Customer Reviews

Peddling Prosperity: Economic Sense and Nonsense in an Age of Diminished Expectations

5 star:		(19)
4 star:		(6)
3 star:		(4)
2 star:		(3)
1 star:		(1)

 

 

I read "Peddling Prosperity" over a vacation, expecting to read a few pages, put it down, and pick up something more entertaining. (I had the latest Grisham waiting in the wings.) How interesting can a book about economics be? Answer- my Grisham never got read. I couldn't put this down.

Typically economic treatises are uniformly dull, the author spending pages re-stating his thesis, over and over and over. As one of my college professors told me, economists have two basic rules-

1) The market can decide best. 2) Anyone who questions rule #1 is a communist.

I would add a third-

3) bore the reader with technical jargon.

Krugman, mercifully, avoids these traps. He distills economics down to its most basic elements in plain English. Krugman is also a more critical thinker than most of his counterparts, carefully making the argument for Keynesian economics and debunking the myths of Reaganomics. Even the most ardent free market enthusiast will find it difficult to explain away Krugman's notes about wealth distribution during the 1980s (the rich got richer, the poor got poorer) and about the disastrous effects of Reagan overseas. Protectionists will have difficulty as well in refuting Krugman's analysis of the disastrous effects of tariff barriers and the insignificance of America's trade deficit.

The author has it all correct- the fallacy of protectionism (the strategic traders), the failure of Reaganomics, the positive role government can play in American economic life. What makes "Peddling Prosperity" such a good book is Krugman's skill in translating his thoughts into passages a reader without a Phd can understand. Good work.

Economics concepts are frequently difficult to convey, but Krugman is to be commended for his ability to deliver these concepts in an intelligible, coherent, and concise manner. One does not have to be an economic wizard to understand what he has to say. However, I would advise readers to have at least a basic knowledge macroeconomics before diving into the book. As far as content, Krugman is refreshingly balanced. He admits early on that he leans "left," but he pulls no punches when it comes to bad economic policy - whether practiced on the left or the right. He takes the reader through the rise and fall of conservative economic theory from the 70s through the 80s, that peaked during the reigns of Ronald Reagan on the home front and Margaret Thatcher abroad - when "liberal" Keynesian economics was thought to be dead. However, Krugman explains why the conservative theories: monetarism, rational-expectations, and supply-side economics fail on academic grounds and also provides evidence of how and why they failed in reality. He describes the resurgence of Keynesian economics that took academic root during the reign of Reagan, but did not become a real contender until the competing conservative theories were permitted to follow their course of self-destruction. Krugman then goes on to make the case that international trade is not the cause of our slow productivity growth or stagnating wages. He believes that economic policies should focus on domestic causes and domestic solutions, and to resist overplaying international influences, which could ultimately lead to trade wars, having long-term consequences on our economy. Krugman attacks Clinton for subscribing to the ideologies of "strategic traders" in the same manner that Reagan subscribed to "supply-side economic theorists." Both are based on poor academic evidence and both are an oversimplification and inaccurate representation of our problems. Overall, the book is well organized and enlightening. I certainly learned a lot about our economy and the competing economic theories that have been proposed to explain how it works and how to go about effecting changes in that economy. I also learned quite a bit about international trade issues and I must admit that I was a victim of the myth that "productivity growth = international competitiveness," which Krugman eloquently dismisses as misguided and factually incorrect. A must read for those intrigued by economic theories and ideas; but who wish to avoid the academic jargon and gibberish that one would find in an economic textbook!

To many, Krugman's emphasis on what we don't know about economics is probably disappointing. A whole lot of Peddling Prosperity is devoted to the puzzle of the non-existing productivity growth during the 70s and 80s, and Krugman's conclusion is: we just don't know why productivity had fallen so abruptly. Written in 1994, the productivity surge of the 1990s was just starting, and PK had of course no idea that the high productivity growth would recover.

