Lately, it seems, a growing proportion of my time, and my patience, is being commandeered by people rancorously imposing their views of what’s wrong with the U.S. and the economy and what our leaders should be doing differently. And it’s surprising in how many cases these pontificators drop the names of various economists and economic theories to bolster their opinions. It caused me to think I should equip myself a little better for such tirades, acquaint myself with some of the basics of economics, in short, read a book about economics.
I’m not all that sectarian or discriminating about what I read, and knowing little about economics, I figured my choice needed to be “easy,” and if it were also popular, as in bestselling, I too would be able to drop names and titles and concepts: to counterpontificate, as it were. So I picked up Freakonomics, because it was already sitting on the shelf, i.e., was free, a rational cost-benefit decision in economic terms.
The economist of the author duo, Steven Levitt, is described as “rogue” in the subtitle. I think that should have been “irreverent,” or “quirky.” (Yay, I’m pontificating already.) He’s from the Chicago School. Oooooooo, that’s one of the names all the others are dropping. I must be on the right track. He’s exploring the hidden side of everything! Everything? Well, maybe not everything, but perhaps a modicum of hyperbole is permissible in the name of book promotion. And what’s the first thing Levitt does? He posits a cause-effect link between Roe v. Wade and a drop in crime in the 1990s. Wait a minute. Chicago School? A socially liberal court ruling? Of course, Levitt didn’t say he supported Roe v. Wade, nor did he say he opposed crime. He held neutral on the social issues while he applied his craft. And thus did I learn in the first pages the main things I would learn from Freakonomics:
- Economists are all about measuring
- When you actually measure things, you sometimes learn some very unexpected lessons
- More things are subject to measurement than we might think
- You can measure the same thing in different ways, and therefore draw different conclusions about it
- If they’re not grounded by measurement, your pronouncements probably amount to little more than “claptrap,” or “bluster,” or how about “fearmongering,” or “propaganda!”
So I did learn something, and I think Freakonomics was worth my time, and I urge everyone to read a book on economics, any book. But there’s more. This book exposed me to enough unfamiliar people and terms that it piqued my curiosity.
About other economists:
Other “schools” of economics:
And all those splendidly named concepts that economists traffic in:
- Supply-side economics?
- Efficient market hypothesis?
- Consumption theory?
- Say’s Law?
- The Phillips Curve?
The path of least resistance, here at the beginning at least, was Wikipedia,* and I spent hours entering keywords, clicking on links and then more links, and scratching my head in bewilderment at all the assumptions, what-ifs, and variables that economists attempt to understand and master. Several patterns began to emerge after a while, which are pretty important. One is that of all the theories and hypotheses, I didn’t find a single one that worked all the time. Likewise, even the most successful economists’ theories don’t get applied as the economist envisioned, broadly enough or for long enough to definitively establish their efficacy. They get diluted and distorted by political and social considerations. Why don’t economists quantify this partial application phenomenon and factor it into their models? It all made me wonder how anyone can really say what works and what doesn’t. Maybe everything works. Maybe nothing works. Maybe some things work some of the time, and if that’s the case, what’s to be gained by an unyielding adherence to any one theory? Maybe a lot of babies get thrown out with a lot of bath water. Maybe all economists are somewhat frustrated much of the time.
The “maybes” are innumerable, and each one represents a thousand grains of salt, which the economists will tell you. Certainly Levitt does, in his way. If trained, motivated economists acknowledge the limitations of their discipline, why is it that the aforementioned pontificators sling half-truths and misinterpretations with such abandon? Human nature? Is that what we’re like? If so, how did we get this far? Here is a starter list of economists, alphabetical so as not to betray any bias. I invite you to explore their respective contributions to economics and public and fiscal policy.
Keynes, John Maynard
Pigou, Arthur Cecil
von Mises, Ludvig
*Wikipedia is a good example of laissez-faire principles at work. It is also a nice first-round convenience but needs corroboration from other sources.
Jim Bessent is an Associate Editor at AMACOM. He works in the production department and sees finished manuscripts through the various stages of production: copyediting, proofing, indexing, all correction cycles, etc. Prior to joining AMACOM, Jim worked as an editorial freelancer and had a small collectibles business. Visit our website for freelance editorial opportunities.