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Zombie Economics: How Dead Ideas Still Walk among Us
In the graveyard of economic ideology, dead ideas still stalk the land.
The recent financial crisis laid bare many of the assumptions behind market liberalism―the theory that market-based solutions are always best, regardless of the problem. For decades, their advocates dominated mainstream economics, and their influence created a system where an unthinking faith in markets led many to view speculative investments as fundamentally safe. The crisis seemed to have killed off these ideas, but they still live on in the minds of many―members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess. In Zombie Economics , John Quiggin explains how these dead ideas still walk among us―and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future.
Zombie Economics takes the reader through the origins, consequences, and implosion of a system of ideas whose time has come and gone. These beliefs―that deregulation had conquered the financial cycle, that markets were always the best judge of value, that policies designed to benefit the rich made everyone better off―brought us to the brink of disaster once before, and their persistent hold on many threatens to do so again. Because these ideas will never die unless there is an alternative, Zombie Economics also looks ahead at what could replace market liberalism, arguing that a simple return to traditional Keynesian economics and the politics of the welfare state will not be enough―either to kill dead ideas, or prevent future crises.
In a new chapter, Quiggin brings the book up to date with a discussion of the re-emergence of pre-Keynesian ideas about austerity and balanced budgets as a response to recession.
The recent financial crisis laid bare many of the assumptions behind market liberalism―the theory that market-based solutions are always best, regardless of the problem. For decades, their advocates dominated mainstream economics, and their influence created a system where an unthinking faith in markets led many to view speculative investments as fundamentally safe. The crisis seemed to have killed off these ideas, but they still live on in the minds of many―members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess. In Zombie Economics , John Quiggin explains how these dead ideas still walk among us―and why we must find a way to kill them once and for all if we are to avoid an even bigger financial crisis in the future.
Zombie Economics takes the reader through the origins, consequences, and implosion of a system of ideas whose time has come and gone. These beliefs―that deregulation had conquered the financial cycle, that markets were always the best judge of value, that policies designed to benefit the rich made everyone better off―brought us to the brink of disaster once before, and their persistent hold on many threatens to do so again. Because these ideas will never die unless there is an alternative, Zombie Economics also looks ahead at what could replace market liberalism, arguing that a simple return to traditional Keynesian economics and the politics of the welfare state will not be enough―either to kill dead ideas, or prevent future crises.
In a new chapter, Quiggin brings the book up to date with a discussion of the re-emergence of pre-Keynesian ideas about austerity and balanced budgets as a response to recession.
288 pages, Paperback
First published January 1, 2010
71 people are currently reading
1203 people want to read
About the author
John Quiggin
28 books19 followersJohn Quiggin (born 29 March 1956) is an Australian economist, a Professor and an Australian Research Council Laureate Fellow at the University of Queensland, and a member of the Board of the Climate Change Authority of the Australian Government.
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Displaying 1 - 30 of 86 reviews
June 19, 2011
This book is a lot of fun. It is *not* an introduction to economics. It *is* a political statement, with heavy economics backing up that statement. If you're looking to learn more about economics this is not likely to help you, but if you're looking to go argue economics-based politics with a bunch of friends, this will fit into your arsenal nicely.
For each of five major topics: trickle-down economics, privatization, moderation economics, efficient markets, and dynamic stochastic general equilibrium, he talks about the background of why the theory became popular in macroeconomics theory, the result of its use, how observation of its effects on the market tend to discredit it, and why it's likely to still be popular despite that. In some, particularly efficient markets, his criticism is withering. In others, like privatization, it's much more nuanced: he discusses when privatization works, when it could work, and when it doesn't seem to work at all.
This is complex stuff, and his treatment isn't soft. Here's a randomly-chosen sentence: "Used with care, representative agent models can simplify macroeconimc analysis, allowing a focus on aggregate features of the economy, where individual differences cancel out." That's not a particularly difficult sentence, compared to some (on that same page, in fact.) It's not trivial reading. But it's interesting reading, and jam packed with information.
For each of five major topics: trickle-down economics, privatization, moderation economics, efficient markets, and dynamic stochastic general equilibrium, he talks about the background of why the theory became popular in macroeconomics theory, the result of its use, how observation of its effects on the market tend to discredit it, and why it's likely to still be popular despite that. In some, particularly efficient markets, his criticism is withering. In others, like privatization, it's much more nuanced: he discusses when privatization works, when it could work, and when it doesn't seem to work at all.
This is complex stuff, and his treatment isn't soft. Here's a randomly-chosen sentence: "Used with care, representative agent models can simplify macroeconimc analysis, allowing a focus on aggregate features of the economy, where individual differences cancel out." That's not a particularly difficult sentence, compared to some (on that same page, in fact.) It's not trivial reading. But it's interesting reading, and jam packed with information.
August 13, 2011
John Quiggin in an Australian economist. He made his name in the early 1980s in an esoteric area called decision theory. The Econometrics Society made him a fellow on the basis of this work, a distinguished award. He writes a blog, which has many devoted followers. The book is primarily about macroeconomics, however, which is not his area. Asking Quiggin about macroeconomics is like going to a podiatrist for your headache: it's the wrong end of the body.
The chapter on Dynamic Stochastic General Equilibrium modeling (DSGE modeling) is a good example of Quiggin's lack of expertise about modern macroeconomics. He states that one of the oddities about DSGE modeling is the representative agent paradigm. This is an abstraction where the decision making of one representative consumer/worker is taken as a stand-in for the millions of people living in an actual economy. This abstraction was employed in a famous 1982 article by Kydland and Prescott. Finn I. Kydland and Edward C. Prescott justly won the Noble prize in 2004. The stand-in consumer was abandoned in 1994 in important work by the late and great economist S. Rao Aiyagari. Every graduate student in macroeconomics today knows the Aiyagari paradigm. This work is not mentioned in Quiggin. Nor is the celebrated work by Mortensen and Pissarides, done during the late 1980s and early 1990s, on modeling unemployment. Dale T. Mortensen and Christopher A. Pissarides won the 2011 Noble prize for Economics. There has been a flurry of work in macroeconomics embedding the Mortensen and Pissarides framework of unemployment into an Aiyagari/Kydland/Prescott style DSGE model. An early example is the research by David Andolfatto in 1996. Interestingly, Noble Prize winner Paul R. Krugman's latest research with Gauti B. Eggertsson borrows from Aiyagari (they cite it) and is essentially a dynamic general equilibrium model, albeit with a very Keynesian flavor. Quiggin is really out of touch with modern economics.
The trouble with Quiggin's book is that to the non-economist his little bit of knowledge will sound authoritative. Like an undergraduate's essay, many of the bits and pieces are indeed correct. But, also like many undergraduate essays, it shows little understanding about modern macroeconomic, just a superficial dropping of names and theories. Beloved Albert Einstein, a hero for scientists, didn't like quantum mechanics and argued against it. Perhaps it was because of the escalation of the mathematics required to understand the quantum world. Some people say that Einstein wasn't good at math. The mathematics in his papers is easy for a modern economist or physicist to understand--look them up on the web. Time has advanced mathematical training among scientists. Anyway, this was one battle Einstein lost. When Keynesians displaced the classical economists in the 1940s, 1950s and 1960s the latter cried out about the mathematics (calculus and statistics) the former used. Keynesians, such as the Noble prize winners John R. Hicks, Lawrence R. Klein and Paul A. Samuelson, were at the forefront of technique in their day. And now it is the displaced Keynesian crying about the new math (dynamic programming, numerical analysis, stochastic processes) used by the neoclassical economists ushered in by the Kydland and Prescott revolution. Maybe the table will be reversed tomorrow. Who knows: if you could forecast this you could be a Noble Prize winner. This is the process of science: New ideas don't come easily and old ones are hard to displace. Professor Quiggin: You sound like an old man whining about the young Turks.
