A decent and readable overview of large-scale economics, that helped explain why a little inflation (but not a lot) was desirable, why printing money is good sometimes and bad other times, why some people believe in stimulus and others believe in austerity, and why governments often screw this up. ( )

A million readers bought The Undercover Economist to get the lowdown on how economics works on a small scale, in our everyday lives. Since then, economics has become big news. Crises, austerity, riots, bonuses - all are in the headlines all the time. But how does this large-scale economic world really work? What would happen if we cancelled everyone's debt? How do you create a job? Will the BRIC countries take over the world? Asking - among many other things -- what the future holds for the Euro, why the banks are still paying record bonuses and where government borrowing will take us, in The Undercover Economist Strikes Back, Tim Harford returns with his trademark clarity and wit to explain what's really going on - and what it means for us all.

A könyv Harford többi munkájához hasonlóan könnyed, mégis tartalmas olvasmány szeretne lenni a közgazdaságtanról. Ezúttal makroökonómiáról van szó, amivel újabban munkanapokon is találkozom, így kissé más szemmel néztem, mint a korábbiakat.
A szerző a fiktív párbeszédes formát választja, ami elsőre meglepett, kicsit erőltetettnek éreztem, de meg lehetett szokni.

Miközben a terület történetén is szépen végighaladunk, megismerhetjük az alapfogalmakat és a lényeges gondolatokat, úgymint
a Ford által "feltalált" munkanélküliség, Bill Phillips vízzel működő analitikus számítógépe, Keynes gazdaságelmélete, gazdaságélénkítés,
bébicsősz-recesszió, fogolytábor-recesszió, GDP, GNP, boldogságindex, a végtelen növekedés, és a növekedés korlátjai.

Jó kis áttekintés, de összességében kevés marad meg, amit megszerzett tudásként fel tudok sorolni, szóval a pop-science-ből inkább a pop maradt meg nekem. ( )

Financial Times columnist and bestselling author Tim Harford tries to show us that macroeconomics is not that hard in The Undercover Economist Strikes Back.

In order to fix the economy, we need to understand the economy. The book is a "practically minded poke-around under the hood of our economic system." It's a sequel to The Undercover Economist, which looked at microeconomics. The first book looked at the cost of coffee and other focused topics that affect an individual's behavior.

The Undercover Economist Strikes Back tackles the world and the uncertainty of macroeconomics. These are the big forces of gross domestic product, inflation, and unemployment. Rather a droll, laborious discussion of complex theories, Harford keeps things witty and perky.

The book is not about bashing big banks or pointing fingers at who caused the financial crisis of 2008. But he does discuss the macroeconomic forces in light of the recovery (or lack thereof) from the 2008 crisis.

He does not try to oversimplify the topics. He cautions that they are difficult to understand, difficult to calculate, and difficult to get right. He offers advice and lessons from history.

He explains the theory of currency with the extraordinary example of the rai used by the Yap islanders in Micronesia. Each rai is a stone wheel, the biggest of which is nine feet across and weighs over four tons. That will help you buy land. Smaller ones, a mere foot or two across will buy you a pig. The islanders still use the currency even if it has sunk to the bottom of the bay while being transported in a boat. Given the small number of transactions, the islanders can just keep track who owns which stone, without having to move the big ones. But is the Yap system any crazier than the use of gold?

He tackles the thornier problem of the cause of recessions. Is it a shortage of demand or a shortage of supply? Or both? Was the 2008 recession a demand shock or a supply shock? It's surprisingly fun to get to the answers with Harford leading the way.

I was happy to accept a review copy from the publisher. ( )

Tim Harford needs very little introduction, Javier Estrada has done Harford justice in his review of Harford’s first book (JOIM Q2, 2006) - The Undercover Economist, which delivers microeconomics to the masses. This sequel is a complementary treatment on macroeconomics. Harford promises to shed light on what is happening to the world economy, why we should care, and what we can do to do better.

