Economism: Bad Economics and the Rise of Inequality

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. (Jan.)