Late last year a couple of students suggested I should do more book reviews. This is something I've been very lax about, and not necessarily because I haven't been reading much of late. So instead of separate book reviews, I've collated three of my recent reads together into a single post.
The first book is The Undercover Economist Strikes Back, the latest book by Tim Harford. Harford's previous 'pop econ' books have focused on microeconomics, but this one is macroeconomics. I'm not much into macroeconomics (despite having taught introductory macro in the past), but I found a lot to like in this book. Harford adopts as a narrative style a conversation with a reader naive to the ways of macroeconomics, and for the most part the style works (although personally, I preferred the style of the previous Undercover Economist books).
In particular, there are good sections on sticky prices, commitment strategies, and the problems with relative poverty measures, that I will put to use in my own teaching. Overall the best part of the book is the end - not because that meant I didn't need to read any more of it, but because Harford discusses the future of macroeconomics. I recommend this book for students starting out in macroeconomics, as well as those looking for a nice refresher.
The second and third books are probably best reviewed together, given that they come at similar topics, but from quite different angles and with very different conclusions. Collapse, by Jared Diamond, looks (as the title suggests) at the failure of a number of past societies, focusing on environmental factors as a commonality among the failures he describes. The collapses include obvious choices like Easter Island, the Mayans, and Norse Greenland, but also more contemporary examples like the Rwandan genocide. Despite the fact that Diamond argues that he is not promoting the idea of environmental determinism and he tries to be more upbeat in the concluding chapters, it is hard to avoid adopting an almost fatalistic interpretation of these collapses. Diamond argues that the choices of leaders can often make environmental issues worse, rather than better, but he ignores the role of markets in solving problems of resource allocations.
Which brings me to The Doomsday Myth, by Charles Maurice and Charles Smithson. When I bought and started reading this book, I had no idea how dated it was (published in 1984), but it still raises some interesting counterpoints to Diamond's Collapse. Maurice and Smithson look instead at a series of purported crises arising from resource shortages, and demonstrate that the operation of markets and price adjustments provided the incentives for the crisis to be overcome. Their examples include the rubber crisis in the early 20th Century, whale oil in the mid-19th Century, and the Black Death in Europe, among others. In each case, the market has adjusted or new substitute products have been developed, that meant the predicted crisis never eventuated. The takeaway message is that governments should leave markets to their own devices, rather than intervening and making the situation worse. Towards the end of reading this book, I wondered what Maurice and Smithson would have made of the Global Financial Crisis some 25 years after writing their book.
In any case, these two books both adopt what I feel is an untenable position. I would argue that markets can neither be ignored, nor can they be entirely left alone. Both books are interesting reads, but the smart reader will probably spend a lot of their time considering the counter-arguments to those proposed by the authors, particularly in the concluding chapters in both cases.
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