Tag: finance

The Great Economists: How Their Ideas Can Help Us Today – Linda Yueh

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Joan Robinson points out that if markets are imperfectly competitive, then firms can earn economic rents because rents aren’t entirely eroded by competition. In that situation, firms have market power…a theory of ‘monopsony’ [refers] to the market power that firms can wield in the labour market alongside the more familiar and established term, monopoly power, where firms have market power in the product market and can charge more for a good or service above their costs, earning them monopoly profits. Monopsony power allows employers to pay workers less than the value of their output, and keep more for themselves.

The book presents a selection of 12 illustrious economists, from the modern era to contemporary times. Linda Yueh introduces the reader to the ideas, times and life of those economists, but also speculates how one such economist would answer to the hot questions of today, from his/her perspective.

The Great Economists includes:
Adam Smith
David Ricardo
Karl Marx
Alfred Marshall
Irving Fisher
John Maynard Keynes
Joseph Schumpeter
Friedrich Hayek
Joan Robinson
Milton Friedman
Douglass North
Robert Solow

Linda Yueh is actually an economist, a fellow of the University of Oxford and assistant professor at the London Business School. A formal lawyer and journalists, she tries to present the groundbreaking ideas of those 12 economists in simple, non-academic terms. On that front, Yueh marvelously encapsulates the times and concepts put forward by those famous economists in the last three centuries.

The book is structured in 12 main chapters, each presented an economist. Each chapter is further divided into an introduction to the economist’s ideas, a presentation of his/her times, a study of today’s societies, with no focus on a particular country, and finally, a subsection where the economists’ ideas are tested to see how they can help us for today’s problems.

The book is truly enjoyable, particularly for a reader accustomed with the domain. It is a great reminder of important economic ideas. It is an interesting read for someone outside the domain as well, as it acts as a textbook, including a dictionary of terms at the end. I particularly liked the short biography for each economist and the brief presentation of the times they lived, bringing many insights into the motivations for their research.

Maybe exploring more the answers that such economists could have given to today’s questions would make the book even more interesting. I would have been delighted to see more economists added into the book, as each was carefully presented through the lens of their time and with a well-written, thoughtful and clear introduction of their ideas.

Overall, a great book to read that has a deserved place on my bookshelf.

Rich Dad Poor Dad – Robert Kiyosaki

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I find so many people struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change. I know people who are losing their jobs or their houses, and they blame technology or the economy or their boss. Sadly they fail to realize that they might be the problem. Old ideas are their biggest liability. It is a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday, yesterday is gone.

“Rich Dad, Poor Dad” is a self-help, motivational and light financial education book. The author starts from an allegory: a poor (real) dad, with an education and a job, and a rich (adoptive) dad, with his own business. As a child, the author learns the mistakes of his real dad in making money and adopts the more successful ways of his rich dad.

Work for money or make money work for you?

Robert Kiyosaki tries to motivate the reader to have courage for his own path, not simply a job given by someone, but for creating his job. He encourages risk-taking, saying that without risk there is no reward. No one won big by playing safe. This advice I heard from other authors as well, such as Arnold Schwarzenegger in his book Total Recall.

Kiyosaki gives the example of real estate, where large sums of money can be made if enough attention and perseverance are given to an opportunity. Seen it as an allegory, or as an example, it makes sense. Taking literally, it could look as a symptom of the real estate bubble.

The author made a fortune after this book. Barnes and Noble considers it apparently the best sold Personal Finance book of all time. (source). It has a website, a game and dozens follow-up books. In 2006, he co-authored a book on advice on personal finance with Donald Trump, Why We Want You To Be Rich: Two Men, One Message.

For those books, usually you either like it or hate it. Taken literally, it doesn’t have much depth, just some advice that you can get anywhere. The book builds its legitimacy from the supposed wealth and financial success of the author. However, it has its moments with decent advice.

[Picture in the post by Gage Skidmore]

[Featured picture by Australia High Commission, Suva – Department of Foreign Affairs and Trade]