Abhijit V.
Banerjee & Esther Duflo (2019). Good Economics for Hard Times, Juggernaut,
New Delhi, pp.402.
Banerjee and Duflo are
back with arguments for conceptualizing economics that is useful to build the
future. This is the second book of the Nobel Prize winning duo (https://www.nobelprize.org/prizes/economic-sciences/2019/banerjee/lecture/) and real-life economist couple after their debut ‘Poor
Economics’ which was reviewed in this blog (http://thehouseofbooks.blogspot.com/search?q=Poor+Economics). The authors take on the biggest problems facing humanity
today- climate change, automation, immigration, welfare and poverty- and
explore how a better use of economists’ frame can help solve them. Armed with
data, case studies, relentless humour and tender feeling, this work is rigorous
as it is humane.
Critique of
Economics
The book begins with a
frank critique of economics as it is practiced today. Economists come in for a
fair share of brickbats for their obsession with economic growth as the
ultimate yardstick of good policy making, the method of trade liberalization as
a means to achieve them, the unwillingness to move from assumptions of rational
economic choices and the inability to connect with the larger public on issues
that impact the average person. Crouched under the complexities of fallacious
assumptions, mathematical modelling, and inept communication, economists have
created a wide gulf between themselves and the rest of the world. Banerjee and
Duflo argue that continuing along these traditions is unhelpful as it is
unethical. They call for an approach that uses realistic assumptions and make
bare the caveat emptor rather than continuing with misleading simplistic
versions of the world.
Analysis of Issues
One of the biggest
takeaways from this book is the way the authors examine some of the pressing
issues today by presenting deliberate questions that challenge commonly held
assumptions. For example, all over the world there is a surge of fear against
immigrants as arguments abound that they reduce chances of employment and
welfare of others. The authors examine immigration both from historical data
and theoretical assumptions to bring out what happens to the local economy when
groups of a particular skill-set immigrate? Who wins and who loses and what is
the long-term impact? The nuances in their reasoning give clear pointers as to
how the problems could be solved. The authors caution that careful
intervention, not outright prohibition is the way forward. Similarly, other issues such as automation,
welfare and climate change are dissected with reasoned arguments and empirical
evidence.
Banerjee and Duflo are
known for writing eminently readable books which provoke our thinking and
arouse our feeling towards action. They do not disappoint this time. Their
canvas is bigger with better challenges to tackle head-on! A great book to
begin your year and decade!