There are some things economist do know, and PK's introduction to Keynes, the attack on Keynes by the monetarists, and the revenge of keynesianism is excellent. Like most real experts, PK is fully able to explain complicated matters in an understandable manner. The story is well written, with plenty of anecdotes to spice it up.

PK's distinction between the `professors' and the `policy entrepreneurs' is a main theme in the book, but he is taking himself too seriously. Anybody really interested in economics is because it is about people, their needs, their wants, their motivations and so on. That clever economist/professors engage in and policymaking or public debate (as PK himself is heavily into), shouldn't lead to lack of credibility. Krugman is also missing the bottom line in the tax debate: people disagree about the best tax and redistribution policy, not mainly because someone believe this or that system is more efficient, but because it is fairer. And it is quite possible to argue, on the grounds of fairness, both that rich people should pay an awful lot in taxes and that they should pay a little, both coercive sharing and keeping their income.

Krugmans brilliant and well-written story about the rise of monetarism during the 1970s earns, and of neo-Keynesians in the late 80s, is great. The best part, though, is his clear explanation of the huge misconception of comparing a nation with a corporation. The comparison is so far-fetched and leading to so much bad policy, yet so normal, that the issue should be dealt with at primary school. And Krugman's explanation is a very good place to start.

This and "Pop Internationalism" (also by Krugman) are the best popular economics books I've read.

The best feature of these books are its translation of textbook micro- and macroeconomics (the kind you learn in Econ 101 and 102) into the language of the op-ed pages. In this language, Krugman is a persuasive voice for academic economics on policy issues such as trade and recession in which public (or at least popular) debate is too often dominated by non-economists. It's not the policy stances he ends up taking that are interesting so much as how convincingly he describes large portions of popular economic debate (for example, the debate about the "competitiveness" of the American economy) as much ado about nothing. It helps that he's usually clear about when he is speaking from the perspective of economics profession as a whole and when he is speaking from his own point of view. The ideas he presents are a lot more lively for his attaching their originators to them; I remember his allusions to Lawrence Summers' arrogance as particularly amusing.

His politics are ultimately more critical of Republicans than of Democrats, but his criticisms are novel, thoughtful and much better than the usual blunt arguments we've heard a thousand times over from liberal columnists and talking heads. He is willing to engage the perspective of conservative economists, and is a lot more interested in carefully interpreting a few statistics than in spewing out a whole bunch and hoping their mere mass overwhelms the debate. I'm still a Republican after reading it, but I think I'm a better-attuned one, too.

One of the things that interested me in Krugman is he is one of the most cited current economists. I can see why, he breaks down complicated economic discussion into plain English - and explains how some other people who break down economics in easy-to-understand English are [unacceptable], whether conservative (supply siders) or liberal (strategic traders), and how some of them are not, from Keynes to Friedman.

I've been trying to bone up on economics, and this book has helped me understand concepts I've heard the names of before in other sources like rational expectations, monetarism, Keynesianism, supply side economics and so forth. He also gives a picture of the US (and European) economy in the 20th century, and a history of economic thought from the conservative attack on Keynes led by Friedman, to the liberal counter-attack up until 1994, when the book was written.

For anyone trying to understand economics, this is a good book, without a right-wing axe to grind since he's a liberal. I've been reading the critiques of capitalist political economy from Marx to his successors (as well as some socialists outside of the Marxian sphere, though the Marxists due dominate socialist economic discourse up to this day), and from that standpoint, Krugman looks something like a bourgeois liberal, but his work is enlightening and seems honest so I recommend it.

I frequently get into arguments with supply-siders and monetarists who refuse to accept that their beliefs are as flawed as, say, pre-Einsteinian physics (or, perhaps, pre-Newtonian physics). (I do not mean to imply that I or anyone else has a lock on economic "truth"; as Marshall states -- and Krugman quotes -- economics is an engine of discovery, not a body of facts). Krugman's intellectual history of and sociological investigation into modern economic pop doctrines is a brilliant refutation of heterodox beliefs including, of course, supply-siders and monetarists. A wonderful book -- especially for non-economists.

