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on December 17, 2013
**I received an uncorrected proof copy of the 2014 paperback edition of this book through a LibraryThing giveaway.**

I came to be a fan of Tim Harford through his podcasts, "More or Less: Behind the Stats" and "Pop Up Ideas". I was eager to read this book, because I am a big fan of the way the podcasts explore ideas and make sense of numbers in the news, and I've recently developed an amateur interest in economics. I was not disappointed.

One word of advice to the reader: throughout the book, Harford explicitly uses the conceit that he is speaking directly to you (who have been chosen to run a world economy) and that you are answering him. I found that jarring, but it was easy to put aside by imagining that instead of participating in a conversation, I was merely observing one.

The book explores macroeconomic ideas in an engaging way, and the dialog style allows the author to take the occasional left turn away from the topic at hand into an interesting cul-de-sac before jumping back on track. Most of the material is readily accessible if you have an interest in current events (no economic theory needed), though the discussion of the Beveridge curve could really have done with at least one diagram.

The entire discussion is bookended with by elements of the story of Bill Phillips, a tinkerer, war hero, hydraulics engineer, and eventually an influential economist who created a very cool machine—the MONIAC, or Monetary National Income Analogue Computer—that solved economic differential equations with water. His story is a highlight of the book, and is told largely in the first chapter.

Overall, this is a very accessible and non-technical introduction to macroeconomics, which is a especially nice since much of the material I've come across recently online, in podcasts, and in books has been on microeconomics or behavioral economics.
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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. »
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on October 24, 2013
The Undercover Economist Strikes Back (2013) by Tim Harford is another excellent book from a superb economics writer. This book covers macroeconomics and presents a Socratic dialogue where Harford discusses how to run a modern economy. This sort of dialogue is often contrite. However Harford manages through his mastery of the subject and by being reasonable, skeptical and carefully presenting both sides of an argument to make it highly informative and enjoyable.
Sadly the cover of the edition I have has a quote from Alex Bellos suggesting that Harford could be Britain’s Malcolm Gladwell. While Harford has some similarities to Gladwell in that both write excellent infotainment Harford is much better because he writes over a more limited subject area but with much greater depth of knowledge.
The book covers recessions, money, inflation, stimulus, output gaps, unemployment, management, GDP, happiness and endless economic growth. It covers all with such aplomb that it’s hard to pick out the best bit.
Stylistically Harford uses a dialogue and also has the wonderful character of the economist Bill Phillips to provide a narrative core for the book. It all works.
This book is a delight to read.
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on August 23, 2015
For what this is, you'd do just as well to pick up something a bit meatier.

This book is only suitable for people who have not taken a semester long course in Macroeconomics. If you have, then you can skip this.

As far as picking up something meatier, the books that I have in mind are any of three:

1. Basic Economics
2. Applied Economics: Thinking Beyond Stage One
3. Economics in One Lesson: The Shortest and Surest Way to Understand Basic Economics

This book comes across as a bit too breezy and working a bit too hard to be funny/ approachable.

For people who have already read on this topic a bit (like the present reader), the book comes across as a shill for Keynesian economics. And even after all that, the author does a lot of hemming and hawing about how stable and predictable is the Keynesian multiplier. He spends the first third of the book building up the idea of inflation and nominal growth and real growth and then finishes by saying that "We don't really know what the multiplier is." Give me a break.

Later, he does actually get around to discussing some classical economics, but only after he has built up Keynes first.

Harford also spends time blowtorching James Rickards (whose books I have read/ am reading) and people who like the idea of the gold standard. In doing so, he goes over the same arguments that Krugman and other anti-gold people have been repeating against the gold standard camp. (He says that gold has nothing to do with the amount of goods and services produced in an economy, when the point that they were making was that gold is a way to constrain the amount of money that can be printed.)

For the record, a 4th book that is worth reading in addition to this is: Currency Wars: The Making of the Next Global Crisis.

Verdict: Qualified recommendation. This book can be useful for someone who has ZERO understanding of Economics, since if they know a little bit then it is better than nothing at all. (A copy of this for every member of Congress would not be bad.) But for people who study Economics as serious hobbyists, then this book is just not that useful.
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on November 3, 2015
Tim Harford is a terrific expositor of modern economics. I teach economics and have read all of his books and always learn something new and useful to incorporate in my classes. Most of Harford's books deal with microeconomic issues or economic development. This book focuses on macroeconomics, which is the study of the whole economy - the average level of employment and unemployment, the aggregate level of production (GDP), changes in the average level of prices (inflation) and policies to influence these variables. Excellent discussion of the controversies in macroeconomics. Harford is a very good writer and does a good job of explaining complex material. Very highly recommended.
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on February 14, 2014
Financial Times columnist and bestselling author Tim Harford tries to show us that macroeconomics is not that hard in The Undercover Economist Strikes Back.

