Economic Crises 101

From Megan McArdle at The Atlantic, an extensive reading list for those seeking a better understanding of the current financial crisis.

Full disclosure: I've only read a handful of these myself.

Change is coming

Barack Obama was born in 1961.

James Meredith, the first black student at the University of Mississippi, enrolled in 1962 with the help of 5,000 federal troops.

Martin Luther King delivered his "I Have a Dream" speech in 1963. Equality was only a dream at that point, as the Civil Rights Act and the Voting Rights Act weren't passed until 1964 and 1965, respectively. The 24th Amendment, prohibiting poll taxes in federal elections, was ratified in 1964.

In 1967, when the Supreme Court struck down laws banning interracial marriage, such laws still existed in sixteen states.

Just over forty years later, the son of such a marriage is the Democratic Party's nominee and a strong favorite to become the next president of the United States.

Win or lose, it's a historic moment. Don't forget to vote.

(Vote early if you can. Turnout is likely to shatter all records, so be prepared for long lines.)

Ink by the barrel

The old saying "never pick a fight with a man who buys ink by the barrel," still holds. Press coverage of John McCain has become steadily more unfavorable since a senior adviser attacked the New York Times.

Now, attributing the negative coverage to McCain's attacks on the press is a bit simplistic. In the same period, McCain's poll numbers have dropped, he has attacked Obama, and the economic news has been uniformly bad, all of which might lead to negative coverage. Still, attacking the press for reporting unflattering facts (i.e. doing its job) is unlikely to improve your coverage.

What deregulation looks like

Over in China, we're seeing a textbook demonstration of the importance of the rule of law and the need for government to guide the market's invisible hand. We're also seeing why government can't be trusted to supply that guidance on its own.

Milk producers -- either individual dairies or processing plants or both, it's not yet clear -- diluted milk with water, then added melamine to make the protein content look better than it was. Rather than being confined to a few rogue producers, this practice apparently took place on a massive scale and over an extended period of time.

Meanwhile, the government regulatory apparatus was either absent or corrupt, or both. Some of the largest offenders were exempt from government inspections under a self-regulation program. When children started getting sick, some of the suspicious products were recalled by individual companies, though without any explanation of the underlying problem or any coordinated effort to inform the public. Inquiries were suppressed in the runup to the Beijing Olympics. The whole mess came to light only when a foreign investor started to worry about its own liability -- after deferring to its Chinese partner for weeks -- and informed New Zealand's government.

There are episodes like this in America's past, too. They are why the FDA and the USDA exist. It's unfair to suggest, as some commentators have, that the Chinese people are any less ethical than anyone else. The problem is that there is no way for the ethical Average Wen to hold the unethical minority accountable. No whistleblower protections, no aggressive personal injury lawyers, no elected officials accountable to the people. When a major embarrassment like this happens, accountability is imposed from the top down -- I'm sure a good number of midlevel bureaucrats will lose their jobs or their lives over this -- but the emphasis is on containing the embarrassment, not fixing the underlying problem. Bottom up accountability would go a long way to reducing the frequency and severity of such incidents.