Economics in two lessons : why markets work so well, and why they can fail so badly / John Quiggin.

Format:

Book

Author/Creator:

Quiggin, John, author.

Language:

English

Subjects (All):

Free enterprise.

Economics.

Capitalism.

Physical Description:

xii, 390 pages : illustrations ; 23 cm

Place of Publication:

Princeton : Princeton University Press, [2019]

Summary:

Since 1946, Henry Hazlitt's bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can't explain why they often fail so badly--or what we should do when they stumble. As Nobel Prize-winning economist Paul Samuelson quipped, "When someone preaches 'Economics in one lesson, ' I advise: Go back for the second lesson." In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes--and failures--of free markets. Economics in Two Lessons explains why market prices often fail to reflect the full cost of our choices to society as a whole. For example, every time we drive a car, fly in a plane, or flick a light switch, we contribute to global warming. But, in the absence of a price on carbon emissions, the costs of our actions are borne by everyone else. In such cases, government action is needed to achieve better outcomes. Two-lesson economics means giving up the dogmatism of laissez-faire as well as the reflexive assumption that any economic problem can be solved by government action, since the right answer often involves a mixture of market forces and government policy. But the payoff is huge: understanding how markets actually work--and what to do when they don't. Brilliantly accessible, Economics in Two Lessons unlocks the essential issues at the heart of any economic question.

Contents:

Lesson One, Part I: The Lesson p. 11

Chapter 1 Market Prices and Opportunity Costs p. 13

1.1 What Is Opportunity Cost? p. 14

1.2 Production Cost and Opportunity Cost p. 17

1.3 Households, Prices, and Opportunity Costs p. 22

1.4 Lesson One p. 24

1.5 The Intellectual History of Opportunity Cost p. 25

Chapter 2 Markets, Opportunity Cost, and Equilibrium p. 30

2.1 TISATAAFL (There Is Such A Thing As A Free Lunch) p. 32

2.2 Gains from Exchange p. 35

2.3 Trade and Comparative Advantage p. 37

2.4 Competitive Equilibrium p. 40

2.5 Free Lunches and Rents p. 44

2.6 Adam Smith and the Division of Labor p. 45

Chapter 3 Time, Information, and Uncertainty p. 50

3.1 Interest and the Opportunity Cost of (Not) Waiting p. 51

3.3 Uncertainty p. 62

Lesson One, Part II: Applications p. 67

Chapter 4 Lesson One: How Opportunity Cost Works in Markets p. 69

4.1 Tricks and Trap? p. 69

4.2 Airfares p. 71

4.3 The Cost of (Not) Going to College p. 75

4.4 An Exception That Proves the Rule: The Boom and Bust in Law Schools p. 77

4.5 TANSTAAFL: What about "Free" TV, Radio, and Internet Content? p. 79

Chapter 5 Lesson One and Economic Policy p. 85

5.1 Why Price Control Doesn't (Usually) Work p. 85

5.2 To Help Poor People, Give Them Money p. 89

5.3 Road Pricing p. 96

5.4 Fish and Tradable Quota p. 100

5.5 A License to Print Money: Property Rights and Telecommunications Spectrum p. 108

Chapter 6 The Opportunity Cost of Destruction p. 114

6.1 The Glazier's Fallacy p. 115

6.2 The Economics of Natural Disasters p. 118

6.3 The Opportunity Cost of War p. 119

6.4 Technological Benefits of War? p. 125

Lesson Two, Part I: Social Opportunity Costs p. 131

Chapter 7 Property Rights and Income Distribution p. 134

7.1 What Lesson Two Tells Us about Property Rights and Income Distribution p. 135

7.2 Property Rights and Market Equilibrium p. 136

7.3 The Starting Point p. 138

7.4 Property Rights and Natural Law p. 142

7.5 Pareto and Inequality p. 145

Chapter 8 Unemployment p. 150

8.1 Macroeconomics and Microeconomics p. 151

8.2 The Business Cycle p. 153

8.3 The Experience of the Great and Lesser Depressions p. 155

8.4 Are Recessions Abnormal? p. 159

8.5 Unemployment and Opportunity Cost p. 162

8.6 The Macro Foundations of Micro p. 165

8.7 Hazlitt and the Glazier's Fallacy p. 167

Chapter 9 Monopoly and Market Failure p. 171

9.1 The Idea of Market Failure p. 171

9.2 Economies of Size p. 173

9.3 Monopoly p. 177

9.4 Oligopoly p. 184

9.5 Monopsony and Labor Markets p. 185

9.6 Bargaining p. 187

9.7 Monopoly and Inequality p. 191

Chapter 10 Market Failure: Externalities and Pollution p. 196

10.1 Externalities p. 197

10.2 Pollution p. 200

10.3 Climate Change p. 203

10.4 Public Goods p. 208

10.5 The Origins of Externality p. 210

Chapter 11 Market Failure: Information, Uncertainty, and Financial Markets p. 214

11.1 Market Prices, Information, and Public Goods p. 215

11.2 The Efficient Markets Hypothesis p. 218

11.3 Financial Markets, Bubbles, and Busts p. 221

11.4 Financial Markets and Speculation p. 223

11.5 Risk and Insurance p. 226

11.6 Bounded Rationality p. 228

11.7 What Bitcoin Reveals about Financial Markets p. 232

Lesson Two, Part II: Public Policy p. 237

Chapter 12 Income Distribution: Predistribution p. 239

12.1 Income Distribution and Opportunity Cost p. 240

12.2 Predistribution: Unions p. 242

12.3 Predistribution: Minimum Wages p. 249

12.4 Predistribution: Intellectual Property p. 254

12.5 Predistribution: Bankruptcy, Limited Liability, and Business Risk p. 262

Chapter 13 Income Distribution: Redistribution p. 270

13.1 The Effective Marginal Tax Rate p. 272

13.2 Opportunity Cost of Redistribution: Example p. 275

13.3 Weighing Opportunity Costs and Benefits p. 278

13.4 How Much Should the Top 1 Percent Be Taxed? p. 282

13.5 Policies for the Present and the Future p. 285

13.6 Geometric Mean p. 286

Chapter 14 Policy for Full Employment p. 288

14.1 What Can Governments Do about Recessions? p. 289

14.2 Fiscal Policy p. 290

14.3 Monetary Policy p. 297

14.4 Labor Market Programs and the Job Guarantee p. 299

14.5 One Lesson Economics and Unemployment p. 301

Chapter 15 Monopoly and the Mixed Economy p. 308

15.1 Monopoly and Monopsony p. 309

15.2 Antitrust p. 311

15.3 Regulation and Its Limits p. 314

15.4 Public Enterprise p. 315

15.5 The Mixed Economy p. 319

15.6 I, Pencil p. 322

Chapter 16 Environmental Policy p. 328

16.1 Regulation p. 330

16.2 Environmental Taxes p. 332

16.3 Tradeable Emissions Permits p. 334

16.4 Global Pollution Problems p. 335

16.5 Climate Change p. 336.

Notes:

Includes bibliographical references (pages 345-370) and index.

ISBN:

0691154945

9780691154947

OCLC:

1051137065