I am one of those people who have a mental block about economics. When I read about it, my eyes glaze over and my brain goes “are you kidding?” and shuts down. I think this is ridiculous. I consider myself a reasonably intelligent person, and economics isn’t exactly theoretical physics. So when I came across a book that claimed to be a user’s guide to economics, it seemed too good to be true.
The book is written in the way academic texts for lay persons should be—accessible without being dumbed down, reasonably jargon-free and with a clear structure. There is a lot of information here, but it’s presented with a light touch, using concrete examples from everyday life, with plenty of cultural references and humour. There is even a section on how to read the book depending on how much time you have. It’s set up in a way that allows you to grasp the essentials just by glancing at the headings and a few short paragraphs. But if you have the time, it’s well worth reading the entire book.
Chang starts out by demystifying economics and debunking economists. Economics is the study of the economy and rational choice. The trouble is that it has been used to explain everything, something the author refers to as “economic imperialism”. Some economists have claimed that economics can (almost) explain the Ultimate Question of Life, The Universe and Everything. As Chang points out, we already know the answer to that: it is 42. (See Douglas Adams’s The Hitchhiker’s Guide to the Galaxy.)
One of the things I loved about this book is that the author unpacks all the economic terms we take for granted. For example, what does “economy” really mean? What are GDP, GNP and GNI, and how are they calculated? The chapter on national statistics is rather tellingly named “How Many Do You Want It to Be?”
The chapter, “Let a Hundred Flowers Bloom”, describes nine principal schools of economics and provides a chart where you can see at a glance what each school focuses on. This is an important point that the author makes throughout the book: there isn’t just one way of “doing economics”, as neoclassical economists would have us believe. To quote Chang: “it is important to recognize that there are distinctive ways of conceptualizing and explaining the economy….And none of these schools can claim superiority over the others and still less a monopoly on the truth”.
Chang also looks at inequality, poverty and unemployment, and how they lead to inferior social outcomes, which in turn lead to reduced economic growth. With the current focus on individualism, poor people are often seen as being somehow responsible for their poverty. They are poor because they don’t work hard enough, aren’t good enough or don’t believe in themselves enough. But there are structural causes of poverty: malnutrition, lack of decent water and sanitation, bad schools and inadequate health care, all of which affect the individual’s chances to succeed and are out of his or her control. The numbers are shocking: one in five people worldwide lives in absolute poverty, and one in six in many rich countries lives in relative poverty. This doesn’t have to be the case—adequate public intervention can help deal with structural causes of poverty, and while inequality might not be wiped out, it is possible to live in societies that are far more equal than the ones we live in now.
Economics: A User’s Guide is truly a breath of fresh air. A book like this is sorely needed. As citizens, we are all part of the economy, but very few of us really understand economics. Chang ends by reminding us that the 2008 global crisis proved that we cannot leave the economy in the hands of professional economists or other technocrats, but must take the time to understand economics and become “active economic citizens”.
Reading this book is a first step.