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Naked Economics by Charles Wheelan Report

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Updated: Mar 9th, 2022

Introduction

Charles Wheelan an American correspondent of London’s Economist and a lecturer at Northwest University provides us with unbiased, transparent, and relevant information about free-market philosophy in his book “Naked Economics: Undressing the Dismal Science”. For a better understanding of his economical theories, we first define the phrases used throughout his book; “undress” and “dismal. Undressing in his economical perspective means removing all diagrams, jargon, and equations and making real-life science, a move which notoriously challenged the economist. Dismal on the other hand means that science has always been boring, dull, and vague that has led to misunderstanding as demonstrated in Thomas Carlyle’s economics. This book provides us with delightful information on economic life which Burton Malkiel truly finds interesting and unique.

Wheelan in his book defends free-market philosophy. He argues that when markets are left to operate freely, all kinds of evil deeds dominate the markets and a book of this kind would work as a catalyst. In his examples, Wheelan gives clear and solid exquisite examples of the benefits of the market economy. His market re-evaluation finds faults and he strives to advance towards an alternative approach. He finds the free market significantly less effective and when he tries to explain externalities that the market produces, he simply states that “there is no market solution in this case; the market is the problem” (Wheelan 44).

He italicized this particular sentence to challenge the measure that the market is not a perfect economic system and it has been polluted by externalities and created social costs that private actors don’t bear and makes significant inroads into solutions externalities (the government) would find useful.

Mises in his pseudo-economic literature believes that externalities such as the government are what separate the economics of the market from being a social place. However every human action creates market externalities in any economic or political system, we believe that the government in its powers should provide transparency and integrity in the free market which will result to sound economic growth. Wheelman discussions are centered on this theory and very good economists should understand that. Toward the end of the book, Wheelan (204) brings the benefits of international trade to light. He argues that every economic activity generates waste and the international market is no exception and if an economy produces more, it pollutes more.

Description of a better America

Wheelan believes that it’s the people who produce externalities but not the market and expose certain weaknesses of the government, which in part with other externalities, contribute to unstable markets. In his nuanced and well-reasoned discussion he questioned the government on how it would solve this problem; will it force us to produce less or rather force us to pay higher prices for what it terms us social costs?. Mises explains that if externalities are a datum which we should worry about, then there should be torts that could establish responsibility for damages suffered by third parties. In this perspective, Wheelman agrees that the government stands in the way of people acquiring higher standards of living since it controls some aspects of the economy and wonders why we still to the government when we are stuck. The major externalities listed in this book are politicians, bureaucrats, or autocrats who should leave market problems to be solved by market participants for a better life (Wheelan 67).

Wheelan’s skills and judgment consider a better America to be that of sound economical growth and the Federal Reserve System should therefore be treated well as it’s very important in facilitating sustainable economic growth and any market would not service by itself without the Fed. He continues that monetary policy isn’t an easy business and it should be better handled by a skilled person who is well acquainted with America’s economic tap capable of providing the alternative of the market chaos frequented by the economy and should not be able to manipulate the money commodity for microeconomic purposes. In his book he points out Alan Greenspan, the board director of Fed is well equipped with his knowledge to deal with such crisis and knows how much money is needed in America’s economy and he should be better informed on what right interest rates should be applied to America’s buyers and how much commodities each household needs to sustain itself. If all this information is at his fingertips, then the free market will not be needed (Wheelan 18). Many economists do not believe in Wheelan’s theorem, they believe that either the market works or not. They argue that if the markets are not planned, then we should leave them to flow freely. In my perspective, markets aren’t that easy to plan and the solution lies in the third way, a theory Ludwig von Mises disputes. Mises argues that when a third party collapses, one chooses between going back to socialism or back to the free market, a casual relationship that has existed in our markets for centuries.

In another example, Wheelan (26) calls upon students to gain insights into gender relations, environment, politics- to mention just a few rather than being subjected to dull, esoteric lectures while economics is all around them. This statement does not hold any basis, if learning economics is “dull and esoteric” as he describes, then wouldn’t we all need the education to learn economies in the first place? It’s the education that helps us understand the markets and if he opposes learning, why didn’t he see anything wrong with the insight of John Maynard Keynes that states that “spending, tax cuts or by using both”, and using fiscal policies would solve the market problems? Wheelan also quotes Paul Krugman as the advocate of a free market but he doesn’t quote people like Fredrick Hayek who won the 1974 Nobel prize or even Ludwig von Mises who was rejected by major economists because of his uncompromising beliefs of free markets or even other people who have published books on the same topic.

Conclusion

With the few examples illustrated from Wheelan’s book, it’s clear that the government itself destroys the workings of the market and shifts the blame to the free markets. Since the real markets never exist without government interference, there’s no one to for the economical crisis. From these explanations, we can describe a market to be a social process that provides interaction of people from different backgrounds to exchange undesirable information to desirable ones. Anti-market feelings stem when markets fail, people become disappointed and they blame the markets

Works Cited

Wheelan, Charles. Naked Economics: Undressing the Dismal Science. New York: W.W. Norton, 2002.

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