• Cocktail and Dinner Party Economics
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  • Dinner Party Economics

Economic Encyclopedism

Few  people would claim to know very much about economics, perhaps seeing it as a complex and esoteric subject with little relevance to their everyday lives.   Introduction to The Economics Book: Big Ideas Simply Explained by DK (with contributors and Niall Kishtainy acting as the consultant editor)   If I ever teach a course in the History of Economic Thought, I would use this book as a text.  I love the structure (I became a fan when I bought  the similar Philosophy Book) because it suits how I think. (In fact, my book Cocktail Party Economics: The big ideas and small talk about markets has a similar approach.)  The chapters are limited to one big idea,  with some pithy quotes from a famous economist.  I guess great minds do think alike!  I really loved their table of context (that’s right context not content) which puts that idea in historical perspective. Short and sweet.  Most ideas have a biography in a box of the famous economist who was the key thinker.  (Like the gossip columns in my book but mine are more gossipy.)  They also have a flow chart which outlines the main components of the point for a fast visual explanation.  If that isn’t clear, then old-fashioned paragraphs finish off the explanation.   Unlike my book, sections are colour coded with lovely photographs to complement the time of the idea’s genesis.  It is the kind of book you can read a chapter at a time and not worry about losing the plot.  If you read this book you will know more about Economics than most!    

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Great Balls of Money

“I am not interested in what you think you know about baseball, or what you think I don’t know about it. I am not interested in guts or heart or determination or anything else the fans or what your mothers love about you. I’m interested in getting you on base. If you can do that, we win.” Taken from MONEYBALL (the movie pg 75 of script.) Economists  always teach how consumers maximize utility (happiness) subject to a budget constraint or how firms minimize costs subject to a production level.  These are known as optimization problems.   It seems to me that Moneyball is a combo of the two.  The Oakland A’s set out to maximize their wins subject to a salary cap much like a consumer going shopping except the Oakland A’s are a firm trying to make a profit–and wins help the bottom line. Moneyball also uses the concept of exchange or trades to solve this problem. Statistically overvalued players are traded for undervalued players much like overvalued currencies or stocks are bought with overvalued ones.  Players are traded to get the right mix that accomplishes the goal of maximizing wins. Furthermore,  these trades can include money but not necessarily.  In other words, the trades are partly barter.  The movie showed a multi-player trade which beautifully demonstrates the nail-biting  concept of arbitrage and coincidence of wants  which is the rationale for why money is the common medium of exchange in the wider economy. Who knew that baseball could teach us so much about Economics?

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Everything you always wanted to know about Prosperity (but were afraid to ask)

It is precisely because there is so much poverty, hunger and illness that the world must be very careful not to get in the way of the things that have bettered so many lives already– the tools of trade, technology and trust, of specialization and exchange.  It is precisely because there is still so much further to go that those who offer counsels of despair or calls to slow down in the face of looming environmental disaster may be not only factually but morally wrong.   Matt Ridley in The Rational Optimist on page 354 This book had me at ‘feeding the nine billion’! I am a naturally optimistic person and The Rational Optimist: How Properity Evolves gives credence to my inclinations.  I have always thought that humans were capable of solving problems and this book hammers that nail  firmly in place. His basic thesis is as follows.  Humans have the ability to specialize and trade.  This allows more bang for an economic buck and we are never going back to pre-barter days.  Furthermore, since the advent of fast communication, ideas now have sex with one another resulting in an explosion of new technologies.  No DNA to slow things down. This fecundity is the reason so much of the world is better off than it was fifty years ago never mind one hundred years ago.  Except for a few cases of governmental disasters (for example the policies of (Mao,  Stalin, and Mugabe) the average human being would never trade places with their ancestors, even if that ancestor was very wealthy.  For the poor, things have gotten even better. This book is a must read for any leftwing person just so they know the arguments of free market types.

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