(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 economists


Charis Palmer, The Conversation and Helen Westerman, The Conversation

Challenging, inspiring and funny: a handful of our economics writers share the favourite books they read this year.

Rodney Maddock, Adjunct Professor of Economics, Monash University


W.W. Norton & Company

The Courage to Act by Ben Bernanke

Ben Bernanke’s The Courage to Act gives a wonderful insight into the problems he faced in trying to deal with the crisis, around legislative restrictions, and blame shifting amongst the various regulators.



Penguin Random House

Doing Good Better by William MacAskill

William MacAskill’s Doing Good Better is a great read about the problems with international charities and on ways in which we can do better in providing assistance.



Penguin Random House

The Heart Goes Last by Margaret Atwood

Margaret Atwood’s The Heart Goes Last was my best novel of the year: she is simply a wonderful writer and this one extrapolates ideas about how a prison might be run for profit, posing a possible end state of privatisation.



Echo Publishing

Resurrection Bay by Emma Viskic

Emma Viskic’s Resurrection Bay is the perfect holiday detective story set; perfect for aeroplanes or the beach.


Janine Dixon, Senior Research Fellow, Victoria University


Niche Press

Creating Cities by Marcus Westbury

Marcus Westbury, founder of Renew Newcastle, identified a problem and set about trying to fix it. An economist would hardly credit the idea that the main street in the CBD of a major Australian town could lie mostly empty, while at the same time property owners were declining genuine offers of business. Without being an economics textbook, Creating Cities gives us insight into the market incentives that lead to this sub-optimal allocation of resources. The book takes the reader on a fascinating journey through the process of renewal of an urban centre. Westbury describes the failure of large, centrally-led projects (think monorail) to revive Newcastle, and the surprising success of individuals and small enterprises in breathing life into the once empty shopfronts.



Melbourne University Publishing

City Limits by Jane-Frances Kelly and Paul Donegan

“A higher proportion of Australians live in cities than almost any other country, and most of our national wealth is generated in them.” There is no question that well-functioning cities are a great enabler of economic activity and provide residents with a high standard of living. However, in cities a diverse range of individuals and agencies operate and respond to incentives which are not always in the interests of the greater good. This book gives detailed and informative descriptions of the state of many Australian cities, and explores the many challenges faced by city planners, residents and businesses alike.



Allen & Unwin

The Economics of Just About Everything by Andrew Leigh

I’ve been lucky enough to hear Andrew Leigh speak on a couple of occasions and he tells a great yarn. His message is clear – economics is about incentives – and he illustrates his point over and over with interesting data and stories to go with it. He dispels the myth that economists are only interested in money. I’ve got this one for my 14-year-old nephew for Christmas this year.


Stephen King, Professor, Department of Economics, Monash University


Federation Press

From Protection to Competition by Kerrie Round and Martin Shanahan

I reviewed this book for an international competition law journal earlier this year. It is a great little book that provides a history of Australia’s attitudes to competition and our competition laws from 1788 to 1974 (the end date is when our current competition laws were introduced). It is a comprehensive work of economic history and also a great “story”. It is easy to forget that for most of Australia’s history businesses happily and legally formed cartels to prevent “undesirable” competition and to harm consumers. It is also interesting to see government responses (e.g. having government owned businesses to try and increase competition – they usually failed). It is a gem that I referenced in my most recent article on The Conversation.


Deborah Ralston, Professor of Finance, Monash University


Melbourne University Publishing

Advanced Australia by Mark Butler

Much of my research over recent years has been on post-retirement and I think this book is a really accessible discussion of the issues involved. Although a sitting member, Butler seems to take a pretty balanced view of how the ageing population is impacting on the economy. His track record as Minister for Mental Health and Aged Care through a period of considerable reform to aged care gives him a fairly authoritative point of view. I really enjoyed his speech on this topic to the National Press Club recently.


Ross Guest, Professor of Economics, Griffith University


Cengage Learning

Real-world Economic Policy by Jan Libich

This is the best book for me this year. Succinct contributions on a range of topical themes from economists from various fields and persuasions.


Richard Holden, Professor of Economics, UNSW Australia


Crown Business

Zero to One by Peter Thiel

Paypal founder and noted venture capitalist Peter Thiel discusses how monopoly is essential for innovation, not the terrible thing economists have always told you.



Penguin Random House

Destiny and Power by Jon Meacham

Biography of George Herbert Walker Bush (aka Bush 41).



Simon & Schuster

Crippled America by Donald Trump

Just because…



Penguin Random House

America’s Bank by Roger Lowenstein

How challenging it was to create the US Federal Reserve system.


Catherine de Fontenay, Associate Professor, Melbourne Business School


PublicAffairs

Poor Economics by Abhijit V. Banerjee and Esther Duflo

In the last decade, development economics has undergone a revolution, led primarily by Esther Duflo, an intense young Frenchwoman who is a professor at MIT. The new approach emphasises using randomised control trials (similarly to medicine) to test the efficacy of different policies, and to build a more accurate picture of the economic challenges of the bottom billion (the poorest billion people on earth). The insights garnered are simply amazing, and will lead to changes in policy that will have a profound effect on the condition of the poor for many decades.


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


Princeton University Press

Why Australia Prospered by Ian McLean

Ian McLean turns economic history conventional wisdom on its head in this thought provoking book.



Crown Publishing Group

Why Nations Fail by Daron Acemoglu and James Robinson

Why did the USA succeed while Mexico struggled? Same with Argentina or Australia or Botswana and Sierra Leone? The role of institutions matters. A country needs well defined property rights and democratic rights to succeed.



Simon & Schuster

Korea: The Impossible Country by Daniel Tudor

How South Korea went from one of the world’s poorer nations to an OECD nation in five decades.



Penguin Books Australia

Australia’s Second Chance by George Megalogenis

Even better than his first book. Megalogenis looks at the role of immigration in Australian economic development.



Penguin Books Australia

The Story of Australia’s People by Geoffrey Blainey

Australia is 50,000 years old, not 230, and Geoffrey Blainey tells us why. Amazing stories of indigenous history and innovation.

The Conversation

Charis Palmer, Deputy Business Editor, The Conversation and Helen Westerman, Business + Economy Editor, The Conversation

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

Changing the World: December 1 – AIDS Prevention and Treatment


Today’s suggestion is probably one that most people wouldn’t think a great deal about these days. In the Western World, the issue of AIDS is probably somewhat on the backburner so to speak, though that would depend on the community you live within or deal with on a daily basis.

Though AIDS remains a major health threat in Western countries, the real frontline is in the Third World, where entire countries are under serious threat from AIDS/HIV and/or the consequences of the disease on the economy, the community, the family, etc.

So helping to prevent AIDS and to assist in the provision of treatment for AIDS/HIV, as well as caring for those left in it’s wake are all very important.

Some web sites with valuable information:

www.unaids.org

www.aids.net.au

www.afao.org.au

A response to reading ‘365 Ways to Change the World,’ by Michael Norton