Little, Brown, £20 Order at a discount from the Independent Online Shop

Book review: The Undercover Economist Strikes Back, By Tim Harford

Our chief economic storyteller turns his talents to the big picture of recession – and recovery

Tim Harford is trying to do for macro-economics what he – and a handful of others – have sought to do for micro-economics. That is to de-mystify the subject, explaining in simple language what we know and don't know about the way the world economy works.

Get money off this title at the Independent book shop

Someone needs to, for this end of the subject is in serious disarray. Most economists failed to warn adequately of the risks in the run-up to the last recession, and now are confused about the best prescription for pulling out of it. We know quite a lot about how individuals and companies respond to economic stimuli and books such as Freakonomics by Steven Levitt and Stephen Dubner have brought the subject to millions. Harford's The Undercover Economist carried on this work. But while there have been a host of prescriptive books, there has been much less of a mission to explain.

So Harford takes us through the ambiguities of macro-economics, how it developed, the ideas of John Maynard Keynes and Milton Friedman, and also contributors less well-known to the outside world such as Bill Phillips and Andrew Osward. There are implications for policy. The meat of the book is how to deal with recessions, the central question facing the Western world now. But there are also nice diversions into the baby-sitting co-op that workers on Capitol Hill in Washington founded, Henry Ford's doubling of his workers' wages in Detroit, and why cigarettes were a currency in Germany in PoW camps. The first, by the way, failed because there were not enough sitters, the second succeeded because it cut labour turnover, and the third resulted in the cigarettes used for trading having part of their tobacco extracted and smoked – the PoWs debased the currency.

As for recessions: is it shortage of demand or shortage of supply? Or both, but maybe at different times? Was the most recent recession a demand shock or a supply shock? These ambiguities are what Harford so cleverly captures. As a general proposition there is usually a conflict between the short-term and the long-term, in that short-term measures to cope with recessions may undermine long-term potential growth. He is also sensible. Macro-economists did not cause the banking crisis, for it was the job of bankers, accountants, politicians and lawyers to keep things safe. But "when the banking crisis hit, the macro-economic mainstream didn't have good models of what the economic consequences might be," even if "casual empiricism suggested they wouldn't be pretty". So they didn't really know what to do.

That common-sense approach shows through in other parts of the book. Why do we have faster-rising inequality in Anglo-Saxon economies than on the Continent? He suggests it might have something to do with the fact that the English-speaking world has very good universities but not very good schools. He is sceptical of the current fashion for focusing on happiness rather than GDP, noting that the one country that has happiness as a policy objective, Bhutan, has a dubious record on human rights. And as for the concern that growth cannot continue forever, he points out that the peak in energy consumption per person in the UK was back in 1973. It is now the lowest for 50 years.

Economists will continue to attract opprobium. Indeed, by their wild assertions they bring a lot of it on themselves. But maybe, thanks to people such as Harford, the profession will gain a better-informed audience, and a more perceptive one for its real shortcomings.

Arts and Entertainment
Stewart Lee (Gavin Evans)


Arts and Entertainment
No half measures: ‘The Secret Life of the Pub’

Grace Dent on TV The Secret Life of the Pub is sexist, ageist and a breath of fresh air

Arts and Entertainment
Art on their sleeves: before downloads and streaming, enthusiasts used to flick through racks of albums in their local record shops
musicFor Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Arts and Entertainment
Serial suspect: the property heir charged with first-degree murder, Robert Durst
TV review
Arts and Entertainment
Igarashi in her

Art Megumi Igarashi criticises Japan's 'backwards' attitude to women's sexual expression

Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

Arts and Entertainment
It's all in the genes: John Simm working in tandem with David Threlfall in 'Code of a Killer'

TV review
Arts and Entertainment
Far Right and Proud: Reggies Yates' Extreme Russia

TV review
Arts and Entertainment
Kanye West was mobbed in Armenia after jumping into a lake

Arts and Entertainment
The show suffers from its own appeal, being so good as to create an appetite in its viewers that is difficult to sate in a ten episode series

Game of Thrones reviewFirst look at season five contains some spoilers
Arts and Entertainment
Judi Dench and Kevin Spacey on the Red Carpet for 2015's Olivier Awards

Ray Davies' Sunny Afternoon scoops the most awards

Arts and Entertainment
Proving his metal: Ross Poldark (played by Aidan Turner in the BBC series) epitomises the risk-taking spirit of 18th-century mine owners

Poldark review
Arts and Entertainment
Eddie Redmayne is reportedly favourite to play Newt Scamander in Fantastic Beasts and Where to Find Them

Arts and Entertainment
Tom Hardy stars in dystopian action thriller Mad Max: Fury Road

Arts and Entertainment
Josh, 22, made his first million from the game MinoMonsters

Grace Dent

Channel 4 show proves there's no app for happiness
Disgraced Top Gear presenter Jeremy Clarkson
Arts and Entertainment
Game face: Zoë Kravitz, Bruce Greenwood and Ethan Hawke in ‘Good Kill’

film review

Arts and Entertainment
Living like there’s no tomorrow: Jon Hamm as Don Draper in the final season of ‘Mad Men’

TV review

Arts and Entertainment
Yaphett Kotto with Julius W Harris and Jane Seymour in 1973 Bond movie Live and Let Die

Arts and Entertainment

Arts and Entertainment

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

    Who's monitoring the outsourced NHS services?

    A report finds that private firms are not being properly assessed for their quality of care
    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

    The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
    How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

    How do Greeks feel about Syriza?

    Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
    From Iraq to Libya and Syria: The wars that come back to haunt us

    The wars that come back to haunt us

    David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
    Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

    Too busy to surf? Head to The Pool

    A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
    Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

    UK's Major Tum to blast off on a spice odyssey

    Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
    John Harrison's 'longitude' clock sets new record - 300 years on

    ‘Longitude’ clock sets new record - 300 years on

    Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
    Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

    Let the propaganda wars begin - again

    'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
    Why Japan's incredible long-distance runners will never win the London Marathon

    Japan's incredible long-distance runners

    Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
    Why does Tom Drury remain the greatest writer you've never heard of?

    Tom Drury: The quiet American

    His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
    You should judge a person by how they peel a potato

    You should judge a person by how they peel a potato

    Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
    Beige is back: The drab car colours of the 1970s are proving popular again

    Beige to the future

    Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
    Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

    Bill Granger cooks with fresh cheeses

    More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
    Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

    Shay Given: 'This FA Cup run has been wonderful'

    The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
    Timeless drama of Championship race in league of its own - Michael Calvin

    Michael Calvin's Last Word

    Timeless drama of Championship race in league of its own