The book starts (and ends) with the use of Bill Phillip’s Monetary National Income Analogue Computer (MONIAC) at the London School of Economics in the post-depression years to resolve macroeconomic problems in the UK. Harford uses this example to excite us and to demonstrate the resolve and creativity needed to manage any economy. The Undercover Economist Strikes Back engages the reader in a dialogue mode, with the reader assuming responsibility for the world economy. The conversation begins by disclosing that economists do not understand everything about how to prevent economy’s growth slowing or when/how it goes into reverse.

Harford next introduces the concept of printing money and price stickiness (or rigidity) using the Capitol Hill Babysitting Cooperative (popularized by Paul Krugman’s Peddling Prosperity) as an example. The Cooperative’s problems are well discussed. Real world problems are more complex and messy. This example illustrates clearly that economies can get into a rut.

The dialogue segues into monetary systems and the introduction of the gold standard. Harford uses Brazil as a good contemporary discussion of hyperinflation and solution, which was not addressed in the previous chapter. Harford continues to build using the Babysitting example on the importance of inflation in the next chapter, “Just Enough Inflation”; the discussion of deflation/inflation effects and causes of hyperinflation is detailed.

The conversation with Harford continues to formalize the idea of stimulus, as he guides us through the Keynesian strategy of spending to lift out of recessions. What follows is a discussion on the controversy over the International Monetary Fund’s multiplier effect estimates following the crisis.

To distinguish between fiscal and monetary stimulus, Harford examines Robert Radford’s “The Economic Organisation of a P.O.W. Camp”. Radford’s publication describes a prison camp recession due to failure of Red Cross supply, which we can contrast against the Babysitting recession due to failure of demand. Exogenous shocks (mobile phones, China’s growth, natural disasters like the Tōhoku earthquake, and oil crises) change potential output and supply. Both Keynesian and Classical perspectives can be used depending on circumstances, that is whether problems are demand or supply induced.

The next dialogue discusses Potential Output and how estimations of it depend on trend, unemployment levels, surveys, and inflation. Harford seems to suggest that conservatives trim spending during booms and liberals spend during recessions.

Harford next introduces cyclical and structural unemployment using Henry Ford’s implementation of “efficiency wages” and an evaluation of the recent Mediterranean / Euro crisis. The discussion does not consider that structural unemployment could be due to deep seated uncompetitiveness of an economy. He acknowledges that the current Mediterranean employment model provides little help to the young unemployed and overprotects permanent employees.

In a Boss-onomics chapter, Harford deliberates with the reader whether performance within industry varies according to management quality. Advanced economies (America, Japan, Germany, UK, Australia) have better management than developing countries (China, India, Brazil). This discussion is relevant to competitiveness of the respective economies. Harford seems to judge America leading in management on some criteria which may be true, but may not be comprehensive enough. An examination to square with the greater success and productivity of Japanese firms vs. American (Honda vs. GM) could be an interesting inclusion to the text.

The final chapters of the book discuss the misuse of the Phillips curve (unemployment vs. money wage changes), GNP, and Happynomics. Finally, Harford reviews growth and inequality. The dialogue describes the implications of zero-growth model on debt and inequality.

Harford concludes with a discussion on the future of macroeconomics. Academics know that forecasts of complex systems are difficult and the most exciting (economics) innovations come from microeconomics – market design and auctions. Harford reveals that macroeconomics fails to incorporate new perspectives in banking, behavioral economics and complexity theory. He argues that insights about actual human behavior (sticky prices, efficient wages, game theoretic expectations) having no relevance to the economy is incoherent.

The book posits a zero-growth model as normal, which is a welcome respite from all the high growth expectations that drives our economies and lives. Complexity science has also punctured basis for confident forecasts. Over confidence and high growth expectations can cause problems. If we don’t commit to strong growth expectations, perhaps problems will disappear. Harford uses the story of (Bill) Phillips curve fame as an interesting and realistic framework for the book, the origins of macroeconomics, its progress and development over the decades. Phillip’s focus on practical models of the economy is maintained. Problems with debt, stickiness, poverty, and inequity are disclosed objectively to make the book a realistic one. Good, well-written, objective introduction to contemporary macroeconomics. The Undercover Economist Strikes Back should be this weekend’s read. ( )