Good Economics for Hard Times Book Summary - Good Economics for Hard Times Book explained in key points

Listen to the Intro

00:00

Good Economics for Hard Times summary

Name: Good Economics for Hard Times
Rating: 4.2 (174 reviews)
Author: Abhijit V. Banerjee and Esther Duflo

Abhijit V. Banerjee and Esther Duflo

Better Answers to Our Biggest Problems

4.2 (174 ratings)

30 mins

What is Good Economics for Hard Times about?

Good Economics for Hard Times (2019) unflinchingly examines some of the most seemingly intractable problems we’re confronting today. Abhijit V. Banerjee and Esther Duflo argue that economics can provide new perspectives on how to solve climate change without hurting the poor, and also tackle social problems caused by rising inequality, global trade, and fear of immigration.

Table of Contents

Good Economics for Hard Times
summarized in 11 key ideas

Audio & text in the Blinkist app

Key idea 1 of 11

What’s in it for me? Discover how economics can create positive change in the world.

So many things seem to be going wrong in the world that it’s tempting to throw your hands up in despair. We hear that immigration is out of control; that imposing high import taxes on goods will cause the economy to plummet; that if we save the environment it will mean sacrificing people’s jobs, but if we don’t we’ll become extinct.

This is a horrifying cacophony of doomsday scenarios. And what makes it worse is that we often don’t know who to believe. Instead of engaging in substantial debate, politicians seem to be screaming over each other.

Amid this hubbub, we sometimes see economists popping up on TV, making dire predictions, or criticizing the policy of one political candidate or another. Economists seem intrinsically partial, aligned to business interests or a political ideology. We don’t really understand what they do, or how they reach their conclusions.

In these blinks, you’ll have a chance to regain your faith in economics. With down-to-earth insights from two Nobel Prize-winning economists, you’ll learn that a lot of the economic theories peddled by politicians are flawed, and that the most seemingly intractable social problems have clear economic solutions.

Along the way, you’ll learn

why imposing tariffs on Chinese steel may cause American farmworkers to lose their jobs;
why robots can steal accounting jobs but won’t be able to walk dogs; and
how an influx of immigrants can improve job prospects for locals.

Economists can help us solve the world’s gravest problems – but they first have to gain our trust.

In a public poll about how much people trust the opinions of different professionals, nurses ranked the highest and politicians, perhaps unsurprisingly, the lowest. What might be surprising is that economists were ranked only slightly above politicians. Their opinions were seen as being very unreliable.

But why? Perhaps because the vocal economists we see on the news are not the most trustworthy. Often, they are actually employed by a company and have a very pointed agenda toward protecting market interests.

Alternatively, they may be academic economists with extreme views. Whether on the right or the left, economists with an ideological axe to grind don’t always give the most nuanced, trustworthy analysis. Often, even good economists don’t take the time to explain the evidence and reasoning in a way that others can understand. To make matters worse, the opinions of academic economists can seem counterintuitive or illogical because their views don’t match up with what we’re told by politicians.

The fact that people don’t trust economists is problematic. Why? Because they can give us very important information about how to solve some of the world’s most critical problems. So, how can economists start to earn our trust and talk about issues in a way we understand?

For a start, they have to be willing to share their thought processes as well as their conclusions. If we have access to the data they use as evidence and are privy to how they think about that evidence, we’re more likely to believe them.

Even more importantly, they have to be willing to admit that they’re fallible. Today's political and economic debate has become like a shouting match, with each side dearly attached to their own point of view. Economists have to be willing to look at the evidence with an open mind, and where necessary, revise their opinions and admit when they get it wrong.

Politicians mislead voters with lies about immigration.

There is perhaps no issue more controversial today than immigration. Politicians like Donald Trump have painted a picture of their countries being under siege from hordes of hungry immigrants who will decimate resources and threaten the very identity of the locals.

Politicians use the simple economic model of supply and demand to explain why immigration is such a problem. The argument goes that immigrants will be attracted by the financial riches of a first-world country like the US, and so will be motivated to move there in uncontainable droves. When they arrive there will be an over-supply of cheap labor, meaning that salaries will decrease and native workers will lose their jobs.

Immigration helps to boost the local economy and provides new opportunities for native workers.

Imagine for a moment that you’re a waiter, and your town has become heavily populated with immigrants, as certain politicians direly warned would happen. You’re momentarily alarmed that your new neighbors might compete for your job. But then you notice how much busier your restaurant is since they arrived.

Immigrants don’t only bring with them a supply of labor. They also bring a demand for services. They plow money into businesses like cafes and shops which are staffed by low-skilled workers.

Goods move freely in global trade agreements, but people and money don’t.

Advocates of international trade agreements paint a rosy picture: each country will export what it’s best at producing and import things that are more affordable when sourced from elsewhere.

