Good Economics For Hard Times

What are the big ideas?

1. Respecting human dignity in social protection systems: The book argues that traditional cash transfer programs have failed to help people in the long term due to a lack of respect for their potential and dignity. Instead, it suggests focusing on programs that start with respecting individuals' dignity and potential, such as France's young creators program or Chicago's Becoming a Man program (Booth School of Business, 2017).
2. The pain from trade: While the negative effects of inequality are widely recognized, this book emphasizes that people compare themselves to others and their relative position affects their happiness. It also highlights the consequences of despair and anger resulting from unequal economic growth and limited opportunities (IGM Economic Experts Panel, 2018).
3. The role of government in addressing inequality: The authors argue that despite skepticism about government intervention, markets often fail to produce just and efficient outcomes, necessitating government intervention to help the rest of society (YouGov, 2017). They also propose new resources for social innovation coming from various income levels, not just the ultra-rich (Brexit vote, 2016; UK poll, 2018).
4. The impact of climate change on the global economy: The book highlights the disproportionate damage to poor countries and their populations due to climate change. It also emphasizes the danger of HFC gases used in standard air-conditioning appliances, which can both help protect people from climate change and contribute to it (Ten thousand people in the United States, 2018; Survey respondents, 2018).
5. The importance of careful program design: The authors argue that effective social policies are crucial in reducing inequality, but careful program design is necessary to break the impasse and overcome public skepticism (IGM Booth panel answers, 2018). For example, conditional cash transfers have been successful in Mexico and other countries, but their design must be carefully considered to address market failures and redistribute resources fairly.

Summary

Preface

Takeaways

• The authors wrote this book to grapple with the major issues of today's world, despite not being experts in the rich North where many of these problems are occurring.
• The authors aim to provide a clear-eyed assessment of what has gone wrong and how to address these problems, focusing on where economic policy has failed and where ideology has blinded us.
• The authors believe that good economics is useful, especially in today's world, and they hope to build a more humane world by trying ideas and solutions, even if they may be wrong.
• The authors have found similarities between the problems facing the rich North and those they are used to studying in developing countries, such as people left behind by development, ballooning inequality, lack of faith in government, and fractured societies.
• The authors have immersed themselves in new literatures and learned a lot from the experience, becoming more confident in their ability as economists to approach problems with a hard-headed, skeptical, and humble attitude.

1 MEGA: Make Economics Great Again

Takeaways

• Economics is central to understanding and addressing the current crisis of slow growth, rising inequality, and social unrest.
• Economists study issues like immigration, taxes, and redistribution to understand who the winners and losers are likely to be.
• Most people do not trust economists, and the trust deficit is systematically different from that of other experts.
• The professional consensus of economists is often systematically different from the views of ordinary citizens on core economic topics.
• The most recent research in economics often has surprising findings that challenge conventional wisdom.
• It is important to share this expertise with a wider audience to inform public debates and decision-making, especially on urgent issues like automation and helping those left behind by the markets.
• Economists have useful expertise to share, but they must overcome the trust deficit by being transparent about their methods, assumptions, and conclusions.
• Understanding why people distrust economists can help bridge the gap between professional consensus and public opinion, leading to better policy outcomes for all.

Quotes

“And, perhaps most urgently, how can society help all those people the markets have left behind?”

“The answers to these problems take more than a tweet. So there is an urge to just avoid them. And partly as a result, nations are doing very little to solve the most pressing challenges of our time; they continue to feed the anger and the distrust that polarize us, which makes us even more incapable of talking, thinking together, doing something about them. It often feels like a vicious cycle.”

“For that, we need to understand what undermines trust in economists. A part of the answer is that there is plenty of bad economics around. Those who represent the “economists” in the public discourse are not usually the same people who are part of the IGM Booth panel.”

“Everyone gets things wrong. What is dangerous is not making mistakes, but to be so enamored of one’s point of view that one does not let facts get in the way. To make progress, we have to constantly go back to the facts, acknowledge our errors, and move on.”

