Review: Economics, a Crash Course

I bought this 2019 book by David Boyle and Andrew Simms with the hope that I could lend it to students to give them a decent introduction to economics (the book’s subtitle is “become an instant expert”).

Sadly, the book is too polemic — and too misleading — to fit this role. In fact, it’s terrible.

Disclosure: I only read the first 15 or so of the book’s 52 chapters, as the authors’ constant insinuations (see examples below) and biased “balancing” getting in the way of the economics. Skeptical of my method? Complain to Tyler.

I started off with hope that Boyle and Simms, both associated with the New Weather Institute and New Economics Foundation (see a pattern?), would explain “old” (neoclassical) economics and then bridge into the “new” (heterodox, post-autistic) economics that, they claim, are necessary for living in a post-2008 Financial Crisis world. They arranged the books into four chapters (history, ideas, people, planet) that each have 13 sections.

The trouble is that they — like Kate Raworth and Ha-Joon Chang (both appear in the acknowledgements) — are too quick to condemn on shallow or biased understanding of economic ideas and the history of economic thought. These weaknesses in comprehension, which they might portray as “cutting through” or “David vs Goliath”, mean that readers are less likely to become “instant experts” and more likely to come across as shallow and opinionated. That’s a pity, as the book’s aim and structure are laudable. Its execution, alas, is flawed.

Some issues I ran across:

  • Harry Truman, not Woodrow Wilson, asked for a “one-handed economist” (I take this personally ūüėČ
  • The authors are quick to blame economists for the financial crisis but appear to have forgotten (a) the role of politicians and regulators and (b) that many economists are (were) very critical of the causes of the crisis.
  • I doubt Adam Smith was a “controversial figure in Western {?!] economic thought.”
  • In their biographical sketch of Mary Paley Marshall (the wife of Alfred), they offer the dodgy (and only) note on¬†Principles of Economics, i.e., that it¬†was “published in 1890 under Alfred Marshall’s name” [p 53], without offering any evidence.
  • Indeed, it would have been better if the authors had at least documented their claims. They instead sound like slightly drunk undergrads, egging each other on, hoping that they can overthrow The Man.
  • They do not understand that we (humans) gain “utility” from actions and choices, not just “spending and acquiring” (p 57).

…indeed, I can open the book on nearly every page and find errors and bias that don’t just mis-state what economists say and teach, but also deceive any reader from understanding economics. This book is more of a car crash than a crash course.

Just to put this into context, consider how they distort¬†Adam Smith’s ¬†“invisible hand.”¬†First, they claim he introduced the idea in his 1776¬†Wealth of Nations (WoN), when he actually introduced it in his 1759 Theory of Moral Sentiments (ToMS). I have read both books, but anyone on the internet could discover these facts¬†within 2 minutes. Second, they brutalise a quote from ToMS (my strikeout shows what they omitted), which they claim came from WoN:

The produce of the soil maintains at all times nearly that number of inhabitants which it is capable of maintaining. The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.

So, they misquote Smith to fit their ideology: claiming Smith thought ¬†“nothing should obstruct the pursuit of self interest because it would prevent markets from working efficiently” [p 54] when he wrote an entire book (ToMS) about constraining self-interest. It also seems they did not even read Smith’s update on the idea in WoN:

As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.

Note that the main idea (selfish acts help all) has not changed, but Smith has applied it to every individual.

I could go on, but I’m already tired of the fail in this book.

My one-handed conclusion, which should please both Mr. Wilson and Mr. Truman, is that this book is a waste of time. I won’t be able to lend it to my students as I’ve tossed it in the bin. ONE STAR.

Interesting stuff

  1. Listen: The high cost of mishandling the pandemic (an economist’s perspective)
  2. Listen: The truth behind fake news (economically/socially vulnerable people are willing to believe anything)
  3. Listen: Using greed (profits!) to reform anti-social corporations (e.g., Exxon)
  4. Listen: Let’s hear it for the young Black women who raised their profile in academic economics (much against the while male norm)
  5. Read: Why infrastructure costs so much in America (NIMBYs, bureaucracy and other factors)
  6. Listen: Insights from a homeless NFA man
  7. Listen: Stuff the British stole (an interesting angle on colonialism)
  8. Listen: An excellent 3-part podcast on Silk Road and the Dark Web
  9. Read: “Reducing hours without reducing pay would reignite an essential but long-forgotten moral project: making American life less about work
  10. Read: California’s Cliffs Are Collapsing One by One

