centrally controlled to limit the growth of the economy in return for stability, e.g. welfare, NHS etc.

That the essential difference between different countries political and economical outlook and actions are the degree to which the culture demands stability of growth, in the form of a centrally controlled economy verses the free market.

That a purely centrally controlled economy does not work as it cannot react quick enough to the changing supply and demand needs of a country. It is simply too slow and inefficient.

So, in conclusion: out with socialism, in with capitalism.

My next steps after reading this book, are to find out more about Adam Smith and the invisible guiding hand. Also to read more about socialism to get a different view, although, I am not too bothered with that as I dont believe it will help with my goal.