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A tasty introduction to economics and the history of economic thought,
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This review is from: Free Lunch: Easily Digestible Economics (Paperback)
Borrowing Milton Friedman's phrase "there's no such thing as a free lunch", although pointing out that he was not the first to use it, and using the analogy of a very long lunch party, David Smith has written a piece de resistance of a book on economics. It succeeds both in providing a simple explanation of current economic thinking, while introducing them in an order that allows us to understand their historical development.
Thus we travel from Adam Smith, through Thomas Robert Malthus, David Ricardo and John Stuart Mill, enjoy a diversion via Karl Marx, to John Maynard Keynes and finally arrive at Irving Fisher, Milton Friedman and "the Americans" who have dominated economic thinking since the Second World War.
Smith eschews the graphs so beloved of economists because he wanted to avoid the appearance of yet another text book. His book works well without them, although I wonder whether one or two simple ones, like the supply and demand curves, would have enriched the diet a little. But even without them Smith provides a good introduction to supply and demand, and to many other economic concepts including specialisation and the division of labour, the elements of GDP (GDP = C + G + I + X - M is one of just two formulae presented), marginal utility, marginal revenue, monopoly - and why it's never a good thing, taxes and government spending, and the development of theories of money.
In the last chapter, "Arguing over coffee", he addresses some current hot topics in economics, including globalisation, how much tax a government should raise, whether the euro is a good thing, whether growth is necessary, inflation should be kept low, and whether Britain needs a manufacturing sector. While the book is billed as an updated edition, "with a new appetiser on the credit crunch", of a book first published in 2003, the update consists of just nine pages in the new introduction, written in October 2008. We could have had many more "arguments over coffee" about our current financial predicament, and a further and slightly more comprehensive review might therefore be worth it in a year or two.
David Smith, economics editor of The Sunday Times, has a journalist's eye for the prurient interest, and does not hesitate to comment on Adam Smith's physical ugliness but eye for "potato fed Irish prostitutes", Marx's alcoholism and lack of personal hygiene, and Keynes' homosexuality. While some will think this unnecessary, it does give a little flavour of the men (and, with the single exception of Friedman's collaborator Anna Schwarz, they are all men) and their times. This book of 270 pages (including a twenty page "bite-sized" glossary at the end) could, of course, never aim to be more than a "taster", and Smith has had to tread a fine line between ignoring some economists altogether and making a merely token mention. Ludwig von Mises, Friedrich Hayek and "the Austrian school" get a single mention (and no listing in the index (p.203, by the way)) as a footnote to Friedman and the Chicago school.
I bought this book as an introduction to economics for my twelve year old daughter, who has been expressing interest in business - too much exposure to "Dragon's Den" I expect - because it seemed to be written in a light style. For her it is more suet pudding than soufflé, but it's not inedible, and we are working through it together. (Are there no other economics books for kids other than GCSE texts?) David Smith maintains political neutrality as far as he can, although I think readers will discern a slight preference for the free-market approach of the classical economists and, more recently, the monetarists.
This is a great introduction to economics and its history for the general reader, and I can but recommend it. I am hoping to recover from thinking food metaphors soon.