By Joseph Heath.
Apparently, I randomly picked up a book that others are actually reading: see the proof
here.
I like the idea of the book - debunking crappy arguments on both sides of the political fence, not just the side you are not on.
I found the book difficult, I think because I have little to no background in the topic. I was and am willing to hear arguments against what I currently believe, and I am willing to be convinced, but they better be good arguments and not leave anything out. I found my self wanting to argue directly with the author because I found he sometimes didn't address a point I thought was important.
For example, in chapter 8, he states that the Left fails to appreciate corporations real motives for their actions preferring to blame them on the "profit motive." This is a failing because the Left does not check to see if the earnings are actually paid out as profits, which he defines as dividends. He brushes off in passing the pressure to maximize share price - dividends are less important to most investors I know, while share price is hugely important. This is still "profit" for both the shareholders and the employees/officers/directors of a company that hold stock options. I wish he had more fully addressed this issue because there may be some counter to my view that I have not thought of.
My favorite part of the book, by far, is the [fairly short] section where he discusses evolution. In chapter 1, he points out "[s]ometimes the competition for survival results in outcomes that are highly adaptive . . . but sometimes the results are highly maladaptive." I found his explanation of competition within the species itself (for mates), as opposed to between species (for food, shelter, etc.), fascinating. Using peacocks as an example, he explains that the pressure to compete for mates encourages the development of lengthy tailfeathers in peacocks. However, the longer the feathers, the more energy is expended in growing them and the more difficult it is to fly and escape predators. The males with the longest feathers are least likely to survive to maturity, but are most likely to mate if they do survive. The offspring of those males will have long tailfeathers and will therefore be less likely to survive (but more likely to reproduce if the do). This ultimately means that fewer and fewer of the peacocks will survive, leading possibly to the extinction of the species! The point is that "adaptations that are 'good for the individual' are not necessarily 'good for the species' at all. Individuals cannot be counted upon to do what is necessary to promote their own interests as a group." This is the most cogent explanation I have seen for something that seems from experience to be true.
I also found interesting his explanation that we can only import goods if we have some way to pay for them. We pay in our currency (of course), which must then be spent on some good or service provided in or by our country (or exchanged with someone else who has to spend it in our country). If China doesn't want our currency (ie our good or services), it will not trade with us. Therefore, trading with China creates jobs here! I have to think this through more because something seems fishy about the explanation. On the surface, it makes sense, but standing back from it, something just seems fishy.
The author provides a good explanation of how it works by quoting David Friedman's Iowa car crop parable: There are two ways for Americans to produce automobiles: they can build them in Detroit, or they can grow them in Iowa. Growing them in Iowa makes use of a special technology that turns wheat into Toyotas: simply put the wheat onto ships and send them out into the Pacific Ocean. The ships come back a short while later with Toyotas on them. The technology used to turn wheat into Toyotas out in the Pacific is called "Japan," but it could just as easily be a futuristic biofactory floating off the coast of Hawaii. Either way, auto workers in Detroit are in direct competition with farmers in Iowa.
I understand the first part, but I am not as clear about the last sentence. I understand it on a superficial level, but it seems to imply that Detroit is only in competition with Iowa. I don't think that is right. Detroit is also still in competition with Japan, I think. Any of the three of those places could hit on a vast improvement in production and leap ahead to the detriment of one of the others (Detroit makes cars cheaper, then people buy them from Detroit and Iowa and Japan both suffer; Iowa makes wheat cheaper, then Japanese cars become cheaper in the US and Detroit suffers; Japan makes cars cheaper, then Detroit and Iowa suffer (I think - but his theory suggests that only Detroit suffers)).
Part of my problem with the book may be that I think economics has limited use in explaining people. Everything in economics seems to start with "in an ideal world..." or "ignoring this [hugely variable] factor...". This just automatically makes me downgrade the importance of the "discoveries" made by economists.
4 out of 5 stars
