Economics in Two Lessons, reviewed

The first proper[1] review of Economics in Two Lessons has appeared, in Inside Story. It’s by Richard Holden[2] and really gets the point of the book.

The final paras:

Chapters twelve to sixteen deal with what policymakers should do, and here Quiggin’s passion is evident. Moreover, what comes through perhaps more than anything is a sense of balance. There’s what we might want to do and then there’s what the immutable laws of economics — so neatly laid down in the preceding chapters — will let us do. Whether it’s the distribution of income, full employment, or protecting the environment, constraints exist.

But those constraints offer guidance. Quiggin notes, for instance, that “the best way to help poor people, at home and abroad, is to give them money to spend as they see fit, rather than tying assistance to particular goods and services. In other words, it is better to fix the inequitable allocation of property rights in the first place than to fix the resulting market outcome.” Whatever the topic, the framework disciplines and sharpens the policy thinking.

There is little doubt that Quiggin’s Economics in Two Lessons will be an instant classic and feature on university reading lists around the world. It should also be compulsory reading for policymakers and public commentators, who all too often lack a framework for thinking clearly about the costs and benefits of markets. The good news is that Quiggin has one — and he’s happy to share.

It’s certainly encouraging to get such a nice review first time. Fingers crossed for the next one.

fn1. There have been some brief notices in blogs, and a few critical responses from the Mises Institute, not really addressing anything in the book

fn2. Disclosure: we are friendly colleagues in the economics profession, and have discussed working together on joint research projects.

4 thoughts on “Economics in Two Lessons, reviewed

  1. That part of the review is excellent! That advice about the policy approach to inequality is timely. The working poor in Australia, and other OECD countries, need this approach urgently. We no longer talk the vicious cycle of poverty as issue in OECD countries but there is a “well of despair” that the working poor face every day.

  2. John, I’ve read economics in two lessons twice now and, as I’ve said previously, I think it’s great. It’s obviously pitched towards an American audience and for that reason almost all of the case studies are American. I don’t mean that as a criticism and I think that’s fine, but I was wondering whether any Australian edition would have Australian case studies. I could think of many as I was reading the book. I suppose that would involve a fair amount of additional work all for that sake of appeasing our parochialism.

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