MONEY MAKES THE WORLD GO AROUND
One Investor Tracks Her Cash
Through the Global Economy,
from Brooklyn to Bangkok and Back
By Barbara Garson
Viking 342pp $24.95
Some would argue that American popular culture and the mass media did more to end the cold war and spread democracy than four decades' worth of missile programs. Barbara Garson, in her provocative new book, Money Makes the World Go Around, goes this notion one better. She concludes that it is the restless flow of investment capital that spreads the benefits of the free market, the mass media, and democracy to much of our increasingly borderless world. At the same time, she laments the hardships visited upon the less fortunate billions who bob like corks on the rising and falling economic tides.
The reporting that leads Garson to these conclusions makes for a picaresque tale, winding from the canyons of Wall Street to the shrimp farms and oil refineries of Southeast Asia, to a Maine factory town, and to the backwoods of Tennessee. The author's chatty, sometimes loopy writing style may grate on some readers. But her voice is so persistently good-natured and her intelligence so obvious that by the end of this curious capitalist's Baedeker you can't help but trust her gentle judgments.
Garson crafted an unusual strategy to find out just how "one world" we are. She took $34,500, a part of her cash advance for this book, invested it, and then followed the money. Some of her investment was deposited in a privately owned small-town bank, which Garson felt would exemplify "decent" banking principles, unfettered by the pressure to show quarterly earnings increases. For roughly the first half of the book, the author traces this money--or, rather, money that might well have been hers but was technically impossible to identify as such. The day she made her deposit, the bank sent $1 million or so to its correspondent bank, Chase Manhattan Corp., now J.P. Morgan Chase (JPM), to help satisfy a federal funds reserve requirement. Garson's mission: to figure out what Chase would do with the money and track down those it subsequently touched.
Naturally, there's no way to pinpoint which portion of any funds actually belonged to her. But it doesn't matter. The hypotheticals Garson comes up with are just as engaging as the confirmable facts in this story. With admirable tenacity, the author bangs on plenty of doors at Chase, and eventually some do open. During the period of her investigation, the bank was issuing loans and letters of credit right and left to multinationals and entrepreneurs in Southeast Asia, and a couple of these allowed Garson a visit.
Off she flies to Map Ta Phut, Thailand, to see a new oil refinery that is being partially--O.K., infinitesimally-- financed by her money. While in the area, she finds some shrimp farmers and a jellyfish exporter. She posits that all of them may have availed themselves of "her" money via Chase letters of credit.
Garson's adventure serves as a platform for her to explore the impact of economic expansion on the common folk. Throughout Thailand, Singapore, and Malaysia, she chats up everyone from plant managers and small-business owners to migrant workers and street vendors. Many have left ancestral villages and families behind to gain a foothold in the burgeoning economy.
The book's second half unfolds in the U.S. She has also invested $5,000 with the Mutual Series funds started and managed, at the time, by value investor Michael Price. The author is even surer-footed on home turf, and this episode is alternately amusing and poignant.
At the time, Mutual Series owned about 20% of Sunbeam Corp. (SOC), whose earnings were deteriorating. Price, who had made his reputation by pressuring companies to sell off assets or otherwise unlock shareholder value, targeted Sunbeam for a restructuring. Under attack, the Sunbeam board brought in controversial turnaround artist "Chainsaw Al" Dunlap. Dunlap proceeded to shutter factories, outsource manufacturing, and fire workers.
Garson's sketch of Dunlap is memorable. With gusto, she exposes what she sees as his hypocrisy and the line of baloney he fed investors and analysts.
But there is a depth and humanism here that goes beyond the potshots at Dunlap. In the course of her reporting, Garson practically becomes a denizen of Portland, Tenn., the depressed site of a Sunbeam aluminum furniture plant marked for shutdown. She deftly captures the social drama of Portland locals enduring the loss of their livelihood. Her next stop provides a sharp contrast: Garson heads up to the factory town of Biddeford, Me., where employees at Sunbeam's doomed electric-blanket plant avoided a shutdown by means of a hard-won employee buyout.
Garson eventually doubles back to follow up on all her acquaintances. In Thailand the boom has gone bust. One of her interviewees, ominously, has disappeared, another one is studying English to prepare for the next boom. And in the U.S., she reestablishes contact with her Tennessee and Maine friends. Even though these folks are a world apart, Garson manages to extract universal lessons about the unceasing pressure of capital and the nature of the global economy. Half the world has never made or received a phone call, she writes, and that's the half hit hardest by extreme oscillations of capital. Ultimately, she calls for reregulating capital flows--through taxes on currency transactions to limit speculation--and "bail-ins" that force banks to absorb some losses from their own bad loans. After all, she writes: "The goodies in this global village are very unequally distributed."
By Marilyn Harris
Harris has visited shacks and country clubs in several developing nations.