Business

Saturday October 24, 2009

No room for economic rhetorics

Reviewed by Abby Wong


50 Economics Ideas You Really Need to Know

Author: Edmond Conway

Publisher: Quercus

THIS book is for everyone.

For students who find economics distressingly hard to grasp, this book articulates some of the complex and confusing subjects in a highly helpful manner. For example, inflation is said to be “as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” This book tells you why in plain English.

For professionals in the finance sector who are well versed in economic issues, this book makes them more grounded, reminding them once again the essence and discipline of economics. For instance, “Money is more than merely currency. It is also a state of mind, a token of trust.”

Or for anyone else who find themselves antagonised by economists’ rhetorical utterance such as, “Prices are signals that tell us whether the supply of or demand for a particular product is rising or falling. However, the open secret about economics is that, in reality, prices are rarely ever at their equilibrium,” this book smolders that anger.

You can never get enough of economics, particularly in tough times like this. Many have suffered but few have suffered as much in the aftermath of financial crisis as ordinary folks. While the crisis was caused by people who are supposedly knowledgeable in the field of economics, it was the hardworking commoners who have to rove through the tangled mess to understand the causes of the crisis into which they have befallen.

And when there is popular demand for explanations of the economic theories that led to the current recession, Edmond Conway’s 50 Economic Ideas You Really Need to Know comes to our rescue. It is the ultimate primer to teach laymen everything that we need to know about how the economy works. Moreover, it is a simple guide for anyone making first effort to understand the causes, effects and solutions to the current crisis.

Swift, succinct and sufficiently informative, the book tackles 50 key concepts in economics from Adam Smith, demand and supply, money markets to capitalism and some of the new issues facing the modern world today. Each of the 50 concepts is presented clearly in a well-researched chapter in no more than five pages, just enough for the gist and no room at all for the economic rhetoric that aims more to flatter than to enlighten ordinary readers.

The chapters read like short stories with plenty of real life examples and witty remarks made by well-known individuals in regard to the concept being discussed. Appropriately, the remark quoted in the chapter Risky Business is one made by Warren Buffet, a renowned risk adverse investor, “Be fearful when others are greedy and greedy only when others are fearful.” Counter-intuitive as this remark may sound, it is exactly the kind of advice, if taken seriously, that would have helped us dodge the recent financial fireball.

While wise words such as that from Warren Buffet are generously drawn to reinforce prevalence of economic practices in everyday experience, the kernel of all that is said in a chapter is curtly summarised in a single intelligent line under what is called The Condensed Idea at the end of each chapter. The Condensed Idea in the Currencies and Exchange Rates chapter starkly conceptualises exchange rates as “the barometer of a country’s standing.”

On many occasions throughout the book, it does prove that a crisply written chapter, a real life example, a couple of powerful quotes and a one-line recap are all that it needs to get an economic concept across. Getting the point across is what Conway excels in while dressing down a complex field of study his knack.

It is also worthy to note how Conway interestingly divides the 50 chapters into six groups and to each group, he cleverly assigns a name. When placed together, these six groups form the nervous system of our world economy and the group chapters are the various economic functions that propel it. In the case of the recent financial crisis, the nervous system broke down as a result of a virus that was detected much too late in the blood stream, namely the Finance and Markets. This virus is called Mortgage Over-exposure and it creates havoc at veins which are metaphorically similar to Banks.

The book, however, is not without its critics. Conway has been criticised for drawing an invalid parallel between Adam Smith’s Invisible Hands to the theory of Demand and Supply. This criticism is not quite the rhetorical debate that is deemed a waste of our time, but close. Critics must not again, in my opinion, attempt to flatter by making a scholarly issue out of a book that is aimed to enlighten and delight the needy economics illiterates.

This book has got all that we need to know about economics.

At last, for ordinary geeks who make a living in the virtual World Wide Web in which actions are denominated by binary numbers, this book is a guide for them to understand just what makes the real world tick.

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