In order to fix the economy, we need to understand the economy. The book is a "practically minded poke-around under the hood of our economic system." It's a sequel to The Undercover Economist , which looked at microeconomics. The first book looked at the cost of coffee and other focused topics that affect an individual's behavior.

The Undercover Economist Strikes Back tackles the world and the uncertainty of macroeconomics. These are the big forces of gross domestic product, inflation, and unemployment. Rather a droll, laborious discussion of complex theories, Harford keeps things witty and perky.

The book is not about bashing big banks or pointing fingers at who caused the financial crisis of 2008. But he does discuss the macroeconomic forces in light of the recovery (or lack thereof) from the 2008 crisis.

He does not try to oversimplify the topics. He cautions that they are difficult to understand, difficult to calculate, and difficult to get right. He offers advice and lessons from history.

He explains the theory of currency with the extraordinary example of the rai used by the Yap islanders in Micronesia. Each rai is a stone wheel, the biggest of which is nine feet across and weighs over four tons. That will help you buy land. Smaller ones, a mere foot or two across will buy you a pig. The islanders still use the currency even if it has sunk to the bottom of the bay while being transported in a boat. Given the small number of transactions, the islanders can just keep track who owns which stone, without having to move the big ones. But is the Yap system any crazier than the use of gold?

He tackles the thornier problem of the cause of recessions. Is it a shortage of demand or a shortage of supply? Or both? Was the 2008 recession a demand shock or a supply shock? It's surprisingly fun to get to the answers with Harford leading the way.

I was happy to accept a review copy from the publisher.
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on February 24, 2014
It’s odd in economic writing but Hartford makes a genuine attempt to understand and explain economics based on numbers without political bias. In a sea of books purporting to explain why the other guy is wrong and the writer is correct it’s nice, I think, to find an accessible writer focusing on what is provable. Well, arguable.

Hartford has the enjoyable skill for making the difficult sound a little less so. His writing is accessible and his explanations easy to digest. Compared to his other books this one is different: he writes in question and answer form. I notice that other reviewers are bothered by it. The style lends itself to reading in smaller chunks - slogging through page after page of Q&A wears one down. But don’t be put off – it’s accessible and very readable.

In this book he takes on the larger picture of macroecomonics with the same insight he uses in his other books. He lauds logic and history when it is repeatable and explores more deeply when it seems to fail us – we are human beings after all – as in unemployment. Topics include GNP, inflation, money, stimulus, and both the ‘babysitting’ and ‘prison camp’ recession.

No doubt there are cranks on all sides deriding Hartford as leaning too far this way or that. It’s how economists who don’t write books make a living. But for the average interested reader there is much to learn from this very able teacher. You won’t come away understanding triple variable investment curves but you will have an uncommon insight into economy that ought to make you the life of the party.
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on March 4, 2014
I don't agree with it all. I think the classical school of economics is proving that they are more right than given credit. Keynes, Keynes, Keynes is the theme more than Austrian Economics. This book is no different there. Disappointed in that way.
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on February 17, 2014
Will this book teach you all you need to know about macroeconomics? Of course not, no single book will. That said, what it will give you is a great perspective on the push and pull of the many forces that shape our economy. You can agree or disagree with specific arguments, or argue that they "lack depth", but that's not the point: what this book does really well is introduce the big ideas and discussion points, and goes on to disassemble them from various viewpoints. Yes, occasionally the author steps in with his own preference for one side or the other (usually explicitly stated), but its up to you to decide which position you'll take.

In short, a great and an educational read for anyone interested in finance, business, and economics.
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on May 25, 2014
I had previously read Tim Harford's Undercover Economist and this is a great follow up. I don't know if you could pass a Economy 101 course with this book, but for the rest of us this gives a great explanation of how the economy works from the consumer's point of view. Of all the things in this book the one thing that stood out was the short discussion of education in the United States. Some great universities but the education of the masses is a total disaster. It's like the vast majority of Americans is being kept ignorant and stupid. The average American is being fed pablum on Television and they live in fear with the never ending portrait of crime and cops.
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