Economics for the Rest of Us: Debunking the Science that Makes Life Dismal [Hardcover]

Moshe Adler (Author)

Book Description

Publication Date: December 8, 2009

Why do contemporary economists consider food subsidies in starving countries, rent control in rich cities, and health insurance everywhere "inefficient"? Why do they feel that corporate executives deserve no less than their multimillion-dollar "compensation" packages and workers no more than their meager wages? Here is a lively and accessible debunking of the two elements that make economics the "science" of the rich: the definition of what is efficient and the theory of how wages are determined. The first is used to justify the cruelest policies, the second grand larceny.

Filled with lively examples--from food riots in Indonesia to eminent domain in Connecticut and everyone from Adam Smith to Jeremy Bentham to Larry Summers--Economics for the Rest of Us shows how today's dominant economic theories evolved, how they explicitly favor the rich over the poor, and why they're not the only or best options. Written for anyone with an interest in understanding contemporary economic thinking--and why it is dead wrong--Economics for the Rest of Us offers a foundation for a fundamentally more just economic system.

Editorial Reviews

From Publishers Weekly

Armed with vivid case studies and a populist axe to grind, Columbia economics professor Adler debunks the conventional economic wisdom that what's good for the rich and powerful is good for the economy through discussions of economic efficiency and how wages are determined. His main target is "the critical building block of modern economics"--Pareto efficiency--the theory that no one can be made better off without someone else being made worse off. Pareto efficiency balks at equitable resource allocation (especially from rich to poor); Adler argues that the model, carried to its extreme, proves that poor people should not be allowed to breathe clean air and that rich people pay far too many taxes, leading into a fascinating discussion of wage disparity. The claim that a person earns an amount determined by the value of what she produces is fundamentally flawed, he maintains, and the evidence shows that wages are determined by the powers a worker possesses--or does not possess--at the bargaining table. Adler's frustration with wrongheaded economic thinking is as entertaining as it is thought provoking.
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From Booklist

Academic Adler sets out to explain the key concepts and theories of mainstream economics and less-known alternatives. The book considers the two cornerstones of economics. One is economic efficiency and its definition, which at one time included distribution of income but now focuses upon free markets, ruling out government intervention to decrease inequality. The second cornerstone, what a worker earns, is not based on the value of an individual’s contribution to production, which the author contends is a flawed concept; wages are determined by the power workers possess or do not possess at the bargaining table, and Adler points to CEOs’ obscene compensation, which he concludes is awarded because they work for shareholders who are too numerous and lack control. Everyone will not agree with the author, but he makes thoughtful arguments intended for educated readers who are not schooled in economics. --Mary Whaley

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Product Details

• Hardcover: 224 pages
• Publisher: New Press, The (December 8, 2009)
• Language: English
• ISBN-10: 1595581014
• ISBN-13: 978-1595581013
• Product Dimensions: 6.1 x 0.8 x 7.5 inches
• Shipping Weight: 12 ounces
• Average Customer Review: 4.8 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #346,294 in Books (See Top 100 in Books)

More About the Author

Moshe Adler teaches economics at Columbia University and at the Center for Labor Studies at Empire State College. His articles and editorials have appeared in the New York Times, the Washington Post, the Los Angeles Times, and Truthdig, as well as in the most prestigious academic journals. Author of Economics for the Rest of Us, he lives in New York City.

Most Helpful Customer Reviews

44 of 45 people found the following review helpful

5.0 out of 5 stars Wy read 'Freakonomics' when you can read this? December 18, 2009