The chapter on Dynamic Stochastic General Equilibrium modeling (DSGE modeling) is a good example of Quiggin's lack of expertise about modern macroeconomics. He states that one of the oddities about DSGE modeling is the representative agent paradigm. This is an abstraction where the decision making of one representative consumer/worker is taken as a stand-in for the millions of people living in an actual economy. This abstraction was employed in a famous 1982 article by Kydland and Prescott. Finn I. Kydland and Edward C. Prescott justly won the Noble prize in 2004. The stand-in consumer was abandoned in 1994 in important work by the late and great economist S. Rao Aiyagari. Every graduate student in macroeconomics today knows the Aiyagari paradigm. This work is not mentioned in Quiggin. Nor is the celebrated work by Mortensen and Pissarides, done during the late 1980s and early 1990s, on modeling unemployment. Dale T. Mortensen and Christopher A. Pissarides won the 2011 Noble prize for Economics. There has been a flurry of work in macroeconomics embedding the Mortensen and Pissarides framework of unemployment into an Aiyagari/Kydland/Prescott style DSGE model. An early example is the research by David Andolfatto in 1996. Interestingly, Noble Prize winner Paul R. Krugman's latest research with Gauti B. Eggertsson borrows from Aiyagari (they cite it) and is essentially a dynamic general equilibrium model, albeit with a very Keynesian flavor. Quiggin is really out of touch with modern economics.
The trouble with Quiggin's book is that to the non-economist his little bit of knowledge will sound authoritative. Like an undergraduate's essay, many of the bits and pieces are indeed correct. But, also like many undergraduate essays, it shows little understanding about modern macroeconomic, just a superficial dropping of names and theories. Beloved Albert Einstein, a hero for scientists, didn't like quantum mechanics and argued against it. Perhaps it was because of the escalation of the mathematics required to understand the quantum world. Some people say that Einstein wasn't good at math. The mathematics in his papers is easy for a modern economist or physicist to understand--look them up on the web. Time has advanced mathematical training among scientists. Anyway, this was one battle Einstein lost. When Keynesians displaced the classical economists in the 1940s, 1950s and 1960s the latter cried out about the mathematics (calculus and statistics) the former used. Keynesians, such as the Noble prize winners John R. Hicks, Lawrence R. Klein and Paul A. Samuelson, were at the forefront of technique in their day. And now it is the displaced Keynesian crying about the new math (dynamic programming, numerical analysis, stochastic processes) used by the neoclassical economists ushered in by the Kydland and Prescott revolution. Maybe the table will be reversed tomorrow. Who knows: if you could forecast this you could be a Noble Prize winner. This is the process of science: New ideas don't come easily and old ones are hard to displace. Professor Quiggin: You sound like an old man whining about the young Turks.
August 9, 2020
Reading this in 2020 is probably too late to read it. A lot of these ideas have been endlessly discussed in many other books by now and this one was too dry to keep my attention.
December 30, 2010
I've read John Quiggin as a blogger for a while, mostly on the group blog site "Crooked Timber." I knew he was working on this book--he published draft passages for feedback--but didn't read the preliminary stuff and wasn't really planning to buy it. Then I see it at the local bookstores, pick it up out of curiosity and found I couldn't resist the combination of a B-movie zombie cover with chapter titles like "Dynamic Stochastic General Equilibrium Theory."
The basic theme is a review of intellectual economic theories that should've died by now, but still fly around among academics, wonks, or politicians. Despite the zombie theme, the writing is not that gimmicky. Explanations are lucid (at least for someone of my "took a couple courses" background) and, while frustration and passion are there, it's not just a long rant.
In general there was a split between things I had heard before, sort-of knew but hadn't thought of analytically, and actual new-to-me stuff. For example, it's pretty much obvious that anyone who profits from the status quo would be inclined to believe in the "Great Moderation," but I never thought through that academics who are finishing off a paper they've been working on for years about the end of the business cycle have an incentive to pretend the '08 recession was mild, and write Wall Street Journal op-eds making that argument. Similarly, privatization is obviously one of those things that works in some some situations and not in others, but I was completely unaware of some of the theoretical arguments about financing--and how it's affected by the relatively low returns investors accept on government bonds vs. private equity. Some other things I missed are so obvious in retrospect that I'm too embarrassed to enumerate them.
The book is IMHO so much better than Quiggin's online stuff that it was a nice reminder to me of the benefits of book-length writing, relative to web pages or even NYRB length articles. On the other hand, it was also a reminder of why listening to politicians rationalize policies induced outrage fatigue years ago.
The basic theme is a review of intellectual economic theories that should've died by now, but still fly around among academics, wonks, or politicians. Despite the zombie theme, the writing is not that gimmicky. Explanations are lucid (at least for someone of my "took a couple courses" background) and, while frustration and passion are there, it's not just a long rant.
In general there was a split between things I had heard before, sort-of knew but hadn't thought of analytically, and actual new-to-me stuff. For example, it's pretty much obvious that anyone who profits from the status quo would be inclined to believe in the "Great Moderation," but I never thought through that academics who are finishing off a paper they've been working on for years about the end of the business cycle have an incentive to pretend the '08 recession was mild, and write Wall Street Journal op-eds making that argument. Similarly, privatization is obviously one of those things that works in some some situations and not in others, but I was completely unaware of some of the theoretical arguments about financing--and how it's affected by the relatively low returns investors accept on government bonds vs. private equity. Some other things I missed are so obvious in retrospect that I'm too embarrassed to enumerate them.
The book is IMHO so much better than Quiggin's online stuff that it was a nice reminder to me of the benefits of book-length writing, relative to web pages or even NYRB length articles. On the other hand, it was also a reminder of why listening to politicians rationalize policies induced outrage fatigue years ago.
June 5, 2012
John Quiggin who seems to be a left wing Keynsian, rounds up the usual suspects to blame for the Crash of '08 and the continuing economic turmoil and finds that policy makers who argue endlessly about how to intervene and then do the wrong thing don't listen to economists.
Which seems to be OK, since most the economists get thing wrong most the time anyway. A text on political economy with the emphasis on political. Quiggin has a lively style and a ready wit.
Which seems to be OK, since most the economists get thing wrong most the time anyway. A text on political economy with the emphasis on political. Quiggin has a lively style and a ready wit.
July 9, 2023
Interessant boekje van een econoom die een Keynesiaanse sociaal democraat in hart en nieren is. 200 pagina’s aan populair wetenschappelijk maar nog wel vrij technisch bashen van neoliberalisme. Het idee dat de economie vanaf de jaren 80 stabiel was, dat markten alles weten, dat moderne macro-economie ergens op slaat, trickle down economics en dat alles geprivatiseerd moet worden. Allemaal gewoon onzin. Hij onderbouwt het prima, met veel leuke quotes. Interessant is dat dit een boek uit 2010 is, nog redelijk middenin de crisis van 2008. Duidelijk een product van z’n tijd. Aan de ene kant zie je dat dit een beetje naïef hoopvol is, maar soms zie je ook dat sommige ideeen wel echt een beetje gestorven zijn.
March 6, 2023
John Quiggin is a very competent economist with a serious, relevant research background; one of his most interesting previous work is the development of rank-dependent utility, a variant of expected utility theory that handles complications that threat the "classical" EUT and that has enjoyed some empirical success. So we have an economist well versed in economic theory and empirical results, and that makes him a very good author for the kind of book Zombie Economics is. In this book, Quiggin attempts to expose what he calls "market liberalism" ideology, better understood as a set of mutually supporting ideas that were responsible for political/policy complacency about the fact these ideas had dubious empirical credentials up until the Great Recession hit the developed world. These ideas, following the book's chapter ordering, are 1) the great moderation, 2) the efficient markets hypothesis (EMH), 3) dynamic stochastic general equilibrium (DSGE), 4) trickle-down economics, and 5) privatization. Quiggin shows how each of these ideas, as they were sold in general public and political circles, were regularly based on shaky economic thinking - despite there being serious academic versions with varying degrees of theoretical quality and even partial empirical support -, and how each of them was falsified by the events prior, during and/or in the aftermath of the Great Recession.
