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I saw this book (or books, volumes on micro and macro) in the bookstore, and decided to check it out (literally; go library! Though I had to be tricky and lucky with call number to find the second volume, which wasn't coming on a simple title search). For me it was mostly light entertainment; I already knew most of the material, though I did get a couple things out of it. And if you've ever taken a good introductory class in micro and macro, from a teacher not biased too far to the right, it probably taught you a lot more. But if you want to learn or go over the basic concepts in a light fashion, I can recommend these books, both in material and position. It's what I think of as mainstream economics, meaning *not* conservative/libertarian laissez faire but enlightened mixed economies, both market friendly and open to market failures.

The order of content might be unusual; both books build up from simple cases. The micro book starts with the assumption of optimizing individuals, and talks about the decision theory of one individual, then game theory and the interaction of a small number of individuals, and only then about markets and the ideal interaction of $BIGNUM individuals. And it quickly sets up the big question: "Under what circumstances does individual optimization lead to outcomes that are good for the group as a whole?" And it talks about the benefits of trade and comparative advantage and how supply and demand curves work, but also the pitfalls of adverse selection, the prisoners dilemma, asymmetric information. It notes the limitations of economic Pareto efficiency, being necessary but far from sufficient for good outcomes. Competitive markets are awesome, but markets aren't always competitive. How taxes end up getting distributed among buyers and sellers (it largely doesn't matter who you put a sales or payroll tax on; elasticity will pass the burden around.)

Things I learned about:
* Hotelling's Law and why businesses often cluster, like hot dog stands in the middle of a beach rather than spaced out. The book actually just mentioned it in passing, leaving me to think about it then look it up.
* How driving can be a prisoner's dilemma. I sort of knew this, but gained new clarity. Given traffic mixed between cars and buses (or streetcars), driving will always be a dominant strategy as far as speed goes, always faster than the buses. But if everyone drives, you get rush hour congestion. So cars can invade a high quality bus or streetcar system due to individual preferences yet still lead to a worse outcome arguably worth suppression.
* Auction types and how they're equivalent. Ascending auctions and sealed-bid 2nd price auctions both encourage one to bid one's true value, but will lead to the winner paying only as much as the second highest bid; descending auction and sealed-bid 1st price auctions lead to the top bid being paid, but also to that bid being lower than the winner's true value. Which to run? For the auctioneer it often doesn't matter, but I'd guess the first is psychologically less annoying for the bidders.

The second book also builds up. One country, two trading countries, the world. Here, there are two big goals: to explain how economies grow, and why they collapse, with the holy grail of sustained growth without crashing. Again, it's mainstream (or mid-century mainstream, anyway), combining classical views over the long term (creative destruction! trade is just like advancing technology! jobs get made despite massive changes in the labor force!) with Keynesian views over the short term (trade and tech make winners and losers! high unemployment can be sustained for silly and fixable reasons!) It also goes over basics like trade (again), GDP, role of government, money (and currency unions), financial system instability.

It's been noted, perhaps by both Krugman and Mankiw, that the issues where just about all economists agree are often the ones on which they're least listened to. Invoking a favored economist in a political fight? Cool. Listening to a consensus against rent control, minimum wage laws (as opposed to other means of helping the poor), and trade barriers? Uncool. The chapter on sustainability is blase about copper (prices go up, new sources or new substitutes get found, markets are good at this) but alarmed about global warming (seriously guys, market failure, like overfishing!) with a typical economist answer of a carbon tax (help the market do its job properly.)

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Damien Sullivan

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