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The Economic Naturalist's Field Guide: Common Sense Principles for Troubled Times

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Many of our most important decisions have strong economic components, not all of them obvious. This is especially true in the political world. Frank's "The Economic Naturalist's Field Guide" explores the often hidden reality behind a number of them in a collection of short essays previously published in the New York Times. (Pause for conservatives to scream about the NYT.)

Frank begins with income inequality, asserting that most countries tend to push against increasing income inequality, but in the U.S. we enact tax cuts for the wealthy and cut public services for the needy. However, even the wealthy have been made worse off, on balance, by recent tax cuts - per Frank. On the benefit side, tax cuts have led the wealthy to buy larger houses; however, since economic satisfaction if primarily established on a comparative basis, the primary effect is merely to redefine what qualifies as an acceptable dwelling. Meanwhile, deficits have led to cuts in financing for basic scientific research, public health, highway maintenance, "loose-nuke" security of former U.S.S.R. weapons - threatening the long-term economic prosperity of all, including the wealthy. (A bit of a stretch, but interesting.)

Frank then acknowledges that government does waste money from time to time (my experience in education, the military, and health care tell me he doesn't BEGIN to understand how much), but waste is not limited to the public sector. Watches, for example, cost up to $700,000. (I'd be embarrassed to wear one - mine was $29.95 at Wal-Mart, with Atomic accuracy.) More importantly, the middle-class and poor are more likely to spend any tax savings than the rich.

A corollary of the "it's-your-money" argument is that the government should never redistribute income from the rich to the poor. Frank says that no government follows this admonition, and it would sometimes harm the rich. For example, fewer than 10% of L.A. vehicles are over 15 years old, and they produce over half the smog. Further tightening new car standards is several times as costly as meeting standards by eliminating exemptions for older vehicles. Alternatively, raising taxes on high-income motorists could finance vouchers enabling low-income motorists to scrap their older vehicles. The required taxes would be much smaller than resulting savings from not having to adopt more costly standards for new vehicles.

Similarly, private health insurance in the U.S. delivers worse outcomes (47 million uninsured) and substantially higher costs (31% administrative costs) than single-payer systems (17% administrative costs in Canada) in most every other industrial country.

Frank also points out that the Earned Income Credit (EIC) does not discourage hiring, as do increases in the minimum wage.

Bush II tax cuts were rationalized on the basis that they would stimulate robust economic growth. However, the basic hiring criteria - taught even in Bush advisor textbooks, is that workers will be added whenever their output can be sold at prices exceeding added costs. (Me thinks Franks slipped a gear here. Tax cuts would increase the amount left after sales, and therefore also should increase hiring.)

Bush II proposed repeal of the estate tax. Doing so would reduce federal revenues by about $1 trillion from 2012 - 2021. To help reduce costs, Bush also proposed cutting veterans' health care, educational and vocational training, etc. When these cuts are associated with repealing the "death tax," voters are 4:1 against; when these cuts are not mentioned, voters are 3:1 in favor. Regardless, as it now stands, less than 1% will ever pay any estate tax.

Japanese CEOs earn less than 1/5 that of the American counterparts and face higher marginal tax rates on even that - similar to the U.S. situation in the 1950s. Ergo, says Frank, American CEOs don't need all that money and tax relief to be motivated.

Etc., etc., etc. - worth reading!

I was quite enamored with Robert Frank's last popular economics book, The Economic Naturalist. I could barely summon the enthusiasm to finish this one, though.

A collection of columns Frank has written, this book gives short arguments in favor of Frank's opinions on old and new political debates, with most of the justifications for the arguments ostensibly from economics.

Perhaps it's the length restriction on the columns, but almost all of them come off as a collection of hasty generalizations and shoddy reasoning. For example, several times he justifies higher taxes on the rich because otherwise they would just spend their money on something frivolous like a new yacht. There may be lots of good justifications for taxes, but this isn't one of them - yacht companies employ people just like other companies do. Even when I agreed with Frank's conclusions, I felt embarrassed with the reasoning he used to arrive at them.

There are a few flashes of insight, and nuggets of wisdom interspersed, but ultimately this book seemed like a cheap cash in on the success of the last one.