I agree with nearly all of Quiggin's analyses, so I take the book to be successful at explaining why those 5 ideas as they appear in political disputes are mostly bad economics with poor empirical support overall - but even if I didn't agree with Quiggin, I'd still need to admit that he makes a carefully argued case for his criticisms, based on sound economic reasoning and attentive to empirical evidence. And I also agree that there are politico-ideological movements/groups that in fact defend this package deal Quiggin calls "market liberalism", and so, given what I have just said previously, I need to acknowledge that the book is also successful exposure of a relevant ideological movement's shortcomings. That said, reading the book was a quite frustrating experience for me. That's mainly because Quiggin wants to castigate economics as a whole as guilty of the same sins that "market liberals" are. And at times he suggests mainstream economics itself was in the grip of market liberalism. For example, he ends the introduction by saying that "[i]t is clear that there is something badly wrong with the state of economics", and the very end of the book goes along the same lines, with him saying that the "Global Financial Crisis gives the economics profession the chance to bury the zombie ideas that led the world into crisis". There are many other such textual examples throughout the book. The problem is that he barely presents any evidence at all that economics is intellectually bankrupt. The main ways in which he tries to support such a grandiose claim is to rely on anedoctal evidence, and to mention or quote economists who in fact publicly supported certain economic ideas or policies (including economists handling policy levers). These strategies aren't always bad, especially when anedoctal evidence or economists mentioned are representative of the discipline as a whole, and my bet would be that Quiggin most of the time in the book does believe that his examples are representative, but it's far from well established that this really is the case. Granted, it does seem that a lot of high profile economists were guilty of supporting one zombie idea or another back then, mainly one or more of the first three, with the concern over microfoundations that led many economists towards defending DSGE probably being the most common one - but two important caveats are in order here: first, as Quiggin himself notes, DSGE models are useful for many practical policy purposes, and, second, a very important part of this whole discussion is motivated by technical, theoretical, and empirical issues that arise within the normal business of academic research and discussion, with constant feedback from policy trials and errors; so mistaken as the obsession with microfoundations and DSGE may be, I don't think it's fair to attribute it mainly to market-liberal ideology (and this is one major reason why I said I agree with nearly all of Quiggin's analyses instead of agreeing tout court) -, but this is very far from showing that they supported all of the zombie ideas. And quite frankly it's just a lazy, bad inference to start from the former observation and conclude that these economists were sold to market-liberal ideology, and that this furthermore shows that most professional economists followed suit. Interestingly enough, Quiggin himself in many places in the book mentions surveys that show how most serious professional economists didn't agree with the zombie ideas he's attacking. He points out how professional economists never really bought the economic reasoning put forward in the ideological defenses of privatization, of the strong version of the EMH or of trickle-down economics, and that most academic economists in Australia didn't support so called "economic rationalism" (the Australian version of "market liberalism") when responding to a survey made in the early 1990's.
So yeah, the same book that claims economics is compromised by market-liberal ideology presents counter-evidence to this claim. And for people who have read enough about economics it's not hard at all to come across other anedoctal evidence of economists who not only didn't agree with many of the ideas politically dominant up until the Great Recession, but also sounded loud alarms many years prior to the financial crisis of what was to come (it's widely known that The Economist, for example, has written a lot about the mess with the housing market and its relation with financial trouble ahead as early as 2006). Moreover, such warnings were based on regular, mainstream modeling frameworks about the channels through which a financial crisis can impact the real economy having mortgage markets as a nexus. Jean Tirole has been modeling this kind of thing since the 90's, for example. The financial crisis might have surprised a lot of economists, but once it was taking place, they didn't need to look far enough for models to understand how the whole thing happened, as they were already available within the mainstream ballpark. On top of that, all of the successful responses to the financial meltdown were also based on good mainstream economic knowledge, including unconventional monetary policies such as quantitative easing.
So as we can see, there are very good reasons to resist Quiggin's charges against economics. Of course, one can try to argue that economics was corrupted not by lack of available, high quality work that respects mainstream constraints, but because most economists have unjustifiedly ignored such work prior the financial crisis. Quiggin provides ammunition for this argument by citing prominent economists who failed to see anything wrong with what was actually a serious financial bubble that would blow up at any moment, including economists in charge of important policy levers. But here I'll tell you to still color me skeptical, for the basic reason that no political agents in power need expert consensus to let bad policies run. My home country is a prime example of this: during the disastrous Rousseff administration there were professional economists vouching for her economically hideous policies, and even today after the major economic and institutional instability that followed as a result of such policies there are those willing to defend that administration's economic decisions. Fortunately, it turns out that economists like these proudly identify themselves as belonging to some "heterodox" economic tradition or another. This example was only to drive home the point that there being economists supporting bad economic policies is entirely explainable without resorting to the idea that the discipline or its professionals in general are in the grip of the same questionable mindset that affect such economists.
Another frustrating aspect of the book is how Quiggin's tone with state solutions to economic problems is so often complacent. To be sure, I agree with him that there are many economic problems to which state intervention/investment is the best solution, if not the only. However, the same way that it's not good applied economics to simply show how there's a model of how markets left on their own can come to socially optimal outcomes, since real markets may lack some critical assumptions made by the model, so it's not good to point out to models of how governments can intervene to bring about socially optimal outcomes when real markets can't. In both cases we need to examine the best empirical evidence available before deciding which model to favor. And I know Quiggin agrees with that, and in the book it's quite clear he's concerned about it. But at the same time there are points in the book where he seems so concerned to attack "market liberalism" that he ends up being satisfied pointing out how in real economies there are all of these problems only the state action can take good care of.
All in all, the book is an excellent exposition for people curious about the soundness, or lack thereof, of the economic arguments used to support radical free market ideology, and so it's also a good remedy for honestly open-minded defenders of such ideology. Despite the frustrating aspects I've pointed out (and here's another minor one: Quiggin's insistent characterizations of the ideas he's discussing in terms of pop-culture zombies ends up being cringeworthy and even annoying), when it comes down to exposition of actual economic theory and empirical evidence, Quiggin is quite honest and argumentatively careful, both in presenting the economic reasoning behind market-liberal ideas and in pointing out their problems, so the book is successful high quality pop-sci economics, and very relevant to this day. For people who already have some economics background the book doesn't deliver much information-wise, though. But even if one doesn't have a substantial learning experience one can still have a lot of valuable insight while reading. For example, I've been incentivized to be more rigorous and systematic when thinking about privatization and also have had a renewed concern to be even more careful when assessing economic growth data. Also, the way the book discusses this specific set of issues is somewhat refreshing and provides a much needed historical background of these issues. So I'll just be repetitive and reiterate yet again that in the end the book accomplishes its main goal and that I'd definitely recommend it to anyone interested in the subject.
