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Economics for the Common Good Paperback – Illustrated, May 14, 2019
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"One of Bloomberg’s Best Books of 2017"
"One of Choice Reviews' Outstanding Academic Titles of 2018"
"One of Project Syndicate’s Best Reads in 2017 (chosen by J. Bradford DeLong)"
"Winner of the 2018 George S. Eccles Prize for Excellence in Economic Writing, Columbia Business School"
"One of the Microsoft Best Business Books of 2017"
"One of the Times Higher Education Books of the Year 2017, chosen by Sir Anton Muscatelli"
"Jean Tirole, Winner of the 2014 Nobel Prize in Economics"
"Selected for Bloomberg View’s “Must-Reads of 2017: Monopolies, Sexism and Economics”"
"One of Financial Times (FT.com) Best Books of 2017: Economics"
“A constructive critique of economists with a strong defence of the subject they study.”―Martin Sandbu, Financial Times
“An ambitious yet accessible summary of [Tirole’s] ideas on the proper role of economists and the value of their ideas in informing government, business and social life. . . . Tirole has a patient, explanatory style.”―Philip Delves Broughton, Wall Street Journal
“Explains in straightforward language what academic economists do, how they think about society and human behavior, and what advice they tend to offer governments about some of the biggest challenges they face.”―Foreign Affairs
“Spells out the usefulness of rigorous economic thinking for society in deep, yet accessible, language. . . . [A] great book, rich with insights.”―Markus Brunnermeier, Finance & Development
- Publisher : Princeton University Press; Illustrated edition (May 14, 2019)
- Language: : English
- Paperback : 584 pages
- ISBN-10 : 0691192251
- ISBN-13 : 978-0691192253
- Item Weight : 1.55 pounds
- Dimensions : 5.3 x 1.5 x 7.9 inches
- Customer Reviews:
"A timely novel highlighting the worth and delicate nature of Nature itself." -Delia Owens Learn more
Top reviews from the United States
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The book is quite long and is split into five parts. The author starts with how to improve economic understanding and discusses many counterintuitive concepts in economics. In particular the way the market responds to prices is explored and how policies designed to improve equality can often backfire substantially as economic principles dominate political intention. The author briefly discusses how we might improve broad awareness of economic principles so that the population might better understand cost benefit analysis of public policy. The author then moves into the morality of markets and concerns on whether the consequences of the market's lack of principles. Aspects of this seem written for a French audience which has a much higher skepticisms of the benefits of a market based economy. That being said ideas of Sandel are discussed and the author frames the moral concerns with the need for empirical support. This section gives some food for thought but it is largely inconclusive and the fact remains that there are many situations in which market principles degrade social cohesion, for example the instituting of a penalty fee for parents being late to pick up their children in Israel led to a higher incidence of lateness as the penalty became viewed as the price of a service. Subsequently reversing the fee did not lead to lower parent tardiness as the precedent had been set. This is one of countless examples where monetizing something based on reciprocity degrades the reciprocity. There are not economic solutions to certain behavioral science realities (see Bowles). The author then moves on to the job of economists and the general narrowness of their research. The author discusses the difference between market commentary and economic research as well as the sound bites from economists in the media and the discourse of economists at conferences. The author starts to focus on what he believes is the role of economists and dives into game theory and what he calls (or the translator) information theory (theory of signaling rather than Shannon's information theory). The author discusses how research is tested, implemented and how math is used to formalize models and sharpen reasoning. The author then gets into how current research has tested the challenges of assuming homo economicus and some of the issues I mentioned above on how incentives can sometimes corrupt intention. The author then gets into more of the meat of the book which is how to use economics to frame how to solve problems. The author brings up market failures and the role of the state and the incentive problems of politicians and the election cycle. The author highlights France as an example, which is typical of most of the case studies. The author then gets into some big topics like the environment and the EU. The author describes the coordination problems and certain game theory consequences of the tragedy of the commons. The author discusses things like carbon taxes and cap and trade and the various repercussions of various methodologies to reduce humanity's carbon imprint. The author discusses strategies with the goal of keeping carbon output at the level such that temperatures within 2 degrees of where they have been. The challenge of forming consensus is apparent but the author communicates what would be required for solutions to be effective in economic terms. The EU project is discussed and the background of how the sovereign crisis unfolded is discussed. Things again are framed in incentive terms and coordination failures. The consequences of the game theory are used to describe market failures throughout the book, on both large and small scales. The author also discusses market failures in finance with simplified examples of the banking system and how it can privatize gains and socialize losses. The author uses the failure of incentives in the EU and banking system to frame the financial crisis; which though somewhat accurate does not have any new ideas. The author then gets into what is the most valuable part of the book which is an analysis of various industries and the way to frame competition in a digital world alongside how to frame competition in monopolized industries. The author discusses things like intellectual property and how to think about patent law and its place in fostering competition but also in how if too loose creates undesired monopolies. The author discusses the challenges in thinking about industries which are creating large consumer surplus but becoming monopolies simultaneously; like Google and Facebook. The author also tackles things like how to think about utility prices and uniform vs differentiated pricing for users. The author also discusses how to prevent monopolies from becoming entrenched interest, low productivity growth industries.