“The focus on income alone is not just a convenient shortcut. It is a distorting lens that often has led the smartest economists down the wrong path, policy makers to the wrong decisions, and all too many of us to the wrong obsessions. It is what persuades so many of us that the whole world is waiting at the door to take our well-paying jobs. It is what has led to a single-minded focus on restoring the Western nations to some glorious past of fast economic growth. It is what makes us simultaneously deeply suspicious of those who don’t have money and terrified to find ourselves in their shoes. It is also what makes the trade-off between the growth of the economy and the survival of the planet seem so stark.”

“A better conversation must start by acknowledging the deep human desire for dignity and human contact, and to treat it not as a distraction, but as a better way to understand each other, and to set ourselves free from what appear to be intractable oppositions. Restoring human dignity to its central place, we argue in this book, sets off a profound rethinking of economic priorities and the ways in which societies care for their members, particularly when they are in need.”

2 From the Mouth of the Shark

Takeaways

• Social protection systems often fail the very people they aim to help due to a lack of respect for their dignity and potential.
• Pure cash transfer programs have so far been disappointing in the long term, requiring more than just money to put families on track toward productive work.
• The deep disregard for the human dignity of the poor is endemic in social protection systems, often resulting in punitive measures that push people away from seeking help.
• Programs that start with respecting the dignity and potential of individuals, such as the young creators program in France and Becoming a Man in Chicago, have been successful in improving outcomes for disadvantaged populations.
• A shift in attitude toward social protection is necessary to help individuals absorb shocks without defining them by their problems, which can lead to negative consequences for both individuals and society at large.

Quotes

“In France, a parallel experiment found something similar. People deliberately exposed to Marine Le Pen’s false claims were more likely to want to vote for her.6 Sadly, this persisted after her statements were fact-checked in front of them. Truth did not sway their opinions. Simply thinking about migration makes people more parochial. The facts aren’t allowed to get in the way. There is an important reason why facts are ignored, and it is based on a piece of economics seemingly so utterly self-evident that many find it impossible to think past it, even when the evidence says the opposite. The economic analysis of immigration often comes down to a seductive syllogism. The world is full of poor people who would obviously earn a lot more if they could find their way here (wherever that might be), where things are clearly much better; therefore, given half a chance, they will indeed leave wherever they are and come to our country, and this will drive down wages and make most of us already here worse off.”

“The British Somali poet, Warsan Shire, wrote: no one leaves home unless home is the mouth of a shark you only run for the border when you see the whole city running as well your neighbors running faster than you breath bloody in their throats the boy you went to school with who kissed you dizzy behind the old tin factory is holding a gun bigger than his body you only leave home when home won’t let you stay.”

“The effects of migrants will also crucially depend on who the migrants are. If the most enterprising move, they may start businesses that create jobs for the natives. If they are the least qualified, they might have to join the undifferentiated mass that native low-skilled workers will have to compete against.”

“A report by the Center for American Entrepreneurship found that, in 2017, out of the largest five hundred US companies by revenue (the Fortune 500 list), 43 percent were founded or co-founded by immigrants or the children of immigrants.”

“Henry Ford was the son of an Irish immigrant. Steve Jobs’s biological father was from Syria, Sergey Brin was born in Russia. Jeff Bezos takes his name from his stepfather, the Cuban immigrant Mike Bezos.”

“As a result, only the most desperate or the very well off who can afford the risk will leave. Comfort and connections play the same limiting role for would-be international migrants, only much more so. If they leave, they must often leave alone, abandoning everything familiar or dear to them for many years to come.”

“Most people do not like risk, and those close to subsistence level especially so, since any loss could push them into starvation. Is that why so many people prefer not to try?”

“Additionally, there is good evidence that people particularly hate mistakes of their own making. The world is fraught with uncertainties, many of which people have no control over. These vagaries make them unhappy, but perhaps not as unhappy as making an active choice that ends up, purely as a result of bad luck, making them worse off than if they had done nothing.”