Interesting stuff

  1. Read: Essay mills are not just for the rich, but also the poor and desperate
  2. Read: Sixty years of climate change warnings: the signs that were missed (and ignored)
  3. Read: In 2030, You Won’t Own Any Gadgets (and it will suck)
  4. Read: The Dutch government opened clubs to (fingers crossed) “vaccinated” young people. Infections are up over 700% in Amsterdam and the country is going “red” on the risk map. What a fuck up.
  5. Read: Why water is weird (hint — tetrahedrons)
  6. Read: The lie of ‚Äúexpired‚ÄĚ food and the disastrous truth of America‚Äôs food waste problem
  7. Think: Check out the “climate map” of how the US will change (and become uninhabitable in some places)
  8. Read: “Rotten” links are destroying our knowledge base
  9. Read: Eat less sugar
  10. Read: There’s now more concrete (by weight) than all living matter

Why we’re failing to stop climate chaos

Climate chaos (CC) is the largest threat to our collective prosperity. (Water scarcity, biodiversity loss, increasing vulnerability to viruses and bacteria are a few more.)

But “we” (citizens of rich countries) are having a hardER time understanding and addressing CC due to a few strategic mistakes, i.e.,

  1. Most discussions of impacts focus on 2100, which is too far away from our time now to take seriously. It also “hides” the fact that we are now seeing weather patterns (due to changes in climate) that are harming our way of life.
  2. Most discussions focus on +2C increases in average¬†temperatures, when the focus should be on increasing risks at the extremes (the changes in the distribution), i.e., fat tails or black swans causing massive damages in surprising places. Examples: Houston getting three “500-year” storms in a decade a few years ago; the Pacific Northwest recently breaking high temperature records by a huge margin; Texas facing “record” cold then “record” warmth within a month; Hurricane Sandy; etc.
  3. Economists recommending a global cap and trade system rather than a series of national carbon tax and rebate systems at Kyoto (1998). The former requires global coordination, a political willingness to send money to “foreigners”, and trustworthy supra-national institutions. Local tax/rebates do not suffer these issues, but we’ve allowed the perfect to be the enemy of the good.
  4. Economists (led by that incompetent fraud, Nordhaus) have used flawed models to justify inaction (their logic is that action now limits growth that will give us resources in the future to deal with damages in the future) rather than implementing action now that can be tightened/loosened as we learn how taxes affect emissions affecting CC.
  5. Most people do not understand how the change from stationarity to non-stationarity will disrupt their habits, food production, infrastructure performance, etc. These are the same people who hesitate to take the COVID vaccine until they are offered lottery tickets. Their choice inconsistency shows they misunderstand probabilities.
  6. Few people understand the consequences of missing +2C targets due to lag effects. Hitting that target (a long run increase) means reducing emissions (and deforestation) at a radical rate now and still waiting for decades for forcing momentum to dissipate and warming to slow and reverse. Put differently, it would take 50-100 years for currently “baked in” forcing to manifest in CC-impacts assuming we went to zero emissions today, and another 10,000 years (¬Ī) for current CO2 concentrations of 409ppm (a level not seen for 800,000 years) to fall back to “pre-industrial” levels of 280ppm last seen 170 years ago. We’ve passed the point of no return.
  7. Forgetting that non-CO2 factors matter. If all GHGs are included, then we’re looking at 456ppm CO2-equilivalent, so we’re in far worse shape than the most-discussed number would suggest.
  8. I’m not even talking about the problems of greed (converting rainforest into palm oil, soy beans or more oil fields), lobbying (politicians need to be re-elected often and fossil fuel companies have lots of money to pay for protection or inaction), the massive market failure/collective action problem, our psychological desire to maintain “progress” at all costs, and so on.

My one-handed conclusion is that we — humans, as a species — have put ourselves in a difficult situation that we’ve made even harder to tackle by a series of strategic communication blunders.

Interesting stuff

  1. Read: Young Chinese are “lying flat” (taking it easy) and the CPC is NOT happy. This is how it begins.
  2. Listen: “The Catholic Church is a force for good in the world.” Listen to this 2009 debate in which Christopher Hitchens and Stephan Fry eviscerate the proponents.
  3. Read: The Trump Organization has been keeping double-books for years. This black and white case of tax fraud may blow up Trump’s entire world (good).
  4. Look: A photo essay on the heat wave that killed nearly 80 people (that we know of) near Portland.
  5. Read: How Can We Do a Better Job Raising Boys?
  6. Read: How the Church’s ban on cousin marriage spurred the individualism that put “the West” in advance of the world (centuries before the Industrial Revolution)
  7. Read: US hospitals are posting their prices online. A good first step towards ending subjective, unfair pricing chaos.
  8. Read: Academic fraud and corruption at Leiden (my home university)
  9. Read: There are better ways to stay cool than using air-conditioning
  10. Read: Climate chaos is complicating Chicago’s relations with Lake Michigan

The (un)comfortable joy of family

I’m on holiday in the US for the first time since COVID, and just spent 5 days with my family for a reunion that brought some of us together for the first time in 35 years!

