Fragile by Design

An all-time favorite in banking, history, politics

All my main interests converge in this book. The authors' labors came to great fruit in a thorough, eye-opening tour of banking in several countries and centuries. I learned more about the histories of Brazil and Mexico (despite having read other books, and traveled extensively in Mexico) than I ever knew, in a few hours.
The narratives frame banking systems and their impacts on nations as the products of a "game of bank bargains" in each nation, and in each time-frame, between various interest groups. This makes enormous sense, and is a refreshing departure from partisan screeds that lazily serve up the same pre-set heroes and villains. I like the authors' approach of blending disciplined narratives showing particular nations' contexts and nuances, in easy-to-follow stories, with some telling numbers. Various institutional weaknesses are highlighted, or flawed bargains, as sources of trouble: opposing groups can be, at best, powerful checks and balances on each other, and often these balances have become too lopsided, and banking crises are sure to follow. In this light, the collapse of banking systems, currencies, and governments makes clear sense. The result of this approach: deeper knowledge of history and sharper thinking and analysis. And all this is delivered in an accessible, listenable form.
Some with a brittle partisan pre-loaded set of desired answers (on either side) may be perturbed at turns. Some on the left will be uncomfortable when a microscope is turned onto the banker-urban-populist bargains in the runup to USA's 2008 subprime credit bust. But by the time this story is detailed, we are already well briefed on a history of unstable banking bargains in US history, among various players. This made me look with a more appraising and cynical eye at the smooth cartoons of rosy all-around public benefit and skillful crisis management produced by politicians (on either side) as their self-serving draft of history, and as an apologia for their various manipulations of banking systems.
USA's set of bank bargains, and their outcomes and present state, can be compared, apples-to-apples, with Britain, Canada, Mexico, Brazil, Chile, Germany, and more. (This is, however, primarily a history book, not specifically an update of very current events.) This book stands alongside any I've ever read in these various sub-fields. I agree with the likes of Niall Ferguson that finance gives key understandings of history, when done with smarts and disciplined scholarship. This book tells me more about why nations are where they are, than any other I can think of.

6 of 7 people found this review helpful

All Politicians & Financiers should read this book

What made the experience of listening to Fragile by Design the most enjoyable?

This book is extremely academic but still very relevant. It illustrates wonderfully how the government somewhat unwittingly illustrated the ’08 financial crisis through various policy changes and incentives.

I would not suggest this book to anyone who isn’t truly interested in government policy and its relationship to financial markets, specifically banking. However, it’s very enjoyable to any history buffs with more than a basic understanding of economics.

You learn how banks formed and why their lending is so important to the State and vice versa. Once they get into each country case study, they begin with the Bank of England and how England’s wars with Louis XIV led to its formation. From there it goes over in depth the unique agrarian makeup of the US banking system and how national banks came into being during the Civil War. It then dives into the Canadian banking system and its appeared stability. From there historically authoritarian states are explored like Mexico and Brazil. Their implementation of inflation taxes and state controlled banks causes all sorts of unrest. I learned more about Brazil than I ever thought I would, specifically with demographics.

While history is a huge part of the book, it does a wonderful job showing how certain policies really affect banks and lending practices. The writers make a concerted effort to be as fair and non-biased as possible which I believe does show. If there was anything they were really trying to prove it’s that macro-prudential regulation is far more effective than micro-prudential regulation in creating a healthy stable banking system. I enjoyed the book and will probably come back to it in the near future.

Would you be willing to try another one of Basil Sands’s performances?

Unfortunately I thought Basil was not ready for this book. He was not only very dry and robotic but mispronounced quite a bit including Monaco, Curacao, and Econometrics. Those were examples just off the top of my head. I know there were more.

1 of 1 people found this review helpful

A Banking lens to Why Nations Fail

Good for understanding the Gorilla in the room that is overlooked in socio political history books. Cannot underestimate importance of $.

1 of 1 people found this review helpful

Best work of political econ I have ever read!

Would you consider the audio edition of Fragile by Design to be better than the print version?

I have read dozens of books on political economics over an 18 year time period. Most are ideological in nature. This work is a work of descriptive political economics. In our partisan era most people will not recognize the value of making advanced political economic theory palatable to ordinary people in relatively simple language. Politics is always approached from a rights, morals, principles, or social justice perspective. That is like objecting to the law of gravity on the basis of its immorality or inequality. This book comes as close as any ever written to spelling out the NATURAL laws that govern political economics.

4 of 6 people found this review helpful

Historical focus

Heavily focused on history, thus interesting if you are interested in the history of financial systems. Five countries thoroughly discussed as examples. The book is very long and could have been formatted in a more interesting way by better connecting the historical examples to modern systems.