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Well, I haven't yet been able to find David's recommended book, Tulipomania.  But his review did remind me of another really unique and fascinating book: Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay.  Amazingly enough, this 150 year old book is still just as timely as the day it was written, almost every story on the Internet Bubble references it at some point, and it remains readily available, you're even likely to find it in the remainder bin at Barnes and Noble for just a couple of  dollars.  I recommend that you buy it.

MacKay's book, while it also devotes a section to the Tulipomania craze in Holland, is more wide ranging and includes chapters on the South Sea Bubble, the Crusades, Alchymists, dueling and other crazes.  Throughout, he focusses on repeated episodes when entire societies got caught up in these irrational hysterias and behaved as if the laws of science or economics had been temporarily suspended.  In every case, hope overcame reason, as folks labored under the delusion that this time was somehow different, that their form of cultural madness was unique and actually made sense.  Always, and sadly, they were wrong.

The most interesting aspect of these hysterias is just what their capacity to stampede entire populations could mean to a nation's politics.  We know in our own culture about horrible irrational episodes like the internment of Americans of Japanese descent during WWII (see Orrin's review of ).  The herd mentality which such episodes reflect and which McKay portrays are particularly frightening for the vision they offer of what a pure (or purer) democracy, where mass sentiment is unchecked, might look like.

The version of the book that I own has a cover blurb by Andrew Tobias saying:  "If you read no more of this book than the first hundred pages--on money mania--it will be worth many times its purchase."  I couldn't agree more.  As David suggests, reading about Tulipomania gives you a weird frisson of recognition and it seems like you could just substitute the words "Tech Stocks" for "Tulips" every time it appears.  Were he alive today, Charles MacKay would likely be hard at work on a new chapter on the Internet Boom.  Read him and avoid such traps.

(Reviewed:)

Grade: (A)

  

Websites:

See also:

Economics
History
Book-related and General Links:
    -BIO: Charles Mackay (Spartacus)
    -ETEXT: Memoirs of Extraordinary Popular Delusions and the Madness of Crowds Charles Mackay
    -ANNOTATED ETEXTS: Charles MacKay (Self Knowledge)
    -Tulipomania (History House)
    -U.S. Netherlands Flower Bulb Information Center: History, Myths, and Romance
    -A Tale of Tulips
    -ESSAY: WHEN THE BUBBLE BURSTS: PSYCHOLOGY OR FUNDAMENTALS? (Lee E. Ohanian, Business Review)
    -ESSAY: The Trouble with Bubbles (World Link)
    -ESSAY: Delusions of technology (Peter Jackson, Anchor Desk UK, ZD Net)
    -REVIEW: of TulipoMania The Story of the World's Most Coveted Flower and the Extraordinary Passions It Aroused. By Mike Dash (Carol Peace Robins, NY Times Book Review)
    -BOOK LIST: A reading guide for investors (Forbes)
    -BOOK LIST: Strictly Top Shelf  (Fredric Smoler, Worth)

GENERAL:
    -ESSAY: Mass Delusions and Hysterias:  Highlights from the Past Millennium  (Robert E. Bartholomew and Erich Goode, Skeptical Inquirer)
    -REVIEW:  Andrew Hacker: Back to Nature
       The Nature of Economies by Jane Jacobs
       The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell

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