Ever tried reading a business page of a newspaper without a proper grounding in economics? Or reading an annual budget analysis in core jargons of economics? Felt dizzy at the downpour of jargons as comprehensible as Greek or Latin would be to a Metric fail from the outskirts of Delhi? How often you turned those pages to read politics, sports or entertainment? Did you always think that economics was the obverse side of entertainment?
Don’t give up just yet if you are starving to build a foundation in economics - sans the complexities - even though you haven’t formally studied the subject. Help is not far. “Free Lunch” is just the right sumptuous banquet to fill your belly to your satisfaction.
Introduction to economics had never been so simple and interesting. Those who couldn’t read more than a paragraph or two of core economic articles have read the whole book and released a burp of never-before-seen satisfaction after reading “Free Lunch”. Economics, suddenly, was no rocket science to them.
David Smith not only copied the second name from Adam Smith – the man who introduced the world to microeconomics - but also bettered him in teaching economics to novices in a lot simpler manner. He, very skillfully, cuts through the intimidating jargons that surround the modern economics. He simplifies the explanation to near layman language and provides very relatable instances to make the complexities look surmountable.
Why do house prices rise and stock markets fall? How does it affect us when interest rates go up, and why? What is a lesser evil – Inflation or Deflation? Does a budget deficit matter? Suddenly people, after reading Free Lunch, won’t be so indifferent to the economic jargons.
Just like any normal human being, I was always disappointed at the seeing so much poverty, hunger and sickness around me. Other than wondering at the divine plan for such inequalities, I would always search for an economic solution Рto whatever extent my mortal knowledge of the subject would allow Рtowards resolving the problem. One solution I always thought, obviously out of my naivet̩, was to distribute cash to all the poor so they could spend their way out of poverty and hunger and at the same time the society could trudge its way out of inequality and suffering.
I smugly marveled at my solution and wondered why nobody on the planet ever thought of such a solution to this problem. That was until I read Free Lunch.
David Smith, in this book, takes help of innumerable such hypothetical instances, then suggests some solution, which to a layman might look like a perfect antidote at first, and then systematically dissects the solution to show how the solution would lead to another set of problems.
Economics, as you learn through this book, is not about finding perfect solutions to grave economic problems; it is about finding a solution that would lead to least number of subsequent problems or more subsequent problems that might not warrant immediate attention.
Using one such hypothetical scenario described in the book and the incremental knowledge I gained from lapping it up, I could, all by myself, prove that my solution was not a solution at all.
An attempt at emulating Smith’s style of explaining is in order. Assume for a moment that there are only ten people in an economy. Two of them are very rich, five are middle class and three are beggars. Assume just one commodity – Rice, which is needed by all to survive. The demand for rice is generated only by the first two sections (rich and middle class) of the society as the beggars eat only what is leftover. The quantity of rice is constant and just enough to meet the demand.
Now what happens if we distribute enough cash among the beggars so they could buy their share of rice? The demand for rice suddenly jumps from seven to ten while its supply is still the same; just enough to meet the demand of seven. Now we don’t need to be a connoisseur of economics to realize that the excess demand would cause the price of rice to rise. But the price hike would be just enough to bring rice beyond the reach of beggars once again and to not dissuade the middle class from buying it. The great thing about the market is the way it brings this equilibrium. So, the sudden availability of cash would breed sudden inflation, which would leave the intended beneficiaries deprived of those very benefits.
While there might be flaws in my conclusion or the means to this end, I still have come a long way in interpreting the way market works; a far cry from where I was before I read this book.
All is not that rosy though. The author is British and an overwhelming majority of the historical examples he cites, to explain his theories, are on Britain’s economy. At times, the reader is left groping for the background of the events in question. For a book intended to be as globally relevant as this one is, “Free Lunch” makes an unfair assumption, though not always, that readers know what it is talking about. A slightly detailed background of some vintage events would do a world of good to beginners in their quest of conquering economics.
Except for this, ‘Free Lunch’ is a big leap towards making economics an enjoyable read. I realize that there is indeed no such thing as 'Free Lunch.'
Don’t give up just yet if you are starving to build a foundation in economics - sans the complexities - even though you haven’t formally studied the subject. Help is not far. “Free Lunch” is just the right sumptuous banquet to fill your belly to your satisfaction.
Introduction to economics had never been so simple and interesting. Those who couldn’t read more than a paragraph or two of core economic articles have read the whole book and released a burp of never-before-seen satisfaction after reading “Free Lunch”. Economics, suddenly, was no rocket science to them.
