Over on the jungle telegraph thing I am asked the following:
@worstall Do you have any advice for someone who is in their early 20s and knows nothing about economics but wants to learn?
— Kelly (@ylleKResagaS) February 16, 2016
And, well, this is slightly difficult because there’s vast areas of the subject where I know nothing at all. And some very limited areas where I’m right at the research frontier. And yes, I’m usually less wrong when I know nothing than when I know more.
However, an extremely idiosyncratic guide.
1) Any of the standard undergraduate textbooks. Get an old edition, yes, the joke is that the questions are always the same, it’s just the answers that change. But at Econ 101 level not much has changed for 30 years or more. Samuelson is fine, any of Krugman, Cowen and Tabarrok, Mankiw, will walk you through the basics of the subject equally well. For the UK Lipsey is fine as well.
2) There’s two things you’ve really, really, got to understand. The first comes from the game of “Two Things”. We can boil any and every subject down to two things. Boxing is “Hit, don’t get hit”. Civil engineering is “Mud, there is always mud”. Economics is:
Opportunity costs, and there are always opportunity costs.
When you grasp those two concepts no, that won’t make you an economist. But it will offer the nuts and bolts of how to think and reason through an economic point or problem.
The second is what Brad Delong calls the only really important thing we’re trying to understand.
Something the hell happened around 1750. Another way of reacing the same conclusion is to use Angus Maddison’s numbers. Nice spreadsheet of them here. Really worth walking through that for some time. it’s telling us that the average lifestyle for pretty much all people for pretty much all of history was around $600 per person per year. That’s in modern money, at modern prices. And that’s also the same as what the World Bank calls “absolute poverty” today. What those Africans living on maize from their acre of land are living on today.
And that’s our big question: what the hell did happen? Because we have many thousands of years when that was normal: now, only 250 years after something or other, we decry it as being so appalling that we must help everyone out of it. What the hell caused that kink in the graph? Various people have various explanations but that is the thing that we’re trying to explain.
And that’s the heart of the subject, we’ve our two things to give us a general logical structure and we’ve got our great question that we want to answer.
After that all is details. And that’s really just a matter of what interests you in the subject. If you want to understand invention and innovation then Baumol’s your man. For rent, the basic starting point is always Ricardo. And the first chapter of Tim Harford’s “Undercover Economist” is about as good an explanation of Ricardo on Rent as anyone’s ever going to give you.
PJ O’Rourke’s “Eat the Rich” is wonderfully funny but it’s trying to answer that same Delong question. What the heck happened that some places are rich and others aren’t? Another take on the same point is this. That’s the economic models that all of climate change is built upon. Chapter 4 is especially interesting. Because they’re trying to predict, not look back at what happened 250 years ago. But the answer is in fact the same. If we continue doing whatever it was that caused 250 years ago then we’re going to have that same economic growth that we’ve had which is making that chart scream off up to the right. If we don’t we won’t. The assumption is just baked into it: something like vaguely capitalist and vaguely free market makes the world richer, not doing those two things lowers how much richer it gets.
Just because they’re three great books I would recommend Parkinson’s Law, The Peter Principle, and Up the Organisation by Robert Townsend. What they’re really looking at is how organisations work internally. How incredibly difficult it is to get an organisation to do whatever it is supposed to be doing, rather than what an organisation usually ends up doing, which is whatever is of benefit to the continued existence of the organisation. And that’s the beginning of public choice economics. Why is that government doesn’t quite do either what was promised nor what we’d rather like it to do?
But again, that’s to spiral off into details.
The undergraduate textbooks do in fact inform on the basics. Because that’s simply what they’re for. Then, once you’ve grasped the two things, there’s that big question, really the only one we’re interested in (the greatest interest being, of course, how do we keep it going?). And then whatever interests you. Krugman’s essays from the 1990s? Why not, this one is excellent. Guns Germs and Steel by Jared Diamond might not strike you as economics but it’s another attempt to answer that same question, what the heck happened? Assuming that you’re interested in the subject, not trying to get a job in it, you can simply forget all the math and the macroeconomic models in detail stuff. After the undergraduate basics, simply read good economists discussing a problem you’re interested in.