Book review: 'Who's in Charge Here?' by Alan Beattie

— -- From his perch as international economy editor of the Financial Times, Alan Beattie surveys the global economy and sees disturbing evidence of mismanagement.

He places much of the blame on Washington, Brussels and governments of emerging nations, and has harsh words for each.

His message is notable for two reasons: the method of delivery; and the lack of venom in what is an otherwise trenchant analysis of the failure of economic governance.

Beattie's vehicle is an eSpecial from Riverhead Books, a division of Penguin Group USA. Published in all electronic formats for $2.99, Who's in Charge Here? packs the prosecutorial punch of a legal brief and runs about the same length: The PDF is 38 pages.

Authors are increasingly turning to short ebooks to connect with readers familiar with their previous work. Fans of Beattie know him as the author of False Economy: A Surprising Economic History of the World.

The British-born Beattie, who worked as an economist at the Bank of England, heads the Financial Times' coverage of world trade policy and economic globalization.

In Who's in Charge, politicians and policymakers are roughly handled, but it's not a rant against government. Readers looking to buttress that worldview might be disappointed. Beattie is no ideologue, no partisan. He seems motivated more by a desire for smarter government. His tone is that of a caring but stern headmaster, frustrated by the bad choices of students who should know better.

The rascals here are the USA, European Union and BRIC nations — Brazil, Russia, India and China.

Beattie examines "how the dysfunctional political cultures in Europe and the USA took hold, how the emerging economic powers have been big enough to be part of the problem without being part of the solution."

To Beattie, policymakers — Democrats and Republicans alike — enabled the financial crisis by steadily loosening constraints on Wall Street that had been in place since the Great Depression.

With the election of Ronald Reagan in 1980, free-market crusaders declared a holy war on market regulation. Bill Clinton and Alan Greenspan joined the march. The result was a minimalist, light-touch regulatory regime that allowed bankers to capitalize on loopholes in the system and escape needed scrutiny.

"Financial regulators and central banks were far too nonchalant about the huge amount of borrowing that was going on, and the ever more exotic financial assets that were being created to facilitate it," he writes.

"Governments in economies such as the U.K. and USA watched huge housing booms take off, financed by these incomprehensible financial instruments, and cheered them on their way rather than trying to restrain them."

He laments the Tea Party's headlock on the Republican Party and its paralyzing effect on compromise. Purity of purpose may be appropriate for religious zealots but not for politicians of a country in danger of losing its AAA credit rating. Result: AA+.

"Tea Party Republicans proceeded to pursue an extreme version of fiscal stringency" at a time when consumption and investment were sputtering, he says. He gives props to the Federal Reserve for stretching its legal mandate to stop the economy from seizing up.

Beattie reminds us that the European Union worked well until the launch of the euro in 1999.