Wednesday, March 09, 2011

Economics

Continuing my economics education, I've read a couple new books. They were both interesting and loaded with references, as you'd expect from authors of their standing.

"23 Things They Don't Tell You About Capitalism" by Ha-Joon Chang, Professor of Economics at the University of Cambridge. For each of the 23 items, Chang first describes "What they tell you" followed by a longer section titled "What they don't tell you." I had some difficulty with this book because it is heavy with discussion of past (and present) economic theories. On the other hand, it's got plenty of real-life examples and illustrations from recent history. Below are Chang's list of 23 things. My favorite "things" were numbers 1, 2, 4, 7, 13, 15, 17, and 22.

  1. There is no such thing as a free market.
  2. Companies should not be run in the interest of their owners.
  3. Most people in rich countries are paid more than they should be.
  4. The washing machine has changed the world more than the internet has.
  5. Assume the worst about people and you get the worst.
  6. Greater macroeconomic stability has not made the world economy more stable.
  7. Free-market policies rarely make poor countries rich.
  8. Capital has a nationality.
  9. We do not live in a post-industrial age.
  10. The US does not have the highest living standard in the world.
  11. Africa is not destined for underdevelopment.
  12. Governments can pick winners.
  13. Making rich people richer doesn't make the rest of us richer.
  14. US managers are over-priced.
  15. People in poor countries are more entrepreneurial than people in rich countries.
  16. We are not smart enough to leave things to the market.
  17. More education in itself is not going to make a country richer.
  18. What is good for General Motors is not necessarily good for the United States.
  19. Despite the fall of communism, we are still living in planned economies.
  20. Equality of opportunity may not be fair.
  21. Big government makes people more open to change.
  22. Financial markets need to become less, not more, efficient.
  23. Good economic policy does not require good economists.



I'm now finishing "Zombie Economics: How Dead Ideas Still Walk Among Us" by John Quiggin, Professor of Economics at the University of Queensland. I liked this one a little more, but that's mostly because its written in a more consumable style (less dry and didactic than 23 Things).

Below is a rundown of the zombie ideas that Quiggin covers. For each one, he describes the idea and its original birth, its life, its death, its reanimation, and lastly "After the Zombies" where he looks at alternatives.

  1. The Great Moderation
  2. The Efficient Markets Hypothesis
  3. Dynamic Stochastic General Equilibrium
  4. Trickle-Down Economics
  5. Privatization

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