Money Makes the World Go Round

If used as a textbook in international political economy, the book “Money Makes the World Go Round” written by Barbara Garson is an outstanding book that illustrates the reality of how interrelated the modern economy has grown to be, and does so more concretely and evidently than textbooks can. In this book, Garson emphasizes that it is the restless flow of investment capital that distributes the gains and advantages of the free market, democracy, and the mass media to our progressively more borderless world. Simultaneously, Garson bewails the poverty and suffering visited upon the less fortunate billion individuals who bob like corks on the rising and falling economic deluge.

The exposure that directs Garson to these assumptions makes for a picaresque account, meandering from the canyons of Wall Street to the oil refineries and shrimp farms of Southeast Asia, to a Maine factory town, and to then to the backwoods of Tennessee. Personally, I think that Garson’s casual, from time to time loopy writing style might annoy certain readers. Nevertheless her voice is so determinedly good-natured and her intelligence so apparent that towards the end of this probing capitalist's Baedeker the reader can't help but trust Garson’s calm judgments.

Garson’s journey started when she formulated an extraordinary strategy to discover just how ''one world'' we actually are. Garson had obtained a total of $34,500, as part of her cash advance for this book, invested the said amount, and then went after the money. A certain investment was placed in a privately owned small-town bank, which Garson thought would demonstrate ''decent'' banking ethics, free from the pressure to illustrate quarterly earnings increases.

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For almost the first half of the book, Garson tracks this money--or, relatively, money that may well have been hers but was in principle unfeasible to recognize as such. The day Garson deposited her money, the bank transmitted $1 million or so to Chase Manhattan Corp., now J.P. Morgan Chase (JPM), its correspondent bank, to help fulfill a federal funds reserve condition. In doing this mission, Garson intends to work out what Chase would do with the money and trace those it consequently touched.

Logically, there's no way to identify which fraction of any funds in fact belonged to Garson. Nevertheless it doesn't matter. The hypotheticals Garson turns up with are just as appealing as the verifiable facts in this book. With commendable firmness, Garson bangs on plenty of doors at Chase, and ultimately several do open. During the time of her study, the bank was distributing letters of credit and loans right and left to entrepreneurs and multinationals in Southeast Asia, and some of these Garson visit them.

Thus, Garson flies to Map Ta Phut, Thailand, to observe a new oil refinery that is being in part –as Garson thinks-- funded by her money. While in Thailand, she discovers a jellyfish exporter and several shrimp farmers. Garson hypothesizes that all of them may possibly have benefited themselves of ''her'' money by means of Chase letters of credit.

Garson's journey acted as a platform for her to investigate the effect of economic growth on the common folk. All the way through Thailand, Malaysia, and Singapore she chats up everybody ranging from small-business owners and plant managers to street vendors and migrant workers. Garson came to know that a lot of the people have left ancestral villages and families behind to get a grip in the growing economy.

The book's second half unfolds in the United States. Garson has likewise invested $5,000 with the Mutual Series funds created and handled, during the time, by value investor Michael Price.

During that time, Mutual Series have possession of approximately 20% of Sunbeam Corp. (SOC), whose revenue were failing. Price, who had earned his status by means of forcing firms to sell off properties or else release shareholder value, aimed at Sunbeam for a restructuring. Under criticism, the Sunbeam board set up contentious turnaround artist ''Chainsaw Al'' Dunlap.

The book is not without a political spin and a moral force. One of the most horrible villains we come across is Dunlap, the doyen of rationalizing. Throughout his stay at Sunbeam, Dunlap almost clear-felled the firm, wiping out thousands of jobs and lives, and even losing his shareholders a huge amount of money. It was the Sunbeam’s third restructuring in a period of ten years, and as Garson remarks “How many times can you squeeze a lemon?”

The author’s sketch of Dunlap is remarkable. With passion, Garson demonstrates what she considers as his pretense and hypocrisy and the line of hogwash he fed analysts and investors.

Nevertheless, there is a humanism and depth here that surpasses the potshots at Dunlap. During the sequence of her reporting, Garson nearly becomes a native of Portland, Tenn., the miserable place of a Sunbeam aluminum continued to close factories, fire workers, and outsource manufacturing. Garson skillfully describes the social drama of Portland natives bearing the loss of their livelihood. Then Garson’s next stop offers a sharp dissimilarity: Next, she heads up to the factory town of Biddeford, Me., where workers at Sunbeam's ill-fated electric-blanket plant evaded a shutdown through a hard-won employee takeover.

