Who needs econ­o­mists?

JoongAng Daily - - Front Page -

counts of their think­ing. His book would be valu­able, in fact, merely as a guide to key thinkers and fur­ther read­ing.

It’s a lot more than that, though. If you’re go­ing to read only one book on ap­plied eco­nomics, you won’t find bet­ter. Ex­cel­lent as “Freako­nomics” and its var­i­ous se­quels might be, for in­stance, they’re too pre­oc­cu­pied with gim­micks, anom­alies and ar­cana. (That ti­tle said it all. “Eco­nomics can be fun! Re­ally!”) Li­tan con­veys the same de­light in eco­nomic rea­son­ing but a much bet­ter sense of why it mat­ters and how it helps. treat­ments of the sub­ject I know. But he’s care­ful to give fi­nan­cial-prod­uct in­no­va­tion a fair shake. The so­cial ben­e­fits of ideas such as in­dex in­vest­ing have been enor­mous. He gets the blend of won­der at the power of mar­kets and aware­ness of their de­fects just right.

Turn­ing from fi­nan­cial rules to other “pol­icy plat­forms for pri­vate business,” as he calls them, Li­tan dis­cusses un­fin­ished dereg­u­la­tion in trans­porta­tion. This was a big­ger deal than you might imag­ine. “One huge irony,” he says, “is that the age of In­ter­net com­merce, seem­ingly un­teth­ered from the phys­i­cal world, would never have de­vel­oped as rapidly as it did with­out the fun­da­men­tal pol­icy re­forms that trans­formed the phys­i­cal trans­porta­tion world in the 1970s and 1980s.”

Eco­nomic ideas also helped re­shape the en­ergy and telecom­mu­ni­ca­tions in­dus­tries. Again, the re­sults have been pro­found. De­con­trol of oil and gas prices set the scene for the tech­no­log­i­cal revo­lu­tion that is mak­ing the U.S. self-suf­fi­cient in en­ergy and has low­ered costs across the econ­omy. The dis­man­tling of AT&T’s tele­phone mo­nop­oly paved the way for the in­fra­struc­ture in­vest­ments that are build­ing the mod­ern dig­i­tal econ­omy.

You’d be hard-pressed to ar­gue that this is the golden age of eco­nomics. At the mo­ment, schol­ars given to re­flect­ing on the state of the dis­ci­pline are mostly grief­stricken over their own fail­ure (and the even greater fail­ures of their col­leagues) to an­tic­i­pate the crash or cor­rectly ad­vise on where pol­icy should go from here. It’s true that what hap­pened de­mands a fresh look at some ac­cepted or­tho­dox­ies. But the af­fec­ta­tion of despair for the fu­ture of the sci­ence is much over­done. Li­tan’s ex­cel­lent book is a timely and valu­able cor­rec­tive.

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