“Since our preferences are strongly influenced by whom we associate with, social divides are particularly costly because there is very little mixing across these divides; people tend to associate with others like themselves”

“The first is that the circulation of news on social media is killing the production of reliable news and analysis. Producing fake news is of course very cheap and very rewarding economically since, unconstrained by reality, it is easy to serve to your readership exactly what they want to read”

“In 2001, when Sunstein was writing about echo chambers, he was worried about the opportunity users have to choose the news they consume. Increasingly, there is no need to choose. Sophisticated algorithms use machine-learning prediction techniques to try to figure out what we might like based on who we are, what we have searched before, etc. The objective, quite explicitly, is to get people what they like so they spend more time on it.”

“Only a social policy founded on respect for the dignity of the individual can help make the average citizen more open to ideas of toleration.”

“In one large US university, where roommates were assigned at random, a study found that white students who happened to end up with African American roommates were significantly more likely to endorse affirmative action, and that white students assigned roommates from any minority group were more likely to continue to interact socially with members of other ethnic groups after their first year, when they had full freedom in choosing whom to associate with.”

“Prejudice is often a defensive reaction to the many things we feel are going wrong in the world, our economic travails, and a sense that we are no longer respected or valued.”

“In other words, ethnic or bigotted voting is often just an expression of indifference”

“The most effective way to combat prejudice may not be to directly engage with people’s views, natural as that might seem. Instead, it may be to convince citizens it is worth their while to engage with other policy issues.”

“an experiment conducted in Peru shows boarding-school students who were randomly assigned beds near highly sociable students gained social skills themselves. In contrast, being assigned a neighboring student with good test scores did not help them get better grades.63”

“research in education shows that children quickly internalize their place in the pecking order, and teachers reinforce it. Teachers told that some children are smarter than others (even though they were simply chosen randomly) treat them differently, so that these children in fact do better.”

3 The Pains from Trade

Takeaways

• Inequality has negative effects on individuals' well-being, especially for those at the bottom.
• People compare themselves to others and this comparison affects their happiness.
• Americans have an unrealistic view of social mobility in their country.
• Despair and anger are two possible reactions to unequal economic growth and limited opportunities.
• Immigrants and trade are common scapegoats for economic woes, but they are not the real causes.
• The obsession with growth has caused lasting damage, as it mostly benefits a small elite.
• Designing effective social policies is crucial to help people survive and hold on to their dignity in a high-inequality society.

Quotes

“Paternalism, once a feature of the large corporations that demanded loyalty but took care of their own, is now restricted to elite workers in software companies, and is expressed in the form of free food and dry cleaning in exchange for long hours.”

“All in all, therefore, it seems to us that high marginal income tax rates, applied only to very high incomes, are a perfectly sensible way to limit the explosion of top income inequality. They would not be extortionary, since very few people will end up paying them; top managers will simply not get these kinds of income anymore. And from all we see, they won’t discourage anybody to work as hard as they can. To the extent they affect people’s choice of career, it will likely be in a positive direction. This is not to deny the importance of structural economic changes, which have made it increasingly difficult for those with low education to succeed, generating an increase in inequality even within the remaining 99 percent.”

“there are no iron laws of economics keeping us from building a more humane world,”

4 Likes, Wants, and Needs

Takeaways

• Economic growth is not the only thing that matters.
• Inequality is rising, and it has real consequences.
• The world needs to do something about climate change, but it’s a hard problem.
• People are not necessarily selfish and short-sighted, but their behavior can be influenced by the incentives they face.
• Government policy can help, but it needs to be carefully designed to take into account the realities of how people behave.
• The future is unknowable, but we have a moral obligation to do what we can to leave the world better than we found it.
• We need to think about how to distribute resources in a way that respects both current and future generations.
• We need to think about how people’s lives are affected by economic activity in the present, not just how much they consume or produce in aggregate over time.
• We should aim for policies that increase prosperity across all dimensions—including physical health, mental health, and happiness—not just income growth or GDP growth per capita as conventionally measured.
• We should not shy away from using government policy to correct market failures and redistribute resources when necessary, even if this means less economic growth in some cases (or even most cases).

