112 of 119 people found the following review helpful
, 20 July 2006
This review is from: The Undercover Economist (Hardcover)
I picked this up at the airport and nearly finished in two flights. It's an easy reading explanation of an economist's take on some everyday things and some big issues (like globalisation).
Some of the early stuff (about coffee shops etc) is really good fun. You might not be shocked by it but it is a very effective way of explaining some key economic theories in a very accessible and interesting way.
I was also quite impressed by his explanation and perception of the stockmarket. This is something that I have read quite a bit about and deal with through work and I found myself nodding in agreement with him - that share prices are largely random but sometimes there is a brief opportunity to do something logical and make money, therefore fund managers spend a lot of time money and effort trying to find that 1 in 100 chance. (I still think active fund management is on balance a waste of money but that's another argument). I also liked (though I've heard a version of this before) his comparison of arbitrage in markets to picking a supermarket queue - if one is obviously shorter people join it very quickly.
I thought the section on second-hand car dealers, which goes on to discuss firms marketing insurance products, was also very interesting. Especially the way that providers try and communicate their trustworthiness through marketing etc. Again that confirms to me my perception of how the fund management industry pitches itself to clients.
There were a couple of points where I diverged significantly from him. First on tax, where he suggests that sales and income taxes discourage effort. This is something I have argued back and forth many times and I just don't buy it. I don't think most people most of the time think about tax and therefore I don't think it influences their behaviour significantly.
Secondly I think he is a bit too starry-eyed about globalisation. I agree with the general proposition that trade is good (not bad) for developing nations. But it is not an unqualified good. Yes it provides income and employment, and yes for many people in these countries working in a trainer factory is preferable to a lifetime argicultural labour. But that is not always the case.
Similarly I found his defence of free trade against the arguments that it leads to enviromental damage pretty unconvincing. There are plenty of people with lots of business experience who are much less sanguine about the ability of markets to inherently deliver the right results. See Adair Turner's Just Capital for example.
Finally a point on the writing style. Generally this is very clear and readable. but I find the whole 'undercover economist' thing a bit annoying. either use it or don't use it. in the book he seems to forget that he has been using it and only drops it in every 30 pages or so. why bother?
those whinges aside it's worth a read.
Help other customers find the most helpful reviews
Was this review helpful to you?