Economics for the Common Good has a lot of material. I wouldn't say the book follows in the most cohesive fashion from start to finish. The author wants to discuss various ways in which Economics can be beneficial for giving solutions to problems as well the nature of what the field can be expected to provide solutions for. The author is definitely a mathematical economist looking to give concrete examples and doesn't drift into his political philosophy masked as economic reasoning; as such if one wants to learn some economics, this is a good book. It can be a bit dense and detail oriented, especially in the substantive parts of the book, but that's what makes it valuable. Definitely worth a read if one is looking for how economics looks at problems and in what form can it provide solutions.
Suggestion … before buying, reflect if the content is a good fit for you based on the summary table of contents, sub topics listed for portions of the book that could be of particular interest. This is a survey of the universe of economics.
* Introduction and Economics and Society - pp. 1-61
- Do You Like Economics?
- The Moral Limits of the Market
* The Economist’s Profession - pp, 65-152
- The Economist in Civil Society
- The Everyday Life of a Researcher
- Economics on the Move
* An Institutional Framework for the Economy - pp. 155-191
- Toward a Modern State
- The Governance and Social Responsibility of Business
* The Great Macroeconomic Challenges - pp. 195-352
- The Climate Challenge
- Labor Market Challenges
- Europe at the Crossroads
- What Use is Finance?
- The Financial Crisis of 2008
* The Industrial Challenge - pp. 355-480
- Competition Policy and Industrial Policy
- How Digitization is Changing
- Digital Economies: The Challenges for Society
- Innovation and Intellectual Property
- Sector Regulation
* Epilogue - 2 pages
* Notes - pp. 485-550
After the first 3 parts were of very mild interest initially but were interesting and informative. Wading into the challenges I found the treatment well done however, there was insufficient depth to enhance understanding more than gained from other books and periodicals (esp true with climate change and financial crisis where I’ve read considerable material). I found myself skimming and skipping until I got to the Industrial Challenge. This material will cause you to think, challenge your views. An issue I wish he had commented on in the digital chapters is whether the economic activity is creating intrinsic value … what additional value is created by A, B, C ….
Summary: Excellent text if you want to learn more about what economists do, and/or would benefit from a sound understanding of current major global issues. Only a few chapters offer food for deep thought.
Top reviews from other countries
The authors discuss whether free trade is the solution for poor economic growth, or is free trade the problem? They study countries (such as India) that have gone through different approaches and arrived at uncertain conclusions. After opening up to trade – in return for IMF money – it took India more than a decade after 1991 to see economic growth. They discuss the economic benefits of tariffs versus free trade. The conclusions are far from clear, because trade and growth are a complex mix, but it seems that tariffs often backfire.
Economic growth id not entirely dependent on trade, and even in trade, one factor stands out in contrast to capital – labour. Once the authors launch into the supply of labour, we see the problems of immigration and racism. The authors point out that the traditional bias against immigrant workers is mistaken. People do not move just because the pay is better elsewhere. In fact, we are blinded into not seeing that people generally do not like to move, and there are many strong reasons for that. There is the issue of connection. People are more likely to move if they have connections in their intended destination. Then there are family ties back home, in contrast to the poor living conditions elsewhere, and so on. The authors also point out that anti-immigrant sentiments have existed from time immemorial, only the subject changes. First people were against Jewish immigrants, then Italian immigrants, then African immigrants, and now, it is Muslim ones. Eventually, the authors say, the immigrants get assimilated, and the nation’s attention (or prejudice) turn to others.
The authors examine and analyse the factors that lead to growth and those that do not. The question whether using GDP is the accurate way to measure growth. In the history of modern times, there has only been one growth spurt, and that ended on 16 October 1973 with the Arab oil embargo – a spurt never to return, say the authors.
The authors presented a detailed and persuasive argument that taxation is beneficial and useful in lowering the inequality gap. They explain that when people get poor, they tend to blame the wrong factors, for example, immigrants for taking away their jobs. Lowering the income inequality is thus a important priority. Unfortunately, politicians do not have the will to impose or increase taxes. The authors further explain that taxing the rich helps but not enough. There should be a wealth tax on the assets of the rich. They present powerful arguments as to why that is so.
This is a remarkable book that covers a wide range of economic topics with an aim of making the dots connect, and disabusing us of seeing magic dots that don’t connect. It is a book worth reading even if one is sceptical about some of its claims – after all, the Messiah of Economics has yet to come.
The book sends an important message to economists that they can bring their important to the socieatal debate by sharing the results of the research. Economists may have also their personal views on values, but the objectivws based on values of society must be left to the democratic process.
The book is important for any citizen who is interested on what economics can bring to the solutions of today`s problems in many areas.