Economic Gangsters by Raymond Fisman and Edward Miguel

This is an awesome book. It's hugely readable, brilliantly researched and profound without losing subtlety or consideration for the complexities of what it's looking to discuss.

The authors are two economists - field economists for the main part - and they restore, in my mind, a shred of belief in a discipline which has over the last ten years had about as much of substance to say about the global economy as Hello Kitty.

They present a series of different discussions, starting with how corruption can be laced through society via networks of the powerful and entrenched and show how this can be measured in stock price movements for companies associated with individuals rather than products of businesses themselves. They move on to show how the behaviour of diplomats at the UN in New York may, or may not, reflect the level of corruption of that country and finish up by examining how wealth, foreign aid and natural resources can not account for the outcomes of different countries' development.

Not only is it replete with case studies that illustrate what they are trying to say but these two guys are looking at stuff and saying "it's not all about rationality - it's about culture and personality too". This, for me as someone who models markets to make money, is a breath of fresh air.

There is a brilliant discussion about how aid can help people out of poverty but also about how it may leave them there and even hold them down. They discuss how targeted aid - for instance looking at providing aid as insurance for when things go wrong (like drought or commodity price volatility) - rather than a steady stream of money is nearly always more effective and look at countries such as Japan where aid was effectively non-existent but the country leapt back after devastation anyway.

Who is this book for? I think that if you believe people deserve a fair chance, if you wonder how corruption can be stamped out, how law can make people's lives better or even if you sometimes think - where on earth does all this money go when Live Aid comes to town - then this book is for you.

At a time when discussion is all about incentives and how to get bankers' pay to reflect performance (yadda yadda yadda) a discussion on how incentives can transform how we behave is a must read.

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