Wheelan, Charles, naked economics – a recommendation.
I love this little book. I have been reading about economics
for a couple of years. I started with the standard texts, the history of ideas,
secular philosophers, and some other commentaries. I should have read this one
first. It is brilliant, and eminently easy to read.
First off, Mr. Wheelan is a “centrist”. There are ideas on
the left and the right, there are Austrians, Libertarians, Keynesians – but he
hews carefully and strongly to the centrist path. All sides have some wisdom to
contribute, and all are respected – but none have the whole story. I like that
approach, and it works pretty well. The book has also been extensively revised
since the crisis or “Great Recession” of 2008. The author has some telling
comments about that as well.
He is also amazingly refreshing as an author. He has a good
sense of humor, sense of self, and he is not afraid to say, “I really don’t know”.
That counts for a lot.
Let me give you some of the ideas that were of particular
interest to me. I would really like you to read this book – I would like everyone to read this book. If we can
all actually share a grasp of the “dismal science” at this level, I think we
might have hope to actually move forward, instead of just throwing stones at each
other.
P. xviii. He talks about Ross Perot’s mistake with the
“fixed lump of work” problem. Mr. Perot ran for President on the threat that NAFTA
would create such an open market with Mexico that all of the US jobs would
disappear into Mexico with a “giant sucking sound”. That did not happen, and
the whole idea is based on a totally confused idea of labor and trade. But,
similarly, p. xix, the French government undertook a campaign to cure chronic
unemployment by mandating a reduction in the workweek from 39 to 35 hours. The
theory was that this would create more jobs for the unemployed. Both ideas are
based on the misconception that the economy only contains x number of jobs –
the fixed lump of work. As the author says, “It’s utter nonsense”. No economist
would have supported the idea, but the politicians clearly do not listen to
reason here. They go with their gut, or whatever sounds good and plausible to
the common voter.
Anti-globalization activities and protests are a similar bit
of madness. Globalization is a simple fact of modern life, with transportation
and communication. It has enormous benefits, although it does generate
transition costs, as jobs and capital move across borders to generate new wealth.
Restricting that movement is not a positive force, and can be very harmful to
all parties.
P. xxi. With all the talk about health care and reform, it
is still fundamentally a matter of economics. If we mandate better coverage,
then we can anticipate market response and pricing changes as a result.
P. xxii. Consider the cost of the US love affair with the
automobile. Some of us can afford BIG cars, and can afford gasoline – so we drive
large vehicles. But we also pollute the air, destroy public transportation for
the rest of us, consume energy resources needlessly that would be used for
other wealth creation, etc. The buyers of these vehicles are paying only a
portion of the cost of these things. Left to our own devices, to a laissez
faire economic system, we will continue to do this until we have destroyed the
planet. A rational approach would be to enforce a higher cost on this type of
transportation by means of higher automobile and gas taxes, until the society is really
recovering the cost of providing the free goods these things are consuming – not to mention the cost of
the highways and other infrastructure required.
P. xxv. As the author states, this book is not economics for
dummies. This is economics for smart people, who never studied economics
academically in its gory detail. This is a simplified explanation of the
basics. And it is important! Our current politicians and the electorate are making
economic and political decisions on the prevailing view of economics, and that
has been a disaster to this point. We can do better.
p. 47 – Walmart. Capitalism is a great engine of
productivity, but it also has enormous costs along the way. The steam engine
generated tremendous productivity gains – but it totally changed the market for
unskilled labor. Walmart is an amazingly efficient engine for providing goods
and services at low prices. Lowering the cost of things is basically the same
as providing people with more income. That does generate wealth. But Walmart is
the scourge of the old approach of main street stores with narrow market share.
Capitalism is a brutal, cruel process. Stopping that progress is not the
solution. But letting the victims all fall by the wayside is not a very sound
outcome, either. In the current incarnation of capitalism, we spread the wealth
around primarily by means of labor. If we destroy jobs and incomes to the point
that no one can afford to buy things, that is not progress. We can do better.
p. 47 “Creative destruction is not just something that might
happen in a market economy. It is something that must happen. At the beginning of the twentieth century, half of all
Americans worked in farming or ranching. Now that figure is about one in a
hundred and still falling. . . . Note that two important things have not happened: (1) We have not starved to
death; and (2) we do not have a 49 percent unemployment rate. Instead, American
farmers have become so productive that we need far fewer of them to feed
ourselves. The individuals who would have been farming ninety years ago are now
fixing our cars, designing computer games, playing professional football, etc.
Just imagine our collective loss of utility if Steve Jobs, Steven Spielberg, and
Oprah Winfrey were corn farmers.”
That is the type of wisdom you will find through the book.
Do get a copy and read it. Thank you, thank you very much. We will all be
better off because of your investment of dollars and time.
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