By Eric Laursen

Format:Hardcover|Amazon Verified Purchase

"Freakonomics" was a popular sensation a couple of years ago. Why? Because it used a series of cute anecdotes to show the ingenious ways in which economists can explain virtually any aspect of our lives, including some we don't normally think of us "economic." As if it hadn't been already, "Freakonomics" raised the "dismal science" to cult level, implying that everything can be understood by quantifying it: the clockwork universe of the Enlightenment run amok, sort of.
Thankfully, along comes Moshe Adler with "Economics for the Rest of Us" to debunk that notion. He takes aim at two of the founding myths of modern economic theory and practice, and eviscerates them. One is "Pareto efficiency": the notion that you can't change the rules to alleviate the misery of the poor because it would take away too much from the affluent, and therefore make "the economy" as a whole less efficient. The other is the notion that there is such thing as a quantifiable "marginal product of labor" that determines how much each person earns for his or her labor. (In reality, wages are determined by the workers' bargaining power, which is why management loathes unions.)
Taking off from these two points, Adler raises - and answers - a set of questions far more interesting than anything in "Freakonomics": Are monopolies good or bad? Can public education, for instance, be improved by "throwing money" at it? What's the impact of rent control? What's the impact on employment of a minimum wage? Can low wages cut unemployment during a recession? Why are corporate CEOs so eager to pursue mergers and acquisitions?
Along the way, Adler uncovers some forgotten aspects of economic history. For instance, Adam Smith and David Ricardo, those supposed icons of the ultra-free market, didn't believe in a quantifiable marginal product of labor. They both understood that wages are based on bargaining power. It was later, "neo-classical" economists who fabricated the theory that workers always receive the full value of what they produce: a myth that's hoodwinked even supposedly liberal economists to this day.
Adler signs off with some recommendations for getting us back to economic reality. These include setting the minimum wage at a level where it always constitutes a living wage. But more important, he reminds us of a basic, humbling fact that's been forgotten in our market-obsessed world: "There is really no such thing as 'the economy,' there are only people." What's so terrifically "efficient" about a society that will let people starve and allow the environment to be destroyed rather than violate an abstract economic theory? Fortunately, Adler is here to ask the question and provide some timely answers.

29 of 33 people found the following review helpful

5.0 out of 5 stars A timely rebuke November 29, 2009

By Tomrus

Format:Hardcover

In clear prose and with some well chosen examples, Adler demolishes two of the central tenets of received textbook economics. The first is a justification for social non-action known as the principle of Pareto efficiency. Stated simply, this principle states that on grounds of efficiency, one must be wary of a policy which feeds the hungry, if that policy would reduce the bonus of a Goldman Sachs executive by even one cent. The second is the view that the relative earnings of the rich and the poor are determined by the application of calculus to a technologically determined relationship between inputs and outputs independent, for example, of relative political strength. (For an obvious counter-example, again think Goldman Sachs).
The non economist reader of this book will wonder how such thinking could ever have come to dominate the discipline of economics (Adler provides a nice historical overview). The economist reader will never again think about these two concepts in quite the same way.
If teachers of Econ 1 really want their students to "think for themselves" they will require this book as supplementary reading. But let them be forewarned. Dropping these two principles cuts the legs from a great deal of the psudo-scientific defense of policies which permit the continuation of social injustice, a defense into which many teachers of introductory economics have been co-opted without even knowing that they have been duped.

7 of 7 people found the following review helpful

4.0 out of 5 stars True to its title February 4, 2011

By CrunchyCookie

Format:Hardcover

For those who haven't been through a certain college curriculum, the subject of economics is about "the allocation of scarce resources", and is basically a social science (like psychology, sociology, and a bunch of other majors ending in "ology") with ten tons of math unnaturally shoved where it doesn't belong. This book thankfully keeps the formulas and graphs to a minimum, instead focusing on explaining and philosophizing about a few key economic concepts. I thought it did so in a way that's pretty thoughtful and engaging, with the welcome oversight of a social conscience.

The first, more interesting half of this sub-200-page book explores the concept of economic efficiency, defining/debating stuff like Utilitarianism (which basically argues that feeding the poor with the rich's money is a net good for society since a dollar means more to the poor), Pareto efficiency (argues against that), supply and demand, taxes, and income redistribution. It gets especially thought-provoking near the end, i.e. Chapter 7 gets into how massive inequality can ruin society through consumption alone. How? Because it becomes more rational/profitable for sellers to cater to only a tiny handful of super-rich instead of masses of average people, which leads to consequences like a dearth of real estate in NYC (because the rich demand space-hogging mega apartments), airplanes with no legroom, lower availability of doctors and medicines, and even crappier rock concerts (cuz some CEO just hands Elton John a million to show up at his house instead). He also argues against popular notions like higher taxes discouraging CEOs to work or rent control hurting the real estate market, and expends lots of effort discrediting Pareto in general.

The second half is about wages and employment, exploring things like the Value of Marginal Product, how CEOs get away with earning $11,000,000 on average (answer: because the loss to each shareholder is too small for any of them to care, and because of the inherent difficulty in technically proving that the CEO didn't actually contribute that much value, even though everyone knows it), how minimum wages don't hurt the economy, and how lowering taxes doesn't help it. All the while, he reminds us that the economy does NOT have a self-correcting mechanism in times of failure, and that there's really no such thing as "the economy" anyway -- which can be empirically robust even when most of the people in it are just scraping by. If you're sensing that this Moshe Adler guy's a Democrat, you'd be right (he even slips in a jab at creationism on the last page, heh heh), but I thought his arguments were pretty convincing, even if I occasionally got lost in his hypothetical examples.

Pick this up if you're interested in an econ book that won't put you to sleep.