So no ripping, and lots of riding. And lots of summer reading to pass along to co-counter-conspirators. First, I'm delighted to have found a book good enough to add to our Books and Media page. It's something I've been seeking for quite a while, in response to many requests from readers -- a good college-level introductory economics principles textbook. The Economic Way of Thinking by the late Paul T. Heyne with Peter J. Boettke and David L. Prychitko fills the bill. It is truly a principles book -- thinking of economics not as a set of institutional solutions, but (as the book's title implies) a set of philosophical tools for thinking rationally about choices in organizing individual and collective human activity. It almost entirely avoids political and social preconceptions about how such choices should be applied in actual institutions and policies. When it talks about institutions and policies at all, it does so with a thoroughgoing skepticism and a deep respect for the law of unintended consequences. Suffice it to say that this book will never be used in any Ivy League econ courses. This is great stuff. Get it!

I also read Economics and Its Enemies: Two Centuries of Anti-Economics, a sweeping survey of critiques of economics by William Coleman, an econ professor at (believe it or not) the University of Tasmania. Coleman's purpose is, unashamedly, to defend economics from its critics (of whom Paul Heyne, the author of the first book, is definitely one). He does his best work taking on the most superficial critics -- the ones who fault economics for being "too rational," "too selfish," and "too anti-environmental." He's less effective in taking on -- or even engaging -- deeper and more trenchant criticism, such as that economics is "too abstract" and "too mathematical." He waves away the critique that economics has no real-world predictive value -- and so entirely avoids the issue that political policies derived from economic theory may not be effective. He spends a great deal of energy toppling critics who find economics "too liberal" or "too conservative," but he fails almost entirely to even acknowledge the issue that I spend the most time on here -- the critique that economics has been "weaponized" as a statist political tool. He speaks at length of the Stalin era in the former USSR in which economics was suppressed and economists were persecuted, and economic policy was taken up entirely by politicians and engineers. That was an era both of horrors, and of horrible economic policy. Yet he doesn't talk about the horrible economic policies that were put in place in other countries when card-carrying economists were making policy. Save your money on this one.

On a lighter note -- and just so you won't think I spend all my spare time reading economics texts -- I highly recommend Positively Fifth Street, by James McManus. It's the amazing story of a Chicago academic who goes to Las Vegas to cover Binion's World Series of Poker for Harpers -- and ends up almost winning it. It's interwoven with an astonishing story of murder, sex, corruption and internecine warfare in the Binion family, one episode of which, en passant, offers a most interesting paradigm for thinking about monetary policy (okay, I do spend all my spare time reading economics textbooks). At one point one of the Binion heirs orders the manufacture of $125 million in large-denomination poker chips -- and the implication is that it was for some purpose other than simply providing a medium for gambling in the casino. Ostensibly, chips in circulation -- which are as good as cash in Las Vegas -- are backed by customer money or debt on deposit with the issuing casino, in what amounts to a "currency board." But, of course, the casino could simply make as many chips as it wants, and its executives can spend them however they wish -- much as central banks can print as much money as they want, and governments can spend it however they wish. This miniaturized example of money issuance in action strips the process of all its grand institutional trappings, and allows you to see money for what it really is -- chips in circulation -- and the Fed for what it is -- a casino. Economics microcosms aside, this is an outstanding summer read -- go for it!

Posted by Donald L. Luskin at 1:22 PM | link    

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