Are there one or two books you would recommend to understand the current state of the economy?
1. I am tempted to answer “no” and stop there.
2. Depends on what you want to understand. I think that Kindleberger’s Manias, Panics, and Crashes is probably good for understanding the way that financial bubbles show up and affect things. I think that McAfee and Brynjolfsson’s The Second Machine Age is good on contemporary structural change. Probably McCloskey’s Bourgeois Equality is good on the deep causes of what she calls “the great enrichment” (note, however, that I have yet to plow through the book).
3. When Specialization and Trade comes out, I am going to wish that a lot more people would read it than actually will do so.
I propose 3 books that don’t yet exist: Interpretive Frameworks in Economics, Edited by Arnold Kling; Trade and Specialization by Arnold Kling; the book Warren Buffett threatened to write, the closest of which is the Berkshire annual letters and Security Analysis and Common Stocks and Uncommon Profits.
Yeah that Buffet book. That could be some read. I wonder if it would be fluff though. What I would want: “This was my valuation of KO (say). Based on this cash flow, and this growth rate and this discount rate. And this is what the market thought. ” But I doubt it would be that precise.
I read somewhere Charlie Munger had stated that Buffett has never actually done a net present value of a business, the point being that his margin of safety is so enormous that the precise calculation doesn’t even matter. I would like someone to just follow him around like the Snowball writer and just have him wax philosophical about business and then some business professor could edit it up as a treatise on what the state of the art of “microeconomic capitalism” means.
Is there a good book on the Japanese economy after the stock market bust? Long term their economy of slow growth, low interest rates, limited investment and falling populations seems to be direction of all modern developed economies including the BRIC ones as well. (OK not India but China, Brazil, and Russia appear to be going that direction.)
How about “Invisible Wealth: The Hidden Story of How Markets Work”? I found that one helpful!
The “current state” recorded in any worthwhile text is substantially based on what has passed. But, in the future (near or distant) the books on what this current condition really is (once it has “jelled” and can be seen as an objective set of facts, will not be what you may read today.
It is a bit like asking for a book on the current state of the weather.
Does one want a book about the financial crisis and aftermath? Then what interpetive framework does one prefer?
There’s a fantastic book about the world’s real poor:
The Bottom Billion, by Paul Collier.
He talks about four important traps of poverty, briefly with how they interact, and then in more detail with excellent examples.
There are many analogies to failed policies in the developed world that a thoughtful reader can see easily.
Besides, most folk don’t want to understand the ‘current state’ as much as accurately predict the future — and that is really a mess. But the over-spending post WW II “American Century” is about to move into an unfunded pensions crisis, like what Puerto Rico is suffering now.
Nobody knows what will happen, and you shouldn’t trust those who say they do, altho many have good insights that might be true.
Thanks for the Paul Collier reference, I think I’ll be getting it.
My book for my preferred interpretive framework is Bill Bonner’s “Empire of Debt.” I’m sure there are even better books with that framework, and probably slightly better frameworks, and frankly I don’t read many books, but deleveraging seems to be the defining “current state” of the economy.
It is a public service for scholars to list books (a few dozen or so) that they suggest as reading for the educated laymen.
Thomas Sowell has a list at his web site.
Paul Graham has a list at his web site–under “Rarely Asked Questions.”
Deirdre McCloskey had a list of books to read to learn more about economics–it was a handout that came with the syllabus in her Price Theory class. I don’t recall every title. Friedman’s _Capitalism and Freedom_ was on the list, and so was Albert Hirschman’s _Exit Voice and Loyalty) and Theodore Schultz’s _Transforming traditional agriculture_.