(Economics) books to read over summer



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Peter Martin, Crawford School of Public Policy, Australian National University

The Deficit Myth: How to Build a Better Economy

Stephanie Kelton, Hachette Australia

No book prepared ahead of time better targeted the year in economics.

Just as governments including Australia’s were embracing debt (A$800 billion and counting) and creating money out of nowhere ($200 billion scheduled) came a treatise explaining that at times like these (actually, at any time when the resources of the economy aren’t fully employed) that’s entirely responsible.

Stephanie Kelton’s book has rightly been displayed on Alan Kohler’s desk, and Kohler himself has become a convert to modern monetary theory which the book outlines in the clearest of terms.

Kelton explains that in an economy such as Australia’s the purpose of tax isn’t to raise money but to slow spending, and something else: demanding the payment of tax in Australian dollars forces Australians to use Australian dollars.

The example of teenagers not cleaning up around the house that she used in her talk at Adelaide University in January is priceless. You can watch the video here.

Economics in the Age of COVID-19

Joshua Gans, MIT Press

Written as we were coming to grips with what to do, and posted online chapter by chapter to get real-time feedback, the Australian author’s flash of inspiration was that we have experience in shutting down an economy and then restarting it.

We do it every Christmas writes Joshua Gans, and “no-one screams depression”.

That his way of seeing things now dominates talk about the pandemic doesn’t make it less radical. It’s partly because of his insights, published in April, that most governments no longer think that in this crisis they can trade off health against wealth.

He persuades by analogy. Fans of Mission Impossible II, the computer game Plague Inc and the came of chess will appreciate the references.

Radical Uncertainty

Mervyn King, John Kay, Hachette Australia

The idea that every possibility can be reduced to a number, to a probability, is what makes simple mathematical economics work. It’s what makes insurance and credit ratings and assessments of the risk of getting coronavirus work. And it is wrong, as became clear in the devastation caused by the global financial crisis.

By itself, that’s not a particularly useful observation, but what is useful is the author’s discovery of where the idea that probability could be reduced to a simple number came from. The Nobel Prize winning economist Milton Friedman shares much of the blame. He insisted that every uncertainty could be reduced a number that a rational utility-maximising human being could use to make decisions.

Before Friedman and contemporaries, there used to be two numbers, one representing risk, and the other representing uncertainty, which are quite different things and can’t be thrown together.

If you’re too busy for the book, try the London School of Economics podcast.

Fully Grown: Why A Stagnant Economy Is A Sign Of Success

Dietrich Vollrath, University of Chicago Press

Advanced economies may or may not roar out of the recession, but they are unlikely to boom as they did before. For decade after decade throughout the 1900s annual economic growth has been strong, averaging 2% per capita in the US.

In the first two decades of the 2000’s that growth has been weak, averaging 1% – only half of what it did.

Dietrich Vollrath, who blogs on growth and had no preconceptions, approached the puzzle as a mystery and found that the usual suspects (rising inequality, slower innovation, competition from China) didn’t explain enough.

The extra comes from success. The populations of the US and kindred nations have become so rich and (on average) old that having more children and striving for even higher incomes no longer makes sense.

The technical stuff is at the back. The message from the front is that we’ve arrived at our destination, which needn’t be a bad thing.

Economics in Two Lessons

John Quiggin, Princeton University Press

I’ve slipped this one in from 2019 for a reason. John Quiggin is about to publish a sequel, The Economic Consequences of the Pandemic.

Economics in One Lesson, published in 1946 financial journalist Henry Hazlitt, was a homage to the power of prices in a free market.

In lesson one (the first half of the book) Quiggin teases out Hazlitt’s thinking, and in lesson two shows how it follows from it that in many circumstances the market has to be contained.

Central to both lessons is opportunity cost, “what you give up in order to get something”, the most important concept in economics.

Polluters will make the wrong decisions if the cost of their pollution (largely borne by others) isn’t charged for. It’s a persuasive and increasingly-pressing argument.The Conversation

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Summer reading guide from The Conversation’s business & economics writers


Janine Dixon, Victoria University; Beth Webster, Swinburne University of Technology; Gigi Foster, UNSW Australia; Rodney Maddock, Monash University; Ross Guest, Griffith University, and Tim Harcourt, UNSW Australia

Janine Dixon, Economist at Centre of Policy Studies, Victoria University

Black Inc. Books.

In his 2016 book Richard Denniss calls out politicians and vested interests for using “econobabble” – which he defines as “incomprehensible economic jargon and apparently simple words that have been stripped of their normal meanings” – to conceal simple truths from the public. Econobabble was published at the beginning of 2016, but it almost feels as though Denniss knew in advance that “post-truth” would be voted the Oxford Dictionaries 2016 word of the year.

The book teems with examples of econobabble that are both entertaining, because of the way Denniss describes them, and infuriating, because the consequences are so devastating. The discussion of the Adani coal mine, which continues to this day, is particularly enlightening.

Economists themselves are not immune from criticism. As an economic modeller, I was particularly interested in the chapter on economic modelling. In this chapter, continuing with the main themes of the book, Denniss promotes simplicity and openness in the way economic issues should be communicated to the wider community – and I can only agree!


Gigi Foster, Associate Professor, School of Economics, UNSW Australia


Oxford University Press.

Back in September I had the unique experience of attending the Sydney launch of William Coleman’s new edited volume, “Only in Australia” (OUP 2016). I like William and I bought his book mainly out of curiosity and a desire to be entertained.

