Naked Economics by Charles Wheelan

A relatively easy read, this book serves as a great introduction for anyone not well-versed in economics. It still remains relevant for
experts, touching on key issues that are a part of everyday life. With a broad focus, this book will be useful to debaters of all forms, with
facts and analysis over topics such as globalization, the space race, communism, the free market and airline ticket prices. In fact, it is a
book that I would highly recommend to hand off to your parents, little siblings, friends, or even classmates suffering in AP Economics,
since its coverage is extremely wide and its explanations simple and easy to understand. In addition, the multiple facts and sources cited
by the author help his explanations to become more legitimate, considering the fact that he relates his arguments to his facts extremely
well.
The first chapter touches on the basics of modern economic theory, such as his comparison between a communist economy and a free
market economy through the anecdote of trying to find the cheapest cigars in Cuba, in which case there was none, seeing as prices were
controlled by the government and kept constant. Another example of a free market economy would be the example of differing classes
for an airline and how they serve the needs of different customers. In addition, he finally argues how the free market is mostly self-
correcting; since everyone acts on their own interests, no one would be willing to accept something that is sub-par for them and thus,
the market benefits everyone.
The second chapter talks about how economic incentives affect a market. First, the example of black rhino hunting is given. In it, he
talks about how that market is specifically unable to be self-corrected, since the supply of black rhinos is not controlled by a private
entity. He offers a solution to modify a specific market in the form of incentives, since they can steer a market towards a different
direction. Interestingly, he also gives the example of how you can claim a free meal at Burger King if you did not get a receipt by 60
seconds as an incentive for cashiers not to steal money in the form of unrecorded transactions. However, he then gives an example of a
problem with incentives in the form of corporate mergers. During a merger, he states that all the losses are absorbed by the firms that
fund them, while the CEOs are free of any potential risk; this is what caused the downfall of Lehman Brothers.
The third chapter then moves on to the governments role in the economy and how it benefits the individual. For example, the
governments main role is given as that of taking care of externalities, that is, when an individual does an action mainly because of the
social benefits and not the economic benefits. In addition, he counters a claim about how government is wasting the money of taxpayers
by stating that taxpayers do not have to resources that government does when making decisions for their actions, such as the case of
hunting for criminals.
The fourth chapter than goes off in the opposite direction and talks about the instances where government involvement is not
necessarily a good thing. He gives the example of the mail, where there would be no incentive to improve service if the government is
the only one in charge. He then provides an advocacy for a system where the government allocates the funds, but the private sector
actually does the work, since that brings the benefits of government funding along with competition. In the end, he advocates for private
and public sector cooperation in most fields, except in those where there is a lack of a competent private sector.
The fifth chapter talks about the necessity of information when making decisions, such as maternity benefits and how they apply to
women who are not interested in having children. In those cases, the woman should receive other benefits to compensate for those
irrelevant benefits, and is in this case that information over the preferences of this woman is necessary to make an informed decision.
Of course, excess information has harms such as companies possibly increasing the price of health insurance for people who are more at
risk of catching diseases.
The sixth chapter moves to the topic of income inequality and how it relates to human productivity. First, first-world countries with
relatively low amounts of natural resources like Japan and Israel are compared against lower-income countries such as Nigeria with
plenty of natural resources. The conclusion is that human productivity is a major factor in success of a country as well as individual
success, with more productive people being a key factor in a successful country.
The seventh chapter talks about the balancing of markets and how there is no such thing as a way to get rich quick without any trade off,
such as an arm and a leg. Every dollar gained has to be protected, since inflation exists. In fact, floating cash always loses value, thus
risks have to be taken in order to secure their value against future threats such as a stock market crash. In the end, it is always more
beneficial for rich people to invest in a large amount of places, since their losses would be significantly less in case of an economic
accident.
The eighth chapter then talks about political opposition to sound economic policy, such as benefits to outdated farmers who no longer
supply goods to the government, but who still fight tooth and nail for their benefits. This then moves on into a talk about the strength of
the vocal minority, and how democracy usually isnt really about what the majority wants. The example of small groups is given and how
they often successfully push for some obscure legislation through Congress that do not necessarily reflect the will of the majority. In the
end, it isnt always the fault of the politicians that useless legislation is passed.
The ninth chapter is a basic introduction into world economics and touches on concepts such as GDP, real GDP and inflation. It also
discusses the basics of globalization and its effects on the lives of people around the world. It gives examples from both first-world and
third-world countries and serves to educate readers on certain global affairs and how past events such as colonization have influenced
modern-day economics.
The tenth chapter discusses how good monetary policy is able to prevent economic collapses in the wake of disasters such as 9/11. In
addition, interest rates and how they reflect current economic conditions are explained.
The eleventh chapter talks about the volatility of national economies in the global stage, giving the example of Iceland and how their
economy broke after a depression.
The twelfth chapter talks about how outsourcinxg is good for the global economy as it fosters competition. It also states that sweatshops
arent necessarily a bad thing since they are better quality than their competition.
Finally, the thirteenth chapter talks about the wealth and poverty of nations and how that happened.
In the end, this book is slightly liberal because of its leanings towards government influence and how globalization is important for all
economies.
The most important point is that economics is easy to understand when it is broken down to the basics.