Need to read

So many books, so lit­tle time. Eco­nomics cor­re­spon­dent Adam Creighton is here to help with 10 books you need to read to cope with the dis­mal science.

The Australian - The Deal - - Front Page - Adam Creighton talks eco­nomics books http://www.theaus­tralian.com.au/busi­ness/the-deal-mag­a­zine

Adam Creighton's 10 best-ever eco­nomics books

Lords of Fi­nance: The Bankers Who Broke the World

Li­aquat Ahamed, Ran­dom House, 2011

The global fi­nan­cial cri­sis gen­er­ated a li­brary of books on eco­nomics and fi­nance aimed at dis­sect­ing the big­gest re­ces­sion since the 1930s. Ahamed shows how the con­tro­ver­sial meth­ods em­ployed by cen­tral banks to­day – in­ject­ing un­prece­dented sums of newly cre­ated money into fi­nan­cial sys­tems – were in­formed by the se­ries of dis­as­trous de­ci­sions taken by the cen­tral bankers in Bri­tain, France, Ger­many and the US in the 1920s. The ob­ses­sion of both the Bank of Eng­land and fledg­ling US Fed­eral Re­serve with re­turn­ing to the gold stan­dard af­ter the de­struc­tion of World War I caused great fi­nan­cial in­sta­bil­ity and at least ex­ac­er­bated, if not caused, the Great De­pres­sion.

The Power of Gold: The His­tory of an Ob­ses­sion

Peter Bern­stein, John Wi­ley, 2012

Among the most use­less of met­als, gold has cap­ti­vated mankind from an­cient times. Bern­stein’s eru­dite and elo­quent his­tory tracks the pre­cious metal’s tran­si­tion from mon­archs’ jew­ellery of choice to the bedrock of the global fi­nan­cial sys­tem by the late 19th cen­tury. The ob­ses­sion has had a pro­found im­pact on the course of his­tory out­side mon­e­tary af­fairs, be­ing the cru­cial im­pe­tus for Euro­pean con­quest of the Amer­i­cas and even the eco­nomic devel­op­ment of Australia. Af­ter the GFC and the loss of con­fi­dence in pa­per money, the book’s anal­y­sis of the pre-1971 gold stan­dard has taken on re­newed rel­e­vance.

The Wealth and Poverty of Na­tions: Why Some are So Rich and Some So Poor

David Lan­des, WW Nor­ton, 1999

This mas­terly work uses the his­tor­i­cal record rather than the­ory to try to an­swer the most im­por­tant ques­tion in eco­nomics: why do some na­tions grow rich and oth­ers re­main poor? Tak­ing a broadly chrono­log­i­cal and the­matic ap­proach, the book ex­plains why Euro­pean civil­i­sa­tion ul­ti­mately pros­pered and came to dom­i­nate. China started out as a leader, but be­came in­su­lar and scle­rotic. Dif­fer­ent at­ti­tudes to in­no­va­tion, the com­pet­i­tive ten­sion of nearby coun­tries, and a coast­line con­ducive to ex­plo­ration were all in Europe’s favour. Lan­des in­cludes fas­ci­nat­ing de­tails on Switzer­land’s jour­ney from farm­ers’ back­wa­ter to watch­maker to the world, and Ja­pan’s tren­chant re­sis­tance, then em­brace, of for­eign trade, among many oth­ers.

The Worldly Philoso­phers: The Lives, Times and Ideas of the Great Eco­nomic Thinkers

Robert Heil­broner, Simon and Schus­ter, 2011

This is the most fa­mous col­lec­tion of bi­ogra­phies of the great econ­o­mists, from the French phys­iocrats and Adam Smith in the late 18th cen­tury, to John May­nard Keynes and Joseph Schum­peter in the mid­dle of the 20th cen­tury. Pub­lished orig­i­nally in 1953, the book misses the eco­nomic gi­ants of the lat­ter 20th cen­tury, and its se­lec­tion of econ­o­mists is a lit­tle biased to­wards those who ad­vo­cate a larger role for the state, such as Karl Marx. But the qual­ity of Heil­broner’s prose, the level of schol­ar­ship and the fact no book has emerged to re­place it, make it es­sen­tial for any­one in­ter­ested in the his­tory of ideas.

The Bankers’ New Clothes: What’s Wrong with Bank­ing and What to do About It

Anat Ad­mati and Martin Hell­wig, Prince­ton Uni­ver­sity Press, 2014

The au­thors make a pow­er­ful case for fur­ther re­form of the global fi­nan­cial sys­tem. Their book ex­poses the fal­la­cies put by banks in the wake of the GFC to pre­vent any re­duc­tion in fi­nan­cial lever­age (the ra­tio of bank as­sets to share­hold­ers’ eq­uity). Ad­mati and Hell­wig show that the steady in­crease in lever­age since the 1980s has led to greater bank prof­its and boosted banker’s pay but con­tin­ues to ex­pose tax­pay­ers to mas­sive losses in case as­set prices fall. It is de­press­ing but fas­ci­nat­ing to learn how the lob­by­ing power of fi­nan­cial in­sti­tu­tions has so suc­cess­fully stymied changes in the public in­ter­est and cap­tured reg­u­la­tors.

