1 comments about Economic Issues and Policy with Economic Applications.

1. Be careful when buying this book used because you may just be buying the book and not the serial code to register for the online applications website. Purchase a serial number additionally costs about $14, so it's still cheaper than buying a new text.

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1 comments about A New View of Comparative Economics with Economic Applications Card and InfoTrac College Edition.

1. This is one of those books - you would expect in the thirties or fourties - that tell you how bad planning is but then suggest that a socialist society is probably great if you live there. The only really annoying part is when facts are down-played, which they are in certain descriptive paragraphs. Describing a centrally planned economy:
   
   "Restrictions on movement and the central determination of wages made the market for labor clumsy and unresponsive, but on the whole workers responded to material incentives just as in the developed market economies."
   
   -- Anyone who has studied Socialist planned economies knows just how untrue that statement is. Material incentives were introduced and constantly re-worked in an attempt to get a response from workers, but largely the material incentives did not work or did not work as planned. Firms could not profit-maximize because they had to fulfill a plan, the plan would be given in "tons" or "square meters" and the incentives were skewed toward fulfilling the plan - sometimes for material reward, other times due to coercion, but in neither case was it an incentive system that lined up in the way it does in a market economy. The phrasing leads one to beleive that the incentive is similar in both systems, but the incentives in a planned economy were a constant struggle and often produced the opposite of the objective (eg incentive to produce less instead of more).
   
   One or two just misleading paragraphs would not bother me. But there are very many:
   
   "Workers performed because of piece rates, bonuses, or the prospect of advancement as well as supervision, just as in the West... Truly coercive systems of labor allocation and job performance are those that rely on slavery, serfdom, indenturement, or peonage."
   
   -- So, the USSR had no gulags, then? Forcing people to work and allocating a job for them at a certain wage, with all consumption products from housing to media to milk to clothing also planned and priced by the government - the one employer - is nothing like serfdom, then?
   
   The wording is clearly trying to convince the reader that the USSR was an improvement on what came before it. Many Russian would disagree and you have to skew the facts and omit facts - keep the discussion at a very high level - to get this viewpoint across.
   
   In case you think I am twisting the words of the writer, he states several times that planning is not that bad, the market is coercive through its "whip of hunger", and "it may be premature to assume that central planning is buried forever", "the widely held belief in the superiority of the market, which may well be called into question in the future." etc etc.
   
   My other complaint is that although it *does* do a nice job of describing many different economic systems - it doesn't go into great detail about all of them, and clearly at least some of the high-level analysis is questionable. Therefore it remains a very introductory text on comparative systems that ought to be taken with a grain of salt.
   
   There is also one absurd thing that the author does - maybe more than one, but here is an example of a ludicrous bias.
   
   There is one very dishonest and obviously biased paragraph in this book. Its so obvious that its bizarre to see it published in a textbook. The book makes the choice to compare two economic freedom rankings. The first is the Heritage Institute's Indices of Economic Freedom. The ranking is described and the table is shown and then the author provides a caveat:
   "The six 'freest' nations are all small, with an average population of less than 4 million. ... On the whole it is difficult to draw lessons for the design and conduct of an economic system from the experience of such small states, no matter how rapid their their recent growth experience. It is simply not realistic to assume that Russia or India will undergo sustained growth by adopting the same policies as Hong Kong or Singapore."
   
   Okay. Reading this one may notice that he seems to want to defend more socialistic states, but perhaps he is simply making the observation that if the "freest" countries by this measure are all small and have had recent growth but not long-term growth, then you may not be able to draw any conclusions.
   
   But the table is included and I sincerely hope that no reader falls for that or moves on taking his words at face value. It is completely dishonest. One look at the table shows that his "6 freest" are actuall 6 of 8 - the first three are ranked #1 #2 and #3, then there are 5 ranked #4 that are all equal in score!
   
   Guess which countries came in #4 with a score of 1.8 exactly?
   
   Estonia
   Ireland
   Luxembourg
   Netherlands
   United States
   
   Then the next in rank is Australia with a score of 1.85.
   
   So, is it "difficult to draw lessons" from the Unites States - ranked equally to some of those 6 that he mentioned? Is it "simply unrealistic to assume that Russia or India will undergo sustained growth by adopting the same policies as" the United States, ranked equal to some of his 6?
   
