By Greg Ip
Economists are often accused of failing to focus enough on the real world. Greg Ip, the US economics editor of The Economist, has set out to remedy this by producing an updated version of The Little Book of Economics: How the Economy Works in the Real World. In his words, the book aims "to provide non-economists with a practical, plain-language guide to the concepts they encounter in their daily lives".
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At only 258 shrunken pages, Ip's book is small enough to fit into the pocket of a jacket. Nonetheless, it covers a wide spread of topics over 15 chapters. These range from the basic building blocks of economic growth through to the workings of the US financial system.
The book also covers the development and roles of major American economic institutions, such as the Federal Reserve. Despite the complexity of some of the subject matter, Beth Belton, writing in USA Today, praises Ip for his use of "understandable but not overly simplistic language".
However, while the book is useful if you know little about either the US economy, or economics in general, those more familiar with the subject may find it a bit basic. As Trent Hamm of the Christian Science Monitor puts it, "it speaks very well to the person who is new to economics, but not so much to someone who studied it in college, and has kept up with the ideas". So while Ip states that he's made an effort to include a bit more textbook theory in this edition, some readers may still find the lack of detail frustrating.
A more serious gripe is that this book is very one-sided in places. While it's unrealistic to expect a short book to cover every angle, a bit more balance would have been welcome. Chapters on the Federal Reserve and its response to the crisis are a case in point the Fed is presented in such a positive light that you are left wondering how anyone (including MoneyWeek) could possibly criticise the role of central banks in the financial crisis. The only faintly critical comment Ip makes of its recent market interventions is that they "awakened politicians as to [the Fed's] formidable power".
A final word of caution: the book is clearly pitched at the American reader. This isn't a fatal flaw, since a large part of it is also devoted to international economic issues. However, you may want to skip chapter nine, which focuses on the various agencies and councils that advise the US president on economic policy. American beginners will be happy enough, but seasoned British readers may prefer something altogether more challenging and more focused on Britain.
The Little Book of Economics: How the Economy Works in the Real World by Greg Ip. Published by John Wiley & Sons (£15.99).
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