A Shorter His­tory of Australia

Ge­of­frey Blainey, Ran­dom House Australia, 2014

This is, per­haps, the best short gen­eral his­tory of Australia from pre-white set­tle­ment to the present. It is elo­quent and ac­ces­si­ble, fo­cus­ing on how the lives of or­di­nary Aus­tralians have changed rather than the minu­tiae of pol­i­tics. Blainey is part of a gen­er­a­tion of his­to­ri­ans who started to give more weight to the im­pact of eco­nomic forces on po­lit­i­cal de­vel­op­ments. He tells how the gold rush of the 1850s, the great de­pres­sions of the 1890s and 1930s, the dis­rup­tion of the two world wars and the great waves of sub­se­quent im­mi­gra­tion are the most for­ma­tive eco­nomic events in Aus­tralian his­tory.

Eco­nomics in One Les­son

Henry Hazlitt, Crown, 1946

Hazlitt was a renowned Amer­i­can jour­nal­ist af­ter World War II. He was highly scep­ti­cal of gov­ern­ment and a cham­pion of free mar­kets in an age in­creas­ingly dom­i­nated by bu­reau­cracy, even in the rel­a­tively free-mar­ket US. This book sum­marises the dam­age even well-mean­ing public pol­icy can cause to fair­ness and ef­fi­ciency. In­spired by 19th cen­tury French econ­o­mist Fred­eric Bastiat’s pam­phlets, but still highly rel­e­vant to­day, Hazlitt de­bunks ar­gu­ments in favour of cor­po­rate wel­fare, min­i­mum wages, Key­ne­sian pump-prim­ing, tar­iffs, and the su­pe­ri­or­ity of spend­ing over sav­ing.

In De­fence of Global Cap­i­tal­ism

Jo­han Nor­berg , Cato, 2001

Nor­berg’s primer on the benefits of free mar­kets is, per­haps, the best of the past 20 years. and prob­a­bly the most in­flu­en­tial. He shows how free en­ter­prise has lifted bil­lions out of poverty, and led to the lib­er­a­tion and ed­u­ca­tion of women from their ear­lier po­si­tions of servitude. Writ­ten be­fore the GFC, in hind­sight his book evinces (un­der­stand­ably) a lit­tle too much con­fi­dence in the ef­fi­ciency and ef­fi­cacy of the global fi­nan­cial sys­tem, but it still blasts a hole in lead­ing left-wing ar­gu­ments that seek to re­strict trade and ex­tend the scope of gov­ern­ment and tax­a­tion.

Vi­enna & Chicago, Friends or Foes? A Tale of Two Schools of Free-Mar­ket Eco­nomics

Mark Sk­ousen, Cap­i­tal Press, 2005

“Right-wing econ­o­mist” is a term of de­ri­sion among antiglob­al­i­sa­tion, anti-free mar­ket com­men­ta­tors. Sk­ousen’s book shows how lit­tle mean­ing it con­tains. The prin­ci­ples de­vel­oped by thinkers such as Gary Becker and Mil­ton Fried­man at the Uni­ver­sity of Chicago af­ter World War II of­ten con­flict with those that emerged in Vi­enna, as­so­ci­ated with other “rightwing” econ­o­mists Fred­er­ick Hayek and Ludwig Mises. Both schools cham­pion free mar­kets but Vi­enna is even more scep­ti­cal of gov­ern­ment, bu­reau­crats, and banks propped up by im­plicit guar­an­tees. “Aus­trian”eco­nomics has en­joyed a re­nais­sance since the GFC.

Cap­i­tal in the Twenty-First Cen­tury

Thomas Piketty, The Belk­nap Press, 2014

Piketty’s mag­is­te­rial mix of eco­nomics, statis­tics and his­tory is an un­likely best­seller, de­tail­ing the ebb and flow of in­come and wealth in­equal­ity from 18th cen­tury France to 21st cen­tury Amer­ica. It will be­come the eco­nomic man­ual for 21st cen­tury pro­gres­sives, as Marx’s Das Kap­i­tal was for so­cial­ists in the 19th cen­tury. Piketty’s sim­plis­tic propo­si­tion – that the rate of re­turn on wealth is per­ma­nently greater than the growth rate of the econ­omy – fore­shad­ows a world of ris­ing in­equal­ity that makes a mock­ery of equal­ity of op­por­tu­nity. How­ever un­de­sir­able or un­re­al­is­tic his pol­icy sug­ges­tions – such as a global tax on wealth – his em­pir­i­cal anal­y­sis is com­pelling.

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