The Economist's View of the World : Government, Markets and Public Policy

Rating:
Summary: For Economists and Noneconomists
Review: Rhoads is an effective promoter of the economic way of thinking. He quotes Kenneth Arrow: "the economist's frequent job is to say 'this or that, not both. You can't do both.'" Perhaps owing to his outsider's perspective as a political scientist, he is able to usefully contrast the economic way of thinking with various alternatives. Whereas engineers concentrate on making equipment safer in order to reduce the number of accidents in the workplace, economists would tax each firm based on the number of accidents in its workplace.
Rhoads understands the economic way of thinking well. On regulations aimed at saving lives, he states: "We must weigh in our own minds, using our own standards, the gains forgone elsewhere when money is spent on such programs." On marginalism: "Many doctors will want to use scarce resources to the point where the marginal utility of further expenditures equals zero ('everything possible for my patients'), not to the point where it equals the opportunity cost." He explains the economist's approach to reducing (not eliminating) pollution through taxes on pollution and licenses to pollute. "With the incentive schemes", the advantage is that "the possibility of increasing profits by reducing pollutants remains as long as any taxes are paid or capital is tied up in the marketable effluent licenses, that is, as long as any pollutant remains." The author's knowledge of the literature on the microeconomics of public policy and his explication of it impress this reader.
Although Rhoads proves to be a clear believer in the benefits of a price system, his philosophy is not free market or libertarian. He justifies subsidies for science and art on grounds that appreciation and fondness for those subjects "are higher, more distinctively human, pleasures, but also harder and less enticing initially." A good sentence that describes Rhoads's perspective and why economists and noneconomists might find the book interesting is this: "I think economists should read more outside of economics, but most people should read more within it."

Rating:
Summary: Sophisticated analysis but lucid reading
Review: This is an excellent book. I first read it while doing graduate work in public administration and then read it again as I worked towards a Ph.D. in political science. For the student of public policy, an understanding of economics is critical to understanding the underlying rationale behind many failed as well a succesful governmental initiatives. Further, for the public servant, it casts light on policy design in one's professional work. This book is helpful in both arenas.

The book clealry describes the traditional justifications for government in a market economy, market failure; but also delves into government failure, and the limitations of democratic processes in shaping rational policy.

The book describes other economic concepts; marginalism, opportunity costs, welfare economics, pareto optimality in such a manner as to make their policy relevance very clear.

Underlying this non-technical and jargon free discussion is a well intended (and on-target) critique of the academic discipline of economics. Juxtaposing early economic thinkers with today's calculus driven analysts, Rhoades sees a dearth of span of vision. Technical expertise has overwhelmed broad understanding and mathematical brilliance has driven out a wide breadth of learning.

This is an great book for the serious reader and a must for graduate students in policy, PA or politics.