Ever wondered why governments make the economic choices they do, and why these sometimes seem counter-intuitive? Then you should read Tim Harford's new book The Undercover Economist Strikes Back. It will answer a lot of questions for those not trained in macro-economics.
British economics journalist Tim Harford rose to fame with The Undercover Economist, which did a brilliant job of explaining micro-economics - the economics of the everyday world, if you like. It was very easy to read and I liked it so much that I gave copies to my two sons. The Undercover Economist Strikes Back does the same thing with macro-economics, or the economics of nations.
Subtitled How to Run - or Ruin - an Economy, Harford's book takes you through some basic concepts before explaining GDP, inflation, money supply, employment and the like. He also explores newer concepts such as happiness economics and inequality. My biggest "Aha!" moment came when he explained the difference between demand-based and supply-based recessions, and the policy responses to them. He also explained why the Global Financial Crisis has created such a mixed bag of nations' problems and solutions.
Harford's easy prose and chatty style make a potentially dry subject interesting and informative. He uses a slightly quirky device to get his messages across. The reader is brought into the conversation as the asker of naive but good questions. It irritated me at first, but I persevered and soon stopped noticing it.
New Zealand readers will be delighted to see that the book's introduction is built around the story of Bill Phillips, the Kiwi jack-of-all-trades who in 1949 developed a water-based analogue computer to model the macro-economic system of the UK, and who arguably enabled a much greater role for economics in government policy-making. It's a story that should appeal to New Zealanders: an ordinary bloke solving a complex problem with Kiwi ingenuity.
Overall, I enjoyed reading this book and learned a lot. I recommend it to you and will add it to my bookshelf.
Disclosure: Isambard receives commissions from Amazon for items purchased via this website. This does not influence my review.