I will admit to only reading almost one chapter. Frankly I couldn't take it any more. The book seems to be mainly comprised of a compilation of popular magazine articles. The connecting material is choppy at best.

Here is one example of the economic principles espoused. He responds to the criticism that the government is wasteful by stating private citizens can be wasteful too. He then uses an example of some extremely wealthy individuals throwing ridiculously extravagant birthday parties for their children.

I would certainly agree that many people spend lots of money on things that I would not. If it is their money then it is their right. How does this make government waste right?

The book represents the author's plan for a planned society of mediocrity based on HIS value system.

There have been a number of books published recently covering economic principles and their applications to the world we see around us (e.g., Freakonomics and Armchair Economist). Frank's book however emphasizes a different slice of the field, in particular covering the concepts of "relative spending", "expenditure cascades", and an examination of the effects of various kinds of tax policy on people's daily lives.

The book consists of a collection of prior articles, organized by general themes and woven together with additional narrative. The book should not be looked at as "the definitive word" on the topics in question; indeed, Frank himself prefaces his article on the AOL/Time Warner merger with the caution that it was the worst piece he'd ever written. However, the book does take a look at various economic topics in an accessible an engaging way, and presents interesting perspectives that would probably be new to most.

Those with a strong ideological tilt in either direction will probably not appreciate the book, but it does provide an interesting and engaging look at a variety of economic concepts in play in the real world.

I enjoyed this book as Franks runs through a variety of scenarios. As an economist he approaches problems from the perspective of incentives. In doing so he makes some interesting and thought promoting observations. I'd also say for a book about economics it's very readable and accessible. I didn't agree with all of the authors conclusions mind you - but the subject matter is covering the behavior of people on mass, so thats just to be expected.

Some of the other reviews here take a highly negative view of the book - but basically their arguments seem to boil down to the politically simplistic ideologies such as tax 'bad'. Not considering why there are taxes, or how they might be used. Franks books looks at taxes through the lens of incentives - sometimes they are good and sometimes they are bad.

The economic boom has ended and the connections between money and happiness have become quite tenuous: THE ECONOMIC NATURALIST'S FIELD GUIDE discusses this link, considers how the crisis has changed middle class perceptions and values, and offers a key to consuming less as part of the solution. From reducing consumption to working towards a national health plan, this provides a host of theories on how to win in troubled times.

Good that Dr. Frank is a college professor. He should feel right at home theorizing with juvenile minds.

The theories proposed in this book are incomplete in their analysis- academic and not remotely practical. His premises are clearly shaped by a theoretical view of the world vs. reality.

The answer to all social issues is to tax demand out of existence. Governence by penalty- versus ingenuity. The Federal government should control all behavior to cause the world to look like he and myopic clique think it should.

The book certainly answers the question that he raises, as to why people do not embrace economics. It is in large part because most economists- Frank foremost among them- proffer impractical conclusions based on hand chosen (and incomplete) data and analysis, without thorough consideration of all the consequences taken into account. More important to be clever than practical. Regular people, using common sense, can see through that, so dismiss the pontificaing- as they have to survive in the real world.

Not a scholarly work. Not thoughtful, or rigorous, in its analysis.

Read "Naked Economics", by Charles Wheelan, to get an unbiased and accurate understanding of the dismal science.

Dr. Frank's starts with the premise that we live and work for the right to pay taxes. Dr. Frank has a vested interest in higher taxes because the taxpayer pays his salary. He says that tax cuts hurt the rich because they spend the excess money on having a larger house. Dr. Frank fails to mention that the rich individual pays construction workers for these home improvements. He offers another lame comment that increasing disposal income by tax cutting leads to more expensive gifts. The rich individual gives his wife a dozen roses instead of a single rose. Buying a dozen roses instead of a single rose increases demand for roses which benefits a small business person.

Taxes are an impediment on the entrepenure. The owners of small business often want to hire more people but can't because taxes are a drain on his business. He derides the U.S. Health care system but fails to mention that other countries ration health care to control costs. You get what you pay for.

Dr. Frank is a member of academia and is probably a tenured professor. He will have a secure job until he chooses to retire. He is insulated from the realities of life. He is insulated from having to design products that will sell or having to comply with the myriad of government regulations that increase cost of doing business.