Books on the economy

November 26, 2007 7:14 PM

Can the hive recommend books on the global economy? I'm pretty clueless so I'm looking for stuff that's easy to read, a la The Tipping Point by Malcolm Gladwell.

Ultimately I want to understand what's going on right now, with the declining US dollar, subprime something or others, trade deficits, how China fits in, how climate change fits in, and bonus points for how it affects the Australian economy.

I'm sorry, I absolutely do not know where to begin, so please excuse the vagueness. I just find what I'm hearing on the radio and in the paper really quite fascinating...just the other day I heard a bunch of economists talk about how the world is heading into a depression. Frightening.

posted by mooza to society & culture (17 comments total)

Economics is hard, particularly because no one is right. It isn't even clear if anyone is less wrong than anyone else.

Certain economic theories are more useful in certain circumstances than others. Adam Smith had some useful things to say, but they aren't useful all the time. Karl Marx made some interesting observations as well, but he has his own set of problems.

You might want to read Alan Greenspan's book. Probably not easy reading, but it should give you some idea of what a lot of professional and well recognized economists think. Note that professional and well recognized means just that.
posted by b1tr0t at 7:28 PM on November 26, 2007

The World Is Flat: A Brief History of the Twenty-First Century by Thomas Friedman might be a good place to start.
posted by OlderThanTOS at 7:29 PM on November 26, 2007

For stuff on the Australian economy have a look at Ross Gittin's columns and his books Ross Gittin's Guide to economics and his book How Australia compares and check out Ozonomics by Andrew Charlton. It's a bit of a silly book, but has a point.

For general stuff on economics, check the lists on Amazon and all the usual places.
posted by sien at 7:49 PM on November 26, 2007

If you’re interested in understanding what’s happening in the current global economy, you’re probably better off reading blogs, magazines, and newspapers than books. Right now we're in the thick of things and any book that comes out now will probably be out of date. The best books explaining what happened to the housing market are probably a few years away. It’ll take time to figure out where our current situation fits into the business cycle.

A good place to start would be the Economist's View Blog by Mark Thoma. He mostly covers macroeconomics. The blog is updated frequently and there are numerous links to other blogs and news sources on the side panel.
posted by Jasper Friendly Bear at 7:49 PM on November 26, 2007

You'd be hard pressed to find a single book that covers all the topics you listed. I refer people to the Backgrounders section of The Economist website. There's short briefs on every major contemporary economic issue.

From there, head to the library and read recent issues of The Economist magazine. Don't feel obligated to read every article - just go for the articles on topics that interest you. If you have a basic grasp of economics, you should have no problems with understanding the concepts.

Each issue usually focuses around a theme with multiple articles covering every angle. For example, since China is hot news, the magazine seems to dedicate one issue each year to China/Asia. Use the Economist website or library computers to pick out particular issues.
posted by junesix at 7:55 PM on November 26, 2007

If you're looking at increasing your understanding of how the Australian economy is effected by climate change, the American dollar, China and Indian's emergence on the global market, a textbook or book won't help you that much. It'll give you a primer on the basics of economic trends and definitions, but due to the time lag between when the book was written and when it is published, it can be out of date pretty quickly. That being said, not all is lost on your quest to gain a new understanding of what is happening in the global market. In order not to overwhelm you with information, I'll break my suggestions into a few categories.

I realize that you asked for "simple", but really - this is how I taught myself after finding economic texts useless in trying to apply theories to everyday situations

1) Understanding the current trends and impacts on Austraiia's economy

I might be wrong, but as far as I know, Australia relies heavily on importing goods and services produced elsewhere, and exports based on demand for natural resources (such as minerals and agriculture). To understand why their prices fluxuate (and therefore impact the economy), go to your national newspaper. Read two sections: the Front section where the big news happens and your Business section. These two sections will most likely report on things such as: company mergers, embargos, trade relationships,multilateral corporations buying out "Australian" companies, the daily prices of gold and oil on the commondities exchange, etc. Rip out *every single* article in these sections on things that impact Australia's natural resoures industry (or on the global scale)

Track the price of oil and gold daily. I did this for 4 months with the Canadian natural resource industry, and compared the fluxuations with what was reported in the Front and Business sections, and rest assured there is a correlation. For example, Canada's nickel and copper industry was driven to skyhigh prices earlier this year due to Asian Demand (China is experiencing a boom and wants to import as much as possible to keep their economy moving). I assure you this will improve the knowledge of what is going on in the world greatly. Knowing how the London (LME), New York (NYME) and other Mercantile Exchanges work will

Learn who or what structures control certain resources (OPEC - Org of Petroleum Exporting Countries) ihas a weak monopoly on oil these days. Understand why member countries may not want to follow the price for oil which OPEC suggests.