So, Egypt can export labor-intensive items like handwoven carpets, capitalizing on a cheap domestic workforce. China can use its formidable technological resources and efficient factories to export mass-produced computer parts. Those parts can then be bought cheaply by Indian companies, bolstering the local tech industry.

Trade agreements can harm local workers, but protectionist tariffs won’t solve the problem.

You’ve probably seen footage of Trump surrounded by steelworkers in 2018, proclaiming that the US will impose a heavy tax on aluminum and steel imported from China to protect local jobs.

Might this tactic work? Well, the steelworkers’ jobs will likely be protected by the measure. More people will buy local steel, meaning that there will be more demand and fewer layoffs in those factories. So far so good, but it’s not that simple.

The fight against climate change can’t be separated from the fight against economic inequality.

At the end of 2018, crowds of “yellow vest” protesters thronged the streets of Paris, bitterly protesting a proposed tax on gasoline. They argued that this was a move designed to hurt the poor while protecting the elite. Wealthy Parisians could afford to take the metro to work; but poorer people living in the suburbs or countryside whose livelihoods depend on being able to drive to work couldn’t.

The argument that fighting climate change is a luxury that the poor cannot afford is very common. The thinking is that either we can save the planet for the future or we can protect the economy in the present.

AI is evolving to take over more complex human tasks, negatively affecting the job market.

You’ve seen the scenario in sci-fi movies: humans have been replaced by gleaming robots, who took over our jobs before taking over the world.

It might sound a little far-fetched, but is it really? Today, robots can flip burgers, vacuum floors, and even take care of complex logistics.

Economic inequality long preceded intelligent robots.

It might be tempting to blame economic inequality on robots. They are the ultimate intrusive aliens in our society, and therefore a very convenient scapegoat.

But inequality was rising long before self-scanning supermarket tills were invented. In fact, we can’t understand the effects of AI without looking at the bigger picture of the labor market and how income is distributed in society as a whole.

Proper taxing can help to solve economic inequality.

There’s one way to level the playing field between exorbitant top earners and other workers: taxes. Studies have shown that when the tax rate for the top 1 percent is 70 percent or higher, salaries become more equal. That’s because corporations stop paying such crazy salaries, as it isn’t worth losing 70 percent to the tax office.

Countries like Germany, Spain, and Denmark, which have maintained such high taxes, have less of a gulf between the salaries of top and average earners compared to countries like the US, Canada, and the UK, which have all slashed taxes for top salaries from the 1970s onwards.

There is no one-size-fits-all way to alleviate poverty, but foregrounding the dignity of the poor is essential.

Imagine your job as a bookkeeper has just been taken over by a robot. Or your regular work on an organic farm has disappeared because of the impact of the trade war with China. Or your work in an Indian garment factory disappears as Korean textile imports become more affordable to the West.

These job losses will have profound economic consequences for you and your family. But money won’t be the only thing lost. You’ll also lose your work community, your identity in the workplace, and perhaps even your sense of dignity.

To fix the political polarization and prejudice eroding democracy, we have to listen to each other.

According to the FBI, the number of hate crimes in the United States rose by 17 percent in 2017. This was the third consecutive year that the number had increased. Over a long period before 2015, the number of hate crimes was flat or declining.

How can we understand these soaring figures? What makes someone hate black people, or immigrants, or people from a different social class? Is it that some people are born prejudiced and grow up like that? Or is it the effect of the media, and the rhetoric of an anti-immigrant president like Donald Trump?

Want to see all full key ideas from Good Economics for Hard Times?

Key ideas in Good Economics for Hard Times

More knowledge in less time

Read or listen

Get the key ideas from nonfiction bestsellers in minutes, not hours.

Find your next read

Get book lists curated by experts and personalized recommendations.

Shortcasts ^New

We’ve teamed up with podcast creators to bring you key insights from podcasts.

About the Author

Abhijit V. Banerjee and Esther Duflo won the 2019 Nobel Prize for Economics in recognition of their contributions to the field of development economics. Their previous book Poor Economics was a pioneering investigation of what it means to be poor, and how to provide the most effective aid to struggling communities. They are both professors at MIT, and have received numerous academic honors and prizes.

Who should read Good Economics for Hard Times?

People who want to regain their faith in the usefulness of economics
Environmentalists who want a new perspective on how to save the planet
Workers who are worried about how immigration and trade will affect their jobs

Categories with Good Economics for Hard Times

Economics

Books like Good Economics for Hard Times

Doughnut Economics

Kate Raworth

Seven Ways to Think Like a 21st-Century Economist

27 min

4.1

Economics for the Common Good

Jean Tirole

Delve into economics with a Nobel Prize winner

28 min

4.0

The Value of Everything

Mariana Mazzucato

Making and Taking in the Global Economy

25 min

4.4

Who Gets What – and Why

Alvin Roth

The New Economics of Matchmaking and Market Design

11 min

3.8

Nudge

Richard H. Thaler and Cass R. Sunstein

Improving Decisions about Health, Wealth and Happiness

14 min

4.1

Poor Economics

Abhijit V. Banerjee and Esther Duflo

A Radical Rethinking of the Way to Fight Global Poverty

16 min

4.2

A Little History of Economics

Niall Kishtainy

A whistle-stop tour of the major questions posed by economists through the centuries, from Aristotle to Thomas Piketty

26 min

4.5

The Future of Capitalism

Paul Collier

Facing the New Anxieties

20 min

3.9

The Millionaire Fastlane

MJ DeMarco

Crack the Code to Wealth and Live Rich for a Lifetime!

