The book Naked Economics is a successful attempt to introduce a comprehensive description of key economic processes in the approachable format.
The tenth chapter, The Federal Reserve, explains in detail the adverse effects of the proposition not being able to meet the demand. Inflation is named as the primary result, and several ways to avoid it are presented. The author goes on to explain the difference between cash and wealth and describes such attributes of money as purchasing power, which results from the stability of the currency. Thus, the chapter tackles the topic of the value of money, which is confusing and often misinterpreted by the public (Bacon par. 1).
Furthermore, the chapter shows not only the origins of inflation but also the ways of effective wealth management, like the proper cash investment. It also explains the opposite process – the deflation, which, again, is perceived by the public as positive, but is, in fact, disruptive to the economy. Finally, the influence of inflation on interest rates is explained, which can be helpful in decision making connected to loans.
Chapter 11, International Economics, highlights the principles of international trade and outlines two main strategies available: keeping the currency undervalued and overvalued. While the topic of international trade seems to be interesting only to the specialists in the field, two aspects of it are detailed which concern all the population: the taxation of imports, which occurs in the case of undervaluing the currency and results in higher prices of goods, and the artificially high prices of exported goods in the opposite scenario, which should concern anyone in business dealing with export.
Finally, the chapter makes some insights into the process known as “dissaving” and exemplifies the benefits of the universal currency by reviewing the transparent prices and lowered transaction costs resulting from the implementation of Euro (Wheelan 247).
Chapter 12, Trade and Globalization, explains the philosophy of international trade by comparing it to the individual market relations. Thus, it does not only bring clarity to its target issue but also helps to understand the market principles in general, especially those that deal with intangibles like services. The author makes a good point by explaining the benefits of trade, which allow us to specialize and reach a higher level of life by effectively bringing down the required effort to a minimum.
Again, while speaking about international trade, Wheelan provides good advice on an individual level, tying productivity to specialization and, ultimately, to profit (272). Besides, the chapter tackles two important ethical issues: the reasons behind choosing trading partners from “enemies”, and the complicated question of sweatshops, which violate many human rights but remain the soundest economic option for some countries (Wheelan 287). Both issues are often viewed in separation from their economic grounds, so this particular chapter is what distinguishes the book from others and possibly broadens its target audience.
The thirteens chapter, Development Economics, broadens the idea of benefits of a sound economy beyond the traditional context of “profit for its own sake.” The author shows the correlation between the economic development of countries and their level of education and development of social infrastructures (Wheelan 296). While this can be viewed as a prerequisite, Wheelan suggests the inevitable rise of many aspects of life as a result of the developing economy.
He also describes the opposite side of the spectrum, speculating on the adverse effects of closed economies not only for the country as an entity but of all its residents (Wheelan 304). This chapter can serve as additional motivation and challenge the notion of economic growth as something unethical.
In all, the book presents valuable insights on economic topics in an approachable manner and, more importantly, does not limit the scope and highlights the ethical and social aspects of some questions.
Works Cited
Bacon, Christopher. Common Misconceptions: The Printing Presses. 2015. Web.
Wheelan, Charles. Naked Economics: Undressing the Dismal Science, New York: W. W. Norton & Company, 2010. Print.