Bad Economics and the Rise of Inequality

Book - 2017 | First edition.
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Here is a bracing deconstruction of the framework for understanding the world that is learned as gospel in Economics 101, regardless of its imaginary assumptions and misleading half-truths.

Economism: an ideology that distorts the valid principles and tools of introductory college economics, propagated by self-styled experts, zealous lobbyists, clueless politicians, and ignorant pundits.

In order to illuminate the fallacies of economism, James Kwak first offers a primer on supply and demand, market equilibrium, and social welfare: the underpinnings of most popular economic arguments. Then he provides a historical account of how economism became a prevalent mode of thought in the United States--focusing on the people who packaged Econ 101 into sound bites that were then repeated until they took on the aura of truth. He shows us how issues of moment in contemporary American society--labor markets, taxes, finance, health care, and international trade, among others--are shaped by economism, demonstrating in each case with clarity and #65533;lan how, because of its failure to reflect the complexities of our world, economism has had a deleterious influence on policies that affect hundreds of millions of Americans.
Publisher: New York : Pantheon Books, [2017]
Edition: First edition.
Copyright Date: ©2017
ISBN: 9781101871195
Branch Call Number: 330 Kwa
Characteristics: xvi, 237 pages : illustrations ; 22 cm
Additional Contributors: Johnson, Simon


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Aug 04, 2018

For a society to become rich, competitive markets are not enough; there must also be pluralistic, democratic political institutions that prevent elites from monopolizing power, suppressing competitors, and seizing an excessive share of resources. In this model, inequality is not a harmless by--product. . .[it] creates the risk that economic elites will dominate the political process and use their power to cement their position in society.

Aug 03, 2018

Within a rich country, in short, the primary winners [of foreign trade] are people who are already well-off, and therefore one result of increased trade with poor countries is greater inequality within the US workforce.

Aug 01, 2018

The current [health] system provides widespread but not universal access to health care by (a) selling insurance in "competitive markets," (b) forcing everyone to buy it, (c) providing subsidies to people who can't afford it, (d) limiting the policies that insurers are allowed to sell, (e) restricting their ability to set prices, (f) subsidizing employer-sponsored plans because companies can get better deals than individuals, (g) penalizing people who get plans that they don't like, (h) reshuffling money among insurance companies.

Surely, there must be another way.

Jul 31, 2018

a prominent tax expert has found that tax rates on capital gains have had little impact either on savings or on economic growth.

According to Economics 101, this should be impossible.

Jul 29, 2018

[Economism] enabled conservatives to say that they were "pro-market" rather than "antigovernment."

This confluence of ideas and interest is the fundamental reason for the rise of economism.

Jul 29, 2018

Ideas matter. . . . Ideas gain power precisely when they become useful to an important segment of society - when they support the interests of that group. . . .They must be refined into easily understood form, applied to the issues that people care about. . . .That. . . requires money and manpower, which will rarely be expended without the expectation of some return.

Economism matters today. . .because it is one important vehicle that interest groups have used to pursue their objectives during the past half-century.

Jul 29, 2018

"I suddenly saw how free-market economics provided the maximum good to the maximum number, and I became convinced that if I had the opportunity, I'd like to serve in public office and further the cause of the free market." - Jeb Hensarling (R) Texas, chair of the House Financial Services Committee.


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Jul 28, 2018

Delightfully lucid presentation of how over-simplified notions about. how the economy works distort public discourse.

Kwak cleared up the puzzle of why people like Paul Ryan, (R-WI), espouse the politics they do. Many (not all) people like Ryan genuinely see these policies as a way to maximize the public good.

Kwak's chapter on finance, capital, and banking (#7, "Capital Unbound") is particularly worthwhile as a succint review of how faith in Economism produced the Great Recession.

NFreaderNWPL Mar 10, 2017

The "bad economics" of the title refers to overconfidence that the most simplified models in economics apply directly to the real world. The economist Noah Smith refers to this ideology as "101ism." Be sure to check out "Filthy Lucre" by Joseph Heath for another engaging book about economic literacy.

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