STRIKES BACK
macroeconomic policy. It called into question the assumption that macroeconomic predictions could be based on the
Having told this story in the introductory chapter, Harford then breaks the narrative into a direct conversation with you, dear reader, where he helpfully asks questions on your behalf, and then proceeds to answer them.
by Tim Harford Tim Harford, that no-longer-so-undercover economist, often gets called the Malcom Gladwell of Great Britain. He’s out misconception, and breaking down the jargon for the masses.
Wait a minute – suddenly the economy is my problem? Relax. It’s a big responsibility, I know: n economy is for life, not just for Christmas. But you’re an intelligent person and you’re eager to learn. Cringe.
He takes mathematical broccoli and turns it into pizza. Or more accurately: He takes convoluted academic papers, and turns them into stories.
Then he tells the story about the great baby-sitting recession of Capitol Hill, (parable number two). The story involves babysitting coupons that functioned as scrip, and how a shortage of them led to hoarding (what Paul Krugman would call a saving glut).
In The Undercover Economist Strikes Back, Harford sets out to explain why macroeconomics is so frustratingly complicated.
The recession was eventually solved by the baby-sitting
particular parables.
smoking New Zealander of humble farming stock, who would rise to become the Indiana Jones of the economics world. Bill is most famous for the Phillips Curve, his namesake, which he developed in his doctoral thesis.
although this policy eventually led to a very different type of recession, where there were not enough baby-sitters, but plenty of scrip. The moral of the story: Government intervention is sometimes a good thing, but you can also have too much of it.
Harford eventually gets round to parable number three: The economics of prisoner of war camps. It involves food parcels from the Red Cross, an extraordinarily well-adjusting system and everyone nearly dying after the supply of Red Cross packages dried up.
So instead, Harford turns our attention to Phillips’ invention of
tanks through which water could circulate.
can devastate in a way that has nothing to do with how well the economy works.
national income, foreign trade, government spending, and
If anyone was paying close attention, you might have noticed recession, and the P.O.W. camp crisis sounded a lot like a
There were tanks for the banking sector and for foreign of economic activity.
So if you’ve ever wondered why the Republicans want austerity and the Democrats favour spending programmes, then this is a book you should read.
T O P 5 0 0 / 6 th E D I T I O N
147