I thought this was a very good introduction to economics for the layman. Wheelan purports to explain the subject without all the mind-numbing charts and economics jargon and he succeeds in doing just that. My initial reaction to the book was that Wheelan was merely an apologist for unfettered capitalism but it turned out to be a relatively objective work. He gives both sides of the story so to speak, and concludes that government is important to a healthy economy, as long as it is used judiciously. For instance, on page 51 he flatly states; "Anyone who tells you that markets left to their own devices will always lead to socially beneficial outcomes is talking utter nonsense." He points out how most developing countries would love to have the bureaucracy that we have, and this lack of effective government is what keeps many nations from prospering. Of course, this goes both ways as he also describes the damage done by excessive government regulation, as witnessed by states like North Korea. He argues against the allures of protectionism and emphasizes the importance of international trade, for rich and poor countries alike. Besides the relationship between government and economies, the author tackles all the major aspects of economics such as how the financial markets work, the difference between monetary and fiscal policy, the Federal Reserve, inflation, human capital, currency, externalities and so on. His analysis of "creative destruction" can be summed up by the following; "It would have been one thing to help displaced Pony Express workers by retraining them as telegraph operators; it would have been quite another to help them by banning the telegraph." He's actually quite humorous at times also; "Any thoughtful policy analyst knows that some individuals who wear spandex in public should be taxed, if not jailed."
Wheelan makes no secret that capitalism is an amoral system that often leaves short-term damage in its wake. He insists though, that in the long-term it is the best system around, hands down. He makes some interesting points about international trade and globalization, pointing out that those who oppose it, often do more harm to the very people they intend to protect. For instance, he claims that Third World sweatshops, while deplorable by Western standards, are often the best option that some people have, and that they are a necessary step in the process toward industrialization. He claims that any attempt to boycott or otherwise oppose these conditions would simply force these places to shut down, condemning the workers to even worse prospects. My only criticism of this argument, and maybe I'm naïve, is that this seems a bit too "all or nothing." It seems hard for me to believe that any effort to enforce better working conditions would automatically put these places out of business. Isn't there a middle road here?
One thing I did notice was that Wheelan states early on that capitalism is not a zero-sum game, meaning that my wealth does not depend on someone else's poverty. Then, later in the book he says that there is a finite amount of capital in the world and the more in the hands of government, the less for the rest of us. Either I'm missing something or this is a contradiction. Other than that, I enjoyed the book greatly and actually feel more knowledgeable on the subject than before I started. Economics has always frustrated me but the author explained it in a way that even a meathead like myself could understand. Wheelan also accomplished something I heretofore thought impossible; he actually made economics interesting! 4.5 stars.
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- Reviewed in the United States on May 17, 2008
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