In this easy-to-read book, Prof. Krugman proves his worth as one of the most distinguished economists of his generation and a Clark medal recipient (awarded every two years to "the best" US economist under 40). The book's ten chapters are wonderfully clear and fast-moving, easily understood by anyone with just a little economics in their background. Krugman lucidly explains the economic issues and undercurrents that have driven the US economy over the last few decades.

Although the book lacks some of his personal brand of overt diatribes and personal attacks you'd find in his NYTimes column or elsewhere, it still manages to pack a wallop of personality. For example, Krugman is insightful and shamefully entertaining in his condemnation of the extreme conservatism of Robert Bartley & the WSJ editorial page, mainly in Bartley's (ab)use of the page as a pulpit to catapult the supply-siders to relative celebrity in the 80s.

As strong as his views are, Krugman has managed to strike a wondrous balance between technical economic concepts and uncomplicated, intelligible layman's terms. The bottom line?Pick it up to be educated and entertained all in one go.

I took a macro econonomics course in college and a couple of economics courses in business school, but I was still pretty helpless when it came to discussing economic issues with my dad and others with strong opinions. That was until I read this book. What this book did for me was to help me understand the strengths and weaknesses of everyday policy decisions based on the best academic research on the subject. Krugman writes in a crystal clear style with wit and charm. Stay away from this book if you don't want to see him mock the cherished economic homilies delivered by the Wall Street Journal, Republicans, or Democrats. Having alienated policy makers from both parties, Krugman sits above the political fray, his only allegiance being a professional commitment to sound economic reasoning. So if you want to be able to gently (or wickedly, depending on your personality)win cocktail party arguments against people whose political opinions cloud their economic reasoning, I strongly recommend it. The book also got me to buy The Age of Diminished Expectations (another 10) and Pop Internationalism (7) which I would have rated a 10 but for the non-existent editing

As a non-economist who has read several works to better understand what the political, financial, and economic "talking heads" are promoting, there is no better basic book than Peddling Prosperity to shine a light of clarity on a much muddied topic. Mr. Krugman is one of the few economists who can write well in a non-technical manner while sill conveying a decent understanding of the issues. He's even quite humorous at times!

Mr. Krugman is quite good at outlining the history and basic tenets of each economic school of thought, and then observing the results of their policies based on economic indicators. He makes a very enlightening distinction between the true academic economist, and the economic policy entrepreneur. Most of the well known economic theorists and experts are the latter, and their goal is not an objective evaluation and observation of economics, but rather a sales-pitch for their own philosophies and points of view.

I strongly agree with the other positive reviewers here, so I refer you to their reviews rather than repeat what they have written.

My only criticisms with Mr. Krugman are:

1. He often uses information to support his openly Keynesian point of view, while ignoring contradictory information. Therefore, an investigation other points of view is warranted.

2. While he is an equal opportunity critic of both the supply-side & free-market theories, as well as the liberal ones, his answer to most of the questions of economics is a somber, "We just don't know". It seems he often presents and sets up other economists and economic theories as Straw men which he then proceeds to knock down. He does not readily offer anything constructive in their place other than a modest Keynesian proposal.

That being said, this is a wonderfully informative and enjoyable book.

Krugman's most important achievement in this book is, possibly, outlining the limits of our ability to understand and forecast the workings of the economy. To a scientist, this makes perfect sense: economy is almost impossible to predict because it is the ultimate chaotic system. In the "normal" world, however, many rational people tend to fall for the most ludicrous promises regarding economic prospects, even though the same rational people understand why weather is extremely difficult to predict. Krugman describes the class of people who make a living generating these promises, "economic policy entrepreneurs", and their interaction with politicians. In this respect, this book is invaluable and should serve as bed-time reading for voters during elections. At the same time, Krugman's reasoning is itself not without flaws: he does cut corners and sometimes spends too little time arguing a point that should be argued in greater detail. I would hesitate to call this book a classic of modern intellectualism, yet it is certainly highly relevant.