Saturday, March 02, 2013

Money Matters

In the weeks both before and after the presidential election, talk of the economy was on everyone's lips. As a liberal arts major, I began thinking to myself, "Self, you need to know more about general economic theory. How do various schools of thought believe the economy works? Where are the different camps coming from?" I took to Amazon to find some books that would help me learn more.

I ended up with two books, each from widely divergent economic philosophies: Meltdown by Thomas E. Woods (with a foreword by Ron Paul) and Naked Economics by Charles Wheelan.

In Meltdown, Woods proposes that any government intervention in the way the economy works masks what the market is trying to tell us regarding supply/demand, creative destruction, price, etc. He calls for the abolishment of the Fed and as close to a completely free market as we can achieve. I applaud Woods for rightly blaming both major political parties for meddling in the market and for being an outspoken critic of government bailouts. However, I don't see his recommendations being implemented anytime soon. Indeed, the staunchly vested interests of power players on both sides of the aisle guarantee that government meddling in markets will be a reality in the United States for the foreseeable future. So while the book is interesting in theory, I'm not sure how applicable it is in the U.S. And Woods' writing can be somewhat plodding, so this book took me a while to read and digest.

In Naked Economics, Wheelan hews more to the Keynesian model of economics, where government can and does exert a strong influence on the economy through various policies. Wheelan is a witty writer, and I found this to be a great book for someone like me, who didn't go to business school. It took a potentially dry subject and made it quite interesting. (And it is interesting, really. Reading this book, I began to see economics as the science of people plus value. How do you incent people to do what you want them to do? How do you disincent them to keep them from doing what you don't want them to do? Fascinating stuff, once you start really thinking about it.) Though there were some quotes that made me cringe ("Government is your friend." Really, Wheelan? How so? Depends on who's running it, don't you think?), I left this book thinking it provided a much more realistic picture of what does and can happen than Woods' tome. Whereas Woods excoriates the current system and calls for a complete overhaul, Wheelan acknowledges that, at least in the U.S., government influence on the economy isn't going anywhere. Therefore, he talked about how those policies work and don't work.

At any rate, I learned so much from reading both of these books. Wheelan also has a book titled Naked Statistics, and I may pick it up later.

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