The Undercover Economist
by Tim Harford
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Book Reviews of The Undercover Economist
Book Review: Sickening Neoliberal Apologist Propaganda
Summary: 1 Stars
I am delighted that I borrowed rather than paying for this book - I would hate to send a price signal to the market that might encourage Harford to write more of this rubbish.
Listening to a neoliberal talk about economics usually feels like listening to a fundamentalist talk about their religion. There is no doubt that Harford is a preacher of the neoliberal religion.
It is difficult to explain just how intellectually disingenuous this book is. I will attempt to do so by drawing an analogy with one of my favourite passages from answersingenesis dot org.
"As you add up all of the dates, and accepting that Jesus Christ, the Son of God, came to Earth almost 2000 years ago, we come to the conclusion that the creation of the Earth and animals (including the dinosaurs) occurred only thousands of years ago (perhaps only 6000!), not millions of years. Thus, if the Bible is right (and it is!), dinosaurs must have lived within the past thousands of years."
The above passage makes more sense than most of Harford's book, which is nothing more than a bunch of cherry picked examples that supposedly validate the author's fundamentalist neoliberal worldview. The examples are oversimplified to the point of irrelevance, and then tied together in a series of non sequitirs that Harford ultimately uses to proclaim "Thus, if neoliberalism is an accurate and complete model of human economies (and it is!), then globalisation is great, and poor countries are poor because they deserve to be."
This apologist propaganda would be funny if there weren't so many people falling for it. In its defence, this book does paint a reasonably accurate if grossly simplified picture of one of today's most widely (ab)used economic models. In doing so it also provides some damning insights into how the neoliberal mind "works".
It is unsurprising though that when a fundamentalist like Harford repeats (ad nauseum) that "we economists think ..." he completely neglects to mention that other economic theories and models exist outside the neoliberal doctrine.
The majority of readers who will be appalled by Harford's bigoted insincerity should take heart that there are vast numbers of principled economists working towards a sustainable and more humane future for us all.
Book Review: An upbeat version of Economics 101!
Summary: 4 Stars
Using Ricardo's theory of rent seeking as a jumping off point, Tim Harford's "The Undercover Economist" is an upbeat introduction to microeconomics couched in language that is accessible to the layman without being trite or boring for those that already have a solid grasp of the subject.
The first half of the books deals with a somewhat more modern version of standard theories of supply and demand, rent seeking, perfect and imperfect information, externalities and incentives. Modern examples such as the location of Starbucks and the cost of a double latte grande clarify the points completely.
In the second half of the book, Harford moves into the realm of macroeconomics dealing with issues such as taxation, government subsidies, incentives and disincentives related to externalities, the seemingly endless cycle of poverty in third world countries, the theory of comparative advantages, third world dictatorship and communist government policies as contrasted with democratic capitalist economies, education and so on.
Not quite a treatise on macroeconomics, Harford makes the subject infinitely more interesting by exploring the margins of the topic and explaining how such macroeconomic considerations drift into the world of microeconomics and affect such basics as pricing, supply, demand, production and incentives.
Perhaps the most interesting chapter in the entire book was Harford's brief explanation of the mathematics of game theory and how economic game theorists constructed a series of government auctions to attempt to sell frequencies for cellphone licences to the highest bidding communications companies. The devil was obviously in the details as one auction succeeded beyond the wildest expectations of the government policy wonks whereas another garnered less than 1% of the anticipated revenue for the sale. Another chapter that will raise more than a few eyebrows explained in some depth why the world should welcome the globalization of trade and the elimination of trade barriers entirely.
Informative and entertaining, somewhat more academic in approach than the likes of "Freakonomics", "The Undercover Economist" is good reading for anyone who would like to have a deeper understanding of what makes the world's economies tick.
Paul Weiss
Book Review: Some Good Content But Very One Sided
Summary: 2 Stars
There have already some good reviews that have pointed out some good points of the book. I want to mention some of his points that I disagreed with.
