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Naked Economics: Undressing the Dismal Science | 
| Author: Charles Wheelan
Publisher: W. W. Norton & Company
Category: Book
List Price: $15.95
Buy New: $10.85
You Save: $5.10 (32%)
Rating:  134 reviews
Sales Rank: 1065
Media: Paperback
Number Of Items: 1
Pages: 260
Shipping Weight (lbs): 0.6
Dimensions (in): 8.2 x 5.5 x 0.9
ISBN: 0393324869
Dewey Decimal Number: 330
EAN: 9780393324860
Publication Date: September 2003
Availability: Usually ships in 24 hours
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Product Description
Finally! A book about economics that won't put you to sleep. In fact, you won't be able to put this one down. Naked Economics makes up for all of those Econ 101 lectures you slept through (or avoided) in college, demystifying key concepts, laying bare the truths behind the numbers, and answering those questions you have always been too embarrassed to ask. For all the discussion of Alan Greenspan in the media, does anyone know what the Fed actually does? And what about those blackouts in California? Were they a conspiracy on the part of the power companies? Economics is life. There's no way to understand the important issues without it. Now, with Charles Wheelan's breezy tour, there's no reason to fear this highly relevant subject. With the commonsensical examples and brilliantly acerbic commentary we've come to associate with The Economist, Wheelan brings economics to life. Amazingly, he does so with nary a chart, graph, or mathematical equation in sight—certainly a feat to be witnessed firsthand. Economics is a crucial subject. There's no way to understand the important issues without it. Now, with Charles Wheelan's breezy tour, there's also no reason to fear it.
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| Customer Reviews: Read 129 more reviews...
 peerless February 13, 2005
105 out of 119 found this review helpful
I've been studying economics for the past six months or so from various texts, plodding through all of them by dint of perseverance and a sense of duty.
For some light reading, I picked this book up. From it, my studies of economics gained renewed vigor, because this was the first book that really made me LOVE ECONOMICS. After reading it I saw most economic ideas -- especially macroeconomic ideas -- in a new light.
Folks, it's fantastic. Absorbing, witty, and clearly-written.
Not only will you come to basically understand many important economic principles from reading it, but the book contains not a single graph, chart, or unsavory equation.
This is the only economics books I've ever read and read, until I was done: on the john, in the tub, on the bus, etc. I just could not put it down!
The thing I really like is Wheelan's genius for picking examples, many of which will boggle your mind and stick with you for days.
Wheelan has also got a great sense of humor. When's the last time that you found yourself laughing out loud every few pages while reading an economics book?
Here's an example:
"The sultan of Brunei earned billions of dollars in oil revenues in the 1970s. Suppose he had stuffed that cash under his mattress and left it there. He would have had several problems. First, it is very difficult to sleep with billions of dollars stuffed under the mattress. . ."
Fundamentals of Capitalism July 26, 2004
50 out of 57 found this review helpful
I highly recommend this book to anyone unfamiliar with basic economics, or looking for a simple, easy-to-read introduction to the science. Wheelan does a great job explaining the nuts and bolts of a free market system, and why this economic system as it stands is currently the most successful in the world. He's devoted chapters to the power of markets, incentives, the government, information, productivity, human capital, finance, the federal reserve, organized interests, trade and globalization, and ends with a discussion as to what it would take for poorer, less developed countries to get out of poverty. After reading Thomas Sowell's, "Basic Economics" I found Charles Wheelan's writing to be refreshingly balanced, and more humorous. That said, I still think both writers and books are worth-while. Anyone unconvinced that a free market system is the best economic system available, or wishing to know more about the system in which we live ought to read these books. Especially if you're against free trade, and fear "globablization". Wheelan admits there are serious social consequences and problems related to bad government, but insinuates (with a little more finesse than Sowell) that the problems are mostly rooted in bad policies, not economics. Corruption and dishonest politicians and leaders impoverish countries, not capitalism itself. However you choose to look at these issues, I think Wheelan does an excellent job at providing the fundamentals of the world in which we operate on a daily basis, and reading "Naked Economics" can only help one understand how to better affect desired change. Every college student should be required to read this!
 A good introduction, but lacking insight March 14, 2006
42 out of 85 found this review helpful
It's funny reading economists trying to explain human behavior. An economist will say that people make decisions in order to maximize their utility, without understanding what motivates them to do so. Why would anyone ever want to be generous, or altruistic? It makes you feel good to be generous or do a good deed. Why is that? Economists are apparently ignorant of the Biological concept of reproductive fitness.