David Smith not only copied the second name from Adam Smith – the man who introduced the world to microeconomics - but also bettered him in teaching economics to novices in a lot simpler manner. He, very skillfully, cuts through the intimidating jargons that surround the modern economics. He simplifies the explanation to near layman language and provides very relatable instances to make the complexities look surmountable.
Why do house prices rise and stock markets fall? How does it affect us when interest rates go up, and why? What is a lesser evil – Inflation or Deflation? Does a budget deficit matter? Suddenly people, after reading Free Lunch, won’t be so indifferent to the economic jargons.
Just like any normal human being, I was always disappointed at the seeing so much poverty, hunger and sickness around me. Other than wondering at the divine plan for such inequalities, I would always search for an economic solution Рto whatever extent my mortal knowledge of the subject would allow Рtowards resolving the problem. One solution I always thought, obviously out of my naivet̩, was to distribute cash to all the poor so they could spend their way out of poverty and hunger and at the same time the society could trudge its way out of inequality and suffering.
I smugly marveled at my solution and wondered why nobody on the planet ever thought of such a solution to this problem. That was until I read Free Lunch.
David Smith, in this book, takes help of innumerable such hypothetical instances, then suggests some solution, which to a layman might look like a perfect antidote at first, and then systematically dissects the solution to show how the solution would lead to another set of problems.
Economics, as you learn through this book, is not about finding perfect solutions to grave economic problems; it is about finding a solution that would lead to least number of subsequent problems or more subsequent problems that might not warrant immediate attention.
Using one such hypothetical scenario described in the book and the incremental knowledge I gained from lapping it up, I could, all by myself, prove that my solution was not a solution at all.
An attempt at emulating Smith’s style of explaining is in order. Assume for a moment that there are only ten people in an economy. Two of them are very rich, five are middle class and three are beggars. Assume just one commodity – Rice, which is needed by all to survive. The demand for rice is generated only by the first two sections (rich and middle class) of the society as the beggars eat only what is leftover. The quantity of rice is constant and just enough to meet the demand.
Now what happens if we distribute enough cash among the beggars so they could buy their share of rice? The demand for rice suddenly jumps from seven to ten while its supply is still the same; just enough to meet the demand of seven. Now we don’t need to be a connoisseur of economics to realize that the excess demand would cause the price of rice to rise. But the price hike would be just enough to bring rice beyond the reach of beggars once again and to not dissuade the middle class from buying it. The great thing about the market is the way it brings this equilibrium. So, the sudden availability of cash would breed sudden inflation, which would leave the intended beneficiaries deprived of those very benefits.
While there might be flaws in my conclusion or the means to this end, I still have come a long way in interpreting the way market works; a far cry from where I was before I read this book.
All is not that rosy though. The author is British and an overwhelming majority of the historical examples he cites, to explain his theories, are on Britain’s economy. At times, the reader is left groping for the background of the events in question. For a book intended to be as globally relevant as this one is, “Free Lunch” makes an unfair assumption, though not always, that readers know what it is talking about. A slightly detailed background of some vintage events would do a world of good to beginners in their quest of conquering economics.
Except for this, ‘Free Lunch’ is a big leap towards making economics an enjoyable read. I realize that there is indeed no such thing as 'Free Lunch.'
4 comments:
Hey kam...this was a good article although I haven't read the book but got an insight of it by reading your article...the good part of it is it covers the thing which are required, definitely book might have contained much more things but as this is just an article and not the explanation of the book so its quite good
Your article has triggered an erg in me to read the book and will definitely try to take some time and read it...may be after that ill be in a better situation to comment on what you have written.
Still what ever you have written is quite good and informatory.
Cheers,
Amit
Read the book review. It was simply amazing. I am sure after reading this,the SPJain faculty would probably decide to waive off rest of your tuition fees.
I have read and done a few book reviews during my college days as part of certain assignments, but never have I come across such a concise and clear one as this.
The common mistake that we novice students used to do during these reviews is to simply quote what was written in the book, as a result used to lose focus of what
the book really implies.
It goes without saying that you definitely have got a head start by starting off on the right note.
Best of luck. SP Jain is awaiting you.
Cheers,
Ranjitee
Hey,
That seems like an excellent book, will definately pick it up to brush up my concepts. You should ask Veernamani to add it to the SP Jain library as well.
I learnt my economic concepts by simply reading eco times everyday-first it all seemed nonsensical, then i began to understand the pattern.
Well enjoy ure year at SPJCM, definately one of the best years of my life-Miss it so much!
All the best!
Hey Kammo,
you seem to improve as an writer with every write up of yours.
I must say, this review was excellently drafted and was quite informative.
Sumit
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