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Cowboy Capitalism: European Myths, American Reality [Paperback]

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Item description for Cowboy Capitalism: European Myths, American Reality by Olaf Gersemann...

Europeans and many American pundits believe that while the U.S. economy may create more growth, Europeans have it better when it come to job security and other factors. Olaf Gersemann, a German reporter who came to America, found the reality quite different. He checked facts and found the market freedoms in America create a more flexible, adaptable and prosperous system then the declining welfare states of old Europe.

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Item Specifications...

Pages   247
Est. Packaging Dimensions:   Length: 0.25" Width: 6" Height: 9"
Weight:   0.74 lbs.
Binding  Softcover
Release Date   Sep 25, 2005
Publisher   Cato Institute
ISBN  1930865783  
ISBN13  9781930865785  

Availability  0 units.

More About Olaf Gersemann

Register your artisan biography and upload your photo! Olaf Gersemann is the foreign news editor for Financial Times Deutschland. Prior to that, he was the Washington correspondent for Wirtschaftswoche, Germany s largest economic and business weekly. Before joining Wirtschaftswoche in 1996, he studied economics at Cologne University and Trinity College, Dublin, and worked for the German financial daily Handelsblatt. In 2001, Gersemann was awarded the Ludwig Erhard Prize, the most prestigious German economic reporting prize for journalists under the age of 35.

Olaf Gersemann was born in 1968.

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Product Categories

1Books > Subjects > Business & Investing > Economics > Economic Conditions
2Books > Subjects > Business & Investing > Economics > General
3Books > Subjects > Business & Investing > General
4Books > Subjects > Business & Investing > International > Economic Conditions
5Books > Subjects > Nonfiction > Politics > International > Relations
6Books > Subjects > Professional & Technical > Accounting & Finance > Finance > General

Reviews - What do customers think about Cowboy Capitalism: European Myths, American Reality?

Good information  May 27, 2007
Most literature showing the greatness of capitalism through statistics is horribly biased, but this book keeps the bias to a moderate level. This means you get a wealth of statistical information that is not overly influenced by ideology, which is a rare find.
A Well-Made Case  Apr 30, 2007
Like the previous reviewer, I think Olaf Gersemann offers a balanced and well-documented case that France, Germany, and Italy would benefit from some American-style economic liberalization. Advancing an argument with logic and solid empirical evidence is not the same thing as writing propaganda.

Gersemann goes out of his way to point to that it is "foolish" to believe that post-war European economic models are "generally, under all imaginable circumstances, inferior to other economic models." He draws attention to the number of Americans without health insurance, the sorry state of many of our public schools, the alarmingly high rate of poverty among American unwed mothers and their children, and the "ridiculously high" compensation of many corporate managers. This book is not a one-sided apologia.

But it does, as advertised, manage to dispel many myths about American capitalism and the supposedly kinder, more agreeable European version.

As have a number of others before him, Gersemann reveals the hollowness of the claim that the purchasing power of working-class people in the U.S. has been stagnant since the early 1970s. And he does this using household income numbers as his primary statistical evidence, even though he could have shown even more improvement (as he briefly points out) if he had used the *per capita* money income of the average household. (Household income has been depressed because there are now fewer people per house, which is a sign both of more widespread home ownership, and thus more wealth, as well as a sign of higher rates of illegitimacy.) If further adjustments are made to control for immigrants--whose pre-immigration incomes do not, obviously, show up in U.S. statistics--it becomes even more evident that the American economy is much more successful at improving the of lot native-born workers in the bottom quintile than one would gather from watching ABC News or reading *The New York Times*. That our economy also improves the lives of immigrants, and in the process makes the gains of the native-born less statistically obvious, is cause for congratulations, not criticism. The improvement in the lives of particular individuals is what matters, not the fate of a particular quintile, the composition of which is ever-changing.

