Starred review from October 24, 2016
A little knowledge is a dangerous thing, asserts this treatise from business law professor Kwak (coauthor, with Simon Johnson, of White House Burning), which observes how simplistic and misleading economic models migrate directly from undergraduate economics to Wall Street and Pennsylvania Avenue. This is a book that has begged to be written for some time, although perhaps only today—now that the Great Recession has cast doubt on the free market’s infallibility—will it find a receptive audience even among economists. Kwak brings a refreshing irreverence to this upstart challenge to dogmatic ideas. He first sketches the supply-and-demand curves familiar to students of Economics 101, then goes beyond the “frictionless world” of the charts to explain how taxes, minimum wage laws, and international trade work in the real world. (Kwak, cofounder of a software company, has substantial business experience beyond the ivory tower, something all too rare among professional economists.) He also rightly questions modern economics’ moral underpinnings, arguing that material prosperity should not be society’s overriding goal. He has written a thoughtful counterargument to the classical economic ideas frequently encountered in public life. It should be companion reading to every introductory economics text. Agent: Rafe Sagalyn, ICM.
November 1, 2016
A spry manifesto that dismantles the many suppositions of modern economic theory.The fundamental duty of a corporation is to increase the wealth of its shareholders, is it not? It's in all the economics textbooks, and it rolls off the tongue of financial journalists and talking heads, all defended by the supply curve and the ineluctable laws of elasticity of demand. As Kwak (Business Law and Corporate Finance/Univ. of Connecticut School of Law; co-author: White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You, 2012, etc.) writes, "this is why Economics 101 has become the preferred conceptual vocabulary for people who defend and even celebrate the high levels of inequality in the rich world today." Economics as it is now taught, Kwak charges, is not really economics at all but economism, a near-religious, certainly ideological belief system on par with communism and other -isms in providing all the answers a believer would ever need. Some of the author's criticisms are aimed at the larger greedhead culture that thrives due to economism; some of them, too, are aimed at the discipline of economics itself, which uses such things as the demand curve to justify things as reprehensible as price gouging in times of emergency. The author excoriates economics for its mathematical soullessness and its lack of attention to "historical context, critical thinking or real-world applications," as a survey of undergraduate programs put it. He even manages to do a nice takedown, along the way, of the Leibnizian notion that this is the best of all possible worlds; for surely, he asks, there must be something better than "consumer surplus plus producer surplus." Indeed, as he argues, the world cannot turn on economics alone, and the notion of economism that the aim of all life is to increase wealth carries the prospect of social harm. Do the better angels of our nature demand double-digit profit? For a soft-path, smart refutation, Kwak's book is just the ticket.
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Starred review from December 1, 2016
Kwak (law, Univ. of Connecticut Sch. of Law; cofounder, Guidewire Software; coauthor, 13 Bankers) scrutinizes economism, which he describes as the misuse of basic economics to explain income and wealth inequality in the United States. After giving a nutshell tutorial on supply and demand principles, he explains how economism developed with the support of wealthy donors and corporations in the second half of the 20th century as a counter to the New Deal consensus and socialism. Kwak traces how its tenets of free enterprise and smaller government were spread by think tanks and the media to influence new generations of academics, politicians, and, ultimately, the electorate. Kwak dissects how such simplistic economic thinking fails to work in a complicated real world consisting of imperfect markets, unequal participants, asymmetrical incentives, and broad societal needs. In a series of chapters, he focuses on how economism has distorted discussion on the minimum wage, taxes, health care, financial market regulation, and trade policy. VERDICT Kwak's work strikes a major blow for economic literacy and complements Thomas Piketty's Capital in the Twenty-First Century. All readers, despite preexisting leanings, will find it both provocative and enlightening. [See Prepub Alert, 7/11/16.]--Lawrence Maxted, Gannon Univ. Lib., Erie, PA
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