In their book, Perverse Subsidies, Kent and Myers adequately demonstrate how global tax revenues can at times adversely affect the economy and the environment. The book is an expanded version of a 1998 report on the topic of perverse subsidies, focusing in particular on the OECD nations. Given the magnitude of these pervasive, deleterious subsidies, the authors were genuinely perplexed to find that the subject received scant attention from specialists in economics, public policy and the environment. As such, the book's subject matter would serve as an excellent springboard for hundreds if not thousands of graduate level research projects in the fields of economics, public policy, urban planning and development.
On the organizational front, the authors divided the book into three uneven parts, with the second of the book comprising the majority of the text. Part one of the book consists of two chapters that for the most part are readable and understandable. The first chapter covers basic concepts associated with subsidies in general such as: what subsidies are, the various types of subsidies given, the advantages and disadvantages of subsidies, social equity concerns, scale and externality issues associated with subsidies, and finally an extended discussion of how the authors derived their rough estimate for the size and extent of subsidies globally. The authors astutely note the difficulty of tracking down information regarding subsidies in general, and openly admit that their estimate for global subsidies may not accurately reflect the true value, given the hidden nature of subsidies and the active roles of governments to contain detailed information about payments and transfers. The second chapter tells the reader what constitutes a perverse subsidy (which the authors define as having deleterious and distorting effects on both the economy and the environment), delves heavily into economic and environmental values and costs associated with perverse subsidies, and tersely explains the role of (negative) externalities, focusing almost exclusive on the role perverse subsidies play in exacerbating global warming.
Part two contains individual chapters devoted to the agricultural, energy, transportation, water, fisheries and forestry sectors of the global economy and each chapter outlines the type and magnitude of the subsidies given to each sector, and offers specific policy recommendations for policy intervention, change, and/or overhaul. In each chapter, some countries are emphasized more than others, and this I believe reflects the availability of reliable data more than the political and economic importance, however great or small, of the countries emphasized. Part two also contains a final chapter that discusses the combined effects of perverse subsidies across all sectors presented, as well as their political, economic, and social implications. The last part of the book consists of one chapter, and
For the curious layperson, chapters one, two and nine of the book contain the most useful information, albeit of a general nature. Specialists with an interest in the various sectors emphasized in the book may find one or more of the chapters in Part Two of the book to be of some utility. In addition, researchers in the field may find the book's extensive notes section at the end of the text immensely helpful.
I found the book to be somewhat lacking in three key areas. First, the authors devoted much of their attention to explaining the flaws and holes in their research methodology, data and conclusions. Judicious readers will expect a considerable degree of uncertain in the numbers, data and results, given the magnitude of the challenge before the authors. Because of the breadth of the topic, rigorous statistical analysis may have been difficult to perform, and any attempts to perform such analyses, given the lack of hard data on the topic, may not have been of sufficient utility. However, I felt that too much space was devoted to justifying their numbers in every chapter, and such detailed justification could have been sufficiently presented in the first chapter. Second, graphs and charts would have done much to make the text more readable, and key points presented within the text-rich format would have been better understood in graphical or tabular form. Pie charts, bar graphs and other descriptive, graphical methods would have the reading much more brisk and enjoyable. Third, some key concepts, such as the subsidy, were explained in great detail with skill and precision, but other concepts and issues, such as externalities, costs, values and political dimensions of subsidies, were not very well delineated. Yet, in spite of these moderate criticisms, the authors have managed to write a good introduction to the Hydra-headed, shadowy and amorphous topic of subsidies in the global economy.
Frankly speaking, expositions on dry economic subjects such as subsidies tend to be more effective at eliciting yawns and putting people to sleep than sleeping pills. Nonetheless, not only did the authors convincingly argue that the problem of perverse subsidies is a gargantuan one indeed, they also made their case using an active writing style that engaged the reader, as opposed to making him or her yawn. One can not expect one small volume to do adequate justice to a topic of such magnitude, and for these reasons, the authors should be applauded for bringing some aspects of this gargantuan topic to the public.