Book: Rethinking the Network Economy by Stan Liebowitz
Krishna
This is a business book written by an economist. This will be of interest to those who are interested in either of these subjects – business or economics. If you are one of these, however, you will find that this short and concise book is very well written and is an interesting and easy to read. The concepts are laid out in an easy to understand way for a lay man, and so you need not be a person who understands economic concepts to follow the arguments in this book. (In the beginning, I said ‘interested in economics’ not ‘expert in economics’!)
It is interesting to see how this book came about. The author was exasperated by the dot com hype and the insane valuations that existed for companies at the height of the boom (think 1999, 2000). To prove that he was right, he even placed large sums of money (‘shorting’) on the possibility that the stockmarket will nosedive. Unfortuntely he both chose the wrong timing and the wrong stock (Yahoo, before 1999). So, he saw part of his daughter’s education savings disappear before he threw in the towel! He was proved right, of course, and we now know of the ‘irrational exuberance’ that famously inflated the tech stocks and spectacularly burst in 2000.
This book was completed only in 2002 and as the author says he ‘had to change a lot of my work to past tense’. Still it is interesting to see the underlying factors that led to the great dot com crash of 2000.
He talks about how most financial crystal gazers got it wrong then, and why Internet can never change the fundamentals of the market. (Demand and supply are still kings – they always will be. Profitability and Income are the lifeblood of companies and so on).
His discussions on the copyright protection issue and how it riles big media companies (Napster being the most famous case) are thought provoking. Some of his arguments appear strange but he backs them up with evidence that is convincing.
Nicely written, fun to read, my only caveat is that he seems to take his battle with the fellow economists in the opposite camp a trite too far, but then he never oversteps professional boundaries, so it may be just my preferences which are not aligned with his, which cause this impression.
All in all, a good read, and let us say, a 7/10
— Krishna