If you are familiar with Tim Harford’s work, whether as an author, print journalist or broadcaster, then this book is not a surprise. It is, as you would expect, well-written, de-mystifying complicated subjects and giving the novice an understandable overview of controversial and complicated areas, explaining clearly what the experts agree on, what they disagree on – and why. This time his subject is macroeconomics and it is a highly enjoyable read.
Highly enjoyable, that is, save for one depressing lesson.
Harford’s broad conclusion is that the economic evidence points towards it being best to have traditionally right-wing policies in boom times (such as labour market reforms) and traditionally left-wing policies in times of recession and stagnation (such as fiscal and monetary stimulus). In other words, it’s not a matter of being left or right but of having the best policies for the current times.
However, as he also points out, politics in Britain and elsewhere tends to operate the other way round. Right-wing parties tend to do better in economic bad times (when their policies are less suitable) and left-wing parties tend to do better in economic good times (when again their policies are less suitable). The electorate serves up the mirror opposite economic policies from those that would work best.
The book is also packed full of fascinating (and rather cheerier) other information. One point which rather caught my eye was about how public services are valued in GDP calculations. As most of them are not sold and so don’t have a market price, they are valued at the cost of providing them. However, that underplays the contribution of the public sector to the economy because private sector goods are valued at their market value which is normally higher than the cost of providing them.
Many of these interesting examples are from the USA. Despite his British roots, Tim Harford clearly had an eye on where the biggest market for books is. That isn’t a problem given how international economics is, though it would have been nice for the rest of the world to have featured a little more.
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