Title: "Naked Economics: Undressing the Dismal Science"
Author: Charles Wheelan
Publisher: Norton, 2010 (revised and updated from 2003); 354 pages; $16.95
When things affect us personally, we crave to understand them. To wit, economics became a much sexier topic than ever before during the recession, as almost everyone was either affected by it personally or was no more than a single degree of separation away from someone else who was. But the reality is that economics affect us every day, whether or not we are in financial distress or aware of the topic.
To the extent that we spend our time shopping, planning for retirement and working, we spend our time participating in the economy. Understanding the science of economics, then, is an essential element of the smart person’s quest for knowledge — no matter where the market is at or headed.
But without the personal distress element, it’s tough for economics to pique our Web-and-TV-disabled attention and interest.
Bringing sexy back to economics, though, comes Charles Wheelan with his 2010 edition of the classic page-turner "Naked Economics: Undressing the Dismal Science," updated to address the recent economic crisis and ask some hard questions about America’s financial future. I sat down for a casual flip-through of this book and literally could not stop reading it until I was done.
As Wheelan himself posits in the epilogue: "Economics offers insight into wealth, poverty, gender relations, the environment, discrimination, politics … How could that possibly not be interesting?" Indeed.
The compelling nature of Wheelan’s "Naked Economics" starts off with a proposal and a promise from the author. His proposal? That the reader rethink what economics actually is — "a powerful, and not necessarily complex, set of analytical tools that can be used to … make sense of the world" — past, present and future. His promise: Read his lips — no charts, graphs or equations. In an economics book. Who’d have thunk it?
Even more unexpected, though, is Wheelan’s expression that economists are aware of their profession’s failure at predicting the recession, or the scope thereof, and the fact that economics is a living, evolving science.
Wheelan then defines what’s "naked" about his economics, declaring that "most of the great ideas in economics are intuitive when the dressings of complexity are peeled away." Ah, so.
Wheelan commences to unpeeling in the first chapter, The Power of Markets: Who feeds Paris? — the rhetorical question insider economists pose to illustrate the vast number of things that must take place and interact successfully, around the clock, to fuel a modern economy, from the South Pacific fisherman to the chef on the Rue de Rivoli.
He explores the enhancements to all of our lives that arise from the inevitable advances — from immunization and disease control to personal electronic technology — due in no small part to our market economy.
He goes on to break down the concept of maximizing utility, maximizing profits, market amorality and supply-and-demand, and with illustrations ranging from LeBron James’ salary as compared to Rush Limbaugh’s, Nepalese laborers cutting the grass at the Kathmandu airport with sickles instead of mowers, Viagra and selling Microsoft shares on the NASDAQ. (Yep, it’s that kind of book. And I mean that as a high compliment.)
Wheelan proceeds in this completely entertaining fashion through chapters on incentives and how they impact human behavior from driving to poaching, an appropriate two chapters on government and the economy.
Those chapters include an explanation of externalities that includes another economist’s well-reasoned (to me!) argument that all parents with small children should be segregated to create a child-free zone on commercial planes, and the economics of information, including economists’ explanation of discrimination and America’s health care crisis — both of which have their roots in an "asymmetry of information."
Black males may be discriminated against based on an inaccurate assumption that they are more likely to have a criminal record; "doctors have an incentive to perform expensive medical procedures (insurance payments) and you have no reason to disagree (because the insurance company is paying).
Wheelan is both engrossing and comprehensive. He covers productivity and human capital, the financial markets, the Fed, global trade and international economics, among other topics.
I won’t suggest that "Naked Economics" is quite as anti-highbrow as a table-flipping episode of "Real Housewives," or a perusal of those LOLcat animal pictures online — you know, the ones with the bizarre captions, like "I can has cheezburger?"
However, his treatment of the topic does live up to the title, stripping back the intimidating, "snooty-llectuality" so many associate with the field and showing us exactly how deeply economics affects and effects every one of us and our everyday lives.