   Why pick six? He picked them because they were small, and if the United States ranked *after* them by score, it would make sense, although you might expect him to mention that the US came soon after, if it was close in score. But the US didn't come after, the US tied in score! So did the netherlands which is 19 million, not under 4 million. And then Australia was in fact very close, another larger country.
   
   It would be an outrage if it weren't so idiotic.
   
   Then again, if you are buying it second hand as I did, only two years old and under $10, it is probably worth the buy and worth the read.

1 comments about Comparative Economic Systems (The Dryden Press Series in Economics).

1. This book explores and compares the different economic systems throughout the world in an easy, almost non-academic manner (it's used in several universities as a textbook.) Mr. Gardner writes in an entertaining and easy-to-understand style, and his explanations are precise and informative. Having been written in 1988, the book still dedicates a good portion of its content to the Soviet communist economic system, which is now a "distant" memory. Still, it's a good reminder of how divided the world was economically and philosophically for almost the entire 20th Century. All in all, a must read for people who want to learn the basics (and a lot of nuances) of the main economic systems of the world

5 comments about The New Geography of Global Income Inequality.

1. This thorough and informative investigation should be rewarding reading for anyone who is interested in understanding the past, assessing the present, and thinking about the future of world income inequality. This book puts conventional wisdom to the test about the course of global income inequality at a time when alarms are being sounded about large-scale economic changes that are occurring throughout the world with increasing globalization. Among the claims of conventional wisdom that this book challenges are: (1) world income inequality is increasing across nations, with the rich getting richer and the poor getting poorer; (2) globalization exacerbates inequality across nations; and (3) international exchange is inherently exploitative. One of the nice things that the author is able to do is point out how inequality within nations and inequality between nations contribute to the overall level of global income inequality. I would recommend this book to readers of all ideological persuasions who are interested in a thoughtful presentation and discussion of evidence about a contentious issue.



2. Are rich nations getting richer and poor nations getting poorer? Are the rich nations exploiting the poor nations, as critics of globalization in the trade protest movement suggest? The answer to both questions is no, according to Firebaugh, who shows that world inequality is on the decline. This book should become a classic among scholars, but it should also be of interest to the general public. Firebaugh writes well and uses plain talk and common sense along with plenty of supporting evidence.



3. Much of what you thought you knew is wrong! If you are seriously interested in globabilization and recent trends in world income inequality, you need to read Glenn Firebaugh's The New Geography of Global Income Inequality (Harvard U. Press, 2003). In a straightforward and detailed presentation, Firebaugh explains the arithmetic of inequality -- how it divides into within-nation and between-nation components. He then charts each of these, both over-time and at the present time. You will learn where the U.S. fits in the world, and which countries and continents are at the top and the bottom in terms of income and inequality in income. Most important, you will see that, contrary to much current journalistic and even scholarly writing, world income inequality has actually been decreasing since the 1990s. This books complements and in important ways adds to recent books by Stiglitz, Easterly, Soros, Bhalla, Diamond, and Landes



4. Glenn Firebaugh is the first scholar to document an extraordinarily important pattern in modern economic history.

   Prior to industrialization, persons in one nation fared about as well as persons in other nations with respect to income and standard of living. Within nations, however,individual deviations from the means of national income were commonly quite large.

   One effect of industrialization was to reverse this situation. Today dramatic disparities in income are found between industrial and non-industrial nations, with industrial nations and their citizens being quite well off and non-industrial nations and their citizens being quite poor, on average.

   Using highly regarded national income data and bringing to his analysis a set of well-reasoned assumptions, Firebaugh makes an astounding discovery. In the last quarter of the 20th Century income inequality began to increase within nations and
   decline across nations. An economic process that has pointed in one direction for over a hundred years has begun to reverse itself.

   Firebaugh coins the term "inequality transition" to identify the two stages of an economic process related to the global spread of industrialization. In the first stage, the principal source of global income inequality moves from within-nations to between-nations. In the second stage, the principal source of global income is restored to the historic norm, namely, within-nations. Today we are in the early stages of the second phase of the inequality transition.

   Critics of modern, capitalist, industrial expansion have it wrong. Contrary to their pessimistic pronouncements, today, the overwhelming majority of the world's poor are not getting poorer but are getting richer. Spreading industrialization is improving the lot of most of the world's peoples. Indeed, the promise of global economic justice is inherent in the notion "inequality transition."