Gersemann also rebuts much of the nonsense reported about the percentage of Americans who are "trapped" in poverty and about low unemployment merely being the result of mind-numbing service jobs that don't pay a living wage. He demonstrates that those on the left who praise the security offered by the European system too often fail to note that security comes at the price of dynamism, which comes at the price of opportunity, especially for those on the bottom.

Unfortunately, the same neighborhoods in France that suffer most from this lack of opportunity, and from debilitating unemployment, voted overwhelmingly for the Socialist candidate (Ms. Royal) in last week's elections, even though it is not she but the much hated Mr. Sarkozy who stands at least some chance of offering them economic opportunities infinitely more lucrative than burning cars. And of course it was the French left that took to the streets when the government attempted to enact modest reforms to make the labor market more flexible. Marching for "social justice" and against "American conditions" also meant marching for the continued joblessness of North African immigrants. But what of it? It's all too easy to ignore arguments like Gersemann's, congratulate oneself on being morally superior to capitalists, and then take a nice long vacation.

Both Europeans and Americans would benefit from reading this book. It's not a groundbreaking work of research, and in fact most of the information Gersemann presents can be gleaned from the financial press. But the book doesn't pretend to be groundbreaking. What makes it a success is that it so clearly and dispassionately debunks many of the most frequently repeated falsehoods about the American and European economies.
Challenge - not propaganda.  Apr 20, 2007
It is surprising that "Cowboy Capitalism", recommended by two nobel laureates (the late Friedman and Buchanan), would be accused of propaganda by a critical voice (Newton Ooi, below) who first proceeded to point out that all the facts it presents are true. "Cowboy Capitlism" has an agenda, of course - an agenda to show through the raw numbers that European (or NYTimes readers') perceptions of the two economic systems of central Europe and the US are skewed... that there is more to the differences and the benefits/detriments that each system offers, than is popularily acknowledged. Fear and suspicions (and lack of knowledge) are the cause of this - rather than facts. This book pokes fun at the former by trying to reveal the latter.

In doing so, CC is actually rather fair. It does not pretend that the European economic system is per se inferior to the US System. In fact, there were times in which it was rather superior. (Times of great economic stability had Germany, for example, grow its economy at a pace well above that of the US. Or healthcare - where Europe admittedly piggy-bag rides on US consumers' expenses, but which Gersemann has no probolem stating is a matter of preference, not "better" or "worse".)

Anyway... to look at the criticism listed below:

Home Ownership: The argument that because of higher population density, home ownership would *naturally* be less ("less land to build on") is completely ludicrous. What would follow that argument would be mass-homelessness, not low ownership rates. People in Europe still live in places... the question is: why don't they own? Apartments count, too, you know! (Density contributes to homes being more affordable - which is one of the reasons. Red tape making ownership more difficult is another. Rent-protection is yet another. (And when looking at entire countries, the numbers *are* meaningful. The author did not compare only New York to rural Europe.)

Education: I'm European, so I don't want to argue the point that by going to high school I am automatically smarter than a US college graduate... even though I had to learn that knowing where Malaysa and Phoenix are (I've 'always' known), somehow don't give me the edge on the job-market that I thought it would. :-( There are Americans who audaciously compete with me, despite flagrant lack of geographical knowledge... And win out! Perhaps other factors matter, too? Drats.

Unemployment rates are not measured by whether one "has to work" or not. Unemployment rates are measured by how many people *want* to work and can't. A busy little Hausfrau who takes care of the kids and whose husband makes enough to support the entire family doesn't show up in the unemployment numbers, because she probably doesn't run out and declare herself unemployed. So the higher numbers of unemployment of women in Europe reflect women who "have to work" -- but won't find a job. And that's the real problem... whether one likes the social ramnification and the dissolution of the family nucleus or not.