16 min

3.8

The Power of Discipline

Daniel Walter

How to Use Self Control and Mental Toughness to Achieve Your Goals

14 min

4.4

The Road to Serfdom

Friedrich August von Hayek

Van Hayek's classic text on Freedom

15 min

4.4

How the World Really Works

Vaclav Smil

The Science of Our Past, Present and Future

22 min

4.4

Economic Facts and Fallacies

A Simple Strategy to Grow a Remarkable Business in Any Field

Why Generalists Triumph in a Specialized World

21 min

4.4

Why Nations Fail

Daron Acemoglu & James A. Robinson

The Origins of Power, Prosperity, and Poverty

29 min

4.6

The Laws of Human Nature

Robert Greene

What affects your day-to-day life

The Science of Synchronicity and How Your Choices Shape Your World

16 min

4.2

Phishing for Phools

George A. Akerlof and Robert J. Shiller

The Economics of Manipulation and Deception

15 min

4.0

The Undercover Economist

Tim Harford

The economics behind everyday decisions

Modern Monetary Theory and the Birth of the People's Economy

25 min

4.0

The Social Contract

Jean-Jacques Rousseau

A cornerstone in modern political and social thought

An uncommon guide to rapid fat-loss, incredible sex and becoming superhuman

19 min

3.3

The Dialectical Behavior Therapy Skills Workbook

Matthew McKay

Practical DBT Exercises for Learning Mindfulness, Interpersonal Effectiveness, Emotion Regulation, and Distress Tolerance

How to Boost Cognitive Health, Performance and Power

Leading Flexible Teams To Do The Best Work of Their Lives

19 min

13 Things Mentally Strong People Don't Do

Amy Morin

Take Back Your Power, Embrace Change, Face Your Fears and Train Your Brain for Happiness and Success

38 min

4.6

The WEIRDest People in the World

Joseph Henrich

How the West Became Psychologically Peculiar and Particularly Prosperous

The Facts and the Solutions

The End of the World Is Just the Beginning

Peter Zeihan

Mapping the Collapse of Globalization

21 min

4.5

The Gap and the Gain

Dan Sullivan with Benjamin Hardy

The High Achievers' Guide to Happiness, Confidence, and Success

How Non-Conformists Move the World

A Very Short Introduction

23 min

4.4

How to Win Friends & Influence People

Dale Carnegie

Basic rules for how to make a good first impression

18 min

4.7

An Economist Walks into a Brothel

Allison Schrager

And Other Unexpected Places to Understand Risk

19 min

4.0

The Whole-Brain Child

Daniel J. Siegel and Tina Payne Bryson

12 Revolutionary Strategies to Nurture Your Child’s Developing Mind

A 400-Year History of American Capitalism

37 min

4.4

The Conscience of a Conservative

Barry Goldwater

A classic statement of the conservative mindset

22 min

4.3

The Millionaire Next Door

Thomas J. Stanley and William D. Danko

The Surprising Secrets of America’s Wealthy

13 min

4.0

The Demon-Haunted World

Carl Sagan

Science as a Candle in the Dark

The Evolution and Future of the Human Animal

The Carbon Footprint of Everything

26 min

4.2

Building a Second Brain

Tiago Forte

A Proven Method to Organize Your Digital Life and Unlock Your Creative Potential

The Hidden Determinants of Human Behaviour

19 min

4.2

Built to Move

Kelly Starrett & Juliet Starrett

The Ten Essential Habits to Help You Move Freely and Live Fully

The Path to Fulfilling and Sustainable Sexuality

or the Matter, Forme and Power of a Commonwealth Ecclesiasticall and Civil

How Covid Shook the World's Economy

24 min

3.3

People ❤️ Blinkist

Sven O.

It's highly addictive to get core insights on personally relevant topics without repetition or triviality. Added to that the apps ability to suggest kindred interests opens up a foundation of knowledge.

Thi Viet Quynh N.

Great app. Good selection of book summaries you can read or listen to while commuting. Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion.

Jonathan A.

Life changing. The concept of being able to grasp a book's main point in such a short time truly opens multiple opportunities to grow every area of your life at a faster rate.

Renee D.

Great app. Addicting. Perfect for wait times, morning coffee, evening before bed. Extremely well written, thorough, easy to use.