I agree with nearly all of Quiggin's analyses, so I take the book to be successful at explaining why those 5 ideas as they appear in political disputes are mostly bad economics with poor empirical support overall - but even if I didn't agree with Quiggin, I'd still need to admit that he makes a carefully argued case for his criticisms, based on sound economic reasoning and attentive to empirical evidence. And I also agree that there are politico-ideological movements/groups that in fact defend this package deal Quiggin calls "market liberalism", and so, given what I have just said previously, I need to acknowledge that the book is also successful exposure of a relevant ideological movement's shortcomings. That said, reading the book was a quite frustrating experience for me. That's mainly because Quiggin wants to castigate economics as a whole as guilty of the same sins that "market liberals" are. And at times he suggests mainstream economics itself was in the grip of market liberalism. For example, he ends the introduction by saying that "[i]t is clear that there is something badly wrong with the state of economics", and the very end of the book goes along the same lines, with him saying that the "Global Financial Crisis gives the economics profession the chance to bury the zombie ideas that led the world into crisis". There are many other such textual examples throughout the book. The problem is that he barely presents any evidence at all that economics is intellectually bankrupt. The main ways in which he tries to support such a grandiose claim is to rely on anedoctal evidence, and to mention or quote economists who in fact publicly supported certain economic ideas or policies (including economists handling policy levers). These strategies aren't always bad, especially when anedoctal evidence or economists mentioned are representative of the discipline as a whole, and my bet would be that Quiggin most of the time in the book does believe that his examples are representative, but it's far from well established that this really is the case. Granted, it does seem that a lot of high profile economists were guilty of supporting one zombie idea or another back then, mainly one or more of the first three, with the concern over microfoundations that led many economists towards defending DSGE probably being the most common one - but two important caveats are in order here: first, as Quiggin himself notes, DSGE models are useful for many practical policy purposes, and, second, a very important part of this whole discussion is motivated by technical, theoretical, and empirical issues that arise within the normal business of academic research and discussion, with constant feedback from policy trials and errors; so mistaken as the obsession with microfoundations and DSGE may be, I don't think it's fair to attribute it mainly to market-liberal ideology (and this is one major reason why I said I agree with nearly all of Quiggin's analyses instead of agreeing tout court) -, but this is very far from showing that they supported all of the zombie ideas. And quite frankly it's just a lazy, bad inference to start from the former observation and conclude that these economists were sold to market-liberal ideology, and that this furthermore shows that most professional economists followed suit. Interestingly enough, Quiggin himself in many places in the book mentions surveys that show how most serious professional economists didn't agree with the zombie ideas he's attacking. He points out how professional economists never really bought the economic reasoning put forward in the ideological defenses of privatization, of the strong version of the EMH or of trickle-down economics, and that most academic economists in Australia didn't support so called "economic rationalism" (the Australian version of "market liberalism") when responding to a survey made in the early 1990's.
So yeah, the same book that claims economics is compromised by market-liberal ideology presents counter-evidence to this claim. And for people who have read enough about economics it's not hard at all to come across other anedoctal evidence of economists who not only didn't agree with many of the ideas politically dominant up until the Great Recession, but also sounded loud alarms many years prior to the financial crisis of what was to come (it's widely known that The Economist, for example, has written a lot about the mess with the housing market and its relation with financial trouble ahead as early as 2006). Moreover, such warnings were based on regular, mainstream modeling frameworks about the channels through which a financial crisis can impact the real economy having mortgage markets as a nexus. Jean Tirole has been modeling this kind of thing since the 90's, for example. The financial crisis might have surprised a lot of economists, but once it was taking place, they didn't need to look far enough for models to understand how the whole thing happened, as they were already available within the mainstream ballpark. On top of that, all of the successful responses to the financial meltdown were also based on good mainstream economic knowledge, including unconventional monetary policies such as quantitative easing.
So as we can see, there are very good reasons to resist Quiggin's charges against economics. Of course, one can try to argue that economics was corrupted not by lack of available, high quality work that respects mainstream constraints, but because most economists have unjustifiedly ignored such work prior the financial crisis. Quiggin provides ammunition for this argument by citing prominent economists who failed to see anything wrong with what was actually a serious financial bubble that would blow up at any moment, including economists in charge of important policy levers. But here I'll tell you to still color me skeptical, for the basic reason that no political agents in power need expert consensus to let bad policies run. My home country is a prime example of this: during the disastrous Rousseff administration there were professional economists vouching for her economically hideous policies, and even today after the major economic and institutional instability that followed as a result of such policies there are those willing to defend that administration's economic decisions. Fortunately, it turns out that economists like these proudly identify themselves as belonging to some "heterodox" economic tradition or another. This example was only to drive home the point that there being economists supporting bad economic policies is entirely explainable without resorting to the idea that the discipline or its professionals in general are in the grip of the same questionable mindset that affect such economists.
Another frustrating aspect of the book is how Quiggin's tone with state solutions to economic problems is so often complacent. To be sure, I agree with him that there are many economic problems to which state intervention/investment is the best solution, if not the only. However, the same way that it's not good applied economics to simply show how there's a model of how markets left on their own can come to socially optimal outcomes, since real markets may lack some critical assumptions made by the model, so it's not good to point out to models of how governments can intervene to bring about socially optimal outcomes when real markets can't. In both cases we need to examine the best empirical evidence available before deciding which model to favor. And I know Quiggin agrees with that, and in the book it's quite clear he's concerned about it. But at the same time there are points in the book where he seems so concerned to attack "market liberalism" that he ends up being satisfied pointing out how in real economies there are all of these problems only the state action can take good care of.
All in all, the book is an excellent exposition for people curious about the soundness, or lack thereof, of the economic arguments used to support radical free market ideology, and so it's also a good remedy for honestly open-minded defenders of such ideology. Despite the frustrating aspects I've pointed out (and here's another minor one: Quiggin's insistent characterizations of the ideas he's discussing in terms of pop-culture zombies ends up being cringeworthy and even annoying), when it comes down to exposition of actual economic theory and empirical evidence, Quiggin is quite honest and argumentatively careful, both in presenting the economic reasoning behind market-liberal ideas and in pointing out their problems, so the book is successful high quality pop-sci economics, and very relevant to this day. For people who already have some economics background the book doesn't deliver much information-wise, though. But even if one doesn't have a substantial learning experience one can still have a lot of valuable insight while reading. For example, I've been incentivized to be more rigorous and systematic when thinking about privatization and also have had a renewed concern to be even more careful when assessing economic growth data. Also, the way the book discusses this specific set of issues is somewhat refreshing and provides a much needed historical background of these issues. So I'll just be repetitive and reiterate yet again that in the end the book accomplishes its main goal and that I'd definitely recommend it to anyone interested in the subject.
June 14, 2017
I've had this book on my bookshelf for a while but have finally bitten the bullet and read it and I am glad I did. It provides the best explanation I have come across as to why many of the so call economic ‘reforms’ here in Australia have been failures and have actually made life worse for the average Australian. Both the Electricity and Gas sectors of the Australian economy are in crisis because of these reforms and the transport sector appears to be heading in the same direction.
The author presents a convincing case that the economic models that have guided government policy for the past thirty years are essentially bogus and have been used to enrich the financial elite. This explains why some 40% of all economic returns (profits) are being channeled into the financial sector. (This is not good for the welfare of society as this misallocation of resources will keep on reducing the productivity of the whole economy the longer it goes on.)
And I believe the academic who dreamt up these bogus model have blood on their hands. The Dynamic General Equilibrium model was used to justify the ‘big-bang’ transformation of the former eastern blocked from planned economies to free markets in the 1990s. The average age of Russian male dropped to dramatically during this time due to the social dislocation that resulted. A United Nation Development Fund report written in 1999 put the number of ‘missing males’ in these economies at 9.6 million. That is a lot lives!
The target of the book is the notion that “a liberal market system in which risk is managed through financial markets will outperform one in which governments intervene to stabilize outcomes and mitigate individual risk”. The books shows that despite overwhelming evidence from events such as the eastern bloc “big-bang”, the Global Financial Crisis, and the enemic growth in the incomes of all but the top percent of the income distribution, this idea still guides most government policy today. Zombies are very hard to kill.
