255 of 275 people found the following review helpful
on February 12, 2005
I've been studying economics for the past six months or so from various texts, plodding through all of them by dint of perseverance and a sense of duty.
For some light reading, I picked this book up. From it, my studies of economics gained renewed vigor, because this was the first book that really made me LOVE ECONOMICS. After reading it I saw most economic ideas -- especially macroeconomic ideas -- in a new light.
Folks, it's fantastic. Absorbing, witty, and clearly-written.
Not only will you come to basically understand many important economic principles from reading it, but the book contains not a single graph, chart, or unsavory equation.
This is the only economics books I've ever read and read, until I was done: on the john, in the tub, on the bus, etc. I just could not put it down!
The thing I really like is Wheelan's genius for picking examples, many of which will boggle your mind and stick with you for days.
Wheelan has also got a great sense of humor. When's the last time that you found yourself laughing out loud every few pages while reading an economics book?
Here's an example:
"The sultan of Brunei earned billions of dollars in oil revenues in the 1970s. Suppose he had stuffed that cash under his mattress and left it there. He would have had several problems. First, it is very difficult to sleep with billions of dollars stuffed under the mattress. . ."
104 of 118 people found the following review helpful
on July 26, 2004
I highly recommend this book to anyone unfamiliar with basic economics, or looking for a simple, easy-to-read introduction to the science. Wheelan does a great job explaining the nuts and bolts of a free market system, and why this economic system as it stands is currently the most successful in the world. He's devoted chapters to the power of markets, incentives, the government, information, productivity, human capital, finance, the federal reserve, organized interests, trade and globalization, and ends with a discussion as to what it would take for poorer, less developed countries to get out of poverty. After reading Thomas Sowell's, "Basic Economics" I found Charles Wheelan's writing to be refreshingly balanced, and more humorous. That said, I still think both writers and books are worth-while. Anyone unconvinced that a free market system is the best economic system available, or wishing to know more about the system in which we live ought to read these books. Especially if you're against free trade, and fear "globablization". Wheelan admits there are serious social consequences and problems related to bad government, but insinuates (with a little more finesse than Sowell) that the problems are mostly rooted in bad policies, not economics. Corruption and dishonest politicians and leaders impoverish countries, not capitalism itself. However you choose to look at these issues, I think Wheelan does an excellent job at providing the fundamentals of the world in which we operate on a daily basis, and reading "Naked Economics" can only help one understand how to better affect desired change. Every college student should be required to read this!
73 of 83 people found the following review helpful
on July 7, 2005
Naked Economics is a good introduction to economics for the layman. There is no math, although personally I wish Wheelan had used some to back up some of his points or to show some issues in more depth. It is well written and easy to read. So even though the information is as useful as many textbooks, it isn't tough to understand it.
Subjects covered include: why capitalism and free markets is better than communism and state-controlled markets; how information is crucial (such as product or corporate branding and health insurance for individuals); efficiency of financial markets (why the individual is often foolish when he buys a stock after reading a tip from the newspaper); and why international trade is good even if special interest groups may oppose it due to job losses.
Readers on both the extreme left or right will be able to pick up certain issues in the book that they disagree with. They will then pick those up and attack Wheelan for being an extreme liberal or an extreme conservative. They will accuse him of not caring about U.S. jobs; they will accuse him of pandering to the environmentalists. For those readers, their mind is already made up before the read this book. For open-minded readers, this book will be very enjoyable and interesting.
50 of 56 people found the following review helpful
on September 29, 2002
Naked economics is an extraordinary account of what economics really is and how they should teach it. Unfourtunately current professors think that throwing a lot of math at you (without any intuition whatsoever) makes them look intelligent. Economics is much more fun (not necessarily easier) than solving a hundred optimization problems without any regard for the real world.
To all the people who design economics undergraduate programs in the U.S. please understand that: (1) we need something useful, (2) most of us are not going to study a ph.d., (3)we need a tool for understanding the world, not something we won't remember six months after the end of the course. What was a Lagrangean anyway?
21 of 23 people found the following review helpful
on September 6, 2002
I got this book up after reading the comments of Prof.Burton Malkiel of Princeton University about it. Prof.Malkiel is the author of highly acclaimed "A Random Walk Down Wall Street" (now in Seventh Edition). This is the book Prof.Malkiel wanted to write himself.
The author combines his excellent background in economics with the writing skills of a top-flight journalist. It reads like a good novel. Very hard to put down.
It leaves the reader with a better understanding of how the world works, from an economist's point of view.
Well worth the price and a place in the bookshelf. Highly recommended.
21 of 23 people found the following review helpful
on January 2, 2012
The original version of this book was written before the events of 2008. While I enjoyed it at the time, after 2008, I felt it was discredited due to the author's excessive fawning over Greenspan, and espousing many policies that were found to be an abject failure and the cause of the financial meltdown. Now that 2008 happened, the author has found it necessary to present an after-the-fact correction to the original book and explanation. I find that disingenuous. If the original edition had held up better, I would have considered buying this edition too.