Quotes

“The increasingly open expression of unvarnished animus toward people of different race, religion, ethnicity, and even gender has become the staple of populist leaders throughout the world. From the United States to Hungary, from Italy to India, leaders who offer little more than racism and/or bigotry as their policy platform are becoming a defining feature of the political landscape, a ground force that shapes elections and policies”

“Bigotry can be good business, at least for some, and it seems to be good politics as well.”

“Herd behavior generates informational cascades: the information on which the first people base their decision will have an outsized influence on what all the others believe.”

“A recent experiment nicely demonstrates the power of random first moves to generate cascades.6 Researchers worked with a website that aggregates advice on restaurants and other services. Users post comments, and other users add an up- or down-vote. In their experiment, the website randomly chose a small fraction of comments and gave them one artificial up-vote as soon as they were posted. They also randomly chose another small batch to get a down-vote. The positive up-vote significantly increased the probability that the next user also gave an up-vote, by 32 percent. After five months, the comments that had received one single artificial up-vote at the beginning were much more likely to get a top grade than those that got a single down-vote. The influence of that original nudge persisted and grew, despite the fact that the posts had been viewed a million times.”

“Where do these preferences and attitudes come from? Why do we seem to look for a new enemy even as we become reconciled to the previous one?”

“Most people believed, correctly, that most normal North Africans tended to be relatively poor and therefore unlikely to be able to afford a new car, and on the basis of that statistical association their presumption was that the individual North African driver of a nice car was a criminal. Now they assume he is an Uber driver, which is clear progress.”

“Statistical discrimination explains why the police in the United States justify stopping black drivers more often. And how the Hindu majoritarian government of the state of Uttar Pradesh recently explained why so many of the people “accidentally” killed by the state police (in what are called “encounter deaths”) are Muslim. There are more blacks and Muslims among criminals. In other words, what looks like naked racism does not have to be that; it can be the result of targeting some characteristic (drug dealing, criminality) that happens to be correlated with race or religion. So statistical discrimination, rather than old-fashioned prejudice—what economists call taste-based discrimination—may be the cause. The end result is the same if you are black or Muslim, though. A recent study on the impact of “ban the box” (BTB) policies on the rate of unemployment of young black men provides a compelling demonstration of statistical discrimination. BTB policies restrict employers from using application forms where there is a box that needs to be checked if you have a criminal conviction. Twenty-three states have adopted these policies in the hope of raising employment among young black men, who are much more likely to have a conviction than others and whose unemployment rate is double the national average.31 To test the effect of these policies, two researchers sent fifteen thousand fictitious online job applications to employers in New Jersey and New York City, just before and right after the states of New York and New Jersey implemented the BTB policy.32 They manipulated the perception of race by using typically white or typically African American first names on the résumés. Whenever a job posting required indicating whether or not the applicant had a prior felony conviction, they also randomized whether he or she had one. They found, as many others before them, clear discrimination against blacks in general: white “applicants” received about 23 percent more callbacks than black applicants with the same résumé. Unsurprisingly, among employers who asked about criminal convictions before the ban, there was a very large effect of having a felony conviction: applicants without a felony conviction were 62 percent more likely to be called back than those with a conviction but an otherwise identical résumé, an effect similar for whites and blacks. The most surprising finding, however, was that the BTB policy substantially increased racial disparities in callbacks. White applicants to BTB-affected employers received 7 percent more callbacks than similar black applicants before BTB. After BTB, this gap grew to 43 percent. The reason was that without the actual information about convictions, the employers assumed all black applicants were more likely to have a conviction. In other words, the BTB policy led employers to rely on race to predict criminality, which is of course statistical discrimination.”