I enjoyed catching up with my cousins and their fun, engaging and diverse-in-personality kids. We ate and drank too much, lounged and talked for hours, and had a lot of fun in the pools and rivers nearby.

This element was comfortable in a way I’m not accustomed to, as I’ve been one of the more distant members of our family (living in Amsterdam doesn’t help). It was really great, so I understand how and why people with close families are more happy, safe and content than those without. It’s great to know that others have your back and that you can help them (or just share a meal) without any expectations of future change or obligations.

On the other hand, there’s also the fact (or issue) of interactions among folks with different lives and beliefs. We’ve seen how diverse outlooks have fuelled ¬†a cataclysm of anger and othering on social media, and some of these dynamics have affected families (e.g., with respect to Trump or vaccines), but I think that most families have dampened down the rage by Forcing relatives to engage with others’ views. This dynamic has been in place for ages, so I am confident that most families will find ways to live with each other (agree to disagree) and compromise (respecting the potential for valid disagreements). It’s not an easy process, but it’s a valuable process — for those individuals as well as for societies that depend on cooperation for their prosperity.¬†

My one-handed conclusion is that the benefits family far outweigh the costs. Count yourself lucky to have your (extended) family, and make sure you “spend” enough time to smooth each others’ sharp edges.

Interesting stuff

  1. Read: Human Evolution Led to an Extreme Thirst for Water
  2. Listen: Adaptation via community not bunkers #noManIsAnIsland
  3. Read: Can We Survive Extreme Heat? (from 2019 but very much current)
  4. Read: A bit of insight: Belgitude: the art of Belgian zen
  5. Listen: A discussion of freedom, walking and our use of violence
  6. Read: Economics needs more evolution and less equilibrium
  7. Read: Dispossessed, Again: Climate Change Hits Native Americans Especially Hard
  8. Listen: An interesting (high-speed, high-energy) discussion of DeFi. Take away: Financial innovation without regulation is faster but risky.
  9. Read: Amazon Prime is Amazon‚Äôs greatest‚ÄĒand most terrifying‚ÄĒinvention
  10. Listen: Property rights (why reclining airline seats cause fights)

H/T to MN

Ricardo’s doctrine as to taxes and improvements in agriculture

Appendix L

¬ß1. Ricardo claimed that expensive food harmed the nation far more than it benefitted the landlords profiting from higher food prices. ¬†(This makes sense… read more about the Corn Laws and how their repeal in 1846 massively helped the poor.)

Ricardo then says that higher taxes on domestic grain (“corn”), in the special case of no imports and perfectly inelastic demand, will only result in higher prices to consumers. Relaxing these restrictions, higher taxes would result in producing shifting to other crops (“substitution”) and lower prices for producers (“incidence”), both of which illustrate the limits to the power of taxes as well as the dead weight losses (from changes in production) that taxes bring.

Finally, Ricardo claims that higher returns to capital will result in LESS investment in each area, as capital is removed for use elsewhere and local profits are maintained. This is slightly counter-intuitive, but not if you think of profit seeking being a more important goal than grain production.

Overall, Ricardo — Marshall claims — had deep and interesting insights into what would (today) be called general equilibrium theory.

/fin

This is where my year-and-a-half “review” of Marshall stops. ¬†There’s one chapter left — the Mathematical Appendix — but I can’t be bothered to review, interpret (there are many novel symbols and expressions) and compare that Appendix to the current practice of (over) using mathematics in economics. I am sure that it has many interesting insights, but those are best left to others who are into the math.


This post is the last in part of a series for the Marshall 2020 Project, i.e., an excuse for me to read Alfred Marshall’s Principles of Economics (1890 first edition/1920 eighth edition), which dominated economic thinking until Van Neumann and Morgenstern’s Theory of Games and Economic Behaviour (1944) and Samuelson’s Foundations of Economic Analysis (1946)¬†pivoted economics from institutional induction to mathematical deduction.

Interesting stuff

  1. Read: How to prepare and maintain a car for a 50,000 mile road trip around the world
  2. Read: Nokia’s collapse turned a sleepy town in Finland into an internet wonderland
  3. Listen: A good debate on the pros and cons of “big data”
  4. Listen: The economics of parking (and cities and life)
  5. Read: Boris Johnson Knows exactly what he’s doing
  6. Listen: David Van Reybrouck on Citizens’ Assemblies ability to tackle the political climate change problem
  7. Read: Private schools are the Real College Admissions Scandal
  8. Read: Airbnb Is Spending Millions of Dollars to Make Nightmares Go Away
  9. Read: Rome’s Pandemic Recovery Sparks a Fight Between Cafes and Cars
  10. Read: Silicon Valley’s “tech food” might not be that great