Book Review: Good Economics for Hard Times

Recall watching many dish tv antenna on top of very weak Jhuggi or in slum areas? Thinking, people who can’t afford food and clean drinking water, how can they afford a TV? It’s not rational right?

Wrong, my fellow reader, People knows what they want…

Television is more important than food

The book tells the story of a man in Morocco. After he made a compelling case that he and his family really did not have enough to eat, he showed us his largish television with a satellite connection. We might have suspected the television was just an impulse purchase he had subsequently regretted. But that was not at all what he said. “Television is more important than food,” he told us. His insistence made us ask how this could make sense, and once we went down that road it was not that hard to see what was behind this preference. There was not much to do in the village, and given he was not planning to emigrate, it was not clear that better nutrition would buy him much more than a fuller stomach; he was already strong enough to do the little work that was available. What the television delivered was relief from the endemic problem of boredom, in these remote villages where there was often not even a tea stall to relieve the monotony of daily life.

The book I’m about to review, gives such examples , which are so co-relatable. Let’s start the review

The Book: Good Economics for Hard Times

By Abhijit Banerjee and Esther Duflo (Both are Nobel holders and married to each other

The book tries to answers questions like:

  • Is immigration a biggest problem, to swing our attention, political environment and really a concern?
  • Does welfare, free cash make people lazy?
  • Do we need to fear Automation? Will it take away all jobs, leading to more jobless people on ground?
  • Does inequality going to stay?
  • Is climate change really impacting productivity and poor people?

What this book do wonderfully?

The book’s greatest contribution is its methodical deconstruction of fake facts: migration, we learn, is not on the rise – indeed, at 3% of global population, it is at the level it was in 1960. Natural experiments (involving Finns expelled from the USSR in 1945, Cubans flocking to Miami in 1980 and Jews settling in Israel in the 90s) prove that migrants do not steal natives’ jobs; they just help expose the holes in public services and social housing left by austerity. As for trade liberalisation, which economists treat as super-important, Banerjee and Duflo suggest it brings relatively small benefits while doing a lot of damage to the poor in countries such as the US and India. The resulting discontent turbo-charges racism: the moment white blue-collar men lose hope and apply for disability welfare benefits, it is no longer enough for them to denigrate black people and Latinos as “welfare queens”. They must now be depicted as gang members or rapists.

My MindMap

Key topics and some insights

Impact on me

Current times, when you have more news coming on mobile than you go out and watch yourself or ask someone to validate it, and as people around loosing patience in a blink of an eye, and even knowing that the content received, has high probability of being a misinformation, we get biased and make out perceptions on surrounding and creating an irreversible situation around us. This book helps clear this muddy water, helps get clear reflection of self in clear water to know self better.

Reading this book helped me to understand my biases and basic assumption on human behaviour when it comes to subject like migrants, tax cuts or taxing riches, automation taking job away, climate change impacting once life, racist behaviour towards community either cast based or economy based.

The book clearly mentions, “We should not stop telling the truth, but it is more useful to express it in a nonjudgmental way”. And it did wonderfully well in this regards it shares data points which we can see, validate and hence accept.

Key concept like to remember

Statistical Discrimination: This concept helps why police stops and checks black driver more often, why we see more Muslims “accidentally” killed by authorities and why There are more blacks and Muslims among criminals. Why we see so less women at leadership position. And how self discrimination impacts one’s performance in a place, where there are no bias. (Self discrimination triggers once under performance thinking s/he is getting discriminated)

Where to buy? It’s Available on Amazon as Kindle or hard copy. Great for collection.