Learn the following terms: natural capital, assets, equity, income, profit, debt, cash flow, valuation, depreciation. appreciation, inflation, Internalizing, Externalizing, Subsidies, costs of production, GNP, Tax, Deferral, venture capital, added value.

2) General Books or Useful Reference Materials:
I can't stress this enough, your newspaper. If you read the fine print in each article, over time you'll accumulate more that enough knowledge to understand what's going on. Or, do one better: read mulltiple newspapers. My daily collection includes: The Globe and Mail (Canada), New York Times (US), South China Morning Post (Hong Kong), Financial Post (London) and a handful of others.

The Economist and Foreign Affairs are two magazines which you might want to use to understand policy implications on the economy worldwide.

I own an Oxford Dictionary of Economic Terms. It's useful if the media is talking about things I may not know, but you can look up many of the definitions online.

3) Understand there are many fields of economics to study these things. Each field gives a different theoretical and contextual framework, so be aware of the biases of each sub-group:

- Developmental economics (A. Sen's "Development as Freedom", Jeffrey Sachs are two names you'll hear thrown around in that field).
- Resource economics: H. Innis was a Canadian historian who developed the "staple theory" to understand the ebbs and flows of dealing with a resource based export economy. It might apply to Australia.
- and many, many more. I could go on. Ask if you need any further information.

I apologize for the length (and possibility of straying away from what you are looking for), but hopefully some of these suggestions will point you to what you're looking for.
posted by carabiner at 8:15 PM on November 26, 2007

wow, i forgot to hit spellcheck. i apologize..
posted by carabiner at 8:19 PM on November 26, 2007

Avoid thomas Friedman. He's like antithought. The best book about the global economy that is short and lucid is Panic Rules by Robin Hahnel. It's not malcolm gladwell, but at the end of it, you'll have a good sense of how the thing works.
posted by history is a weapon at 8:34 PM on November 26, 2007

I disagree with bitrot et al. Not because their points are wrong per se, but because your question makes it sound like you are less interested in understanding economics than in understanding the global financial system. The degree to which the monetarists are on point doesn't really matter in the small to understanding the wholesale repricing of risk that is going on (it does, however, in the large, as that's what informs the moves the central bankers make to straighten things out). Economics is bunk. Finance actually happens.

Unfortunately, there is no good book out yet that explains the current burrito, as far as I know. There certainly will be soon. Some Wall Street Journal reporters will sift through all the paperwork and legal fallout and write a really awesome book that explains the current goings on in a Den of Thieves or Predator's Ball style and it will be on all the "Best Of" lists (because business books are almost without exception awful, so just picking a good topic pretty much puts you on the list).

If you can't wait, though, there are a couple of things you can start with that will give you enough background to make sense of all the WSJ articles and finance blog posts. I'd suggest reading Against the Gods, because it gives you the long view of the management of risk and its a good read. Then I'd read one of the books about the mortgage markets in the 80s, or the S&L and junk bond scandals which are interrelated. Liar's Poker is the funnest to read but least substantive. This will basically take you through the development of mortage securitization and a bunch of other key crap and its an object lesson in the credit cycle thats well-documented, in recent memory, and intimately related to the current one. Finally, I'd read the Strouse biography of J.P. Morgan because its basically about the development of the modern Anglo-Euro-American financial system, which is at the core of this whole thing, but anchoring the book on the story of one dude with a weird nose makes it much more readable than some textbook about like the Federal Reserve.