That aside, I found the book to be a good, if somewhat typically biased, introduction to economic principles. For example, the author claims that sweatshops improve lives, because they pay a greater wage than is otherwise available in that region. Well, looking at Saipan in the CNMI, it seems that the only reason the sweatshops pay a greater wage than might otherwise be available is because we are not enforcing federal labor laws there, despite the fact that the manufacturers are gaining economic benefit by being able to use a "Made in the USA" label while paying typical sweatshop wages. In other words, if we required the standard federal minimum wage to be paid, and enforced other labor laws like workplace safety and overtime requirements, the workers would benefit due to the rule of law being enforced for social good. That's why we have the laws, to prevent abuse in the face of no bargaining power, a concept lost on this author. Further, by allowing countries to engage and compete in our market using sweatshops, it diminishes the quality of life for everyone by encouraging and perpetuating labor abuses. There are other profitable business and job creating investments to be made in foreign countries besides sweat shops.
The author goes on to claim that Social Security is a waste of money, because it's a tax that reduces savings and capital for investment. Of course, history proves it also dramatically reduced elder poverty, a point lost on the author. This is a common theme in economics and in this book, the "starve the market losers to feed the market winners" approach to society, no matter the cost.
Another example is the already debunked earned income tax credit. This allows low wage workers to be subsidized in their many, benefit-less, part-time jobs, instead of getting aid. Of course, it doesn't help the unemployable, but more importantly it also causes a parenting cost. What's the cost? Single mothers are not raising their children.
In an anecdotal example of how economists fail to account for all costs, the author states that we should allow people to pay extra and be allowed to drive the Unimog (a giant SUV that didn't make it to market), because we can choose to eat ice cream. But I'm not going to mow over a family of four with a pint of Haagen-Dazs. It doesn't matter how much extra you pay, that money doesn't defray the cost of others of being in increased road danger. Again, this author and economists in general fail to acknowledge the real costs of social policies. It's easier to ignore reality and stick with oversimplified models and explanations. Granted, the book is supposed to be light, but in many places it is too light, and gives a biased assessment as a result.
He suggests public education is a function best privatized, which makes for a great discussion topic. Realize that it used to be private, back in the days when most were illiterate. Apparently we should return to those days.
A common free market argument is that the government should contract out for public work projects to be done by private sector, which certainly happens a lot, e.g. Halliburton and all of our missing money for the Iraq reconstruction. In contrast look at the infrastructure road building in Alaska done by the Army, which was accomplished ahead of schedule. When we aren't fighting unnecessary foreign wars, our military can accomplish quite a bit, for less money than over budgeted and corrupt private ventures. Both have their place, and I would be remiss not to point out that the real problem is the lack of government contractor fraud enforcement.
The author mentions the CIA venture capital firm In-Q-I as another example of tax payer money being spent in the market to benefit us, but he doesn't say if this program ever produced anything of value. I suspect it didn't.
Then comes an old saw about lawyers and the bar: lowering the standards for admission would increase the number of lawyers and ultimately reduce legal costs to the benefit of society. Unstated by the author, this would also be true for doctors, nurses, psychologists, and all other licensed professionals. The author sees no problem with this reduction in licensing requirements, apparently due to being incredibly naïve. A small sampling of problems would include:
-Cost of education would remain the same, so more professionals and lower fees would mean a lower return on tuition investment, thus the better minds will pursue other careers.
-Malpractice has a cost too. A pretty big one in medicine, though not the health care dollar cost that conservatives lie about, since medical malpractice expenses account for less than 2% of healthcare costs. No, the real cost of medical malpractice is 98,000 people killed every year under the current "restrictive" system for medical licensing. That's more than automobiles and handguns combined. Granted, if your attorney commits malpractice, you are unlikely to die from it. But you may lose your house. We already have non-ABA accredited law schools out there, churning out below average lawyers in a diploma-mill style. We really don't need even worse lawyers practicing law.
-Paralegal services fill the gap of low cost legal services already, a rather obvious fact of which the author is apparently ignorant.
The author even claims that using DDT makes economic sense in developing countries, at which point he has driven off the cliff of reality. The cost of environmental destruction is greater than cost of better pesticides, in the long run. Extinct species don't come back.
Economists love to berate regulations, and this author is no exception, pointing to countries that use excessive regulation as a means of extracting bribes. The problem isn't the regulation, it's the corruption.
The author repeats the old saw that economic growth is better for the poor than targeted programs. What we see today is tax cuts without any equivalent economic growth, since those tax cuts only significantly go to the wealthy *and* the benefits reduced were largely job creators (e.g. special education, medical care) with good economic returns. What little economic growth has occurred still leaves an increasing number of children in poverty. When poverty indicators increase every year, along with economic growth, reality disproves the maxim that economic growth helps the poor.
As an amusing aside, the author claims that discriminating based on race is illogical, but on sex is logical if you factor in maternity costs. Gay males would therefore be the most logical choice of all to employ, a conclusion the author misses.
