Naked Economics-Book Review

Book Review

Charles Wheelan is the author of this interesting book, a professor at the University of Chicago, where he teaches courses on politics and economic contributor to various newspapers such as The Economist or The New York Times. This demonstrates on multiple occasions throughout the book auto propagandistic tinge. In any case, the book offers an interesting compendium of examples in which the economy can help to understand the functioning of our planet.In Naked Economics: Undressing the Dismal Science, Charles Wheelan-author, University of Chicago professor, and ancient National Public Radio (NPR) commentatorprovides a lucid, algebra-free account of economics. He relates economics to accustomed issues aural the acquaintance of the accepted accomplished layman. And he does so with accuracy and humor(Michael,2003,pp 48).

Economic assay can aswell brighten the political process. In fact, assay of backroom is conceivably one of the a lot of absorbing aspects of economics. Political action questions are a part of the a lot of acute of our time. And action questions tend to agitate able emotions, as one can see by the acuteness of the political address on bread-and-butter issues. Take, for example, minimum allowance laws. While active tonight, I heard Robert Reich, the above secretary of Labor beneath President Clinton, argue with animus that anyone who does not abutment a minimum allowance law is uncivilized, a "market fundamentalist." Able words those.

Wheelan takes a more nuanced view. True, he is clearly within the free market, "Chicago school" of economics. But he doesn't take a hard line on this. He has a chapter titled, "Government and the economy: Government is your friend (and a round of applause for all those lawyers)." In this chapter, he expands on the classic economic notion of negative externalities-those negative effects upon others of many of our actions, or, as he puts it, "the gap between the private cost and the social cost of some behavior" (p. 44). When I drive a large SUV, I am creating social costs, such as using large quantities of gas and potentially placing at risk those persons driving small cars. He notes that there is no market solution to such externalities, so government has an appropriate role in decreasing negative externalities. He also suggests that between the two ways that governments can deal with negative externalities-regulation and taxing-that taxing, although imperfect, is the lesser of the two evils(Steelman,2003,pp 53-4).

By raising the cost, say, of gas, it limits the externality creating behavior, such as driving large SUVs, by creating incentives to behave otherwise. Taxing also, within limits, generates revenue that can be used (theoretically, at least) to pay for remedies for the negative externalities (in this example, perhaps for research into alternative energy sources). But there is, as Wheelan notes, the problem of getting the size of the tax right-too low and the tax will have limited effect, too high and even those driving Honda Civic Hybrids will feel its brunt. And, of course, there is no limit to the negative externalities that can be ...