Billie Pritchett's Reviews > Naked Economics: Undressing the Dismal Science

Naked Economics by Charles Wheelan
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Jun 07, 13

Read in September, 2009

UPDATE (06/08/13):
I reread Charles Wheelan's Naked Economics, revisiting it now about four years later. It is still one of my favorite books, but I do have a more modest perspective of it now. I'll try to provide a better summary of Wheelan's book than I did four years ago.

A market economy is really just a name for the transaction of buying and selling goods and services, and the scarcer the goods and services and the more demand, the more people are willing to pay for them. This explains in part why LeBron James makes more money than I do. There are fewer people who play basketball exceptionally well than can teach, which is what I do (and remember, teachers are not paid on a sliding scale where the better teachers make more for their outstanding performance). So LeBron James's skills are scarcer, mine are not. Note, by the way, this is not making a value judgment. It is an explanation of the pay disparity. And it is unlikely that the demand would be there for LeBron James's basketball talents were we living in the 18th century, in which case I would have more human capital than someone who can put a ball in a hoop.

Human capital, by the way, is often neglected when thinking about practical economic matters. Here is a rough way to determine your human capital. Consider your work experience, in the different fields in which you've worked. Consider also the degrees you have. Consider also your had and soft skills: Hard skills for a poet, for example, would be knowing how to compose a sonata, whereas soft skills would be something like being a good public speaker (a little more difficult to determine, but which you might think you have abilities with). And consider your life experience: Where have you gone? What have you done? What kind of person does this reveal? Add all that together--work experience, educational experience, life experience, and skills. Now think of the jobs you would best be able to be of service to given your experience and skills. And ask yourself these questions: Is there a demand for more people in these professions or is this profession bloated? How would I compare, in terms of my experience and skills, with other people who would also be looking for these jobs? And if any of these jobs require examinations, compare your examination score to the average, another important determining factor. This is a rough and rocky way to measure your human capital, essentially, for better or for worse, your economic worth. Unfortunately, for many workers vis-a-vis the economy, it is difficult for people to find new jobs if they lose old ones because they don't have very much human capital (that is, their experiences and skills just aren't valued economically).

There are other important lessons in this book, but if you take away any two, for my money, it'd be the ones above: what a market economy is and what human capital is. Your interests may vary.

REVIEW AS OF (09/03/09):
The book promised a good explanation of economics, and it delivered. Author Charles Wheelan conveyed the basics of economic theory and discussed the myriad ways in which economic theory has direct and indirect impacts on everyone's lives. Especially enjoyable were his demonstrations backed by the data that without good government and good regulatory policy, a good, functioning economy is impossible; there can be no good economics without good government. Wheelan also argues for certain social policy positions, and any reader is likely to disagree with him at some points and for seemingly good reasons. However, Wheelan makes clear that these are his positions and that social issues that converge with economic issues are always up for debate. Indeed, that's all part of the dynamism of social and economic life generally. Yeah, read this book. It's a humdinger.
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message 1: by Paul (new)

Paul Lawrence Wheelan's out-of-date assumptions about human nature, trade, motivation and efficiency, make this book nothing more than "feel good about yourself if you're well-off" neoliberal propaganda.


Billie Pritchett You might well be right that the book was written as a justification for the status quo. But I fail to see how it is out-of-date. It seems to me to capture the nature of mixed capitalist economies quite well. Whether these systems are moral is another matter.


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