In the graveyard of economic ideology, dead ideas stalk the land. This title explains how these dead ideas walk among us - and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future.
"Since 1946, Henry Hazlitt's bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can't explain why they often fail so badly--or what we should do when they stumble. As Nobel Prize-winning economist Paul Samuelson quipped, "When someone preaches 'Economics in one lesson, ' I advise: Go back for the second lesson." In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes--and failures--of free markets. Economics in Two Lessons explains why market prices often fail to reflect the full cost of our choices to society as a whole. For example, every time we drive a car, fly in a plane, or flick a light switch, we contribute to global warming. But, in the absence of a price on carbon emissions, the costs of our actions are borne by everyone else. In such cases, government action is needed to achieve better outcomes. Two-lesson economics means giving up the dogmatism of laissez-faire as well as the reflexive assumption that any economic problem can be solved by government action, since the right answer often involves a mixture of market forces and government policy. But the payoff is huge: understanding how markets actually work and what to do when they don't. Brilliantly accessible, Economics in Two Lessons unlocks the essential issues at the heart of any economic question." -- prové de l'editor
The book examines the persistence of outdated economic ideas, particularly those surrounding market liberalism, which were exposed as flawed by the recent financial crisis. It argues that these "zombie" ideas continue to influence public opinion and policy, posing risks for future economic stability. The author, John Quiggin, advocates for a reevaluation of economic theory, suggesting that merely reverting to Keynesian principles won't suffice. The local edition provides additional insights specific to the Australian context, emphasizing the need for a robust alternative to prevent future crises.
The book addresses the pressing issue of catastrophic climate change, deemed a 'super-wicked' problem due to its complexity and urgency. It highlights the overwhelming scientific consensus on the threat and the availability of technologies necessary for climate stabilization. Despite this, the response from policymakers and the public has fallen short, emphasizing the disconnect between knowledge and action in combating climate change.
The book explores the impact of neoliberalism on Australian economic policy since the early 1980s, highlighting key elements such as privatization, financial deregulation, and micro-economic reforms. It examines how these ideologies have shaped the country's economic landscape and discusses the broader implications for society and governance. Through critical analysis, the author delves into the successes and challenges posed by these policies, offering insights into their lasting effects on Australia's economy.
The book explores the evolution of economic analysis regarding choice under uncertainty, highlighting the limitations of the expected utility (EU) model and the criticisms it faced from psychologists. It discusses how individual decision-making often contradicted EU predictions and how simpler models like mean-variance analysis became prevalent in finance. The narrative shifts to the 1980s, when new generalizations of the EU model emerged, effectively addressing previous inconsistencies while maintaining essential principles like transitivity and dominance.