The book is not an easy read but if you make the effort you will be in a much better informed when evaluating the competing economic policies of our politians.
The author presents a convincing case that the economic models that have guided government policy for the past thirty years are essentially bogus and have been used to enrich the financial elite. This explains why some 40% of all economic returns (profits) are being channeled into the financial sector. (This is not good for the welfare of society as this misallocation of resources will keep on reducing the productivity of the whole economy the longer it goes on.)
And I believe the academic who dreamt up these bogus model have blood on their hands. The Dynamic General Equilibrium model was used to justify the ‘big-bang’ transformation of the former eastern blocked from planned economies to free markets in the 1990s. The average age of Russian male dropped to dramatically during this time due to the social dislocation that resulted. A United Nation Development Fund report written in 1999 put the number of ‘missing males’ in these economies at 9.6 million. That is a lot lives!
The target of the book is the notion that “a liberal market system in which risk is managed through financial markets will outperform one in which governments intervene to stabilize outcomes and mitigate individual risk”. The books shows that despite overwhelming evidence from events such as the eastern bloc “big-bang”, the Global Financial Crisis, and the enemic growth in the incomes of all but the top percent of the income distribution, this idea still guides most government policy today. Zombies are very hard to kill.
The book is not an easy read but if you make the effort you will be in a much better informed when evaluating the competing economic policies of our politians.
May 10, 2013
A great overview of modern economics, how it went wrong and gave us gross inequality and the Global Financial Crisis, and possible avenues for new research. And it's not as pro-Keynesian as some reviewers would have you believe.
Quiggin covers the Great Moderation (unsustainable in the long term), the Efficient Markets hypothesis (wishful thinking), Trickle-Down Economics (self-serving bullshit), and Privatisation (actually a good idea when done pragmatically instead of ideologically). He also covers Dynamic Stochastic Equilibrium, but since a lot of that went over my head I won't give a glib summary!
But he also explains why people came up with these theories due to the economic woes of the 70s. And although those turned out to be incorrect, it wasn't wrong to re-examine the commonly held wisdom and look for alternatives. It's just that its time to do the same with market liberalism as was done to Keynesian economics.
My edition also has a chapter on the Australian history of economic 'rationalism', which I found interesting for filling in the gaps of my understanding of the 80s and 90s political climate. I was a kid then so all I knew was that my parents had no jobs to go to anymore. It's good to understand the bigger picture we were part of.
Quiggin calls for a greater focus on real-world data instead of academic theory, and more emphasis on equality than efficiency, in order to make the economy work for society as a whole instead of a few stockbrokers and corporate raiders. He backs it up with solid reasoning and a fair bit of sarcasm, and I'd recommend this book to anyone trying to understand modern politics.
Quiggin covers the Great Moderation (unsustainable in the long term), the Efficient Markets hypothesis (wishful thinking), Trickle-Down Economics (self-serving bullshit), and Privatisation (actually a good idea when done pragmatically instead of ideologically). He also covers Dynamic Stochastic Equilibrium, but since a lot of that went over my head I won't give a glib summary!
But he also explains why people came up with these theories due to the economic woes of the 70s. And although those turned out to be incorrect, it wasn't wrong to re-examine the commonly held wisdom and look for alternatives. It's just that its time to do the same with market liberalism as was done to Keynesian economics.
My edition also has a chapter on the Australian history of economic 'rationalism', which I found interesting for filling in the gaps of my understanding of the 80s and 90s political climate. I was a kid then so all I knew was that my parents had no jobs to go to anymore. It's good to understand the bigger picture we were part of.
Quiggin calls for a greater focus on real-world data instead of academic theory, and more emphasis on equality than efficiency, in order to make the economy work for society as a whole instead of a few stockbrokers and corporate raiders. He backs it up with solid reasoning and a fair bit of sarcasm, and I'd recommend this book to anyone trying to understand modern politics.
April 22, 2011
(x-posted from http://ketsugami.livejournal.com/tag/...)
An interesting book that talks about "dead" (read: disproven by events) economic ideas and how they continue to influence thought and policy. Quiggan goes about his work in a straightforward fashion, and although the death of some of these ideas is more controversial then others, he makes a pretty good case that all of them need to be consigned to the scrap-heap. There's a certain amount of academic-economics inside-baseball involved here, but not so much that it becomes uninteresting to the casual reader. He does get a touch jargon-y at times, so this isn't good for total novices.
His speculative "what we need to do now" is interesting to read, but sometimes a bit pie-in-the-sky, in that he appeals for wide-ranging changes of major policies. I wish he went a bit deeper into why these ideas refuse to die; some of them are pretty easy to understand (in regards to supply-side economics, the quote is "there will always be a place for any philosophy which appeals to the prejudices of wealthy, powerful men") but some of the more abstract ones, I don't get their staying power. Still, short and well-written, worth a read if you're interested in economic debates.
An interesting book that talks about "dead" (read: disproven by events) economic ideas and how they continue to influence thought and policy. Quiggan goes about his work in a straightforward fashion, and although the death of some of these ideas is more controversial then others, he makes a pretty good case that all of them need to be consigned to the scrap-heap. There's a certain amount of academic-economics inside-baseball involved here, but not so much that it becomes uninteresting to the casual reader. He does get a touch jargon-y at times, so this isn't good for total novices.
His speculative "what we need to do now" is interesting to read, but sometimes a bit pie-in-the-sky, in that he appeals for wide-ranging changes of major policies. I wish he went a bit deeper into why these ideas refuse to die; some of them are pretty easy to understand (in regards to supply-side economics, the quote is "there will always be a place for any philosophy which appeals to the prejudices of wealthy, powerful men") but some of the more abstract ones, I don't get their staying power. Still, short and well-written, worth a read if you're interested in economic debates.
June 14, 2018
Is this book good? Is it bad? I don't know. All I know is that it is a supreme bait. By that I mean, I was lured by the title, cover, and focus of the book into thinking that this would be an accessible practical introduction to economics for someone who has little prior knowledge. Unfortunately it was not this - at least not to me. Some parts of the book I found quite interesting, but most of it just went over my head.
I'm not necessarily blaming the author or the cover designers for this. But it made the reading experience quite difficult. So overall I can't give the book more than a 2, even though I know it could possibly have been a great read for someone better versed in economics than me.
I'm not necessarily blaming the author or the cover designers for this. But it made the reading experience quite difficult. So overall I can't give the book more than a 2, even though I know it could possibly have been a great read for someone better versed in economics than me.
January 28, 2019
Lefty "social democrat" book examines how both Keynesian and classical economic views are incorrect and instead reckons making the government a risk manager for both social outcomes and social equity is a good thing.
The problem is, equality of outcome means that parasitical traders get regulated but also legitimate wealth creators do too.
The message of humility is endearing but not a replacement for real wisdom.
The problem is, equality of outcome means that parasitical traders get regulated but also legitimate wealth creators do too.
The message of humility is endearing but not a replacement for real wisdom.
February 15, 2011
This an absolutely superb book. It is not only relevant to understanding what has happened to the international economic system in the last three years, but provides advice and theories to help understand both change and continuity in the history of ideas.
May 22, 2021
"Zombie Economics" is disappointing. Sadly, my opinion was biased before I began reading the book. It isn't that I heard of John Quiggin before or that I am a diehard fan of zombies. No, the reason is that I read some of the negative reviews of this book before I began reading it. This slight error made reading this book insufferable. It colored my views on everything I read.
From the book's cover, I thought "Zombie Economics" would be easily understood by a layperson or someone that doesn't know too much about economics. I was mistaken. I suppose I should have assumed something was wrong when I read the table of contents. Chapter one is titled The Great Moderation, but by Chapter three, Quiggin talks about Dynamic Stochastic General Equilibrium.
