Book Review — Americana by Bhu Srinivasan
Yesterday’s afternoon, I finished Bhu Srinivasan’s "Americana: A 400-Year History of American Capitalism".
It's always exciting to have people read books with you. Sometimes the thought that those you started the book with have finished reading and are asking for a new recmmendation can only encourage you.
This book was not an exception. Not unlike some of the other books I have journeyed this year with, this was one that had me studying dozens of reference materials to further understand the topics under discussion.
Bhu chronicles the start of the American nation through the efforts of foreign men of means driven by appetites for glorious gains willing to overlook the possibility of loss on a venture - the Virginia Company - to gaining independence from the British monarch and asserting its authority as a world superpower through its unique nuance of capitalism.
With the book broken into four interesting parts containing 36 chapters, it describes the several contributions to the economic supremacy of this unlikely group of independent colonies.
How tobacco seeds brought from England found such a fertile land in America that it quickly became the America's dominant export, accounting for nearly 80 percent of its total export. Fur, the next-largest export item, accounted for around 5 percent.
In discussion about slavery contributed to America as a nation, so much nunace is lost. It was interesting to see Bhu acknowledge that for a while it was more expensive to keep slaves than indentured servants - European immigrants who worked for a certain number of years, mostly 7 years, and then provided some of the abundant lands after their servanthood - because of the upfront allocation of capital and their high mortality rate. However because land is not unlimited, owing slaves and their acclimatization to the new environment eventually made owing and keeping them a better economic decision. And for this, the nation would fight a really bloody civil war, the South vs the North, to emancipate them.
Quick fact: Save for a few slaves owners in Washington (representing 0.075%), the United States remains the only country to abolish slavery without paying compensation to slave owners.
Like I always say, I read every book with Nigeria in mind. Imagine my surprise to see that as far back as 1792, facing the “extreme difficulty” of separating seeds from cotton, men would get to work seeking and finding a solution; a solution without which America would never have been much of a cotton producer. Eli Whitney's invention’s impact on the lives of people, nations, and war and peace was staggering. Just to mention one of such impacts: This mechanical act of separating cotton from its seeds led to America suppling over 70 percent of the world’s raw cotton. It's 2019 and Nigerians are still manually picking stones from beans before cooking. Our rice farmers are telling us to help them pick stones from the rice before cooking (You don't believe me? Ask me and I will send you links).
Then there were the captains of industry like Carnegie, JP Morgan, and Rockefeller who embodies or were seen to embody the free market ideology. Perhaps no one practiced free market strategies more than Vanderbilt. While government tariffs propelled men like Carnegie, Vanderbilt's strategy was simple: enter a market, undercut prices to the point of causing pain (by at least 50%), and get bought out.
Indeed the trajectory of America as an economic miracle was fuelled by the notion of everyone for himself at the time after the basic rule for law and order are established. This led to unprecedented wealth and raised standard of living because people will use the impetus of survival to produce and innovate, which then led to the need to regulate and punish untoward behaviour in the market, for instance the establishment of the Food and Drug Administration, which then led to provision of more infrastructure like Canals, Railroads, Roads, etc., which led to even better environment to produce for the consumer. For many countries, the government insistence of knowing all that may be wrong before providing citizens the freedom to create handicaps the entire process of wealth creation.
It's interesting that much of what separates early America from the world was progressive leadership. Once the government recognizes what it has leverage in, it leaves the American market to create. Vital developments in radio, television, satellites, mainframe computing, and the Internet were achieved through military expenditures to win World War I & II, and thereafter left to the market to commercialize and make available for and to all.
Some products of capitalism may appear mundane but their impacts are extraordinary. Take the typewriter as an example, this device was what brought the first thousands of women into the modern office setting.
For what it's worth, I leave the book with a deep acknowledgment of the impact of Franklin Roosevelt on modern America and his intervention in the market. To guarantee the safety of bank deposits, the Federal Deposit Insurance Corporation was created. To regulate the entire American stock and bond markets, the Exchange Act of 1933 required companies to report their financial condition accurately to the buying public, establishing the Securities and Exchange Commission. Safety nets such as Social Security for retirement and home loan guarantees for individuals were added to the government’s portfolio of responsibilities. Franklin created the largest peacetime escalation of government in American history. The effects are still felt today.
I however disagree with some postulations in the book. Bhu claims Herbert Hoover lack of intervention in the market led to the Great Depression, yet he failed to mention that unemployment peaked 9 percent in December 1929 and was down to 6.3% in June 1930 until Hoover imposed higher tariffs to save American jobs by reducing imported goods, then unemployment rose above 20% in 1932 and stayed above 20 percent for 23 consecutive months.
Bhu also praised Franklin Roosevelt for expanding federal intervention and credited the New Deal for ending the depression, yet I found it curious that he devoted just a few paragraphs to Ronald Reagan (mostly as a Hollywood star) and never mentioned his non-intervention in the 1987 stock market as President which was followed by two decades of economic growth with low unemployment. For someone who to conservatives is the very definition of limited government and the ability of markets to self-correct, I expected more to be said about Ronald Reagan in a book about American capitalism.
The criticisms notwithstanding, I found Americana a thought-provoking and eye-opening book on the intricacies of the market and democracy. I took more notes on Google Keep reading this book than I did any other this year.
I have had a few people I respect name it their best book of the years they have read it (it was published in 2017), and while I would not go as far as saying that it's my favourite book of the year, I would say it is one of the best history books I have read, perhaps because it's written by a polymath immigrant who offers perspectives I have seen many natives miss.