Naked Economics Wheelan, Charles (books to read for 13 year olds TXT) 📖

The reason, I believe, is that economists have a unique way of viewing the world and thinking about how to solve problems. Thinking like an economist involves chains of deductive reasoning in conjunction with simplified models such as supply and demand. It involves identifying trade-offs in the context of constraints. It measures the cost of one choice in terms of the foregone benefits of another. It involves the goal of efficiency—that is, getting the most out of limited resources. It takes a marginalist or incremental approach. It asks how much extra benefit can be achieved by incurring some extra cost. It recognizes that resources have many diverse uses and that substitutions can be made among different resources to achieve desired results. Finally, the economist has a predilection to believe that welfare is increased by allowing individuals to make their own choices and to argue that competitive markets are a particularly efficient mechanism for giving expression to individual choices. And while all economic problems involve normative issues (views about what should be), thinking like an economist involves an analytical approach that usually abstracts from or at least downplays “value” issues.

This gem of a book is both well balanced and extremely comprehensive. It recognizes the benefits of the free market in making our lives better and shows why centrally controlled economies ultimately fail to increase the living standards of their citizens. At the same time it recognizes the crucial role of government in creating the legal framework that makes markets possible and in providing public goods. It also understands the role of government in correcting situations when the free market creates undesirable externalities such as environmental pollution or where private markets will fail to produce some of the goods the country’s citizens desire.

Did you ever wonder why mohair farmers earned a subsidy from the federal government for decades? Wheelan explains how politics and economics can lead to such results. Do you really understand why Ben Bernanke is often referred to as the second most powerful person in the United States? Wheelan demystifies the effect of monetary policy on economic activity. Did you ever consider that you never fully understood the final scene from the movie Trading Places when the bad guys were wiped out in the commodities futures market? Wheelan makes the theory of supply and demand completely accessible. Have you ever wondered if the people who protest against globalization have a good point and whether either the developed or developing nations would be better off with less economic integration? Wheelan will make the issues crystal-clear. When you read the newspapers about disputes concerning current economic issues, are you often perplexed and dismayed at the cacophony of competing arguments? Wheelan parses the jargon and pierces the politics to lay bare the essential issues. In so doing, he successfully transforms the dismal science into a lively weaving of economics and politics into the fabric of national discourse and policy.

Wheelan has produced a delightfully readable guide to economic literacy. By boiling economics down to its essentials, he makes the reader a more informed citizen who can better understand the major economic issues of the day. He shows that economics can be explained without graphs, charts, and equations. He demonstrates that economic analysis can be intensely interesting. The book should provide a useful supplement for the college and high school basic course on the economy. More important, it can stand on its own as an introduction to the field that will change the views of those people who have rejected the study of economics as incredibly tedious and terminally boring. I have often considered writing a basic introduction to economics myself, but competing projects always intervened. Had I done so, this is the book I would have wanted to write.

BURTON G. MALKIEL

Princeton, New Jersey

January 2010

Introduction

The scene is strikingly familiar. At a large American university, a graduate student stands at the front of a grand lecture hall drawing graphs and equations on a chalkboard. He may speak proficient English; he may not. The material is dry and mathematical. Come exam time, students may be asked to derive a demand curve or differentiate a total cost function. This is Economics 101.

Students are rarely asked, as they might be, why basic economics made the collapse of the Soviet Union inevitable (allocating resources without a price system is overwhelmingly difficult in the long run), what economic benefit smokers provide for nonsmokers (they die earlier, leaving more Social Security and pension benefits for the rest of us), or why mandating more generous maternity leave benefits may actually be detrimental to women (employers may discriminate against young women when hiring).

Some students will stick with the discipline long enough to appreciate “the big picture.” The vast majority will not. Indeed, most bright, intellectually curious college students suffer through Econ 101, are happy to pass, and then wave goodbye to the subject forever. Economics is filed away with calculus and chemistry—rigorous subjects that required a lot of memorization and have little to do with anything that will come later in life. And, of course, a lot of bright students avoid the course in the first place. This is a shame on two levels.

First, many intellectually curious people are missing a subject that is provocative, powerful, and highly relevant to almost every aspect of our lives. Economics offers insight into policy problems ranging from organ donation to affirmative action. The discipline is intuitive at times and delightfully counterintuitive at others. It is peppered with great thinkers. Some, such as Adam Smith and Milton Friedman, have captured mainstream attention. But others, such as Gary Becker and George Akerlof, have not gotten the recognition outside of academe that they deserve. Too many people who would gladly curl up with a book on the Civil War or a biography of Samuel Johnson have been scared away from a subject that should be accessible and