Shannon Costello

I was looking for a readable book that would give me an overview of economics, and I found what I was looking for in a big way. Wheelan uses a great deal of humor and an abundance of extended examples; because of those two elements he teaches economics, a traditionally dry subject, in a way that inspires one to want to know more. (I have worried that education focuses too much on entertainment at the expense of depth, but this book is a fabulous example of teaching in an entertaining way without sacrificing content- inspiring. Here is another interesting attempt at teaching economics while entertaining.)

One reason I don’t understand economics is that I fail to apply my understanding of human depravity to what people do with their money. Teachers Unions, Wheelan says, will support additional certification requirements for new teachers as long as they are grandfathered in, meaning that it is harder for new teachers to get in, which helps keep current teachers’ jobs secure. Small groups, such as American Mohair farmers, worked to keep the government subsidies they were getting even when the need for such subsidies no longer existed and it was taxpayer money that they were getting. I just now thought of something similar in my own life: language teachers get a certain amount of money to spend every year, and I make sure I find ways to spend every penny- I do not want that money going anywhere else. One benefit of this book, then, was seeing how the motivations of a person or group will lead them to work for their own ends at the expense of others.

This book was good for perspective. I started with the belief that government was not to be trusted and a vague idea that globalization might be bad. Actually the US government keeps us in pretty good order: it provides us with the dollar, a convenient way to pay for things. It provides public goods- things we couldn’t do individually such as protection (military and police) and infrastructure (I’m thinking about highways, for example). Even the fact that it has a system that works pretty well for collecting taxes is a plus. Greece has been in the news lately for its financial problems, and part of that problem is widespread tax evasion. Hurray for the US government!

I think I was associating globalization with things like the United Fruit Company- unregulated big business. Anti-globalization protesters would probably be opposed to what the UFC did as well. But they also accuse organizations like the World Bank of actually contributing to poverty. For them, the spread of capitalism is not a good thing. Wheelan points out that international trade is a good thing. It gives people access to goods they otherwise could not get, including technologies they might not have the skills to develop.

Speaking of skills, I was particularly interested in his explanation of human capital. As a trained teacher who is (more or less) bilingual I have more human capital than I would as a high school drop out. Education is a human capital investment…I wish I could convey that to every middle school child I come into contact with. Generally, the poor have less human capital than the wealthy. I think about the despair that makes it so difficult to motivate one’s self to break that kind of cycle…it makes me sorry.

Economics lead to interesting views of reality. In the school cafeteria I routinely see students purchasing handfuls of cookies for lunch. Cookies are $.25 each, I think. The social cost of such behavior (health, obesity), since it is not reflected in the price, is what is known as an externality. This relates to our perceived environmental problems…gas, for example, is not expensive enough to make us want to use less (no incentive). Or now I know about price discrimination- why on the same airplane different people pay different prices. (And we are stuck paying extra baggage fees and fees for headphones or blankets because we will still fly, I suppose. I wish we wouldn’t.)

Other interesting ideas: creative destruction. Like self check-out lines in grocery stores cutting somebody out of a job. Painful but necessary. And, from an economics perspective, working overly hard to avoid creative destruction is not a good idea. Wheelan would say that giving farmers subsidies to keep them growing is not a good idea because we are just keeping too many farmers around. His PhD is in public policy, and I’m starting to see the connections. Another book I read recently Dirt Under my Nails by Marilee Foster, discussed the damage that poor policies have on farmers and the environment (she was focused on Long Island, not the US in general). (It was after all my lack of understanding about the economics of farming that sparked this whole economics kick.)

Finally, my ideas for further reading (names and titles that sounded interesting): F. A. Hayek, Keynes, Joseph Schumpeter, Hernando de Soto (Peruvian economist), Burton Malkiel (if I wanted a book on investing in the stock market), and I will be more likely to read Paul Krugman’s columns from now on. In general, I think the direction I should head in next would be finding out more about labor unions in the US, particularly the NEA, since I’m a member.