Good Economics for Hard Times

Good Economics for Hard Times: A Radical Rethinking of the Way to Fight Global Poverty” is an economics book aimed at the general reader by two MIT professors of economics who specialise in the economics of poverty, social and political equality, migration and globalization.

Economics is important to be as one of the mechanisms to help us (where “us” means individuals, communities, nations and all mankind), as in How do we decide.

Throughout the authors try to promote Evidence Based Economics, with similarities to Evidence Based Medicine, as per Bad Pharma.

This is a Work in Progress, I am still reading the book, although further ahead than the chapters I have written about.

Chapters

Mega: Make Economics Great Again

Discusses the growing polarisation of ideas and values – they say between left and right, but to me the debate around Brexit, Covid, Climate Change and immigration seem to be going the same way. Loss of public trust in economists, and distinguishing between academic economists and those who are effectively spokesmen for interest groups. To me this is reminiscent of how difficult it is to distinguish between a scientist employed by, say a tobacco company, to put forward their message and an impartial academic (or even an actor in a white coat advertising on TV), also of the book Merchants of Doubt.

From the Mouth of the Shark

The title comes from a poem “Home” by Warsen Shire, . This chapter is focussed on migration, discussing the contrast between facts and public perception, and the flaws in a simple ‘law of supply and demand’ take on migration. The section ‘Lava Bombs’ discusses ‘natural experiments’ which caused forced migrations (such as the Eldfell volcanic eruption in Iceland). The section ‘Do they know’ used an experiment in internal migration in Bangladesh to explore the impact of information on people who might migrate to find the impact. The section ‘Lift all the boats’ discusses the impact of migrants on wages of the natives, and concludes that it is low. The section ‘Whats so special about immigrants’ discusses why this might be.

Workers and Watermelons

describes factors which affect the job market for immigrant workers. There are higher risks associated with a wrong choice in employing even a casual worker, so known workers are more likely to be employed than newcomers, even if the newcomer will work for less until the difference becomes sufficiently large.

Through a glass Darkly

About loss aversion

The comeback cities tour

The barriers to moving jobs to places of high unemployment. They authors use the US Rust Belt in their discussion, but it applies equally to Glasgow, Newcastle, Liverpool etc in the UK. The new wealth generating businesses set up in the expensive Silicon Valley, rather than Detroit, or Oxfordshire rather than Derbyshire.

My thoughts from this chapter

My Great, Great, Great, Grandfather was Justus Reitze, a German immigrant baker, whose story is here. In a historical context many Americans have Scottish or Irish roots, not because the Scots or Irish are necessarily more adventurous, but due to the Potato Famine (which tie in with my feelings about the importance of diversity) and Highland clearances. (The Cheviot, the Stag and the Black, Black Oil was a topic amongst my school friends)

The Pains from Trade

This chapter discusses international free trade and the issues around it.

Stan Ulam’s Challenge

Introduces the theory of Comparative Advantage, and the theoretical effects it should have on wages when two countries with different balances between capital and labour trade with each other.

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