The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crisis of the Last Century

by Mark Thornton

The Skyscraper Curse is Dr. Mark Thornton's definitive work on booms and busts, and it explains why only Austrian economists really understand them. It makes business cycle theory accessible to a whole new 21st-century audience. And they need it, especially those under 40. Many of the brilliant quants working on Wall Street and at the Fed barely remember the Crash of 2008, much less understand it. But Mark Thornton does, and his book is a warning about overheated equity markets, over-inflated housing prices, and clueless central bankers. Given the shaky stock markets lately, 2018 may be the year the Fed’s latest bubble bursts. And when it does, it will be even more painful than 10 years ago. In fact, US household and business debt is now one trillion dollars higher than 2008. Mark is well known as an expert on bubbles and Fed malfeasance. His work appears in outlets like Wall Street Journal, Bloomberg, Forbes, The Economist, Barron’s, and Investor’s Business Daily. His now-infamous Skyscraper Index theory draws the connection between loose monetary policy, artificially low interest rates, and vanity construction projects. Put the three together and it doesn’t turn out well. And let’s not forget that Dr. Thornton was among only a handful of economists to warn about the dangerous housing bubble in 2004, and again in 2006. Cabbies and waiters bought up condos with no money down in places like Las Vegas. Prices rose 25 percent or more every year in some coastal markets. Even people with terrible credit financed houses at five or seven times their annual income. All of it was made possible by the Fed and its mania for low interest rates. So when the experts said “Nobody could have seen this coming,” the Mises Institute had Mark’s articles and papers ready to go. The housing crash, and the meltdown in equity markets less than a year later, were thoroughly explained by Austrian business cycle theory. And Mark was the capable face of the Mises Institute during it all. Without a lay-friendly book like The Skyscraper Curse, millions more Americans will be duped by the next crash. Dr. Thornton’s book tells the story that needs to be told. It will be among the only alternative explanations available when the next crisis comes.

Genres: Economics, Audiobook, Politics, History, Nonfiction, Finance

280 pages, Kindle Edition

Published July 31, 2018

About the author

Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows.

Reviews

[Shane Hawk · Rating 5 out of 5]

Excellent. Divided into a section pertaining to the main title and a second section for the book’s subtitle. In the first section you’ll learn about the Skyscraper Index, Cantillon effects, and history about skyscrapers, architecture, etc. The latter section is essentially a collection of essays showing how Austrian economists have predicted the majority of economic crises since the early 20th century. These essays examine the Great Depression, New Economics, the 1970s Depression, the boom-bust in Japan, the late 2000s housing crisis, string theories, and legitimate criticisms of the Austrian business cycle theory (ABCT).

[Ietrio · Rating 1 out of 5]

This is an overblown economic article. It was inflated in any way known to Thornton to fit a small book. Because of that it is also boring. It drones on and on about who did what and not much about the sensationalist meme of "the curse". Thornton also does an attempt of generalization, beyond the exaggeration of the title. Chapter 2 states something about the Ancient Egypt. Well, yes, the Ancient Egypt was about credit and market indexes.

Also the Austrian school of economy is put there only to feed the tribalism of some readers. And, as it is a rather new hypothesis, hardly "predicts" anything. Even worse, even if Thornton could speculate about predicting from say the 1990s forward, and he does, the "Last Century" goes a lot more way than 1990s.

This is a particular case of a simple misunderstanding of the short series. Just because it is true for the 10 cases in the last decade, it does not mean it is a good indicator for a longer series, say 1000 or 10000. This does not invalidate the thesis, it simply says we know nothing about this correlation.

[Borislav Boev · Rating 5 out of 5]

Great book. Very informative on the Austrian Business Cycle Theory and the basics of Austrian School of Economic thought. The economic crises are well explained through the classic Austrian analysis. The Austrian school of economic thought correctly identifies the real problems in the business cycle, which is mainly caused by excessive and inadequate interventionist policies by the central banks and governments.

[Daniel Moss · Rating 4 out of 5]

This is a really good work on the different theories in circulation explaining the causes of boom/bust cycles.

[Ravi Warrier · Rating 1 out of 5]

When the future economy looks promising, governments will reduce interest rates to encourage (even more) spending. People then spend for a time, cautiously, until they become careless or greedy and then start spending frivolously. Then a bunch of people start realizing the problem, start predicting a problem, more people catch on and the herd (of spenders) reverse direction.

This happens every few years and not just with money (and in economics).

At the beginning of the COVID pandemic, people used to interact socially with caution, then things became (a bit) better and people started letting their guards down. A new wave of infections surge.

A wave function, or a cycle, is the nature of all things (well, all that I can think of while I write this), but that doesn't make an 'aha!' theory - at least, not for people who ponder about things.

This book and its theory seems like a book written in the pre-scientific era, where correlation (in this case, a carefully picked one) is considered as a factor to determine the future. The author talks about skyscrapers as an indicator to an economic downturn, but, if I had the time to research, I am sure I could find similar correlations with purchase of TVs, or sofas, or gadgets, or anything else people spend money on when they are making money.

This is not a criticism of ABCT (Austrian Business Cycle Theory) because it is common-sensical (as I illustrated in the opening paragraphs), but of the book and the author who uses ABCT to drum up a non-sensical, almost pre-scientific model of predication.

I abandoned reading the book after four chapters because I could no longer bear the stupidity presented in the book and hence my review is based only on those chapters. The book might have become interesting, informational or even intellectual later, but I didn't have the patience to find out.

[Grant · Rating 1 out of 5]

A game of hide the ball where Thornton attempts to dress up economic fantasy as thorough economic analysis under the coincidence of his skyscraper nonsense. A very useless read that gets the Scooby Doo monster unmasking moment when Thornton’s mask is removed, unveiling a word salad of Cato institute, Chicago school and libertarian economic mindsets. Although he does at least try to attempt to gather a wide range of arguments he should probably take the hint when he admits most of his letters to economic publications go ignored and switch careers to the lobbyist industry where he’d probably make better bank.

[Sylvester · Rating 4 out of 5]

An insightful introduction to Austrian School and Austrian Economic Cycle Theory. By using a sensational title and topic, Thornton discussed the history of political economy and the causes of every economic crisis, by linking the so called "skyscraper curse" with recession, he explained the creation of economic bubbles due to interventionist monetary policies and central banking.

Thornton kind went round and round in circle referencing his own works but it was still a good introductory lesson.

[Matthew Cannon · Rating 4 out of 5]

A good deconstruction of the 2008 economic crisis while giving historical context of previous building boom busts from a monetary and economic perspective.

[Susan · Rating 3 out of 5]

It's ok at best but of limited use because it tracks so few skyscrapers an their effect. To be honest there is not much there and what is boring.

[G.A.Monster · Rating 4 out of 5]

A great shorter, more digestible Austrian book than the more involved treatises. Lots of good information for new Austrian readers and more seasoned ones as well.

[Amanpreet Singh · Rating 4 out of 5]

Analysis of down cycles from 1800s and why they are linked to sky scrappers.

Reasoning in light of austrain business cycle and how things link to fed for these cycles.

[Tadas Talaikis · Rating 4 out of 5]

Interesting idea, but more of a spurious correlation as building height is limited and how to predict booms in, let's say, 3000s?

[Paul · Rating 3 out of 5]

Paradoxically despite repeated disclaimers makes wild predictions but unfortunately qualified to the point of being unfalsifiable. Ends with straight up libertarian propaganda.

[Kurt Wagner]

Great book I read it in hardcover. It’s interesting how history repeats.

[Thuan Khanh Nguyen · Rating 5 out of 5]

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