Tim Harford's latest book, The Undercover Economist Strikes Back, is a great macroeconomic companion to his 2005 debut, The Undercover Economist (UK edition), an excellent and accessible book on microeconomics. Structured as a dialog between an economist (Harford) and a notional punter who has been put in charge of getting an imaginary economy going after a deep, long recession (ahem), Strikes Back is full of Harford's witty, clear and memorable explanations of complex and vital subjects.
I know Harford and consider him a friend, even though as he's pointed out, we don't exactly agree on economics (we don't entirely disagree either). I was educated, informed and delighted by nearly everything in this volume, but worried about what was missing. Particularly on the subject of continuous economic growth, I was concerned about the breeziness with which Harford predicted growth in economic activity by means of buying and selling information, which is a rather fraught and complex subject (and worthy of its own book, which is probably why it didn't get the explanation it deserved). One thing that's clearer every year is that the ability to charge money for information is entirely dependent on the cooperation of the buyers, who can choose at virtually no risk to themselves to get the same information for free. This doesn't mean that no one will pay, but it does point to a complicated future for information marketplaces.
I was more worried about the lack of consideration given to corruption and its place in markets, regulation and economics. Harford points out that the increasing inequality in the world is bad in many ways, and suggests multiple causes for this phenomenon, but underplays the role that corruption has played. It's pretty mainstream to observe that we are in the grip of a cycle of policies that enrich important and wealthy people, whose wealth and import then grows, who are then better positioned to influence policy to enrich themselves further still (lather, rinse, repeat). The distorting effect of corruption on sound policy is vital to understanding recession, poverty, inequality, environmental problems and many of the other phenomena that Harford addresses with otherwise exemplary thoroughness.
But let me reiterate that while I argued with what was missing from this book, I have enormous admiration for what was present. Harford is a gifted explainer of complex ideas, and his use of narrative in storytelling makes his explanations sticky and memorable. There is no one book you can read to understand macroeconomics, but Strikes Back is one book you should read to gain that understanding.
The Undercover Economist Strikes Back: How to Run or Ruin an Economy (UK edition)
Holy federalism, I love every single thing about this. And Peggy! (via Kottke)
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