When I read a book, it is supposed to be pleasurable. I don't want to have a Wikipedia article open at the same time. All of your terms should be defined and easy to find. Furthermore, this book commits a cardinal sin; it is boring. Quiggin keeps throwing out a Word Salad, and I can't keep anything straight.
Perhaps I am too stupid to read this book. The fact remains that I did not enjoy it, though.
From the book's cover, I thought "Zombie Economics" would be easily understood by a layperson or someone that doesn't know too much about economics. I was mistaken. I suppose I should have assumed something was wrong when I read the table of contents. Chapter one is titled The Great Moderation, but by Chapter three, Quiggin talks about Dynamic Stochastic General Equilibrium.
When I read a book, it is supposed to be pleasurable. I don't want to have a Wikipedia article open at the same time. All of your terms should be defined and easy to find. Furthermore, this book commits a cardinal sin; it is boring. Quiggin keeps throwing out a Word Salad, and I can't keep anything straight.
Perhaps I am too stupid to read this book. The fact remains that I did not enjoy it, though.
October 1, 2018
With Irrational Exuberance, Fool's Gold and Black Swan, one of the best Great Recession books, precisely because it isn't narrowly focussed on the Noughties.
The key point is that the pipeline of ideas from academia to policy is terrible; it doesn't clear out old disconfirmed ideas, and anyway policy is often based on freshman year lies-to-children.
Quiggin does do a little anti-neoclassical hectoring on top of that, but from what I know (from an undergrad in economics) much of it's fair. I'm not sure about his Efficient Market chapter anymore; there are places where it sure seems to operate, as long as the market is liquid. (Which is of course the rub.)
The key point is that the pipeline of ideas from academia to policy is terrible; it doesn't clear out old disconfirmed ideas, and anyway policy is often based on freshman year lies-to-children.
Quiggin does do a little anti-neoclassical hectoring on top of that, but from what I know (from an undergrad in economics) much of it's fair. I'm not sure about his Efficient Market chapter anymore; there are places where it sure seems to operate, as long as the market is liquid. (Which is of course the rub.)
July 8, 2020
The book is a reasonable analysis of the validity of some current economic theories. It does provide a light overview of the ideas, but I imagine a background academic understanding of economics would help in appreciating this book. (I lack said economic knowledge so maybe this book is better than I give credit.) Also, I was hoping (based on the title) for a broad, general overview of economics... Nope! But taken in context of the intent of the book to examine a few of the current economic theories (and subsequent failures of these very theories), the book does a good job of detailing this information.
February 7, 2024
I didn't realize in the beginning that the author, along with Steve Keen, is from Australia. The zombie ideas are the right targets, and I mostly agree with the analysis and explanations, even though I have been influenced by EMH quite a bit (but definitely not the strong version). The only main thing I don't agree with is his characterization of Bernanke, who seems to be following neoliberalism (market liberalism), even took dramatic Keynesian measures during the crisis.
February 5, 2017
Although published in 2010, Zombie Economics: How Dead Ideas Still Walk Among Us still provides a good amount of relevant information for readers about popular ideas which still walk this earth in the wake of the Great Recession.
March 13, 2020
Interesting read that helps me to contextualize and reimagine many of my positions and understandings on economic issues. The format is useful and rather cute too, separating the different ideas into chapters and as different kinds of zombies.
December 31, 2025
I'm guessing the audience of this book is the casual reader, yet it was quite hard for me to follow most of the arguments in this book. There is a lot much better and much more approachable books criticizing modern liberal ideas in economy.
August 27, 2018
Сумма против economics (либерально-глобалистического мейнстрима в экономике), отлично.
March 28, 2019
Interesting, and I understand significantly more about economics than before I read it, but I still don't understand very much.
June 25, 2019
I enjoyed this analysis of how neoliberal economic policies don't actually make economic sense. I feel sure I will reference this book again, probably as I'm teaching.
March 9, 2023
Best book on economics! Very clear, easy to understand. Easy to see how it applies to the current day.
July 17, 2024
Title tricked me into thinking this would be fun. Chapter 7 was good though.
December 26, 2011
Zombie Economics: How Dead Ideas Still Walk Among Us: Review
Zombie Economics: How Dead Ideas Still Walk Among Us is a critique of many of the free market ideas that have defined government policy in the last 30 years. The author John Quiggin a professor of economics at the University of Queensland is a well known Keynesian. The fact Professor Quiggin advocates a return to regulation of financial services and a returned to the mixed economy is not surprising. Taking this into account readers should not expect a balanced account of the pros and cons of the neo-liberal policies that replaced Keynesian policy that had existed since the end of the second world war. The book however, provides a thoughtful critique of some of the ideas that have been used to justify many of the polices carried out in the last 30 years.
The zombies Quiggin slay include, the great moderation, the efficient markets hypothesis, dynamic stochastic general equilibrium, trickle-down economics and privatisation. Despite my free market bias I found myself agreeing with his arguments against the folly that was the great moderation and absurdity that is the efficient markets hypothesis when applied to financial markets.
If history has proven anything, claims that the business cycle has been tamed tend to end in tears. Keynesians made similar claims which ended in the stagflation of the 1970s. Likewise, claims by the advocates of deregulation and the efficient markets hypothesis have ended in the great recession. What seems clear is that at present there exists no economic philosophy capable of taming the business cycle indefinitely.
I first encountered the efficient market hypothesis when studying accounting theory. The argument went, that players in the market have access to perfect information and the financial markets are in the best position to provide valuations of companies. This extended to notion that the marketplace had access to information not publicly available. This was used to justify why accounting standards were unnecessary and that there would a be a market for lemons. Clearly, the collapse of Enron in the mid 2000s and the incorrect valuation of financial assets prior to the 2008 recession should have killed this idea once and for all. Unfortunately, this flawed idea of financial markets being highly efficient is still being peddled to resist regulation of the financial system.
Equally, I found myself agreeing with Professor Quiggin on the trickle down effect, this idea has been used to justify massive tax cuts to the rich. Unlike, Quiggin I believe that reducing taxes on income (the benefit of a person's work) is desirable. He makes the point that at present income rate rates once loopholes in tax law are taken into account the tax system is actually regressive. I would argue that it is better to close the loopholes rather than return the top marginal tax rate to 70%-90%. On the broader point of the trickledown effect, many studies into this area have shown that tax cuts do not pay for themselves through increased growth. Many studies have shown that changes to the marginal rate of taxation has a little impact on the willingness of males to work (Who are usually the major income earner in a family). They do partly pay for themselves but ultimately the costs to a government budget exceed any benefits. Equally, there is little evidence that the poor actually benefit from the rich getting tax cuts. This probably suggests that tax cuts are probably better targeted at the bottom reducing the dis-incentive for people switching from welfare to work.
The greatest area of disagreement I had with this book was the chapter on privatisation. The book paints a picture of well run profitable government owned corporations being sold off at bargain basement prices and consumers losing out in the process. Quiggin does provide some interesting arguments against privatisation and makes a good case that government often leaves monopolies in place when privatising making it unlikely that efficiencies promised will be realised.
Overall I would recommend this book for anyone interested in economic policy. Even those of us who are friends of the free market have to accept that financial deregulation has contributed to the 2008 recession. I do worry that this book in the wrong hands will encourage ill-informed people to rally behind the idea of the mixed economy with out a serious consideration of its many downsides. A good counter to this book would be Milton Friedman's series and book Free To Choose which highlights the many problems of the mixed economy.
