Thursday, April 8, 2010

Book Report: The Undercover Economist

The 8th book I've read this year was The Undercover Economist by Tim Harford. I initially read Tim somewhere on the internet and liked his writing style enough to buy his book.

The Undercover Economist was thoroughly enjoyable although I wanted to understand it so I took my time reading it. In addition, some of it I had to take with a grain of salt. I don't know that any book will convince me that markets are inherently free and that taxes are simply inefficiencies in markets. Experience would dictate that markets are under constant flux because of both government and market participants and taxes can be ways of either correcting for inefficiencies of market structure, forcing participants to address externalities, and (yes) inefficient in and of themselves. He glosses over the example of how Singapore provides health care to its citizens but that seems to me the crux of the type of question his book can help to answer: requirements by governments that in effect create a market. How can this market be created so that consumers win and no monopoly rents can be generated?

That being said, this book was excellent at pointing out ways in which economics can be useful in explaining why prices are what they are (scarcity power driving up rents, barriers to entry, extracting information, and even auctions to name a few) and other such interesting economic phenomena (like congestion pricing - which is good!). It really gave me a lot to think about in how to think about a lot if that makes sense.

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