Would I recommend this book? Yes 👍
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As the book's title might let on, it is a survey on how different economic policies can impact our society. In each chapter, the authors try to drive their point by going over several research studies and examples.
Good Economics for Hard Times tries to convey the idea that economic policies can be either good or bad. It depends on the context. It also tries to debunk common misconceptions around topics like immigration, automation, and free-trade.
Some of the chapters were a real slog to get through, mostly due to the sheer amount of content. The book is pretty dense and covers a lot of ground in its 300-something pages.
Regardless, I recommend reading it. It was an eye opener for me and made me better informed on several topics. The authors did an amazing job distilling such complex subject into an easy to digest format!
My favorite passage in the book
The last thirty years of US history should convince us that the evolution of inequality is not the by-product of technological changes we do not control: it is the result of policy decisions.
Things I liked
- Well written and easy to follow.
- Covers a lot of ground. Gives you a broad overview of how economic policy can affect a country.
- Authors backed their points through studies and examples.
- The book makes it very clear everything is a trade off. There's no absolute right or wrong.
Things I disliked
- Due to the fact this book covers a lot of ground, it can be a bit of a slog to read at times. Some chapters talk about so many different things it becomes tiring. I would have preferred shorter chapters, covering a smaller number of subjects.
This section contains topics that piqued my interest while reading. Take them with a grain of salt. They reflect my own biases.
Economical and political landscape
The book starts by analysing the current (2018/2019) economical and political landscape. Rising tensions when it comes to immigrants, discontent with taxes imposed by governments, people even questioning the purpose of governments, and the list goes on.
It's basically an acknowledgment of the mess we are in.
The authors point out the ongoing tribalization of our culture. More and more people seek to isolate themselves from their opposition. Left-wing supporters shun away right-wing voters and vice-versa. People question the value of authorities (e.g., see all the huge mess regarding use of masks due to COVID).
With increased division, the current socio-political sphere does not encourage dialogue. Instead, it encourages people to silo themselves.
Without dialogue between the two sides, we can't expect to arrive at reasonable economic policies that will benefit society as a whole. This is something we should all be concerned about.
I've heard many people say, and have said it myself, that automation is not a real problem. If jobs go away in one place due to automation, new jobs are created elsewhere to feed it. In the end, the market keeps itself in check.
Unfortunately, as the authors present in the book, that's not true. They dub this the economy's stickiness. As I reflect on my experiences and the people I know, I can see it more clearly now.
Jobs might move from one area to another, but that might not be true for people. People want to stay where they are comfortable. They don't want to forgo the place they grew up, the friends they've made, their homes, etc. So they don't move. They stay even though there are no jobs left. Moving is a huge psychological burden.
Yes, you can blame that on people. You can say it's their own fault for not wanting to move, because the opportunities are there. But this is a problem and it's not gonna change. We need to deal with it. We need to help people live fulfilling and dignified lives. It's pointless to blame it on them.
Immigration/migration doesn't affect low-skilled workers
I'll preface this by saying: every case is different. But from the several studies the authors went through, they've found migrants have little to no negative effect on low-skilled natives.
Quite the contrary. What tends to happen is that natives move up in their professions, taking higher level positions and the migrants step in to fill the lower roles.
There's also a benefit of having migrants move in: those people earn wages and they have to spend that money somewhere. That, in turn, leads to job creation in the area which helps the local community.
Free-trade screws low-skilled workers in rich countries
I think this one was quite obvious. If it's cheaper to outsource production of things or services, companies will do it. This tends to happen particularly in rich countries.
Poor countries, on the other hand, see the opposite. Free-trade gives incentives for those countries to produce more to export, which in turn creates jobs to fulfill demand.
Integration changes people
Multiple studies point out that integrating children from different backgrounds (rich and poor, latino and white, etc) helps them overcome social barriers. They pair students from different backgrounds in settings like study groups or sports teams. The students that experience this are more likely to engage with people from different groups later in their life.
This is pretty cool, specially due to the current climate of tribalisation and division. This might be the way to ensure the young people of today are able to maintain a healthy dialogue in the future.
We all fear that which we do not know.
We don't know what drives growth (in rich countries)
I'm sure a lot of people will disagree with this, but I've seen evidence for this even in my own country.
The USA went through a long process of trade liberalization since the 70s. In fact, I was surprised their marginal tax rate was 90-something% in the 60s (it's only 37-something% today).
During the last five decades, government in the US have alternated between liberal and conservative economic policies. The country was able to grow regardless, and so did social inequality.
Through various studies, they could not pinpoint exactly what makes growth tick (for rich countries).
This is good to keep in mind. As populist governments rise and say the state is too bloated, taxes are too high, that the economy would benefit from more deregulation, etc, it's good to remember they don't really know what they are talking about.
If economists can't figure out what makes economies grow, why would you expect a random politician to do so?
People don't like help from the government
Reading this made me think of home. This is exactly what I have seen happen in Brazil over the past few years. I could hear the voices of people I know while reading the book.
For some reason, people associate participating in government assistance programs as a bad thing. As if you should be ashamed for being poor and needing help.
The authors mention several US assistance programs that don't seem to have enough take up. People just wouldn't sign up. Then they did a study where they didn't call the assistance program a help from the government. And lo and behold, sign ups increased.
I believe, and the authors mention this as well, this stems from the commonly seen idea that poor people are lazy. That it's their own fault for being poor. Stupid meritocratic bullshit.
The sooner we get over this stigma, the sooner we can help those in need.