“American psychologist Claude Steele, which demonstrated the power of what he called a “stereotype threat.” In his original experiment, he found that black students performed comparably with white students when told a test they were taking was “a laboratory problem-solving task.”33 However, black students scored much lower than whites when test takers were told the test was meant to measure their intellectual ability.”

“Female college students performed better on a hard mathematics test when it included at the beginning the statement “You may have heard that women typically do less well at math tests than men, but this is not true for this particular test.”34 Conversely, white male math and engineering majors who received high scores on the math portion of the SAT (a group of people quite confident about their mathematical abilities) did worse on a math test when told the experiment was intended to investigate “why Asians appear to outperform other students on tests of math ability.”

“Women retained more information from the training, and those who were trained by them and listened to them did in fact learn more. But most farmers did not listen. They assumed women were less able, and therefore paid less attention to them. Along the same lines, when women in Bangladesh were trained to become line managers, they were just as good as men based on an objective assessment of their leadership and technical qualities, but they were perceived as less good by their line workers. And, presumably as a result, the performance of their lines also suffered, perversely confirming the prejudice that they were worse managers.39 What started as an unjustified preference against women resulted in women actually doing worse through no fault of their own, and this reinforced their inferior status.”

“We don't like changing our minds because we don't like to admit we were wrong, to begin with. We avoid information that would force us to confront our moral ambiguities.”

“It is easy to see how we may get trapped by these strategies. We don’t like to think of ourselves as racists; hence, if we have negative thoughts about others, it is tempting to rationalize our behavior by blaming them. The more we can persuade ourselves migrants are to blame for bringing their children with them, the less we worry about the children in their little cages. Instead, we look for evidence that we are right; we overweight every piece of news, however thin, that supports our original position, ignoring the rest.”

“solid” the arguments are, has to be either an insinuation of moral failure on our part or a questioning of our intelligence. That’s when it can get violent.”

5 The End of Growth?

Takeaways

• The belief that government is inherently corrupt and incompetent is damaging and often unfounded.
• Inequality has increased in many countries, including the United States and France.
• Redistribution through programs like Progresa in Mexico and similar programs elsewhere have been effective and durable.
• Conditional cash transfers to the poor, such as Progresa in Mexico, have demonstrated nothing terrible happens when one gives cash to the poor.
• Cash transfers have led to a shift in public perception on redistribution all over the developing world.
• Careful program design will be crucial in breaking open the impasse on reducing inequality in countries like the United States and France.

Quotes

“Capital-scarce economies grow faster because new investment is highly productive. Rich economies, which are, in general, capital abundant, tend to grow more slowly because new investment is not as productive.”

“What matters is not just how many smart people you work with, but also how many smart people you are competing with, or just happen to be around in the Valley as a whole. Silicon Valley, in Romer’s theory, is what it is because it brings together the best minds of the world in an environment where they can cross-pollinate each other.”

“So at the end of the day, although we will try to stitch together the best evidence for these theories, the result will be tentative. We have already seen that growth is hard to measure. It is even harder to know what drives it, and therefore to make policy to make it happen. Given that, we will argue, it may be time to abandon our profession’s obsession with growth.”

“A variant of Romer’s hypothesis that is less specific to Silicon Valley and its imitators is that the presence of more educated people makes everyone else more productive.”

“there is no compelling evidence to date of real economic responses to tax rates at the top of the income distribution.”57 By now, there seems to be a consensus among a large majority of economists that low taxes on high earners are not guaranteed to, on their own, bring about economic growth.”

“Clearly education is in part a product of the effectiveness of the government in running schools and funding education. A government good at delivering education is probably good at other things as well; maybe the roads are better in the same countries where teachers show up to work. If we find growth is faster where education is higher, it could be due to these other policies it tends to be bundled with. And of course it is likely that people feel more committed to educating their children when the economy is doing well, so perhaps growth causes education, and not just the other way around.”