Zombie Economics: How Dead Ideas Still Walk Among Us is a critique of many of the free market ideas that have defined government policy in the last 30 years. The author John Quiggin a professor of economics at the University of Queensland is a well known Keynesian. The fact Professor Quiggin advocates a return to regulation of financial services and a returned to the mixed economy is not surprising. Taking this into account readers should not expect a balanced account of the pros and cons of the neo-liberal policies that replaced Keynesian policy that had existed since the end of the second world war. The book however, provides a thoughtful critique of some of the ideas that have been used to justify many of the polices carried out in the last 30 years.
The zombies Quiggin slay include, the great moderation, the efficient markets hypothesis, dynamic stochastic general equilibrium, trickle-down economics and privatisation. Despite my free market bias I found myself agreeing with his arguments against the folly that was the great moderation and absurdity that is the efficient markets hypothesis when applied to financial markets.
If history has proven anything, claims that the business cycle has been tamed tend to end in tears. Keynesians made similar claims which ended in the stagflation of the 1970s. Likewise, claims by the advocates of deregulation and the efficient markets hypothesis have ended in the great recession. What seems clear is that at present there exists no economic philosophy capable of taming the business cycle indefinitely.
I first encountered the efficient market hypothesis when studying accounting theory. The argument went, that players in the market have access to perfect information and the financial markets are in the best position to provide valuations of companies. This extended to notion that the marketplace had access to information not publicly available. This was used to justify why accounting standards were unnecessary and that there would a be a market for lemons. Clearly, the collapse of Enron in the mid 2000s and the incorrect valuation of financial assets prior to the 2008 recession should have killed this idea once and for all. Unfortunately, this flawed idea of financial markets being highly efficient is still being peddled to resist regulation of the financial system.
Equally, I found myself agreeing with Professor Quiggin on the trickle down effect, this idea has been used to justify massive tax cuts to the rich. Unlike, Quiggin I believe that reducing taxes on income (the benefit of a person's work) is desirable. He makes the point that at present income rate rates once loopholes in tax law are taken into account the tax system is actually regressive. I would argue that it is better to close the loopholes rather than return the top marginal tax rate to 70%-90%. On the broader point of the trickledown effect, many studies into this area have shown that tax cuts do not pay for themselves through increased growth. Many studies have shown that changes to the marginal rate of taxation has a little impact on the willingness of males to work (Who are usually the major income earner in a family). They do partly pay for themselves but ultimately the costs to a government budget exceed any benefits. Equally, there is little evidence that the poor actually benefit from the rich getting tax cuts. This probably suggests that tax cuts are probably better targeted at the bottom reducing the dis-incentive for people switching from welfare to work.
The greatest area of disagreement I had with this book was the chapter on privatisation. The book paints a picture of well run profitable government owned corporations being sold off at bargain basement prices and consumers losing out in the process. Quiggin does provide some interesting arguments against privatisation and makes a good case that government often leaves monopolies in place when privatising making it unlikely that efficiencies promised will be realised.
Overall I would recommend this book for anyone interested in economic policy. Even those of us who are friends of the free market have to accept that financial deregulation has contributed to the 2008 recession. I do worry that this book in the wrong hands will encourage ill-informed people to rally behind the idea of the mixed economy with out a serious consideration of its many downsides. A good counter to this book would be Milton Friedman's series and book Free To Choose which highlights the many problems of the mixed economy.
August 23, 2021
[UPDATE 08-23-2021] Hello. It has become clear to me that my ratings system is flawed beyond repair. Due to a lack of standardization, I have rated many books more highly than they deserve, resulting in an inability to rate newly read books accurately without creating an incorrect impression of quality compared to books previously read. As a result, I am re-rating all of the books I have read in 2020 and 2021. For each book, I will append this little explanation, my new rating for this book using Storygraph’s scale (which allows for quarter-star ratings), my reasoning for the change (if necessary), and finally a guide to my new rating scale. Thank you.
Old Rating: 4
New Storygraph Rating: 3
Guide to my New Rating Scale:
* 5 Stars: This book was more or less flawless. One of the best things I’ve ever read.
* 4.75 through 4.25 Stars: This book had slight flaws, but I REALLY loved it. Marked as 4 stars on Goodreads.
* 4 Stars: This book had slight flaws, but I loved it.
* 3.75 through 3.25 Stars: This book had significant flaws, but I REALLY liked it. Marked as 3 stars on Goodreads.
* 3 Stars: This book had significant flaws, but I liked it just fine.
* 2.75 through 2.25 Stars: This book was extremely flawed, but I thought it had some merit. Marked as 2 stars on Goodreads.
* 2 Stars: This book was extremely flawed, but I didn’t actively dislike it. It was a waste of my time but not odious.
* 1.75 through 1.25 Stars: This book was irreparably flawed, and I actively disliked it. Marked as 1 star on Goodreads.
* 1 Star: This book was irreparably flawed. I actively hated this book and am worse off for having read it.
————————————————————————-
The book was very very informative, and holds up quite well despite the intervening years between its publication and now. It was written so that the lay person (such as myself) could understand the economic principles it discusses. At times it is still a little confusingly written for the non-economist, and the confusion couldn’t always be resolved by re-reading the passage. By and large, though, I would say it was successful in its project.
It also managed to make principles like “Dynamic Stochastic General Equilibrium” interesting to someone like myself, who as a rule of thumb hates reading about economics.
Insightful, well-written, well-researched, and persuasive. Would highly recommend to anyone.
Old Rating: 4
New Storygraph Rating: 3
Guide to my New Rating Scale:
* 5 Stars: This book was more or less flawless. One of the best things I’ve ever read.
* 4.75 through 4.25 Stars: This book had slight flaws, but I REALLY loved it. Marked as 4 stars on Goodreads.
* 4 Stars: This book had slight flaws, but I loved it.
* 3.75 through 3.25 Stars: This book had significant flaws, but I REALLY liked it. Marked as 3 stars on Goodreads.
* 3 Stars: This book had significant flaws, but I liked it just fine.
* 2.75 through 2.25 Stars: This book was extremely flawed, but I thought it had some merit. Marked as 2 stars on Goodreads.
* 2 Stars: This book was extremely flawed, but I didn’t actively dislike it. It was a waste of my time but not odious.
* 1.75 through 1.25 Stars: This book was irreparably flawed, and I actively disliked it. Marked as 1 star on Goodreads.
* 1 Star: This book was irreparably flawed. I actively hated this book and am worse off for having read it.
————————————————————————-
The book was very very informative, and holds up quite well despite the intervening years between its publication and now. It was written so that the lay person (such as myself) could understand the economic principles it discusses. At times it is still a little confusingly written for the non-economist, and the confusion couldn’t always be resolved by re-reading the passage. By and large, though, I would say it was successful in its project.
It also managed to make principles like “Dynamic Stochastic General Equilibrium” interesting to someone like myself, who as a rule of thumb hates reading about economics.
Insightful, well-written, well-researched, and persuasive. Would highly recommend to anyone.
June 23, 2015
I thought this book was pretty good, though I think it's primary effects on me were to (1) make me think even less of economics (as a discipline) than I already did, and (2) feel a bit hopeless that things will ever get better (despite Quiggin's sensible proposals at the end). Three thoughts:
1. I love decision theory (I'm a philosopher of science who works on Bayesian stuff), but I think the attempts by economists to derive interesting macroecomic results by doing decision-theory problems on agents who deviate from rationality in small, easily specifiable ways seems pretty misguided. I understand that economists need to do "research", and that figuring out applications for neat-looking decision theory theorems fills this void, but it doesn't seem terribly shocking that this led to a state of affairs where philosophical metaphysics has made more progress than macroeconomic theory over the last 30 years or so. Quiggin does a good job tying this sort of failed research program to a number of bad policy outcomes.
