When I saw SPIN-FREE ECONOMICS by Nariman Behravesh at the library, I felt that it would be a good fit for the Economics category for the World Citizen Challenge I’m currently participating in. 

The book’s subtitle is: “A No-Nonsense, Nonpartisan Guide to Today’s Global Economic Debate”.

I really don’t know too much about economics (other than that of our own household) and what the media covers.  I had hoped that this book would educate me further, and I felt that it did. 

Behravesh feels that :  “First, most people are more “centrist” on economic issues than the current political debate and media coverage suggest.  Second, there are a number of enduring myths on both sides of the political spectrum that create a lot of unnecessary polarization and confusion.”

Although I don’t think that the author is completely nonpartisan in some of his opinions, Behravesh does seem to provide an even-handed approach to presenting current economic issues, many of which are world-wide.  Not only that, having been published this year, this book also covers recent issues which include the financial meltdown and bailouts of 2008.

 While this book looks at world-wide issues, it is definitely American-centric.  I think it still counts for the World Citizen Challenge in spite of that.

Since this book covers a very wide range of economic topics, it would be difficult for me to summarize all of the topics and keep this post shorter than it is already.   Therefore, I will just include some points  Behravesh made that I thought were interesting.

• On command-and-control economic systems versus free market economies, Behravesh is very pro-free market.  He mentions that between 1950 and 1989 almost half of the world’s population (mostly in China) were living in command-and-control economies.  The fall of communism  in many countries, among other things, has changed that.
• Behravesh mentions a joke, that Americans “live to work” while Europeans “work to live”.  He suggests that the real truth is that Americans and Japanese (for example) work more hours per week and retire late in life, because they are taxed relatively lightly and not heavily penalized for working past retirement age.  On the other hand, Europeans get to keep less of what they earn and also are basically forced to retire early.  With high tax rates, workers such as those in Europe will typically respond by engaging in nontaxable work or participating in the underground (cash-only) economy.  Non taxable work is defined here as –for example– someone deciding to work less hours and doing more around the house; rather than working many hours and also having to pay for a maid or paying someone to paint their house.
• The “resource curse”, as Behravesh puts it, is a big problem for many emerging markets.  Studies have shown that economies of resource-poor countries (such as Hong Kong) often outperform those of resource-rich countries such as Nigeria.  The standard of living in Nigeria has stayed the same since 1965 instead of improving.  Yet during that time, $350 billion in oil revenues have gone to Nigeria  but its people have not benefited.  Countries such as Nigeria tend to have corrupt politicians, and/or spend money on unproductive projects rather than on education and health care. 
• The “resource curse” may also cause political instability, and some of the more recent conflicts have been over oil and other commodities–this was one factor (but not the only one) in the Iran-Iraq war.  The author states that some people wonder why so much of the world’s oil is in unstable regions–but actually, the roots of instability is partly due to money pouring through because of oil.  He notes, however, that Norway and Alaska are exceptions and have done a better job of managing their oil.
• This book suggests we should not worry about the rise of China, India, and other emerging markets.  Emerging markets do not necessarily compete directly with the United States and other rich countries.  Countries such as China and India produce goods that require low-skilled work, and those in rich countries have the advantage of industries such as software and pharmaceuticals.  Therefore, trade between rich and poor countries should be considered to be complementary, rather than competitive. 
• Speaking of China and India, many also worry that low wages in these countries will drive down wages in rich economies.  The author argues that if it is true that low wages are the basis of economic strength and competitiveness, then why isn’t Africa economically strong?  The reason is that wages is only one factor– productivity is another.  China has figured out how to have strong productivity growth.
• The relationship between poverty and financial inequality is examined.  They are not really the same.  The United States has had reductions in the poverty rate but an increase in income inequality.  On the other hand, Cuba (a communist economy) has seen both an increase in poverty and a more equal distribution of income. 

The above points are just a few addressed and discussed in this book.  There are (but not to the point of over-kill)  visual aids, such as tables, throughout the book that are used to back up the information provided.   

I think this book is a good place to start if you want to learn more about basic economic theories  that use current world issues.  As Behravesh says, “Whether you are on the left or right of the political spectrum, I expect you will find some points of view in this book to your liking and others not.  My hope is that you will read both”. 

Reviews of other books I’ve read for the World Citizen Challenge:

Politics: “Dreams and Shadows” by Robin Wright

Memoirs/Autobiographies: “Honeymoon in Tehran” by Azadeh Moaveni

Worldwide Issues: “Day of Empire” by Amy Chua

This entry was posted on Monday, June 15th, 2009 at 5:05 PM and is filed under World Citizen Challenge, book review, books. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.