The Undercover Economist
The book is valuable for an average person because it makes an attempt to explain the events that occur in the modern economy. Many people do not take efforts to dig dipper to understand the reasons of certain events. Harford (2007) offered an opportunity for those who seek the answers to the question related economy and the order of things in the world. The Undercover Economist is the book for those who can think and analyze the events. The economic theories are more complicated and difficult to understand from the perspective of a lay reader. Instead of presenting different controversial views, Harford (2007) explained in simple terms the events that had recently occupied the minds of average people including the recession and globalization. Harford (2007) succeeded to explain the demand and supply sides of the recession so that the reasons of the recent recession had became clear to average people. As well as Gladwell (2002) and Rivoli (2009), Harford (2007) concerned the issues of perpetuity of economic growth. However, Gladwell (2002) paid more attention to the technical side and the mechanisms of perpetual growth of economy while Rivoli (2009) expressed concerns regarding the social side of the issue. Definitely, Harford (2007) contributed to expanding the views of an average person on the reason of recessions from the perspective of repressed demand and supply bottlenecks, but in simple terms that could be understood by non-professionals. Beside the issue of limits of economic growth, Harford (2007) also concerned the issues of the patterns of gross domestic product, the possibility of forecasting and mitigation of the crisis of 2008, an appropriate level of inflation, and the reasons of unemployment. All these issues considered in The Undercover Economist present the interest for average people because they influence their welfare and future.
Also, Harford (2007) raised the issue of measuring gross domestic product. He pondered over the issue whether a society needs all the products produced inside of a country. In addition, he pondered over the issue of predicting the crisis of 2008: obviously, economists could predict and mitigate the crisis of 2008, but it resulted in damaging consequences for the global economy. Thus, this crisis was not predicted because certain stratum of people benefited from it while others remained at loss till now. The same issues were raised regarding the rates of inflation and unemployment. There is a natural rate of inflation and unemployment, but these rates should be tracked carefully because if they out of control they may cause social disaster. The role of a government is to form a framework for the control of these indicators. However, sometimes the interests of the government and business coincide leaving no space for growing social welfare. Harford (2007) did not provide any solutions for the situations discussed. However, he offered several perspectives on the current problems that helped evaluate the events that occur in the society being more economically-aware. The tone of the book is non-judgmental and clear to non-professionals.
In his book The Undercover Economist Tim Harford aimed to explain the order of things in economics. The author offered an insight on the economists’ perspective regarding the environments and events. He explained the economic concepts from the perspective of non-economist, but using classical economic theories. He showed how economics can be used in everyday life with examples. Harford also explained the economic systems and their sense to not well-informed reader. The book helps foster more informed consumers making more conscious economic decisions.
When looking at the headings of the book it may seem that they do not relate to each other. However, when reading the book, it appears that the concepts are interdependent and interrelated. For example, Harford explains the price of coffee from the perspective of scarcity and bargaining power. He stated that the premium price for coffee is conditioned by the underlying economic concepts in action rather than merely good quality of coffee. Harford explained different price policies used by the supermarkets stating that the price for the products in the supermarkets is formed taking into account the target market rather than the relative price of goods. Also, Harford explained the concept of perfect market and when the market efficiency makes sense. The impact of externalities was also explained by the author with regard to congestion and pollution. He also offered an interesting insight on the reasons of poorness of the developing countries discussing the absence of democratic opposition in the government, the lack of laws, press inertia, and the lack of counteraction to powerful people on the example of Cameroon. Harford shed light on the reason of boost in China from the perspective of exploitation of comparative advantage and benefits of foreign investments.
The Tipping Point
In general, the book of Gladwell is a guide of how reach big goals making small steps towards success. The approach presented by the author can be used in any area of human life if the changes in these areas are needed. Basically, this is an instruction of how to make big changes by small daily actions. The book of Gladwell attempts to explain complicated things using simple concepts. The author analyzed how success can be reached by concentrating efforts without large investment. Gladwell scrutinized the process of how small things can make big changes or how trends expand. When explaining the expansion of the trends, he drew an analogy with epidemic: first, one person becomes contaminated, then small changes lead to spreading an infection, and further an initial epidemic occurs. Ideas and new products can be expanded similarly using the same principles in economics. Gladwell outlined the roles of people in the process of expansion. There were three groups of people presented namely: mavens, connectors, and salesmen. The maven is a specialist that possesses detailed information about an issue, an area or a product. The maven is technologically-aware person who may consult interested people. Connectors are the specialists in the communication technology. Their task is to link mavens and those who need their talent as mavens are not interested to communicate their knowledge to others because they do not understand the benefits that could be derived from innovations. Thus, the connectors create the networks of capability by connecting the possessors of different talents with those who can make use of these talents. The role of salesmen is to directly contact a final consumer of a product. The most effective selling networks are created by the effective salespersons. The scheme of spreading is relatively simple: first, one distinctive or “sticky” quality of a product should be promoted taking into account cultural and social characteristics of target audience, second, small changes are spread in the environment, and third, when the “tipping point” becomes a trend causing dramatic change in the environment.
