Book Review on ‘Good Economics for Hard Times’
By- Abhijit V. Banerjee and Esther Duflo
The renowned MIT economists Abhijit V Banerjee and Esther Duflo are the power couple in the world economics and they have made unmatched contributions to the economics of ‘Poor Countries’. The book was launched soon after they had won the Sveriges Riksbank Prize in Economic Sciences in memory Alfred Nobel popularly known as a ‘Nobel Prize in Economics’ in 2019 along with their colleague Michael Kremer for their contributions to experiments and research to alleviate global poverty.
Unlike their first book ‘Poor Economics’ which mainly talked about an aspect of economics concerning the poor developing nations, this book talks about the ‘Hard Times’ that economies around the world are facing and makes an effort to provide the answers to the economic problems of our time. The problems that arise out of Free Trade, or if immigration is good or bad? What role can governments play in controlling the inequality exploding everywhere? The rise of artificial intelligence is a boon or a bane? How can we tackle the problem of climate change by not affecting our prospects of growth? The trends of growth that the western countries achieved in the 1970s will they ever return? These are towering challenges ahead of every economy and these are the vital questions asked of every government now. In their attempts to provide a solution to these problems polarization has taken place and as a result, there are many opinions floating around many of which are biased and a result of ‘BAD ECONOMICS’. Hence, in providing the right analysis to the following problems the authors have made their small contribution towards ‘Making Economics Great Again’.
The authors have tried to clear their air around certain misconceptions that immigration results in loss of jobs for the natives. They have tried to give us a lucid account of scenarios where various studies and researches by eminent scholars have proven that this is not the case instead immigration has increased the number of opportunities because the immigrants are not just the earners but also the spenders. Moreover, it is not just the high income opportunities that pushes them out of their native land and it is only when their home is the ‘mouth of the shark’, they decide to migrate to foreign soil.
However, the threats of loss of jobs as a result of the negative consequences of free trade are real. ‘The Pains from Trade’ that a country like the United States has faced as a result of ‘China Shock’ are real. The numerous workers displaced as a result of the promotion of free trade and the ‘sticky’ nature of the economy are the eminent losers of trade. They do require care and attention of the government. The authors have highlighted how the role of the Government is essential to fight this out with the relevant programs like the Trade Adjustment Assistance Program in the United States. The authors have however highlighted the net negative impact that a possible trade war between U.S.A and China will have on the economy.
“A trade war as an effort to save jobs in one industry will cause significant damage to other industries.”
Growth rates have often been a topic of debate in western countries. Growth rates have not returned to their optimum level ever since the oil crisis hit in 1973. The book talks about the various possible reasons for such deflated growth rates and whether the western countries should be optimistic of growth in the times to come. The authors have also tried to throw light on the modern problems of climate change and the rise of automation and Artificial Intelligence, the negative side of the coin of growth.
The authors affirm that the problems at hand are massive but they assure us that we do possess the resources to solve these problems.
“Only if we engage seriously in the quest, and if the best minds in the world work with the Governments and civil societies to redesign our social programs for effectiveness and political viability, will history remember our era with gratitude.”