“The bottom line is that, much as in rich countries, we have no accepted recipe for how to make growth happen in poor countries. Even the experts seem to have accepted this. In 2006, the World Bank asked the Nobel laureate Michael Spence to lead the Commission on Growth and Development (informally known as the Growth Commission). Spence initially refused, but convinced by the enthusiasm of his would-be fellow panelists, a highly distinguished group that included Robert Solow, he finally agreed. But their report ultimately recognized that there are no general principles, and no two growth episodes seem alike. Bill Easterly, not very charitably perhaps, but quite accurately, described their conclusion: “After two years of work by the commission of 21 world leaders and experts, an 11-member working group, 300 academic experts, 12 workshops, 13 consultations, and a budget of $4m, the experts’ answer to the question of how to attain high growth was roughly: we do not know, but trust experts to figure it out.”

6 In Hot Water

Takeaways

• The citizens of rich countries and, more generally, the rich worldwide bear an overwhelming responsibility for any future climate change.
• The damage from climate change will be much more serious in poor countries, where residents are less equipped to protect themselves against the potential bad effects of hot temperatures.
• There are likely to be large losses in US agriculture, but the losses in India, Mexico, and Africa will be much larger.
• People are less productive when it is hot, particularly if they have to work outside. Labor supply in outdoor jobs drops by as much as one hour per day at temperatures over 38ºC compared to temperatures in the 24ºC–26ºC range. Children have lower test scores at the end of particularly hot school years, and these effects are absent where schools have air conditioning.
• A study finds that it being 1°C warmer in a given year reduces per capita income by 1.4 percent, but only in poor countries.
• Numerous studies emphasize the danger of hot temperatures for health. An additional day of extreme heat (exceeding 32ºC) relative to a moderately cool day (10ºC–15ºC) raises the annual age-adjusted mortality rate by about 0.11 percent in the United States and twenty-five times larger in India.
• Being richer and more technologically advanced can help mitigate temperature risks, such as through access to air conditioning and better health care systems that can respond to temperature-related health issues.
• In poor countries, air conditioning is not as widely available and people often work outside or in agriculture, making them more vulnerable to temperature changes; they also tend to be closer to the equator where the real pain will be felt from rising temperatures due to climate change.
• The very technology that can help protect people from climate change can also accelerate the rate of climate change, such as through hydrofluorocarbon (HFC) gases used in standard air-conditioning appliances; new appliances that do not use HFC pollute less but are more expensive, creating a trade-off for countries like India that face a choice between saving lives today or moderating climate change to save lives in the future.

Quotes

“The average estimate implies that when your income increases by 10 percent, your CO2 emissions increase by 9 percent.”

7 Player Piano

Takeaways

• Automation is not a neutral technological development; it can be used to displace workers, increase inequality, and even reduce overall economic output.
• The tax code in the United States is biased against labor and in favor of capital, which encourages automation even when it is less productive than human labor.
• Unregulated automation can be bad for workers, as it can lead to job losses, lower wages, and increased inequality.
• Americans on both the right and the left support limiting automation to "dangerous and dirty jobs," and limiting the number of jobs businesses can replace with machines.
• The current wave of innovation in insurance firms is focused on automating the approval of insurance claims, rather than inventing new products that would create new roles for workers and hence new jobs.
• The bias in the US tax code against labor and in favor of capital is reinforced by industry concentration and monopolies, which reduce competition and increase the focus on cost-cutting innovations that displace labor.
• The bias in the US tax code against labor and in favor of capital is exacerbated by frictions in the labor market, which make managers dream of factories without workers.
• A monopolist does not fear competition; it has no reason to constantly reinvent what it is offering its consumers. Therefore, the monopolist will tend to focus more on cost-cutting innovations, which will increase its profit margins but destroy jobs.
• Most Americans oppose letting companies decide how much to automate; they want there to be limits on the number of jobs businesses can replace with machines, even if they are better and cheaper than humans.

