What I’ve been reading

1. Open Secrets of American Foreign Policy, by Gordon Tullock.  A history of the bloopers and stupidities of American foreign policy, from virtually day one.  If you think Gordon embraces a narrow, reductionist rational choice view of the world, here is the antidote.  Gordon tells me that foreign policy has long been his number one interest, although he has written on the topic only now.

2. One Economics, Many Recipes, by Dani Rodrik.  I agree with much of the substance of this book, namely that we know a lot less about the causes of economic growth than we like to think.  I am less happy with the implied rhetorical choices; in particular I wish Rodrik were more consistently agnostic.  For instance Rodrik defends industrial policy, but at times this just translates into lower (or no) taxes for export zones.  So why frame it as a larger rather than a smaller claim? 

3. The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by CrackpotEconomics , by Jonathan Chait.  I’ve taught Ph.d. macroeconomics to some of the people referred to, either directly or indirectly, in this book.  They didn’t all get A pluses.  So I see the talk of conspiracy as way, way overblown.  This book catalogs many good criticisms of the Bush administration, and in that sense is valuable, but it does not raise the level of debate.

4. Do Economists Make Markets?, an edited collection of essays.  How could they not cite Alex’s Entrepreneurial Economics?  Or pay homage to Robin Hanson and prediction markets?  Still, this is a useful introduction to how economists have tried to shape real world markets, from spectrum auctions to options pricing.


What good timing for Mr. Chait's book, coming on the heels of the Scott Beauchamp triumph.

I once read an article about Tullock where he was quoted as saying something like the U.S. should invade Brazil because we can make better use of their resources than they can. That is not one bit funny.

I hope we get a review of Craig when TC is finished.

Balan, I agree the Brazil remark isn't funny if meant seriously, but it does sound like a good reason not to make an economist Secretary of State or Defense ....

What a revealing comment about Rodrik's book. Entertaining!

I think I'll pick up the Tullock book. Usually I gloss over what you're reading, but this is actually very interesting to me. I trust he retains his Tullock Sass throughout? I mean, how could he not, when discussing such a sass-worthy topic?

Binmore shortly goes around the subject in Game theory and the social contract. On Vernon Smith, I'm not sure what first-hand sources are good, but I once got a good lecture from finnish economist who discussed the way electricity markets in the nordic countries are arranged. They're completely synthetic markets: the power companies (both producers and distributers) insert their demand and supply curves there once a day, and the electricity is auctioned by that.

Toni Heinonen,
I haven't read a word of Hayek, so I may be confused about this exchange, but I don't think he's so interested in how any particular market works, but in the connections between them. The interaction of supply curves and demand curves is the proverbial Econ 101, but determining an optimal supply curve is difficult.

What evolves is not the interaction between the generators and the distributors, but the process inside the power company by which it figures out its supply curve. If you give it an incentive to cut costs, it will slowly figure out ways to do so, but if you give it a fixed profit margin, it won't. It won't figure out better ways of doing things and it will easily convince regulators that there aren't better ways.

Tyler Cowen wrote: "Gordon often asks me the Brazil question. His point is not to advocate invasion, but rather to make it clear that it is hard to explain why the United States resists particular actions..."

It it? Given how the arguably opportunistic invasion of Iraq went, I would question whether the US could make better use of Brazil's resources after an invation, not even counting the cost of the invasion itself, or the political fallout resulting from the example it would set.

I can't see that it is hard at all. Have I missed something?

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