5. When I first came to the United States in 1983 as a graduate student at the University of Wisconsin, I was overwhelmed by how much money Americans made. Sure, I also noticed inequality in America, but what struck me the most was that almost all Americans were better off than all Chinese. My parents were medical doctors and had higher salaries than their peers. With a combined income of about $100 a month, however, they earned only a fraction of what a minimum-wage American worker would earn. As a graduate student in the United States, I was considered rich in China and was therefore expected to bring home luxury items (such as color TVs and cameras), which I did in 1984.
   Twenty years later, I am now relatively well paid as a University of Michigan professor. China has changed far more dramatically during that time, however. When I visit China now, I often encounter situations in which friends make a concerted effort to let me know that they are financially more successful. Indeed, the rapid pace of economic development in China over the past 25 years has led to sharp increases in both personal income and income inequality, so that many among the Chinese elite now enjoy standards of living that surpass those commonly seen in America and other industrialized nations.
   Personal observations are no substitute for systematic studies. If you want to understand how global income equality has evolved in recent decades and why, look no further. Glenn Firebaugh has provided the most complete, thoughtful, and intriguing study on the subject, The New Geography of Global Income Inequality.
   Global income inequality can be divided into two components: Income inequality within countries and income inequality between countries. Firebaugh's book centers on the latter -- between-nation inequality. We know that income inequality within many countries (such as U.S. and China) has been increasing in recent decades. However, the vast majority of global income inequality in the past two centuries has been attributable to between-nation rather than within-nation inequality. Firebaugh divides the history of global inequality into two phases. Phase 1, which occurred between the beginning of western industrialization in the late eighteenth century and the middle of the twentieth century, was characterized by rapid growth in between-nation inequality. In phase 2, which immediately followed, Firebaugh observes a reversal of that trend -- a steady decline in between-nation inequality. Hence his "new geography of global income inequality" is one of a decreasing trend in between-nation income inequality accompanied by a modest increase in within-nation inequality. Firebaugh provides persuasive explanations for his new geography, chief among which is the spread of industrialization to poor countries and the reduction of distance barriers due to advances in technology and the culture of globalization.
   This is an outstanding book, showcasing what sociology can offer by enhancing our empirical knowledge of the world. While powerfully conceptualized and methodologically sophisticated, Firebaugh's case ultimately rests on the analyses of data from the Penn World Table. It is no small task to draw an empirical generalization from the data. Indeed, much of the book is devoted to discussions of measurement issues that may lead to an alternative conclusion - the continuation of the increase in between-national inequality. Two issues are crucial. First, Firebaugh argues that an international comparison of economic well-being should be based on purchasing power parity rather than exchange rates. Second, because the focus is on individual-level economic well-being, he presents a compelling case that comparisons between nations should be weighted by population size.
   As much as I like the book, I encourage readers to appreciate Firebaugh's excellent scholarship as much for the questions it raises as for the concrete conclusions it reaches. I have a few questions of my own. First, as Firebaugh realizes, his conclusions are mainly driven by a single case: China. China is the most populous nation and has recently experienced rapid economic development. Since his measures are weighted by population size, China exerts overwhelming influence on the decreasing trend of between-nation inequality. How to interpret the rise of economic power in China in the post-1978 period is a complicated issue requiring further research, perhaps into the role of social institutions. Second, the national average of personal income, the raw material for the study, contains no information about within-nation variability. Yet, regional (thus geographical) variation and rural-urban difference in income can be very large in some countries (such as China). Would the trend look the same if we disaggregated China geographically? More broadly, should the "new geography" be based merely on discrete, internally homogeneous units called "countries"? If there is good reason for doing so, one would want to include the role of government and economic exclusivity within national boundaries in the discussion. Finally, despite the word "geography" in the book's title, Firebaugh's measures of between-nation inequality are not truly geographic, as distances between countries (within a continent) are not considered.
   In the final analysis, these questions and comments do not detract from the important contributions made by this book. Firebaugh's argument is articulate, forceful, and well-presented. All who are concerned with issues of income inequality, scholars and laypersons alike, will find much to learn from this book, as will students seeking to master the art of conducting empirical social science. For these reasons, I highly recommend Firebaugh's latest contribution.

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