According to an anecdote about President Harry Truman, the President once said of his economic advisers, "Whenever I ask their opinion, they say on the one hand, so-and-so; but on the other hand, so-and-so. I would like to meet an economist with one hand!" Good Economics for Hard Times is a recent work by the 2019 Nobel Prize winning economists Abhijit Banerjee and Esther Duflo, and while this esteemed husband and wife team each possess both of their forelimbs, they are quick to acknowledge that they don't have all of the answers to the perplexing problems that world governments will confront as they head into the 2020s. As the title of the book suggests however, the authors advocate for a compassionate and kinder, gentler brand of economic policy making in an approach to alleviate global poverty, not just in the third world, but in developed nations in North America and Europe, where the gap between rich and poor continues to widen.
The authors tackle such perplexing issues as the economic impacts of immigration and refugee migration, trade wars, the widening income gap, the pros and cons of universal basic income, how the increasing presence of artificial intelligence will affect the job prospects of present and future generations, what to make of slowing rates of growth in developed nations and even the economics of climate change. It is apparent that the authors have researched these topics extensively as this book cites studies and projects from around the globe, providing examples of early indicators of successes in other nations, as well as looking at some historical failures.
While not overtly political, the authors are academically disparaging of the economic policies of the 1980s and 90s which presumed that a welfare state was the cause of global economic woes. They are critical of those who promote the belief that welfare programs only serve to promote laziness and kill a desire for self-betterment. They also argue that the notion that those who receive such benefits will only "drink it away" in unsupported by data, while at the same time noting that how a program is framed and delivered can impact its effectiveness. The authors also challenge the generic portrayal of free trade as a rising tide that raises all boats, noting that free trade improved the lives of many, but it also left many adrift and worse off. They cite the success of Donald Trump, the Brexit vote and other populist-themed world events as examples of those who were tuned into this message. Conversely, they mention Hillary Clinton's promise to "put a lot of coal miners out of work" as an example of those who were oblivious to the pain suffered by those left in the wake of globalization. While the candidate's remark may have been intended as a promise to deliver cleaner air, what was lost was empathy for those in the losing column of recent economic change.
The authors acknowledge that there are no easy answers to preventing the casualties of economic change. While they are not generally against tariffs or even trade wars in the appropriate case, they argue that the consequences of such action must be carefully thought out. Specifically, it must be considered who the winners will be and who will lose, and a plan must be put in place for how to help those whose jobs are displaced by cheaper products from abroad and by technological disruption.
One area where the authors are clear in their criticism is in their conclusion that tax breaks for the wealthiest do not create the economic growth that politicians promise. They argue that rates of taxation, especially on those in the highest income percentiles are unduly low and the growing gap in income disparity contributes to a host of social problems. While raising taxes on these groups will not fund programs such as a universal basic income by themselves, the authors are confident that this is part of the solution.
Portions of the book require great concentration for those of us without a formal background in economics. The micro-economics are often as interesting as the macro-economics such as when the authors describe smaller experimental programs in different locations. The book does not offer a panacea for the economic challenges which now present themselves. But if elections ever become about policy and not personalities, this is a great source for intelligent discussion of how to face the economic future with compassionate and empathy.
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Reviewed in Canada on January 12, 2020
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Top reviews from other countries
AMANDA CARLA RAMOS PENA
Excellent!
Reviewed in Brazil on April 10, 2023Verified Purchase
Gama
Empaque
Reviewed in Mexico on May 9, 2020Verified Purchase
B.Sudhakar Shenoy
For a better, saner, more humane world
Reviewed in India on January 3, 2021Verified Purchase
"freiername"
Sehr gute populärwissenschaftliche Darstellung
Reviewed in Germany on November 25, 2020Verified Purchase
James
A brilliant read!
Reviewed in the United Kingdom on August 30, 2020Verified Purchase
James
Reviewed in the United Kingdom on August 30, 2020
Firstly the edition of this book is one of the nicest I’ve held recently, it’s a really nice paper bound hardback, the paper is high gsm and feels really nice to touch.
This is the second book I’ve read on economics from someone who had no real understanding beforehand, I bought it as it was one of the bill gates summer reading list books, really glad I bought it!
The book starts off with talking about the public perception of economists and how there is a large distrust, usually pedalled by ‘bad economics’ and politicians.
Some fascinating things I’ve learned since reading:
- Economics is not a perfect science, it’s hard to compare data between countries and periods in time, however most often things improve because we learn from past mistakes (e.g. the Great Depression).
- Immigration IS a good thing, the argument that the more people arrive to our developed countries the more people are out of work as the supply demand model would indicate, though this isn’t true as when people move to a new location for work, they earn a wage, pay tax and then spend their money on the local economy which boosts growth. Though remittance has a negative effect on the economy.
- Interesting points about the efficiency wage, generally most employers won’t pay minimum wage and there is no evidence that most of them do due to the fact that it’s often costlier to keep re-hiring new people and they would rather pay a better wage and keep the employee.
- Fascinating comparisons between western economics (mostly focusing on France the U.K. and the states) vs China and India’s economies.
- Lower paid workers in SE and developing countries aren’t necessarily worse off, i.e if you stop buying cheap goods for moral reasons you’re reducing the income to these countries and families. Actually the more we spend having products manufactured in the developing world the more the inflow of cash and so the higher the standard of living for the residents. This is seen in China which less than 100 years ago experienced extreme famine under the Mao regime, now the huge growth (The China Shock) is seeing China moving away from large scale cheap labour manufacturing and more into new growth areas in tech (think Huwawie, Zoom and TikTok).
- Interesting reads on automation and the replacement of humans in the workforce. As someone that works in the tech sector this really made me revaluate things. Simply put, some jobs can be replaced by machines but it’s not necessarily a good thing to do so. Companies would opt to do this for cost saving reasons, however doing this would cause a huge slump in the labour market. I.e poorer people would be out of work and therefore not paying tax, or claiming welfare and not spending much on the local economy. The results being the companies get bigger and richer but the people don’t. Some predictions actually say large scale automation would have a negative effect on GDP. Fascinating chapter.
Last chapter (and I’ve not mentioned them all such as likes wants and needs, climate change and trade) was about universal basic income. This is relatively new turf but I think we’ll see a lot more of it in the future. Essentially people would get a guaranteed income regardless of their employment status. This is fascinating as it eliminates the survival instinct for work, meaning people would be less risk averse in their job often coming up with newer riskier ideas etc. Which is essential for growth (as shown by the Solow model). An interesting concept exists in Denmark called Flexicurity, whereby workers don’t have job security and companies can fire people without legal protection but they automatically receive UBI if they are found out of work. This in essence allows businesses to refine and streamline their business models and allows workers to move onto other work. In essence it’s the complete opposite of a ‘job for life’ mentality which Japan proved doesn’t work that well in the 1990s.
I’m going to end this review here but thanks for reading all this if you have!! I’ve actually been inspired to start studying economics with the open university as a result of reading this book. Thanks very much to Abhijit and Esther for their work on this!!
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