Computer use, Internet access et al. in Germany is well behind that of the US. Especially among the crowd that didn't grow up with them.
Computers, even made from recycled materials or made with the use of recycled parts (I've done that, years ago, but I wonder how common that still is) would still show up as a computer sold... They don't sit around trash-heaps and maker their own computers out of trash, after all.

The last point - oil-war-obesety-pharma-industry - is a little too dense fore me to get into. I am baffled.

Cowboy Capitalism does not pretend not to take sides. But it wants to show that it takes the side of greater economic freedom, because there are benefits to more people to be had - at the price of less security for others. (That's obviously a gross oversimplification... but aims in the right direction, I should believe.) The way this book does it is humorous (in a dry way) and merciless... but not with blindfolds or immune to "inconvenient" facts. This is a must-read for when your European friends come over to visit and try to tell you why everything is so much better in the old part of the world. (30% youth unemployment in France, a terribly efficient but very rigid economy, are just one of many points to consider...)

P.S. The Thinktank CATO is a libertarian institution, not a conservative one. The two overlap on many issues, but are not the same. (Legalization of drugs, Gay marriage et al. are points libertarians support; conservatives by-and-large don't.)
Lying with numbers.  Mar 3, 2007
The title of this book, Cowboy Capitalism, is a term many Europeans use to describe the American business climate. More precisely, the American style of economics involves a lot of uncertainty and risk, with high chances of success (Microsoft and Google) and failure (Enron and GM) and the ensuing results of low job security, high income fluctuations, and high rates of bankruptcies for businesses and individuals. This book argues that this has produced an overall better standard of living in the US than in the countries of Germany, France and Italy. This book is published by the Cato Institute, a conservative US organization that lobbies for deregulation of public enterprises, free market reforms and low taxes. The book argues its points by presenting a lot of statistical data comparing the employment rates, home ownership rates, educational levels, disposable income levels, and other macro and micro economic indicators of the US, France, Italy and Germany. I do not doubt the validity of the numbers presented, but they only show part of the story. Lets go over them one by one.

First, this book gives numbers showing that home ownership is higher in the US than in France, Italy and Germany. This is absolutely true. The author attributes this difference to the fact that since America is more free-market, incomes are generally higher in America, and hence more people can afford to own homes. The author totally misses the affect of population density. The population density of the three European countries listed are substantially higher than in the US, meaning there is less land per person. This means there is less land to build homes on, so of course fewer people can own homes. If one looks back over the past 30 years; the primary engine for economic growth in the US is new home construction. Besides, the use of home ownership as a measure of prosperity is totally bogus. New Yorkers have lower home ownership rates than residents of most southern cities, yet New Yorkers in general are wealthier than people living in the deep South.

Second, the book states that a higher percentage of people in America go to college than in France, Germany and Italy. Again, absolutely true. What the author misses is the amount of knowledge learned K-12. Specifically, many European high school graduates are better educated than many American college graduates. For instance, just about every European has taken a year of calculus before leaving high school. There are many American college graduates who have never taken a semester of calculus! If you don't believe me, ask yourself why College Algebra classes are so common on college campuses. Here is another example. After I received my bachelor's degree, I backpacked through Europe and stayed at youth hostels. Every local I met knew where Malaysia (my birth country) and Phoenix, Arizona (my hometown) was on the globe. Coming back home, most of my American friends could not locate the places I visited such as Berlin, Rome, London, Munich, etc... Another example, every French, German and Italian I met in Europe could speak English to some degree. How many native-born Americans can speak a second language? Getting an education is about acquiring a bank of knowledge and set of skills. I dare say most citizens of Italy, France and Germany acquire more knowledge and skills K-12 than most native-born Americans acquire K-college. Given this statement, the higher rates of college participation in the US do not amount to much.

