Economics: Making Sense of the Modern Economy
Format: PDF / Kindle (mobi) / ePub
This is the starting point and theme of this radically revised Economist books classic, now available for the first time in America.
Richard Davies, economics editor of The Economist, takes us on a journey through the paper's own analysis of the state of the world's economies, how we reached this point and what to expect in the next decade. He explores:
what's gone wrong since 2008, why it's happened and how we can stop it happening again;
the shifting focus of economics from banking to labor economics;
the future hopes and challenges for the world economy.
Along the way, we encounter the global economy laid bare, from banks, panics, and crashes to innovative new policies to improve how markets function; from discussions around jobs, pay, and inequality to the promise of innovation and productivity; from the implications of emerging markets and the globalisation of trade through to the sharing economy and the economics of Google and eBay.
The result is a fascinating review of the global economy and the changing role of economics in the new world order.
because of their ability to block imports and exports. In 2005 port workers successfully foiled European Commission plans to liberalise labour at ports. In January 2012, 600 dockers across Portugal went on strike for five days in response to plans to close a company operating at Aveiro, a second-tier port. Charting a new course Other countries’ experience suggests three ways to bolster Portugal’s seaport performance. First, more competition is needed at the ports: contracts should be extended
markets. This often results in prices that are too high, and a supply of goods that is too low. In other words, things are scarcer than they need to be. If economics is the study of trade-offs, understanding the modern economy means admitting a nasty truth: that the toughest trade-offs are man-made. PART 1 Money, banks and crashes From evil roots to green shoots The crash of 2008 was a seismic event in economics. Despite the time that has passed and the efforts that have been made to fix the
redistribution, corresponds to slower growth in income per person. A rise of 5 Gini points (moving from the level in America to that in Gabon, for instance) knocks half a percentage point off average annual growth. And holding redistribution constant, a one-point rise in the Gini raises the risk that an expansion ends in a given year by six percentage points. Redistribution that reduces inequality might therefore boost growth. If redistribution is benign, that could be because it substitutes for
capability approach is deeply paternalistic, with governments deciding what is best for their citizens. Leading theorists have reinforced that perception: Ms Nussbaum goes so far as to recommend “ten central capabilities” that are essential for a good life. For economists, who tend to be lovers of freedom, this is controversial stuff. But the capability approach may be less illiberal than it seems. Insisting that GDP is the true measure of economic progress is itself a value-judgment. What is
it is pretty good for most of the 20th century, then slumps in the 1970s. It bounced back between 1996 and 2004, but since 2004 the annual rate has fallen to 1.33%, which is as low as it was from 1972 to 1996. Mr Gordon muses that the past two centuries of economic growth might actually amount to just “one big wave” of dramatic change rather than a new era of uninterrupted progress, and that the world is returning to a regime in which growth is mostly of the extensive sort (see Figure 13.5). Mr