Monday, January 03, 2005

Review of David Friedman's Hidden Order: The Economics of Everyday Life

Can one really analyze everything in terms of economics? David Friedman in his Hidden Order: The Economics of Everyday Life thinks that it is obvious that you can. After reading him, one is inclined to agree. This is one of those books that almost forces you to agree with it. It is really good. Having never learned Micro Economics formally I was really glad for the opportunity.

First we learn that economics is not about money. It is really about explaining and understanding a whole range of human behaviours. Friedman's examples range from war to marraige and much in between. Friedman answers all sorts of questions like: "Who gets how much and why", and when do prices go up, and when do they go down. There are also other important questions discussed. Who benefits from Tarrifs? (Small special intersts.) Who looses? (Almost everyone else.) Who benefits from rent stabilization in New York? (people living in New York) Who Looses (Their Children, and everyone else who needs a place in the city.)

There is much debunking of old economic dogmas that someone should have told me years ago. Stopping the sale of Ivory will not save the elephants. Tarrifs do not protect American workers from foreign products. Putting legal restrictions on housing contracts helps hurts everyone.

The heros of the book are the classical figures we've all heard of but never read or understood: Adam Smith, Ricardo, Pareto, and of course (the author's father) Milton Friedman.

To be completely honest, I have no way of veryifying the content of the book. The book is not a very easy read. I cannot tell whether or not he pulled something over me, hidden in an unsupported graph. But I suspect he did not. What I did understand (a good 85%) was clear and sound. I would encourage everyone who wants some grasp of how things work, wnd why we make the choices we make, to read this book.

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