As an Aussie-loving Yankee transplant who for professional reasons is supposed to have at least a passing familiarity with Australian political and economic history, I have found “Only in Australia” to be enlightening, reaffirming, and most definitely amusing. The enlightenment has been in regard to umpteen little facts and interpretations about Australia’s history as a nation.

Did you know, for example, that in the mid-1800’s, “public schooling in NSW was not as exclusive of religion as Victoria but was still, at its core, secular” (from the chapter by Greg Melleuish and Stephen A. Chavura)? Or that “from the 1850s, Australian governments have been responsible for the financing, construction, and operation of railways – urban, suburban, and rural…[while] in other countries, extensive government railways were initiated later than the 1850s, often beginning with the nationalization of substantial private rail lines or networks” (from the chapter by Jonathan Pincus)? These types of titbits have filled in some of my sometimes patchy understanding of the how and why of modern Australia.

The reaffirmation has mainly been of my impressions of Australian culture. The book itself is a testament to that culture: not a single of the 15 chapters is written or co-written by a woman, and the entire enterprise has a clubbish old-boysy feel to it. That said, as a constant whinger about the Australian cultural cringe, I felt my heart buoyed by many observations rejecting European and particularly British derivations of Australian institutions – both formal and informal. Many of my own observations about those institutions were also confirmed as I turned the pages, such as the observation that “no other significant comparator country has tribunal-determined wages to the extent that Australia does ” (from Phil Lewis’s chapter) and the “absence of domestic corporate strength and financing” of Australian agribusiness (from Nick Carter’s chapter).

I didn’t always agree with the ideological packaging sometimes wrapping the text, and of course the book was far too expensive for reasons we all know too well, but I still enjoyed reading “Only in Australia”.


Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith University


Riverhead Books

Tim Harford is one of the best economics writers for a general audience that I have ever read. He shows how economics is everywhere and relevant to our lives in many ways. And he is very entertaining. Besides, this latest book appeals to me because it gives me hope that all of the disorder in my own life might actually be a good thing.


Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW Australia

Penguin.

Last year I read Geoffrey Blainey ‘s history of Indigenous Australia, titled The Story of Australia’s People, subtitled The Rise and Fall of Ancient Australia.

It got me thinking that Australia is 50,000 years old not 230. Geoffrey Blainey tells us, as only he can, the amazing stories of Indigenous history and innovation

This year I am reading the Blainey sequel “The Story of Australia’s people” subtitled The Rise and Rise of a New Australia which takes Australia from the Gold Rush to the present day. Blainey has a unique way of looking at Australia and the world and a unique way of re-looking at it. As he says himself, he has revised a lot of his thinking on Indigenous Australia since his early work The Triumph of the Nomads, written in 1975. He is the master of the historical narrative, a natural born story teller whose words “literally fly off the page”. He is always a pleasure to read regardless of whether you share his view of Australian life.

New South Books.

Another book I’ll be reading, as a self-confessed Australian history junkie, is Stuart McIntyre’s Australia’s Boldest Experiment about the national building efforts of post-war reconstruction in the 1940s. Think of the Snowy Mountains scheme, the Holden car, CSIRO, the ANU, the expansion of the post-migration scheme, all coming out of that innovative policy work undertaken by the war time Curtin-Chifley Labor government and into the long economic boom that Australia enjoyed from the 1950s to the 1970s. The role of the influential economic advisers of the era such as HC Nugget Coombs, JG Crawford and others (known as “The Seven Dwarfs” although no one knows who Snow White was!) is examined in detail by McIntyre. As my own grandfather was an adviser to Prime Minister and Treasurer Ben Chifley in the war years, I am fascinated to see what one of Australia’s most distinguished social historians has to say.


Rodney Maddock, Vice Chancellor’s Fellow at Victoria University and Adjunct Professor of Economics, Monash University

W.W Norton & Company.

My book of the year is The Internet of Us: Knowing More and Understanding Less in the Age of Big Data by Michael P. Lynch. This is quite philosophical work, reflecting on the ways in which we will change and are changing in response to the internet. It explores all the ideas and concerns you would expect and is somewhat pessimistic as is clear from the title. What Lynch underplays is the way in which consideration and debate can and do take place on the web, so that it can assist in active development of knowledge rather than just consumption of facts. A thoughtful read.

HarperCollins.

My novel of the year is Commonwealth by Ann Patchett which I think is her best book since Bel Canto. It is a multigenerational family novel, but written with a light touch and lots of insights into how families function. It is another thoughtful book and one which deserves to be read with time for reflection on its shape and character.


Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology

Princeton University Press.

Joel Mokyr is a smooth read – packed with anecdotes, facts and stories about our economic origins that will surprise even the most crusty scholar. In A Culture of Growth: The Origins of the Modern Economy, Mokyr highlights the persistent fundamentals that are still very much in operation today in the economy. He makes us wonder why no-one studies economic history any more. Are we raising new generations of number crunchers who only have a superficial understanding of data?

The Conversation

Janine Dixon, Economist at Centre of Policy Studies, Victoria University; Beth Webster, Director, Centre for Transformative Innovation, Swinburne University of Technology; Gigi Foster, Associate Professor, School of Economics, UNSW Australia; Rodney Maddock, Vice Chancellor’s Fellow at Victoria University and Adjunct Professor of Economics, Monash University; Ross Guest, Professor of Economics and National Senior Teaching Fellow, Griffith University, and Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW Australia

This article was originally published on The Conversation. Read the original article.