The Tipping Point helps understand the process of transformation and how this transformation can be carried. Many of the contemporary marketing projects are performed using the word of mouth and Gladwell (2002) explained this mechanism very well. Actually, Gladwell (2002) succeeded to explain the nature of change. He developed his own concepts of the participants of the process of the development and promotion of the ideas and products. For example, his concept of “stickiness” explains the patterns of how the ideas are dispersed in the society. Sometimes “tipping point” is considered as a new theory that explains different processes in the societies. Also, unintentionally or intentionally, Gladwell (2002) showed how small things can change the world. He revealed the power of human behavior in the process of changes thus sending a message to humanity that any process starting from the level of crime in New York and the rebirth of shoes called Hush Puppies can be changed by will of one person and spread to other people through the mechanisms described in the book.
The book can be useful for anyone who is willing to make changes, but does not know how to start. From economic perspective it means that the welfare of the nations can be changed if there is a certain plan. Many Americans were frustrated after facing the consequences of the global crisis of 2008. However, if they read this book they would probably not be so frustrated because this book helps look at all world processes philosophically. The changes are perceived as a difficult process while Gladwell (2002) succeeded to explain that nothing is impossible in this world.
The Travels of a T-shirt in the Global Economy
Rivoli (2009) discussed the issues of politics, markets, and the world trade. Also, the author explained economic links in the contemporary globalized world discussing the issues of price forming and distribution issues. On the vivid example of the production and traveling of a T-shirt, Rivoli criticized the advocates of globalization who sometimes oversimplify the underlying issues of this phenomenon. The book of Rivoli (2009) can reverse perception of average men of the contemporary economic relations. Few people ponder over the order of things, the reasons of events, and the underlying economic issues. This book may help them better understand these issues, analyze the situations having more information, and resist unfair attitude to those who are forced to sell their cheap labor staying poor, but making rich people richer.
The book helps a non-economically-aware person understand the sense of application of tariffs, regulations, and other restrictions are applied by American manufacturers and how they benefit from the opportunities presented. However, these patterns in manufacturing ruin the economy of USA because added value is created in manufacturing. All the more, the measures of protectionism hurt American industry badly in the long term. Outsourcing of manufacturing led to boost of China at the end of last century. The same issue was discussed in The Undercover Economist. Harford (2007) revealed the underlying issues of economic growth and its basics. Obviously, the economic growth is based on manufacturing since only manufacturing creates value. The books of Rivoli (2009) and Harford (2007) explained how China became the leading exporter in the global world in less than twenty years. In general, these books help understand how the economies of the countries can be developed and destroyed by implementing different economic policies. In this sense the book of Gladwell (2002) may help solve this issue since it offers the patterns of changing all of the processes.
All of three books are united with one central idea – unfair economic system that makes rich people richer and poor people even poorer. The travel of T-shirt is the most obvious example of how greedy businessmen use cheap labor for enrichment: they cut the costs of production and set the low price at the expense of poor people who merely struggle to survive while rich people are exposed to wastefulness. Wastefulness resulted in the contemporary global problem of pollution covered in The Undercover Economist: while managers of supermarkets in the USA and Europe decide how to eliminate waste, people in Africa die from hunger. The same idea was supported in The Travels of a T-Shirt in the Global Economy explains the mechanisms of creating wealth using simple economic principles: produce T-shirts in the developing countries like India not to pay high wages and sell them in the countries where people can pay $6 for a T-shirt making the owners of the T-shirt factories rich. Interestingly, a T-shirt traveled the world, being priced at $6 and losing its value, several times making several links of the entrepreneurs richer and still it made sense. When a reader gets familiar with The Undercover Economist, these underlying principles of economics become clearer. However, the most amazing discovery is that the added value is created on the stage of production while those who took efforts producing a T-shirt are at continuous loss. Fair labor relations exist in the developed countries where people succeeded to win the struggle for fair payment for the labor, where the laws defend the rights of those who create value, and where the democratic principles rule. Meanwhile, businesses tend to cut cost chased by increased competition resulted from global economic changes. As a result, everybody is at loss: workers in poor countries do not get what they deserve while workers in the developed countries lose their jobs because of competition from the side of less-paid workers. The system defending the rights of one stratum of people does not treat well people of another stratum. The Undercover Economist explained this phenomenon from economic perspective while Gladwell (2002) and Rivoli (2009) used more simple terms to express the same idea.
References
Gladwell, M., 2002. The tipping point: how little things can make a big difference. New
York: Back Bay Books.
Harford, T., 2007. The undercover economist. New York: Random House.
Rivoli, P., 2009. The travels of a T-shirt in the global economy. New York: John Wiley
& Sons, Inc.