On pre: yeah, read tea leaves before T. Friedman. I swear I could write a Perl script to produce his columns and truthiness would be conserved.
posted by jeb at 9:10 PM on November 26, 2007

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner. Also: the authors' NYT blog and how to get a signed bookplate. (I received one but my copy of the book disappeared when I loaned it. Bah.)
posted by bonobo at 9:17 PM on November 26, 2007

Supercapitalism might interest you.
posted by salvia at 9:52 PM on November 26, 2007 [1 favorite]

Steger's Globalization: A Very Short Introduction is, well, very short, but has a lot more rigour than some of the media-loved usual suspects and can be read within a few hours as abroad introduction to global economics. Jameson's The Cultures of Globalization is a similarly wide-ranging (though not as short) analysis of global trade ideologies. He plays a lot with the analyses of the framing of debates as bumpy/flat, north/south and east/west, etc. Cowen's Creative Destruction is a more formal economic treatment but he does look at multi-generational patterns of change in the free trade for media and service industries. Compton's East Asian Democratization is a multi-layered approach to the analysis of how undemocratic elites in some east Asian countries have both benefitted from and resisted "free trade" as part of their hegemonic processes. Finally, Jones' The European Miracle: Environments, Economies and Geopolitics in the History of Europe and Asia is a classic, extremely doctrinaire by-the-numbers economic argument for why what Jones describes as a prototypical European model of laissez-faire economic growth surged past contemporary pan-Statist Asian rivals. It's full of subtle and not-so-subtle analogies with modern trading ideologies.
posted by meehawl at 10:51 PM on November 26, 2007 [1 favorite]

SInce Jeb brought up the concept of risk, I would suggest The Black Swan. The book is excellent in its clarity about knowledge, history, and risk.

I'm adding Against the Gods to my Christmas list right now, thanks Jeb.
posted by herda05 at 11:56 PM on November 26, 2007

The problem with punditry (Op Eds, popular books etc.) is the tendency of hyperbole in lieu of a full analysis. I would recommend some economic development and international relations courses that are being podcasted instead of Thomas Friedman. Stanford seems to have a good set of intro courses in the IR section. If you are interested in print, The Economist is generally really interesting, but this has already been stated.
posted by Large Marge at 12:31 AM on November 27, 2007

For theoretical background on trade, you can look at Jagdish Bhagwati's Protectionism. Bhagwati's is one of the great trade economists, and the book is a lay discussion of the main ideas in his field of study. Note that it won't address any current topics, but it's very good for the intellectual underpinnings.

The blogs and podcasts available now are actually pretty interesting. Take a look through the EconTalk podcast archive for any topics that may interest you. Again, not terribly specific to the issues you mentioned in your question, but instead more intellectual underpinnings and a view into how economists actually think.
posted by chengjih at 1:52 AM on November 27, 2007

The best place to start is with a basic introduction to economics. Without that's it's almost pointless reading books and blogs on globalization in general: there's just way too much dubious axe-grinding and outright kookery, and it's fatally easy to fall into fallacies.

If you like audiobooks, I found The Teaching Company's Economics course excellent. Otherwise, try your local library and look at whatever introductory textbooks they have. The basic principles don't change too much, so don't worry about it being out of date.

Now regarding books on globalization, I've found the following very good.

In Defense of Global Capitalism is a very useful book about the advantages of globalization, packed with a lot of detail about what has actually happened.

Globalization and Its Discontents by Joseph Stilgitz is an insider account, from a Nobel-winning economist, of the problems of the global financial institutions like the IMF and the World Bank.

The Mystery of Capitalism: Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando de Soto is a fascinating look at both the strengths and the weaknesses of global capitalism.

Not really globalization-focussed, but Happiness: Lessons from a New Science is a book by an economist, concentrating on how aiming for an optimal economy can nonetheless harm overall happiness.

Regarding blogs, the best bet is to avoid them completely until you're familiar with the basics. If you absolutely must, it's best to at least mix blogs with opposing views so you can judge between them. On the right you have the popular Marginal Revolution and Greg Mankiw, though that's much less interesting since he disabled comments. On the left you have the somewhat contrarian development economist Dani Rodrik, and the group blog Econospeak.

Reading all those blogs may just leave you hopelessly confused rather than well-balanced though.
posted by TheophileEscargot at 5:08 AM on November 27, 2007 [2 favorites]

Many of the books listed above are interesting, but for the Aussie perspective sien was on the money with Ross Gittins.
Twice a week in the SMH or the Age.
Read his back columns online for the last 12 months and you will be an expert on economics compared to everybody else who isn't an economist.
He is (or at least was) required reading for school level economics because he writes for a lay audience, but he is still very insightful.
Best of all, he is at least somewhat responsive.
A few months ago I sent him an email asking why we needed interest rate rises when surely the big rise in oil would cool the economy. Two weeks later he did a column on it.
posted by bystander at 1:49 AM on November 28, 2007