9 of 9 people found the following review helpful
on September 23, 2012
I bought Naked Economics hoping to get a general overview of economic theory without the jargon that bogs down more technical books on the topic. I haven't taken an economics course since high school but have come to realize that a solid background in econ is essential to understanding how the world works.
Naked Economics is a mixed bag. First, the positives. Wheelan's style is great for this type of book. It's heavy on real-world examples, which helps frame some of the more abstract concepts in an accessible way without feeling like the book is dumbing things down. It also covers enough topics to give a fairly broad look at the world of economics. I felt like I learned a fair bit by the time I finished.
However, the book has enough negatives that I can't give a full-throated recommendation. First, it's repetitive. For example, the book contains several similar explanations of the virtues of free trade. Second (and more important in my view), the book is not well-organized. One would think that an introduction to economics would start with a brief overview of supply and demand and other topics the lay the groundwork for the rest of the book. Naked Economics takes the reader's understanding of these basic concepts for granted. I understand that this is not meant to take the place of a text book, but it feels like it starts in the middle, with a discussion of utility and incentives. These are important topics, to be sure, but it jumps around too much for my liking.
Overall, I recommend the excellent New Ideas from Dead Economists by Todd Buchholz over this. Buchholz's text will introduce you to the major concepts in economics but also the major players in the history of economic theory. For a reader who may not know much about Smith, Marx, Friedman, Ricardo, Mill, Keynes, etc., this is valuable information. It's just as approachable as Naked Economics but is clearer and more comprehensive.
15 of 17 people found the following review helpful
on May 25, 2005
I never attended a single class in economics, so Charles Wheelan's book, Naked Economics, was directed to people like me. The book is well-written and attention grabbing, although I sometimes felt I was being misled by the "enthusiastic school boy" style.
I couldn't agree more with the author's basic premise- that thinking in terms of incentives and disincentives is the best way to formulate policy, and that one of the most important roles of government (besides providing a minimum safety net) is to regulate these incentives to make sure that they work as intended. Although not an economist I had already thought about most of the specific ideas presented in the book, perhaps because during my 30 years in Brazil I have experienced in the flesh the effects of hyperinflation, price controls, overloaded currency and impossible bureaucratic regulations, while at the same time appreciating its public health system. I also understand the author's concern that people do not appreciate these questions enough.
That said, there were a few points I found weak in this book. Perhaps most importantly, I had hoped for a better discussion of utility. Economists readily admit that maximizing utility does not mean just maximizing personal or public wealth. Yet the book leaves totally open just what other kinds of utility there might be, and how incentives might take advantage of our search for these kinds of utility. For example, people are willing to invest enormous amounts of effort to increase their prestige or honor, and not all forms of prestige can be purchased (for example, a Noble Prize). Indeed, it may very well be that for humans "All is Vanity." But what are we vain about? - our ability to control others? The amount of material goods we consume? How much we produce? How much we help others? The book made not even a nodding gesture to these questions in the form of a citation to Maslow's "hierarchy of needs" or other literature. Worldwide, Americans are seen (unjustly from the data I've seen) as being mostly motivated by material rewards. Yet there are cultural differences here - Scandanavians, for example, generally rate higher on seeking "personal fullfilment." Where do these different values come from? How can people be enticed into seeking those types of utility we deem most worthy? What values should be encouraged and how? How can we construct incentive systems based on these values? The author often simply dismisses these questions with the "relativistic" claim that different people are all entitled to their own views and we shoujld respect this. For example, he suggests that one man may find greater utility in beating his boss over the head, than foregoing this pleasure to avoid going to jail.
Often the author cites physical well-being (measured by life-expectancy) as the clincher criterion for whether economic policies work or not. I have no qualms with that, but would also include mental well-being (measured by life-satisfaction or happiness scores), and try to get some measurement of how sustainabile different policies to increase physical and mental well-being might be. These questions have been analyzed. Do we know whether the "social indicators" used by the U.N. or other researchers actually predict physical and mental well-being? I had hoped for a review of the literature here.
One question in this line is the emphasis on the well-being of consumers at the expense of producers, and the lack of concern for "externalities" (secondary costs)here. For example, "total quality control" policies require questioning job hierarchies at frequent intervals. People (and animals) accomodate fairly well to established hierarchies, but unstable hierarchies generally create a great deal of stress. How are these social costs being measured?
