Economics Made Simple

PDF-file by Madsen Pirie

Economics Made Simple PDF ebook download An easy-to-understand, plain-English introduction to economic theory. This book is well organised, concise and clear, and contextualises the explanation using simple stories - and for that, it deserves commendation.

It's full of interesting discussion and explanation. For example, it describes inflation as money becoming less valuable as governments print more of it, which isn't new. The thought-provoking part is that the author says that governments are to blame for imposing inflation on us, and that this happens because printing money is politically easier than raising tax or borrowing money.

Another interesting point is a discussion of the value to the market of two controversial figures, middle-men (efficiency) and speculators (risk management). The author then goes on to describe banks as middle-men (i.e. organisations that conveniently bring together suppliers and customers) that deal in money.

In most places, the author seems to be quite pragmatic and even-handed (e.g. by acknowledging that economic equilibrium is an elusive thing, sort of an idealisation rather than a fact of markets). That's quite a nice way of describing the role of these institutions, though you could argue it is overly benign in the modern financial world of massive levels of speculation.

Having said that, I'm not sure how to react to the claims that fixing prices at a 'fair' level (e.g. through minimum wage laws) and introducing regulation automatically lead to inefficiencies in the market, and therefore less wealth creation. It's possible this is true, but I do wonder if it's actually just free market dogma/propaganda. After all, when has there ever been an economy free of some distortion or other? How could these ideas ever be tested?

Furthermore, the only place in the book where the author is seriously questioning is in his discussion of taxation, which he clearly regards as fraught with all sorts of risks and potential to damage the economy. Once again, unless the author has managed to study some zero-tax nations in his career, I don't see how this configuration of starting assumptions (private business inherently good, government involvement inherently dangerous) is necessarily justified.

What I'm detecting, then, is elements of dogma. At this point, it's worth quoting the author when he writes: "economics is not about fairness but about the allocation of resources". The problem with this idea, of course, is that it's difficult to see how useful economics is as a discipline if it makes claims about how things ought to be but at the same time disavows the notion of fairness - and that, for me, marks the limits of the usefulness of this book.

As an introduction to the basics of economic theory for the lay reader, it's great - but that just shouldn't be taken to mean the theory is correct. There's actually some quite subtle indoctrination going on here, and I don't believe it's right to be doing that in a book such as this, which is intended for a non-expert audience. If the author had managed to liberate the discussion from his biases, I'd give it five stars.

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