Quotes

“The increasing sophistication of robots and the progress of artificial intelligence has generated considerable anxiety about what would happen to our societies if only a few people had interesting jobs and everyone else had either no work or had a horrible job, and inequality ballooned as a result. Especially if this happened because of forces largely out of their control. Tech moguls are getting desperate to find ideas to solve the problems their technologies might cause. But we don’t need to contemplate the future in order to get a sense of what happens when economic growth leaves behind the majority of a country’s citizens. This has already happened—in the United States since 1980.”

“Reaganomics, as the dominant economics of this period came to be called, was quite open about the fact that the benefits of growth would come at the cost of some inequality. The idea was that the rich would benefit first but the poor would eventually benefit. This is the famous trickle-down theory, never better described than by Harvard professor John Kenneth Galbraith, who claimed this was what used to be called the “horse and sparrow” theory in the 1890s: “If you feed the horse enough oats, some will pass through to the road for the sparrows.”28 Indeed, the 1980s ushered a dramatic change in the social contract in the US and the UK. Whatever economic growth happened since 1980 has been, for all intents and purposes, siphoned off by the rich. Was Reaganomics or its UK version responsible for it?”

8 Legit.gov

Takeaways

• Markets often fail to produce just and efficient outcomes, necessitating government intervention.
• Abolishing the wealthiest 1% is not enough; policies must also help the rest of society.
• New resources for social innovation are required, which will likely need to come from various income levels, not just the ultra-rich.
• Raising taxes on the wealthy alone will not generate sufficient revenue for significant public policy efforts.
• Wealth taxes can raise more revenue, but even in countries with high tax rates, most government revenue comes from taxes on average earners.
• Tax reform should apply to the merely rich and middle class, not just the ultra-rich.
• Contrary to popular belief, taxes do not discourage people from working.
• People's reluctance to pay more taxes may be due to skepticism about government intervention and concerns about others' potential reactions to higher taxes.
• Government intervention is often necessary to address problems that cannot be solved by markets alone.

Quotes

“Democracies raise money through taxation. The overall tax revenues (taking together all levels of government) in the United States in 2017 was just 27 percent of GDP. This is seven points lower than the average in the OECD. The United States was tied with South Korea, and only four other countries in the OECD have lower tax revenues (Mexico, Ireland, Turkey, and Chile).”

“The government exists in part to solve problems no other institution can realistically tackle. To demonstrate waste in government, one needs to show there is an alternative way of organizing the same activity that works better.”

9 Cash and Care

Takeaways

• The poor do not waste their money, but instead spend it on food, nutrition, and education.
• There is no evidence that cash transfers make people work less.
• UBI has the potential to improve the lives of the poor in developing countries by providing a guaranteed income floor.

Conclusion: Good and Bad Economics

Takeaways

• Economies are "sticky" and do not always offer equal opportunities for growth and mobility.
• The dynamism of the global economy can lead to both positive and negative changes, such as the rise of new industries and the decline of others.
• Policy has a significant impact on economic outcomes, and governments have the power to do both good and harm through their decisions.
• Good economics can drive positive change and improve policy-making, while bad economics can perpetuate harmful ideologies and lead to poor decisions.
• It is important to be vigilant against bad ideas and to approach complex problems with a critical, evidence-based mindset.
• Economics affects us all, and it is the responsibility of all citizens to engage with economic issues in order to build a better world.

Quotes

“The only recourse we have against bad ideas is to be vigilant, resist the seduction of the “obvious,” be skeptical of promised miracles, question the evidence, be patient with complexity and honest about what we know and what we can know. Without that vigilance, conversations about multifaceted problems turn into slogans and caricatures and policy analysis gets replaced by quack remedies. The call to action is not just for academic economists—it is for all of us who want a better, saner, more humane world. Economics is too important to be left to economists.”

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