Top critical review
15 people found this helpful
Nice read, nice storytelling, lacks depth
on January 25, 2014
This book is very well written and educational, as Tim Harford has led his readers to expect. At times, it is a bit heavy on the storytelling style. Overall, it does a nice job explaining a lay reader how economists think about the big macro issues such as growth, recessions and unemployment. I list what I view as some pluses and minuses of the book below.
- Great quotes from Douglas Adams' Hitchhiker’s Guide to the Galaxy!
- A nice debunking of Krugman's babysitting coop rant.
- A great discussion of Radford's POW camp article.
- A very pedagogical comparison of the classical and Keynesian views of recessions, concluding on an ironic note (but see below for a minus): « Sometimes an economy’s output is constrained by the demand for goods and services (Keynes’s Law) and sometimes it is constrained by their potential supply (Say’s Law). It sounds like neither of them are really laws at all. Yup. This is social science—what did you expect? » ... « But there is also a really simple way to combine the two views. We need to introduce a concept you’ll hear discussed often in economics—the “short run” and the “long run.” Most economists would agree that in the short run, it is Keynes’s Law that is relevant. And most economists would also agree that in the long run, it is Say’s Law that counts. »
- A thought provoking discussion of the question Can Growth Continue Forever?: « Energy growth is not the same as economic growth [...] It’s easy to grasp why exponential economic growth is not the same as exponential energy growth. If I’m worried about money, I may turn off my heating and wear a coat and hat indoors; a bit of extra money will mean I take off the hat and coat and use more energy. But that doesn’t mean that if I win the lottery I will celebrate by boiling myself alive. »
- A presumptuous claim: « Clearly, economists don’t understand everything about how to prevent an economy’s growth from slowing or going into reverse. If we did, it wouldn’t happen. »
- No mention anywhere of the monetary theories of business cycles (e. g. Austrian), besides the Keynesian and classical described above. As a result, another "oil shock" explanation of the crisis of the 70's...
- An unfortunate presentation of the efficiency wage theory of unemployment, as if a "good" labor market had to function like the buying and selling of T-shirts: « Ford’s five-dollar day meant that suddenly his workers had a lot to lose. The job they had at Ford paid twice what they could earn elsewhere. Workforce turnover plummeted, as you’d expect, but the real measure of success was dramatically increased labor productivity. As soon as Ford instituted the five-dollar day, his workers no longer lived in the perfectly functioning labor market of the classical textbooks, in which they could walk out of one job and into another at a moment’s notice. They operated instead on the fortunate side of a highly imperfect labor market. »