Who needs economists?
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.