Mark D.'s Reviews > Hidden Order: The Economics of Everyday Life

Hidden Order by David D. Friedman
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really liked it
bookshelves: owned, economics

This book is not what most people would expect from an economics book, even one aimed at the popular audience. From the start, you can tell that the author approaches economics from an unconventional point of view: in his view, economics is not about money. Instead, it turns out to be about value, and how we exchange things of value to obtain others; money need not be involved. When examined from this viewpoint, economics suddenly becomes applicable to study of how we make decisions about nearly anything. Rational decision-making involves, to a certain extent, evaluating relative value of the options.

After dropping this bombshell, Friedman goes on to demonstrate basic microeconomic principles in a variety of contexts, and shows how changing one variable while holding others constant can affect the outcome. For many situations, this produces counter-intuitive results; for instance, he shows how a homeowner is made better off by changing home prices, regardless of whether prices rise or fall.

In the second half of the book, Friedman takes the principles he demonstrated in the first half and shows how they work together, then applies them to a variety of situations. The chapter on personal economics as applied to political actions is, to me, worth the cost of the book by itself; it supplies a rational explanation for why even the best-intentioned elected officials do things that go against the interests of their constituents.

While not openly advocating libertarianism, Friedman's demonstrations clearly display ample reason for a normal person to embrace a free-market, small-government society; nearly every chapter shows how things the government does to make situations better nearly always makes them worse. An efficient free market is, he claims, the best tool for providing the greatest number of people with the best value for their efforts in life. And since he doesn't just claim it, but show it, I believe it.

The half-star off my review is because the books gets kind of technical in spots, requiring careful reading and selective re-reading to be sure of understanding some points. But that's a minor quibble. I highly recommend this book to anyone who wants to learn how to make better decisions and/or wants to understand what makes a free market work.
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