Another review of Economics in Two Lessons has come out. It’s by David Henderson and appears in Regulation, published by the Cato Institute (link to PDF). There’s a blog post with extracts here.
Unsurprisingly, given the source, it’s mainly critical of the analysis, but still has some kind words about the book. This para gives the flavour
Quiggin is a good writer who lays out much of the economics well. His analysis of rent control and price controls in general is a thing of beauty. Along the way, though, he makes small and big mistakes. He also shows by omission that the book, to be complete, badly needs a third lesson, on why government works so badly even when it intervenes in cases where markets work badly.
In one way, that’s a pity because the key point of the book is the idea of opportunity cost – the true cost of anything, for us as individuals, and for society as a whole, is what you must give up to get it. More precisely, it’s the best alternative available to us.
Harry’s post was all about opportunity cost – what would be the best use of $1.6 trillion in public funds. However, the discussion was inevitably enmeshed in the complexities and inequities of US education, while comments making broader arguments about opportunity cost reasoning weren’t discussed in detail.
One of those broader arguments is the idea that, thanks to Modern Monetary Theory, there’s no need to worry about such questions. In the “chartalist” reasoning underlyng MMT, the fact that governments can issue their own sovereign currency means that there is no need to “finance” public spending by taxation; rather taxation is a tool used to manage aggregate demand so as to keep the economy fully employed but not at a point where excess demand creates inflation. That (essentially correct) position can easily slide into the (only subtly different, but radically mistaken) view that governments can spend money on anything they like with no need for any increases in taxes or cuts in other spending.
As I will argue over the fold, a correct version of MMT makes no such claim. Unfortunately, while avoiding the error themselves, a lot of MMT theorists have not shown much willingness to set their more naive followers straight.
April 23 was the official release day for Economics in Two Lessons. The book is now out in Australia as well Economics In Two Lessonsis now available in Australia from Footprint books.
It’s nearly eight years since I started work on the book. I think it’s been worth the wait. The painful process has produced something better than I originally planned, with plenty of help from commenters here and elsewhere.
According to Amazon, the book is often bought along with Crashed, by Adam Tooze, which is great company to be in.
[Begin plug] If you’ve read and liked the book as it appeared here, this would be a great time to contribute a quick review [End plug]
Two big pieces of news for me today. This morning I got the first physical copy of my book Economics in Two Lessons.
Then, I got the news that, for the first time in my career, I’ve had an article accepted in Econometrica, the top theoretical journal in economics. It’s full of arcane maths, drawing heavily on the expertise of my co-author Ani Guerdjikova, but the key implication is simple. If people aren’t equally good at predicting movements in asset prices, restrictions on the set of assets available to them may improve economic welfare. This undermines the general presumption that financial deregulation will be beneficial.
I’ve just published a piece in Aeon (an excellent and free online magazine) drawing on the analysis in my (about to be published) book Economics in Two Lessons. I make the case that carbon pricing, whether through a tax of an emissions trading scheme, is the most cost-effective way to stabilize the global climate. Moreover, it’s straightforward to offset any adverse effects on low-income earners, displaced workers and others.
That raises the obvious question: if carbon pricing is so good, why is it so hard to implement, compared to less efficient alternatives like mandatory renewable targets. One factor, which I discuss, is that the creation of property rights over previously open-access resources creates obvious, and often powerful losers.
I was limited by space, so I couldn’t discuss the more puzzling problem of why regulations are more politically salable than prices even in the absence of income effects.
Economics in Two Lessons is listed as the #1 New Release in Microeconomics on Amazon. I’m not sure what this means, but it sounds encouraging.
It’s now available for preorder now, with a release date of April 23, the hardcover publication date. Apple books also has it for pre-order.
Thanks again to everyone who read and commented on the excerpts I published along the way. I’ve tried to mention you all in the acknowledgements, but it’s just about inevitable that I will have missed someone.
Today I sent off the corrected proofs of Economics in Two Lessons to the publishers, Princeton University Press #PrincetonUPress. They won’t look at it until New Year, but it doesn’t matter. The book is done, and I can sit down to Christmas dinner with the family knowing it’s off my hands.
The publication date for my new book, Economics in Two Lessons, is set for May 2019. Until then, I’m putting extracts up on a Facebook page I’ve set up. Here’s the first one, part of the Introduction.
Nearly seven years after I started, I’ve finally submitted the manuscript of Economics in Two Lessons to Princeton University Press. There’s still a lot of work to be done in turning it into a published book, and some changes are still needed, but this is as close to a milestone as I’m going to get.
Over the fold are the Acknowledgements. As I mention, I’m sure to have omitted someone, so if you have contributed comments and your name is missing, please point this out. Also, if there’s anyone commenting under a pseudonym who’d like me to use their real name, or vice versa, I’ll be happy to make the change.
… least for me. Princeton University Press has agreed to publish my book, Economics in Two Lessons: Why Markets Work and Why they can Fail so Badly. I’ve been working on it for seven years, but it’s finally done. It should be published in the first half of 2019.
Stay tuned for news on a possible Australian edition.
Nearly seven years after I started work, here’s the final draft chapter from my book-in-progress, Economics in Two Lessons. Thanks to everyone who commented on the first 15 chapters and encouraged me in the project as a whole.
I’ve had quite a few amusing snarks on Twitter to the effect that 16 chapters and 90 000 words is an awful lot for just two lessons. That’s true and yet there are even more topics I wanted to cover. In particular, I wrote quite a bit on health and education but have had to omit most of it for space reasons. Still, if anyone wants to point out critical omissions, now’s the time.
Comments, criticism and praise are welcome. I’m also on the lookout for telling graphs, insightful illustrations and apt quotations.
My long-running book-in-progress, Economics in Two Lessons is nearly done. I have a nearly complete manuscript, and am hoping for news from the publisher soon. Thanks to everyone who commented on the first 13 chapters.
