Naked Economics: Undressing the Dismal Science by Essay

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Naked Economics: Undressing the Dismal Science by Charles Wheelan

Biographical Sketch of Author

Charles Wheelan, author of Naked Economics: Undressing the Dismal Science, is not a traditional economics expert, in that his background education goes beyond economics. He has an MPA from Princeton University and a PhD in public policy from the Harris School at the University of Chicago's School of Public Policy in 1998. He has focused his attention on economics and its impact on public policy and politics. He currently works as a senior lecturer at the Harris School. He is widely known as the author of Yahoo! feature on economics. He has worked at the Midwest correspondent for The Economist. He has also worked as a finance correspondent for WBEZ Chicago Public Radio, an adjunct lecturer at Northwestern University's Medill School of Journalism, and as the director of policy and communications for Chicago Metropolis 2020. Wheelan is best known for his ability to make the complex field of economics not only accessible, but also interesting, to the uninitiated person.

Summary of Contents

Wheelan likes to use examples in teaching economics, so that the reader is not looking at abstract principles, but at specific examples of how the economy helps drive, or is driven by, the lives of real people. This is the factor that makes Wheelan's approach so readily accessible to the reader, even if that reader has no prior knowledge of or interest in economic principles. Moreover, Wheelan takes a global approach to politics, and demonstrates how the same economic principles that can ensure that a specific brand of soda achieves market dominance in a location in the United States can also help explain the poaching of an endangered species across the world. In fact, Wheelan's book mixes policy and economics in a way that makes it clear that even the smallest local political decisions can have a worldwide impact.

Wheelan takes a three-pronged production-based approach to economics, and looks at: what goods should be produced (what), the manner or production (how), and the targeted consumer (whom). One factor that influences these decisions is the availability of goods: scarcity can impact all three of those prongs. Wheelan suggests that the market answers the questions of what, how, and whom and that the price of goods reflects reality and provides information to consumers.

Wheelan also tackles the issues of incentives. His viewpoint about human behavior is somewhat cynical, and he suggests that people need some type of reward or incentive to engage in specific behavior. In fact, in a free market economy, incentives control the market, as each participant in the market process is acting in his or her own best interest. Every time someone acts in the market, that action is the result of a decision, and that decision has only come after a participant has weighed his or her own interests and concluded which decision best serves those interests. Information is critical for decision making, and can lead to discriminatory, but rational choices. The example that Wheelan uses to discuss incentives is a controversial one: the poaching of black rhinoceros for their horns. Wheelan suggests that laws criminalizing poaching will never be sufficient to stop the poaching, because the likelihood of apprehension and the applicable penalties cannot outweigh the strong incentives to poach. Instead, he suggests allowing people to own black rhinoceros, harvest their horns, and breed them for horns, so that their deaths would result in a private loss.

Wheelan also discusses the impact of the government on the economy. He recognizes that government is necessary and that taxes are necessary in order to solve the free-rider problems associated with public goods. However, Wheelan also views the government as a detriment to the free market by interfering with free trade on behalf of special interest groups, which forces the whole of society to bear the costs of a perk to a small group. While Wheelan specifically discusses the U.S. government, one can see how these same principles apply to other governments, as well. In fact, Wheelan concludes that the economy would be aided by getting the government out of the areas where it does not belong.

Then, Wheelan moves on to discuss human capital and its role in the economy. Human capital is what each individual has to offer in society and the reward for a person's skill set is not based on its social value, but its scarcity. In this manner, Wheelan answer the question of why professional athletes earn so much more than teachers; it is not because they are providing more value, but because they are scarcer.

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Moreover, he related poverty to a lack of human capital, and thinks its solution might be found in ensuring that people have marketable skills. He talks about how global trade and economic interdependence both help and hurt poor countries. He also discusses how the global comparative wealth of even the most impoverished American makes it difficult to impose American standards on other countries by giving the example of clean drinking water being the world's deadliest environmental problem, but one that receives little attention from Americans.

Critical Evaluation

Wheelan's purpose in writing this book was to allow the smart reader with no real understanding of economic principles to peel back the unnecessary complications of the science and understand the simple concepts underlying the field. I opened Wheelan's book with a fairly decent understanding of basic economic principles and some understanding of how policy and economics interact. Therefore, I cannot really assess how Wheelan's book would impact someone with no knowledge of the economy. Whether or not he accomplished those goals for the uninformed reader is not something that I can personally judge, but I can say that he made economic principles that had been difficult to understand when I first encountered them much more accessible to me. Furthermore, I felt like his book helped address some economic issues that I had failed to previously consider and did so in a manner that was not only educational, but also entertaining. In fact, Wheelan's greatest strength as an author is not his obviously firm grasp on economic principles and how they impact national, foreign, and global policies, but his ability to break down these large concepts into small, easily-accessible, interesting scenarios. For example, his discussion of Coca-Cola, a beverage that almost every American reader is sure to have tried during their lifetimes, and that several readers are probably consuming while reading the book, hammers home the idea that global financial decisions can and do impact local practices.

One of the strengths of this book is that it challenges some very ingrained American ideals about globalization. There is an assumption by many that globalization helps Americans by making cheaper goods and services available to Americans, but only because of the exploitation of foreign workers. This statement may be true on the surface, but Wheelan is very cautious about projecting American ideals onto foreign countries, particularly developing nations whose priorities may be very different than those priorities that Americans have. It served as a wonderful reminder that American ideals are wonderful, for Americans, but that the relative wealth that Americans experience gives them a perspective that is not shared by people in most other nations. Wheelan's use of two examples really stood out in my mind. He talked about environmental issues, and how America has tried to lead a green initiative, aimed at helping to improve environmental practices around the globe. However, the most-pressing environmental issue to most Americans is global warming. Wheelan points out that in developing nations, many people lack access to clean drinking water, and that literally millions of people die because of this problem each year, global warming is not a significant environmental concern. Globally, water pollution is a much more serious immediate problem than global warming. Therefore, policy decisions, particularly foreign policy decisions, need to factor in global concerns. Wheelan also uses the example of child labor as a way that Americans export their moral views into foreign lands. Very few people would suggest that child labor is a good thing. It involves children, sometimes very young children, doing work that is often dangerous, for very little pay and in relatively harsh conditions. The image is horrifying. However, the reality is that every industrialized nation has had a period of time during which child labor was legal. Not employing these children does not improve their living conditions; these children are working to meet essential needs, like food and shelter. Moreover, when a manufacturer stops using child labor, it does not then ameliorate the problems that led to the children seeking employment in the first place. Stopping the use of child labor, on its own, does nothing to improve the living conditions of former child laborers. With those two examples, Wheelan demonstrates the very real dangers of approaching global economic issues from a wholly-American perspective, which is one of the real strengths of his book.

One of the thoughts I had when reading this book….....

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