W.W. Norton & Co., 2003
Before roundly endorsing Charles Wheelan’s Naked Economics as the most entertaining and the most accessible book on the subject of economics I’ve ever read, I should make clear that I’ve never actually read any books on the topic, unless you count Freakonomics, also anomalous in its accessibility and popular appeal. Unlike Freakonomics, in which Steven Levitt seeks to explain social phenomenon with economic principles, Wheelan’s Naked Economics lays bare the economic principles themselves, making them palatable to readers like me, who would normally steer clear of the subject. But don’t call it "economics for dummies," as Wheelan himself flatly denies the association at the outset:
"This book is not economics for dummies; it is economics for smart people who never studied economics (or have only a vague recollection of doing so). Most of the great ideas in economics are intuitive when the dressings of complexity are peeled away. That is Naked Economics."
Before roundly endorsing Charles Wheelan’s Naked Economics as the most entertaining and the most accessible book on the subject of economics I’ve ever read, I should make clear that I’ve never actually read any books on the topic, unless you count Freakonomics, also anomalous in its accessibility and popular appeal. Unlike Freakonomics, in which Steven Levitt seeks to explain social phenomenon with economic principles, Wheelan’s Naked Economics lays bare the economic principles themselves, making them palatable to readers like me, who would normally steer clear of the subject. But don’t call it "economics for dummies," as Wheelan himself flatly denies the association at the outset:
"This book is not economics for dummies; it is economics for smart people who never studied economics (or have only a vague recollection of doing so). Most of the great ideas in economics are intuitive when the dressings of complexity are peeled away. That is Naked Economics."
Wheelan weaves economic theory and real world examples to create a surprisingly compelling narrative of what some might ordinarily consider rather dry material. He starts at the Berlin wall, where in 1989 Coca Cola Europe made a decision to just hand out free Cokes to the East Berliners. It was a product these people had never seen before, and while giving it away may have seemed like the furthest thing from an economically-sound prospect, it was quickly revealed to be a brilliant gesture. By 1995, per-capita consumption of Coca Cola in the former East Germany matched that of West Germany, where the soft drink was already popular.
So begins the author’s discussion of financial markets, from which he launches into a fascinating chapter on the power of incentives pinned largely to a poignant study of the near extinction of the African black rhino resulting from the strong black market demand for the animal’s tusk. Wheelan’s examples are similarly compelling in chapters on other economic principles as well, such as creative destruction, human capital, and fiscal policy and the Federal Reserve Bank. Wheelan succeeds in entertaining in his presentation of material that in other hands would likely induce narcolepsy or at best drowsiness.
So begins the author’s discussion of financial markets, from which he launches into a fascinating chapter on the power of incentives pinned largely to a poignant study of the near extinction of the African black rhino resulting from the strong black market demand for the animal’s tusk. Wheelan’s examples are similarly compelling in chapters on other economic principles as well, such as creative destruction, human capital, and fiscal policy and the Federal Reserve Bank. Wheelan succeeds in entertaining in his presentation of material that in other hands would likely induce narcolepsy or at best drowsiness.
In a chapter on the importance of trade and the necessity of globalization, Wheelan illustrates his points by asking his readers to consider the alternative, a world without trade:
"You would wake up early in a small, drafty house that you had built yourself. You would put on clothes that you wove yourself after shearing the two sheep that graze in your backyard. Then you would pluck a few coffee beans off the scraggly tree that does not grow particularly well in Minneapolis – all the while hoping that your chicken had laid an egg overnight so that you might have something to eat for breakfast."
"You would wake up early in a small, drafty house that you had built yourself. You would put on clothes that you wove yourself after shearing the two sheep that graze in your backyard. Then you would pluck a few coffee beans off the scraggly tree that does not grow particularly well in Minneapolis – all the while hoping that your chicken had laid an egg overnight so that you might have something to eat for breakfast."
Naked Economics delivers what it promises to: a basic understanding of core economic principles. And more than that, it’s a good read. If you’re like me and just want to wrap your head around what’s going on in today’s economy, there’s no better place to start than Naked Economics.