One problem I had was when he talked about how sweatshops are good because the alternatives for the workers are so much worse. Even if you buy that argument, he leaves out of his discussion the situation that existed in the U.S. before the Sherman Anti-Trust Act. Before it was enacted, one company such as a coal mine which was the dominant employer in an area, was able to control the local economy by not only paying subsistence wages but also forcing the workers to become indebted to the company. The workers weren't free to quit and go somewhere else because of their debt to the company nor could they pay off their debt due to their low wages. This situation still exists in other countries. To ignore that and say that sweatshops provide opportunities for workers makes his book grossly one sided.
In 1977 the U.S. returned to practicing free trade. Almost immediately there were accusations that Japan was dumping steel on the U.S. market at a price much lower than it could be produced by US companies. In fact it was generally believed Japan was selling it below cost. Without tariffs on Japanese steel, U.S. companies would purchase it over U.S. steel. Soon the U.S. steel companies would have had to start shutting down plants. Once a plant is shut down, it can't be easily started up again once prices go up. Skilled workers will have found other jobs, raw materials suppliers will no longer be available, and steel customers will have found other steel suppliers. As the price of Japanese steel remains below its production cost in the U.S., steel users switch to Japanese steel and U.S. plants shut down. Once dependent on Japanese steel, the price would certainly go up. Tariffs are the only practical way to protect U.S. industries from these practices. Surely the author was aware of this practice. This was the way monopolies worked in the U.S. until they were outlawed. Why doesn't the author include this scenario in his discussion? Clearly this book is biased in favor of laissez-faire.
Book Review: Sparks some insights about everyday's economy
Summary: 4 Stars
This is an easy going book that tries to explain few insights from famous economical theories through examples from real life. Basically the author did a very good job delivering that promise and the book is a fairly easy read, but one which also keeps you thinking. Overall this is a very enjoyable book that provides several "ha-ha" types of insights, even for readers who did study economics and marketing in the past (like myself) but usually don't spend to much type analyzing its daily life impact on the smallest things around us.
The book is divided to chapters, each of which explore a different topic. Chapter 1, titled "Who pays for your coffee?" which among others explains the relationship between the high coffee prices at Starbucks and their demand for the top location for their stores (e.g. right across the exits of a train-station). Chapter 2 than continue to explore various tricks from price setting strategies and how they cause us to pay a little more for products that basically have the same value. Overall there are 10 such chapters dealing with the issues of globalization, the growth of china, and others.
My main problem with the book is the following: there are many disagreements about the validity of various economical theories (as they often neglects many of the variables that are found in real world), and as such economic theories have basically very little predictive power. The author on the other hand, while explaining a topic often takes a very narrow, one sided view of the topic and does not give enough room for different views or counter arguments. For example, one can look at the chapter about Globalization and be surprised to see the strong view against the anti-globalization movement. However, in the analysis he neglects many important arguments including political pressures, the importance of self-sustainability and others.
In the end this is a very enjoyable read, the topics are interesting and well explained. This book is recommended almost to anyone as it requires no prior knowledge of economic, just good old intuition and life experience.
Book Review: Powerful and fun!
Summary: 5 Stars
Who said that economics was boring?
Tim Harford, a young English economist, has written a splendid book, probably the best I have read of its kind, about the application of the basic economic principles to little things. This book is for anyone with common sense ---even economists--- who want to better understand the world in which we live in.
The analysis is rigorous and consistent, yet simple and fun. In a natural way, Harford reaps the rewards of almost 300 years of economic doctrines to explain how things work, why frequently they fail to work properly, and what can be done to fix them.
Setting "good economics" at the service of anyone who wants to learn from it, the author explains with a clean logic why freedom and trade probably are the main pillars of modern societies. Indeed, it seems that there is not a more direct way for achieving sustained economic growth and social development.
Harford emphasizes the goodness of a free market, in which prices give adequate information for efficient resource allocation, but without idolizing this system of exchange. In fact, the author devotes many pages of the book to explain the serious problems that emerge when imperfections, as the lack of competition, the presence of externalities, information asymmetries, and inadequate institutions, are important.
Current affairs as corruption, poverty, globalization, environmental problems and the emergence of China are analyzed with a good detail under the magnifying glass of the "undercover economist", who always offers a fresh perspective of the problem and opportune remarks. If these remarks were listened by at least some of the people that actually take policy decisions, no doubt it will deliver some gains to more than one person without taking from any other. Pure economics!