Third, the book states that employment rates are higher in the US than in France, Germany and Italy; especially among women. This is true. What the author does not mention is that many Americans, especially women, work because they have to. Specifically, a larger percentage of American adults are single or divorced than in Europe. And the percentage of single American women raising children is higher than in Europe. Growing up in America, half my friends had working mothers. The most common reasons why was that either their fathers walked out on them, or their parents were divorced. So of course their mothers had to work; they could not rely on the fathers to bring home the bacon. This brings up another unspoken truth. A divorced couple requires twice as many places to live as a married couple; i.e. two houses versus one house. This means that two divorced parents will have to spend more money than two married parents. The more money that is spent means the faster the economy moves, so of course the US economy will grow faster than the European economy.

Fourth, the author states that the use of high-tech products in France, Italy and Germany is lower than in America. He argues this point by stating that the number of units of high-tech items sold in the US is higher per capita than in the 3 European countries, and that these industries employ more people in the US than in the 3 European countries. True again. Again the author leaves out many qualifying factors. For example, Germany has strict recycling and reuse laws for computers. Specifically, when a German throws away her old computer, it does not end up in a landfill occupying space and leaking various chemicals into the environment. Instead, it is taken apart piece by piece. Those parts that can be re-used, like the fans, housing and cables, are packaged with new computers, while those that cannot are recycled. In this way, less is wasted. A side effect is that since more stuff gets reused, there is less need to produce, hence a smaller industry geared around the production of computers in Germany. Does that mean Germans are less computer literate than Americans? I doubt it. I do not remember seeing in this book a chart comparing computer literacy in Germany versus the US.

Fifth, this book compares the state of the pharmaceutical industry in the US versus his three target European countries. The book shows that this industry is more profitable, generates more new drugs, employs more people, and pays better in the US than in Europe. This is all true. But what the author forgets is that demand for pharmaceutical drugs is less in Europe than in the US. As any person who has lived in both Europe and America can tell you, Americans are more obese and out of shape than Europeans. Higher obesity rates leads to higher rates of cancer, heart disease, stroke, diabetes and a whole host of other chronic diseases. This in turn leads to a higher demand for pharmaceutical drugs to treat them, which in turn leads to a bigger and more profitable pharmaceutical industry in the US than in Europe. Why are Americans more obese than in Europe? That leads to my last point, so keep reading.

Last, this book totally misses a point that is very telling in comparing the economies of the US, Germany, France and Italy, and that is energy consumption. Per person, Americans consume more BTUs of energy from fossil fuels such as oil, gas and coal than Europeans. Energy is the blood of economic growth. Since the end of WWII, America has pursued a policy of acquiring and using fossil fuels in increasing amounts with time. On the other hand, Europe has pursued a dual policy of reduced energy use and increased energy independence. The former includes cities built to encourage walking and biking, and high taxes on fossil fuels such as car gasoline. The latter includes nuclear reactors in France, and a high reliance on solar and wind power in Germany. These policies are primarily due to WWII. First, the effects of the war left these countries in no shape to pursue aggressive foreign policies of defending oil wells. Second, many Europeans are aware that the causes of WWII included competition for fossil fuels. On the other hand, America was not devastated by WWII, but strengthened. Hence, America's economic growth has mirrored a growth in its fossil fuel industries. Is this a good thing? Once you consider global warming, pollution, destruction of land due to mineral extraction, and other factors, I think the grade goes to Europe for being more energy efficient; even if it means a slower economy and lower employment rates. As a side effect, Europeans drive less than Americans, but walk and bike more, and hence are generally healthier.

In conclusion, the facts stated by this book are all true, but the conclusions they point to are not. Many of the points must be placed in context with other qualifying factors. Overall, this is an OK book that must be read for what it is, propaganda, and not an economic treatise or case study.
Don't Cut the Pie, Bake Another One  Feb 15, 2007
This book explains that the European model of allocation assumes that the economy is static and employment can increase only by sharing existing jobs with regulation of hours and guaranteed employment. The US model is dynamic and companies that don't perform are replaced through the process of creative destruction by companies that do. Excess resources get reallocated to new enterprises to the benefit of everyone.

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