3/22/2023 0 Comments Economix book review“Your choices reveal your preferences,” Hennessey writes. At the end of the chapter, Hennessy offers an amusing example of cost and choice, wryly noting that “Anyone who’s ever been in an exclusive relationship intuitively understands the concept of opportunity cost.”Ĭhapter four is about preferences, rationality, and thinking at the margin. If you reduce economics to dollars, “you’re thinking like an accountant.” Once you realize what matters is “lost opportunity, then you’re starting to think like an economist.” Our choices are structured by our alternatives our incentives are shaped by the ephemerality of low-hanging fruit. Hennessey disabuses his readers of the notion that economics is about money. Next, we get an overview of two very important ideas: opportunity cost and diminishing marginal benefits. But this causes calculational chaos in markets. Politicians, always promising free stuff, frequently mess with prices. Our decisions “are often motivated by economic concerns–not by money necessarily, but by an intuitive understanding that resources are scarce, trade-offs are necessary, and choices matter.” Just so. “Voluntary and mutually beneficial exchange” is how markets “satisfy people’s needs and allocate resources fairly, efficiently, and without coercion.” Readers also learn about the universality of economizing behavior. Exchange is central to economics, as Hennessey recognizes. The second chapter is a crash course in trade theory. He has greater access to essentials, like good food and quality housing, and enjoys a life expectancy that is essentially double what it was at the founding of the country.” Hennessey explains foundational economic concepts while opening readers’ minds to the Great Enrichment. Under capitalism, man’s struggle against scarcity results in a magnificent economic bounty: “The poorest American in 2022 is hundreds of times wealthier in real terms than the wealthiest Americans in 1776. That’s the heart of economics.” Understanding tradeoffs is crucial to appreciating Adam Smith’s “invisible hand” metaphor. Hennessey is surely correct that economists make economics too complicated. I hope we can get copies of this book in the hands of every high school senior in the country.Ĭhapter one dispels the fog of obscurantism that surrounds economics. It’s something much more important: an everyman’s introduction to how property rights, prices, and profits and losses make the world go ‘round. I don’t mean it’s an Econ 101 text of the kind college freshmen wearily slog through. Visible Hand is the elementary economics book we’ve been waiting for. Over the course of 200 entertaining pages, he proves it. Yet he’s managed to become the Wall Street Journal’s deputy op-ed editor, so he likely knows a thing or two about markets. Until fairly recently, he was quite intimidated by the dismal science. He has no experience in business, accounting, or finance. By his own admission, Matthew Hennessey is an unlikely author of an economics book.
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