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Economics in Two Lessons: Chapter 1

February 19th, 2018

Thanks to everyone who commented on the draft introduction to my book, Economics in Two Lessons. The revised introduction is here. Feel free to make further comments on it if you wish.

Moving along, here’s the draft of Chapter 1. Again, I welcome comments, criticism and encouragement.

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  1. Newtownian
    February 20th, 2018 at 11:40 | #1

    Thanks for the opportunity to comment again John. I guess my reaction is as before. The introduction looks good in respect to current conventional western economics and its paradigms. But so far it still reads as if Economics was only discovered in the 1850s.

    This contrasts with equivalents in hard science. Take Astronomy for example. An excellent introductory but comprehensive book I have is dominated by current paradigms and explanations of the mechanisms complemented by of course spectacular pictures. But it also uses the history of Astronomy to illustrate lessons of how we got to the current point of knowledge and why it is incomplete and where it is incomplete e.g. the massive gaps in our knowledge/mysteries. For example Dark Matter and Dark Energy and the inability to reconcile quantum mechanics and general relativity. These uncertainties dont detract at all from current understanding but just add to the sense of wonder this book imparts.

    For example do you explain the place of Marxist economics, how it differs and where it has fallen down or appears to be unworkable?

    This Astronomy example makes me wonder about another chapter I would also hope to see. Do you include a discussion of Economic uncertainties and knowledge gaps and problems? Obvious topics would be externalities and the poor track record of economics to incorporate them in a way that our way of life does not threaten the planetary ecosystem, and the gap between ecological and environmental economics for which there is no equivalent in hard science but is an impass needing to be addressed perhaps based on understanding the merits and limitations of their different perspectives.

    But perhaps I am wrong and such history and detailing of uncertainties is in further chapters. Some time back you were discussing economic history notably in respect to the thoughts of John Locke, something very relevant to Oz given Terra Nullius which seems to have been justifed using his ideas. Locke’s ideas and philosophical inconsistencies seem to still be the primary problematic basis for ‘private property’ and much else, without which finance and capitalism are pretty meaningless and the rationale for the US is on shaky grounds. e.g. https://en.wikipedia.org/wiki/John_Locke#Religious_beliefs https://en.wikipedia.org/wiki/John_Locke#Religious_beliefs ….. How does this impact on the rationale for future economics as the current emerging generations find themselves in permanent debt in part because economics is grounded on wealth being owned by the powerful>

    Perhaps you could address my concerns by providing us with links to the book’s detailed contents and the draft index?

  2. John Quiggin
    February 20th, 2018 at 13:06 | #2

    @1. Thanks for this. I like the suggestion of providing a table of contents. Index hasn’t happened yet, but I will add that too.

    Responding to the substantive points, I’m working now on fundamental uncertainty and its applications to things like the Precautionary Principle


    I need to work out how to fit this in to the book.

    I’ve had my say on Marxist economics and won’t revisit it in the book


  3. hc
    February 20th, 2018 at 17:37 | #3

    It reads well. The material on comparative advantage is a very practical application of the idea of opportunity cost that is informative because, as Samuelson pointed out, the principle is easy to state but widely misunderstood. A good practical example is very revealing. I assume you will make these points in the later section.

  4. hc
    February 21st, 2018 at 07:50 | #4

    The sharp eye of Aaron Patrick has identified your reference to Marx and Engels in this morning’s AFR page 5. You have been loosely assigned to the “anti-business” sin bin for doing this – along with Craig Emerson, Emma Alberici and Michael West. I guess you can derive comfort from the fact that AFR columnists keep up to date with new postings on your blog.

  5. John Quiggin
    February 21st, 2018 at 15:08 | #5

    @4 As I no longer read the AFR, I rely on friendly alerts. I’ve tweeted back at him, and also Helen Razer, who attacked me from the opposite direction.


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