2. I especially liked the chapters on the strong version of the efficient markets hypothesis and on privatization. Quiggin does a good job documenting the (ample) evidence that markets are *not* efficient in this sense, and in arguing that government-owned industries can do better than privately owned ones in at least some sorts of cases. Again, this isn't a surprising result (the empirical evidence is pretty overwhelming); the bigger question is "Why did anyone believe in these sort of nutty things in the first place?" Quiggin does a good job explaining the motivations behind the views, as well as diagnosing their problems.
3. I'm not super-knowledgeable about economics, but nothing discussed in this book seemed super-surprising. What depresses me is that the sorts of zombie ideas that Quiggin discusses are very much alive and well, despite the fact of their massive discomfirmation by the "facts on the ground"--these are precisely the sorts of ideas that get promoted by a ton of "academic" blogs/articles and that are (at least to some extent) still being taught in Econ 101.
1. I love decision theory (I'm a philosopher of science who works on Bayesian stuff), but I think the attempts by economists to derive interesting macroecomic results by doing decision-theory problems on agents who deviate from rationality in small, easily specifiable ways seems pretty misguided. I understand that economists need to do "research", and that figuring out applications for neat-looking decision theory theorems fills this void, but it doesn't seem terribly shocking that this led to a state of affairs where philosophical metaphysics has made more progress than macroeconomic theory over the last 30 years or so. Quiggin does a good job tying this sort of failed research program to a number of bad policy outcomes.
2. I especially liked the chapters on the strong version of the efficient markets hypothesis and on privatization. Quiggin does a good job documenting the (ample) evidence that markets are *not* efficient in this sense, and in arguing that government-owned industries can do better than privately owned ones in at least some sorts of cases. Again, this isn't a surprising result (the empirical evidence is pretty overwhelming); the bigger question is "Why did anyone believe in these sort of nutty things in the first place?" Quiggin does a good job explaining the motivations behind the views, as well as diagnosing their problems.
3. I'm not super-knowledgeable about economics, but nothing discussed in this book seemed super-surprising. What depresses me is that the sorts of zombie ideas that Quiggin discusses are very much alive and well, despite the fact of their massive discomfirmation by the "facts on the ground"--these are precisely the sorts of ideas that get promoted by a ton of "academic" blogs/articles and that are (at least to some extent) still being taught in Econ 101.
August 28, 2016
Let me start by providing a bit of a backstory here.
Last Summer in the midst of the OMGGREECEISDOOMEDWE'REALLGOINGTODIE!111!!!!!!!11!!! hysteria I went and bought books because that's just how I react to everything.
There I was, in one of my favourite bookstores, browsing away when I happened upon the finance section. I don't choose to read economics books for pleasure the way I do other non-fiction books. When it comes to economics, I'll read whatever I need to read in the news in order to understand what's going on. BUT the title of this book just jumped out at me. OMG ZOMBIES. LIKE, ZOMBIES ON THE COVER! So I bought it because... zombies, basically but not only, because if that were true I would have bought Warm Bodies but I ain't touching that thing with a ten-foot pole. Is nothing sacred anymore???
So I started reading it about a month ago (actually it's been exactly one month). I won't lie, the first three chapters did at times go right over my head. I'm familiar with neither the jargon nor the theories and my knowledge of how markets function is mostly limited to those which include the prefix super or mini. I was more interested and more willing to grasp the final three chapters (the reason I bought the book besides the zombies): Trickle-Down Economics, Privatization and Expansionary Austerity. The last two in particular because if there's one thing we lazy, tax dodging insert preferred stereotype here Greeks are sick to death of hearing about, it's the need for more privatization/austerity. And boy, did these chapters deliver! IT makes perfect sense! It's obvious why these policies are touted and why they don't work.
There's some top notch stuff in the conclusion too. Bloke's awesome. Jesus Christ, I just called the professor a bloke. When I least expect it, the sheila within will do anything to reassert herslf.
p.s. Scroll down for obligatory picture of ZOMBIES
HAHA! GOTCHA!
Last Summer in the midst of the OMGGREECEISDOOMEDWE'REALLGOINGTODIE!111!!!!!!!11!!! hysteria I went and bought books because that's just how I react to everything.
There I was, in one of my favourite bookstores, browsing away when I happened upon the finance section. I don't choose to read economics books for pleasure the way I do other non-fiction books. When it comes to economics, I'll read whatever I need to read in the news in order to understand what's going on. BUT the title of this book just jumped out at me. OMG ZOMBIES. LIKE, ZOMBIES ON THE COVER! So I bought it because... zombies, basically but not only, because if that were true I would have bought Warm Bodies but I ain't touching that thing with a ten-foot pole. Is nothing sacred anymore???
So I started reading it about a month ago (actually it's been exactly one month). I won't lie, the first three chapters did at times go right over my head. I'm familiar with neither the jargon nor the theories and my knowledge of how markets function is mostly limited to those which include the prefix super or mini. I was more interested and more willing to grasp the final three chapters (the reason I bought the book besides the zombies): Trickle-Down Economics, Privatization and Expansionary Austerity. The last two in particular because if there's one thing we lazy, tax dodging insert preferred stereotype here Greeks are sick to death of hearing about, it's the need for more privatization/austerity. And boy, did these chapters deliver! IT makes perfect sense! It's obvious why these policies are touted and why they don't work.
There's some top notch stuff in the conclusion too. Bloke's awesome. Jesus Christ, I just called the professor a bloke. When I least expect it, the sheila within will do anything to reassert herslf.
p.s. Scroll down for obligatory picture of ZOMBIES
HAHA! GOTCHA!
March 27, 2013
This book slays the assertions of free market liberalism, sometimes known in Australia as "economic rationalism".. Written by an Australian academic economist, it thoroughly dissects the claims of free market economics for trickle down benefits, financial deregulation, privatisation, productivity improvements and supposed moderating effects on the economy. The GFC has blown many of these claims out of the water, but more than that, Quiggin painstakingly analyses the evidence from a historical and global perspective to explain exactly why and where they have failed to deliver.
As for the riposte that is often given regarding the failure of Keynesianism during the 70s stagflation era, he addresses that issue also. That problematic era highlighted the need to address inflation via macroeconomic policies, and he praises the Hawke government for its usage of the Accord in moderating wages as part of its policies to manage inflation. He argues that Keynesianism policies can be adjusted in light of the learnings from that time, and that the free market policies adopted actually made the recovery a lot slower than it might otherwise have been.
He advocates a new economics that is less ideological and obsessed with unrealistic microeconomic fantasy worlds, instead being more focused on macroeconomic realities, and managing risk throughout the economy on a social basis by means of government policy interventions. But he comes out very strongly in favour of a mixed economy which balances public and private sector involvement in various sectors as appropriate for the conditions of the times.
I found the book somewhat lacking in a political context and the realities of class power. For that reason, and the fact that the book was somewhat academic and less accessible to the (educated) layman, I'm only giving it three stars. It's a useful source of economic analysis and information, though.
As for the riposte that is often given regarding the failure of Keynesianism during the 70s stagflation era, he addresses that issue also. That problematic era highlighted the need to address inflation via macroeconomic policies, and he praises the Hawke government for its usage of the Accord in moderating wages as part of its policies to manage inflation. He argues that Keynesianism policies can be adjusted in light of the learnings from that time, and that the free market policies adopted actually made the recovery a lot slower than it might otherwise have been.
He advocates a new economics that is less ideological and obsessed with unrealistic microeconomic fantasy worlds, instead being more focused on macroeconomic realities, and managing risk throughout the economy on a social basis by means of government policy interventions. But he comes out very strongly in favour of a mixed economy which balances public and private sector involvement in various sectors as appropriate for the conditions of the times.
I found the book somewhat lacking in a political context and the realities of class power. For that reason, and the fact that the book was somewhat academic and less accessible to the (educated) layman, I'm only giving it three stars. It's a useful source of economic analysis and information, though.
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