Then, Garson ultimately doubles back to catch up on all her connections. In Thailand the growth has been busted. One of Garson’s interviewees, worryingly, has vanished, another one is studying English to get ready for the next growth. And in the United States, she restores communication with her Maine and Tennessee friends. Although these people are a world apart, Garson was able to obtain universal lessons regarding the unending strain of capital and the character of the global economy.

According to Garson, half the world has never made or picked up a phone call, and that's the half struck hardest by tremendous fluctuations of capital. Eventually, Garson calls for deregulating capital flows—by means of taxes on currency transactions to regulate rumors -- and ''bail-ins'' that compel banks to take in certain losses from their own bad loans. Nevertheless, Garson said that the goodies in this global village are very unequally distributed.'

Garson’s conclusion is bleak; having compelled American businesses to combine and divest and break up over the last 20 years, there are hardly any bones left for the organized shareholders to pick, and as a result they're starting to concentrate on European companies. European investment and labor laws have so far avoided much use of the strip-and-dump method; however these laws are now being revoked by governments attempting to be business-friendly. And then when Europe's firms are exposed in a period of 20 years, what then? This section of the book connects properly to some experts’ assumption regarding growth typically being damaging to companies.

Nevertheless, aside from villains, there are heroes in the book as well: smart engineers, farmers, clever engineers, aggressive young women coming from Isarn (North Eastern Thailand) who attack their own noodle shops, impassive factory workers from small town Southern USA and Mangrove Action Network protesters beating out policies in New York City.

In the middle of all these entertaining and earthly stories, Garson elucidates with absolute lucidity how the international financial markets operate, the driving force of shareholder values, the growing dis-articulation between capital and workers, productivity and profit.  With this book as a textbook in international political economy, the reader can notice that Garson is resolutely on the side of the people and she creates an image, frame by frame, of how the globalized economy have an effect on people. This is a helpful reference book because it puts the “real” back into the economy.

The story in Garson’s book can be replicated hundreds of times in numerous nations: capital comes and goes, however labor doesn’t; currency fluctuations produce debt; permanent social changes happen without the economic stability that may possibly mitigate their damaging effects. Then the reader will start to observe one of the focal problems in this entire argument, which is the separation of the social and the economic.

Another supposition in the book is that there actually is a free market in the world economy that everybody, when they have become a producer, is contending in an open and fair field. The cruel circle of currency susceptibility beforehand, certainly, distorts such a picture; yet the simple truth is that traditional protectionism is flourishing and well in the richer countries.

Upon reading the book, the reader will realize that exports coming from the less economically developed nations into the European Union — let alone the U.S. — are up against the harshest limitations, in spite of agreements achieved in 1994 in the Uruguay Round of tariff discussions.  Furthermore, governmental subsidy in the developed nations combines with protectionist tariffs in maintaining an extreme inequality in access to the legendary open market of globalizing premise.

In reading the book, the reader will also be able to come up with challenging thoughts regarding the present mechanism of the global economy, which is to reflect if capital mobility can indeed be a cause in establishing permanent and catastrophic social changes and whether lip service to free trade is exactly that and no more. Moreover, one could also reflect on the diverse phenomena of debt, which play a vital part in the ongoing immobilization of local economies.

Meanwhile, Garson’s book also made me think about the mercurial character of mobile global capital that makes it more difficult for projects to "bed down" in their wider environment; they turn out to be divided from the areas in which individuals act and select, create relationships and establish loyalties.

Lastly, this book is very helpful to people who wants to study international political and for those people who are attempting to study about the world of investing. When one reads the book, one will feel that Garson takes us on her own journey to study the international economy, and during the process of Garson’s journey, we will also feel as if we have met the faces and the individuals behind the entire process. I think that Garson handles the book with a very down to earth and open-minded approach, and for the main part, doesn't draw several of her personal conclusions. Instead, Garson lets the reader come up with his/her own conclusion.

This book is truly a must-read and a helpful book because finally, certain detail and information regarding investing that is more than just numbers and returns is finally offered to the public. Thus, this book is highly recommended for anybody who is searching where to put/invest his/her money, or is just attempting to understand and recognize how "money makes the world go around." After reading the book, one can confidently go to the Reuters newswires and have a knowledge and comprehension of just what is behind the newest news announcements, and most importantly, what they denote in genuine terms for real individuals.

Reference:

Garson, Barbara. (2001).  Money Makes the World Go Round.  Viking.

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