Subject: Re: Recommendations for Basic Economics Guide.
From: "Jerry Dwyer" <>
Date: Mon, 14 Oct 2002 09:45:57 -0400

---------- Original Message ----------------------------------
From: "Stephen J. Turnbull" <>
Date: Mon, 14 Oct 2002 16:57:38 +0900

>The problem is that Friedman's economic science becomes political
>opportunism exactly when expert consensus fails, and you'd like to
>have a trustworthy guide around.  Ie, I know he's smarter than me; I
>also know he will not hesitate to misinform me in certain ways if he
>thinks that will lead to me agreeing with him.  Conclusion:  it's only
>useful to consult him[2] if you are as smart and well-informed as he
>is.  :-(  And, his politics are a big distraction if you want to learn
>about economics.

I don't think that this is a fair characterization of Friedman. He won't mis-state things.
He is too serious a guy for that. He is a debater, which means that he won't always
tell you what you should be saying given your position. (Friedman is _much_ nicer to
non-economists than other economists who he thinks should know better.) In his writing,
Friedman has to assume that the reader has a lot of time to think about things and come
up with every imaginable argument.

>[1]  Well, I borrowed the phrase "Great Vacation" from Mike Mussa,
>who was at the IMF when he described "real business cycle theory"
>using those words.

I wasn't sure that everone on this list would know that. I figured that you knew that
it was "real busincess cycle theory" that gets this jab. (I think that the theory deserves
it. I think that Albert Rees first came up with it in his comment on Lucas and Rapping.)

Back to the original question. Suppose you want to learn economics on your own. What
to read?

My summary (partial, not exhaustive) and comments on some suggestions.

"Capitalism and Freedom" is not intended to explain economics. It is a presentation
of a political point of view and policies that follow from that point of view given
intelligent economic reasoning. Friedman is a libertarian (or "classical liberal" if
you prefer). A similar book from the left-wing point of view is "The Zero-sum Society"
by Lester Thurow. I think that they are good counter-points if one wants to think about
policies informed by economic reasoning.

If you want a videotaped exposition, Timothy Taylor's tapes are outstanding. They are
fun to watch and they cover the basic material. You can learn the basics of economics
from these tapes. The Microeconomics tape is the one pertinent for topics on this list.

I think that Heyne's book is excellent. He explains how economists think about everyday
life and trys to get the reader to think about things that way. You can tell that he
was not a left winger from the text, but the economic analysis is very good and it is
a systematic introduction to how you can use economics to think about things that you
see in the world. The vast majority of economics textbooks are boring. Heyne is not
boring and you will learn about "opportunity cost" and "supply and demand" -- 90 percent
of economic analysis. You'll see that economic analysis requires _imagination_: What
are the alternatives? How might things be done?. You would never guess that imagination
mattered from most economics textbooks, which focus on definitions and manipulating

"Information Rules" is an exposition of the economics of the IT industry. It is a good
read. I would add another book to those suggested on the list -- "Winners, Losers and
Microsoft" by Liebowitz and Margolis -- to get some evidence on how effective some things
such as "lock-in" actually are. These books explain some aspects of the economics of
the IT industry; neither is an exposition of basic economics.

Happy reading.