For our Bill Gates’ Summer Reading List final discussion, we read Good Economics for Hard Times, by Abhijit V. Banerjee and Esther Duflo. Gates describes their book as “useful and compelling,” and says they are “honest about the limits of economics.” In general, our group agreed. Some felt the authors were often too complex, and that it would help readability and shareability if the data were easier to understand. Nonetheless, most appreciated the insight.
Collectively, we noted that many examples – from immigration, jobs, family, and more – were a true reflection of the personal experiences of many in our group. This recognition led to a robust sharing of stories, ah-ha moments, and a fuller appreciation for the reality of what Banerjee and Duflo share. When you have members of the group who have lived in the economies of countries such as Pakistan and Sweden, it really makes the conversation lively.
Fundamentally, Good Economics employs candor as a myth-buster, cracking wide open assumptions on topics such as immigration, trade, and equity. Data-driven at both the macro- and micro- levels, the authors share the economic truth about these global issues. They also acknowledge that although economic factors have some predictability, economics is not a precise science and is heavily influenced by hard-to-predict human behaviors and social factors.
For example, although many people across the globe argue that immigration leads to displacing citizens from low-paying jobs, in truth, supply and demand does not apply to the economics of immigration. When immigrants show up to take on low-paying jobs, they are also consumers, driving sales and growth in supplies and services like groceries and haircuts. And, they help build need and opportunity for citizens to move into jobs at the next, supervisory level.
Also consider tax policy. There’s a long-held belief that cutting taxes boosts the economy, but Banerjee and Duflo suggest otherwise. Regardless of administration, Republican or Democrat, they point to well-meaning tax initiatives that have done little to create growth in the economy.
Ultimately, Good Economics left us with the consideration that perhaps the GDP is not the best indicator of economic success in an economy of today. Perhaps it is less about growing wealth and more about quality-of-life issues such as adequate-income jobs for the working poor, and smart businesses that create a more livable planet. Real food for thought from these Nobel Prize winning authors.