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Seven Bad Ideas: How Mainstream Economists Have Damaged America and the Worldby Jeff Madrick
Synopses & Reviews
A bold indictment of some of our most accepted mainstream economic theories—why they’re wrong, and how they’ve been harming America and the world.
Budget deficits are bad. A strong dollar is good. Controlling inflation is paramount. Pay reflects greater worker skills. A deregulated free market is fair and effective. Theories like these have become mantras among American economists both liberal and conservative over recent decades. Validated originally by patron saints like Milton Friedman, they’ve assumed the status of self-evident truths across much of the mainstream. Jeff Madrick, former columnist for The New York Times and Harper’s, argues compellingly that a reconsideration is long overdue.
Since the financial turmoil of the 1970s made stagnating wages and relatively high unemployment the norm, Madrick argues, many leading economists have retrenched to the classical (and outdated) bulwarks of theory, drawing their ideas more from purist principles than from the real-world behavior of governments and markets—while, ironically, deeply affecting those governments and markets by their counsel. Madrick atomizes seven of the greatest false idols of modern economic theory, illustrating how these ideas have been damaging markets, infrastructure, and individual livelihoods for years, causing hundreds of billions of dollars of wasted investment, financial crisis after financial crisis, poor and unequal public education, primitive public transportation, gross inequality of income and wealth and stagnating wages, and uncontrolled military spending.
Using the Great Recession as his foremost case study, Madrick shows how the decisions America should have made before, during, and after the financial crisis were suppressed by wrongheaded but popular theory, and how the consequences are still disadvantaging working America and undermining the foundations of global commerce. Madrick spares no sinners as he reveals how the “Friedman doctrine” has undermined the meaning of citizenship and community, how the “Great Moderation” became a great jobs emergency, and how economists were so concerned with getting the incentives right for Wall Street that they got financial regulation all wrong. He in turn examines the too-often-marginalized good ideas of modern economics and convincingly argues just how beneficial they could be—if they can gain traction among policy makers.
Trenchant, sweeping, and empirical, Seven Bad Ideas resoundingly disrupts the status quo of modern economic theory.
"Madrick (Age of Greed) takes aim, in dense but readable prose, at mainstream economic thinking: the ideas that are so commonly accepted that they're now taken as gospel. Focusing on the 2008 recession, he presents a thorough exegesis of this accepted wisdom and its effect on the economy, starting with Adam Smith's 'Invisible Hand' theory, which describes how buyers and sellers decide a good or service's ideal price. Madrick goes on to examine Say's Law and austerity economics, John Maynard Keynes's theories on interest rates, and Milton Friedman's theories of free markets. He also addresses the question: where did we go awry? Mainly, he says, when we started treating economics as a perfect science, thereby giving 'economic ideas more credibility than they often deserve.' Moreover, modern thought has led us to believe that the government is almost always bad and the markets almost always good. Those bankers and economists who failed to avert the crisis aren't evil, according to Madrick, just misguided, particularly in oversimplifying major economic shifts. This book is an attempt to inject the complexity back in. As a result, it's a tough read for the nonacademic reader, but one well worth the effort." Publishers Weekly Copyright PWxyz, LLC. All rights reserved.
The author of the widely praised Age of Greed now gives us a bold indictment of some of our most accepted economic theories-why they're wrong, the harm they've done, and the theories that would vastly improve on them.
Jeff Madrick-former New York Times business columnist and now Harper's economics columnist-mounts a comprehensive case against prevailing mainstream economic thinking, illustrating how it has damaged markets, infrastructure, and individual livelihoods, causing hundreds of billions of dollars of wasted investment; financial crisis after financial crisis; poor public education and public transportation; gross inequality of income and wealth, and stagnating wages; uncontrolled military spending; and a failed healthcare system that delivers far less than it costs. Using the Great Recession as his foremost case study, Madrick shows how the decisions America should have made before, during, and after the financial crisis were suppressed by popular theory, and how the consequences are still being felt here and around the globe. And he examines the too-often-marginalized good ideas of modern economics, and convincingly argues just how beneficial they might be if only they can gain greater traction among policy makers.
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