The author also repeats the globalization saw, that increases in overall productivity benefit everyone. Making India more productive increases our economy, because we can trade with a healthier partner. Of course, if we destroy the American Middle Class and lose our labor laws, habitable environment and civil rights in the process, the fact that shirts are cheaper isn't going to be that much of a benefit. If you don't know how all of those are related, you, like the author, haven't been paying attention to the big picture.
The author claims that interest groups are more politically effective when small, but the obvious counter examples are the Military-Industrial Complex (defense industry) and Big Oil. Detroit and Big Tobacco come to mind too, as does the garment industry. In fact, I'd have to say that overall interest groups are more politically effective when large, after all the mohair farmers didn't make the country go to war, but small ones can make gains too.
The author talks against protectionism and how we should all engage in free trade by doing what we do best, taking an example from the Lincoln Administration where Lincoln mistakenly bought American made iron rails which were more expensive than British made ones. Of course, by investing in American refining, America eventually became the best steel producers in the world, and had the manufacturing capacity to win WWII. Can you imagine renting soldiers from China because they are cheaper than American soldiers? Japan didn't start off making better cars than Detroit, and had they relied on their post-war capabilities without investment, they wouldn't be the economic powerhouse they are today. Michael Jordan has long since retired from basketball, and now needs other skills, like how to best manage his estate without getting ripped off.
It is important to plan for the future, to develop new skills and new productive abilities, rather than simply rely on the abilities currently present and risk oblivion if those abilities are not needed in the future, or you are out-competed. Which is a long-winded way of saying that relying solely on your current strengths is a recipe for disaster, and globalization is a risky business to those not already wealthy as American workers have to compete with people willing to work for far less money and social benefits. Call it a "race to the bottom" where the place that provides the most labor for the fewest costs wins. By the way, that "place" is called slavery, and currently, right now as you read this, there are 27 million people in bondage on this planet as the cheapest labor pool of all. This is the perfect world of the free market, a highly productive slave world where GDP is at record highs while most people live in abject poverty. After all, the "average" or per capita income is still good. And yes, you buy their goods and subsidize slavery. Every day. Welcome to globalization.
Trade does increase wealth for most, at the expense of the losers. Overall productivity increases through trade, but the wealth that is created tends to be concentrated at the top. In fact, a recent article showed that while productivity has increased substantially over the last century, the actual wealth of working class Americans has only increased by a small fraction of that increase. Call it "trickle up" economics. The author states that with social programs we can minimize the losses suffered, but of course we don't have many of those social programs because they cost money and in the singular pursuit of greater productivity we sacrifice all other values; instead we only have the losses by the working class and the gains by the wealthy, and a lot of cognitive dissonance regarding the American Dream.
The author admits that the free market generates winners and losers, and life admittedly is about change, but he fails to educate the reader that our economic policies should take that into consideration, and seek to benefit its citizens, including the losers, rather than leave them in the cold, to the wolves, while hoping for some future altruistic social policy that never happens. Being heartless and cruel should not be an American value, nor should it be a desired policy defended by economic free market proponents, like the author.
In general, the author has a myopic view, repeats and relies on typical economic fallacies, and shows the general pro-business bias that plagues modern US policy making. Still, it's a good introduction to economic principles, even if laden with myths, propaganda and error, and it has some good humor to it. I can't say I've found a better book on the topic.
Excellent. Better than my undergrad degree from Chicago September 29, 2002
32 out of 36 found this review helpful
Naked economics is an extraordinary account of what economics really is and how they should teach it. Unfourtunately current professors think that throwing a lot of math at you (without any intuition whatsoever) makes them look intelligent. Economics is much more fun (not necessarily easier) than solving a hundred optimization problems without any regard for the real world.
To all the people who design economics undergraduate programs in the U.S. please understand that: (1) we need something useful, (2) most of us are not going to study a ph.d., (3)we need a tool for understanding the world, not something we won't remember six months after the end of the course. What was a Lagrangean anyway?
A well written layman's economics book July 7, 2005
32 out of 36 found this review helpful
Naked Economics is a good introduction to economics for the layman. There is no math, although personally I wish Wheelan had used some to back up some of his points or to show some issues in more depth. It is well written and easy to read. So even though the information is as useful as many textbooks, it isn't tough to understand it.
Subjects covered include: why capitalism and free markets is better than communism and state-controlled markets; how information is crucial (such as product or corporate branding and health insurance for individuals); efficiency of financial markets (why the individual is often foolish when he buys a stock after reading a tip from the newspaper); and why international trade is good even if special interest groups may oppose it due to job losses.
Readers on both the extreme left or right will be able to pick up certain issues in the book that they disagree with. They will then pick those up and attack Wheelan for being an extreme liberal or an extreme conservative. They will accuse him of not caring about U.S. jobs; they will accuse him of pandering to the environmentalists. For those readers, their mind is already made up before the read this book. For open-minded readers, this book will be very enjoyable and interesting.
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