One argument in the book actually made me rethink an old suggestion of mine, but I still don't have a solution, and, unfortunately, neither does the author. This is the question of how to maximize well-being when a given policy will negatively affect a small group of people, but benefit a large group - for example, farmers who might lose land for the construction of a dam, or young men threatened with being drafted into the army. I suggested that people ought to be given a yearly quota of "votes" and be allowed to invest those votes wherever they want. People most affected by a possible policy would invest a greater proportion of their votes in that question. The author shows (rightly, I think) that such a procedure would create a tremendous "tragedy of the commons" as everyone cared for their own interests to the detriment of the general good. In describing his own actions (fighting to prevent the installation of a new subway line in his neighborhood) the author simply stimulated a "shout-ocracy" in which those who make the most noise always win, and meeker people always lose out - not a good idea in my view.
There were also a few other points where I felt something was missing in the analyses. The author suggests agriculture is less productive in the tropics than in moderate climes, but does not clarify if this is productivity per hectare, per dollar invested, or per man-hour of labor, and he seems to contradict this suggestion when he mentions that the productivity of orange growing is far higher in Brazil than in the U.S.
I had also hoped for a better discussion of international exchange rates. The author simply suggests that over the long run purchasing power parity should be the same in different countries. This is obviously not the case. Why the difference? Surely assessments of political risk affect international investment decisions, which must have an effect on interest rates and exchange rates. What else is involved?
Finally, one argument was badly stated. The author suggests that countries should engage in the activity they do best. Surely this cannot be true. I'm sure the author would agree that a young man in the 99th percentile for music ability, but 60th percentile for computer skills would not be better off choosing a career in music. How does this work out internationally?
8 of 8 people found the following review helpful
on May 17, 2008
I thought this was a very good introduction to economics for the layman. Wheelan purports to explain the subject without all the mind-numbing charts and economics jargon and he succeeds in doing just that. My initial reaction to the book was that Wheelan was merely an apologist for unfettered capitalism but it turned out to be a relatively objective work. He gives both sides of the story so to speak, and concludes that government is important to a healthy economy, as long as it is used judiciously. For instance, on page 51 he flatly states; "Anyone who tells you that markets left to their own devices will always lead to socially beneficial outcomes is talking utter nonsense." He points out how most developing countries would love to have the bureaucracy that we have, and this lack of effective government is what keeps many nations from prospering. Of course, this goes both ways as he also describes the damage done by excessive government regulation, as witnessed by states like North Korea. He argues against the allures of protectionism and emphasizes the importance of international trade, for rich and poor countries alike. Besides the relationship between government and economies, the author tackles all the major aspects of economics such as how the financial markets work, the difference between monetary and fiscal policy, the Federal Reserve, inflation, human capital, currency, externalities and so on. His analysis of "creative destruction" can be summed up by the following; "It would have been one thing to help displaced Pony Express workers by retraining them as telegraph operators; it would have been quite another to help them by banning the telegraph." He's actually quite humorous at times also; "Any thoughtful policy analyst knows that some individuals who wear spandex in public should be taxed, if not jailed."
Wheelan makes no secret that capitalism is an amoral system that often leaves short-term damage in its wake. He insists though, that in the long-term it is the best system around, hands down. He makes some interesting points about international trade and globalization, pointing out that those who oppose it, often do more harm to the very people they intend to protect. For instance, he claims that Third World sweatshops, while deplorable by Western standards, are often the best option that some people have, and that they are a necessary step in the process toward industrialization. He claims that any attempt to boycott or otherwise oppose these conditions would simply force these places to shut down, condemning the workers to even worse prospects. My only criticism of this argument, and maybe I'm naïve, is that this seems a bit too "all or nothing." It seems hard for me to believe that any effort to enforce better working conditions would automatically put these places out of business. Isn't there a middle road here?
One thing I did notice was that Wheelan states early on that capitalism is not a zero-sum game, meaning that my wealth does not depend on someone else's poverty. Then, later in the book he says that there is a finite amount of capital in the world and the more in the hands of government, the less for the rest of us. Either I'm missing something or this is a contradiction. Other than that, I enjoyed the book greatly and actually feel more knowledgeable on the subject than before I started. Economics has always frustrated me but the author explained it in a way that even a meathead like myself could understand. Wheelan also accomplished something I heretofore thought impossible; he actually made economics interesting! 4.5 stars.
12 of 14 people found the following review helpful
on October 12, 2002
As an undergraduate, I used to find topics for potential areas for research papers from the Economist's Economics Focus section. For those uninitiated, the once-a-week, one page explinations the repetitive column provides are excellent, cursory introductions to complex economic topics, usually spawned from new research in the dismal science.
That said, Wheelan has taken that concept and spread it out over a fast-reading, entertaining 236 page book. Basic economic concepts and more complex and modern research are explained with vigor and enthusiasm. The book features no charts, functions, formulas or graphs. Nonetheless, it would prove a much better textbook for a High School or undergraduate Intro to Economics course. Better yet, it serves as an excellent review for those already initiated to the field.