I recently finished reading Eric Janszen's The Postcatastrophy Economy: Rebuilding America and Avoiding the Next Bubble.
While I continue to believe that Janszen's book is the best I've read regarding the ongoing economic crisis, I find myself strangely disappointed. The reason? The book starts out amazingly strong, but it fails to carry the same levels of energy and clarity into the second half. In fact, I'd argue that towards the end, Janszen undermines some the clarity of the first half of the book. Nevertheless, as a whole, the book represents quite an achievement for an entrepeneur turned investment advisor.
The book is divided into three sections. First, he describes the FIRE (finance, insurance, real estate) economy that caused the current crisis. Second, he describes his solution and alternative to the FIRE economy, which he calls the TECI (transportation, energy, communication, infrastructure). Finally, he provides his "midterm macro forecast."
The first section, which spans a little over half the book, details the FIRE economy, how it operates, and how it led to the crisis that began in 2007 and continues today. Janszen is clearly familiar with the economics of Michael Hudson, which form the foundation of Janszen's analysis of the FIRE economy, but Janszen extends Hudson's economic theories and synthesizes them into something that is far more accessible to the lay person than Hudson's original works. He also introduces the interesting metric of "dollar-of-debt" per "dollar-of-GDP."
Things start to break down in the second section, which presents Janszen's vision of a solution to the FIRE economy, which I find compelling but not fully baked. Janszen is clearly speaking from a position of legitimacy as a technology entrepeneur, and it is clear that his experience shades his judgment of what needs to be done. This is when some of his blindspots become apparent. First, his vision is one that caters to people like him, which is a common failing whenever somebody tries to plot a course for the future. The good news is that his vision is complete enough that it can easily be extended to be more inclusive. Second, while he understands the economics of the FIRE sector, it is not clear that he grasps how many of our laws, regulations and "rules of thumb" would have to fundamentally change in order to fully break free of the FIRE economy and the embrace the TECI economy. This is not fatal to implementing his vision, it just means that this is a much larger undertaking than he realizes. That's why I call his solution merely a vision of a solution.
Things almost fall apart in the final section, primarily because he puts on his investment advisor hat. I'm not saying that his predictions about things like "peak cheap oil" or gold will prove wrong. What I'm saying is that, in spite of his understanding of the FIRE sector, he does not seem to truly he understand that he is actually a "speculation advisor" not an investment advisor, and in that role he actually perpetuates the financialization of the real economy by the FIRE sector. When he cannot see his role in perpetuating the FIRE economy, how can he be correct that the FIRE economy is already over? Answer: he can't be.
At the end of the day, I do not believe these relatively minor flaws detract from the genius of the book, which is found in the first two sections. Janszen probably felt it necessary to tack on the third section to treat the preparation of the book as a business expense (advertising), and some people will find the third section alone justifies buying the book.
