Economics and Economists @ BYOB Party in October 2019 (Part 3)

Fasih spoke about probably the only book he’s seen that makes economics appealing The Undercover Economist

“This book is less theory and more anecdotal. Tim Harford is an economist, journalist and podcaster. He likes to look at the big picture. So he takes you through the simple consumerist act of buying a cup of coffee and then he asks you where the money goes. How much does the barista make? What drives the costs of running the cafe? What kind of information do you convey when you buy a cost-effective cuppa or a pricey latte?

“He then moves onto the economics of supermarket displays. Have you ever thought about why an organically grown lemon is never kept side by side with the regular lemon? It’s obvious- it’s not economically viable to keep two highly differing rates together.”

So Harford talks about the Mafia, immigration, China’s economic revolution and makes us think about how each of our financial decisions creates an impact in the world.

“You might want to check out the second part of the book too The Undercover Economist Strikes Back: How to Run–or Ruin–an Economy He talks about the ideal economist as man of the world. Check why economists should be more like plumbers.”

Jaya continued the economics discussion with the book called  The Worldly Philosophers: The Lives, Times And Ideas Of The Great Economic Thinkers by Robert L. Heilbroner. Economists like philosophers frame their principles based on the times they live in. The book gives you insight into the lives of economic thinkers from Adam Smith to Karl Marx and John Maynard Keynes. Through their ideas, the book makes an attempt to understand the workings of a capitalist society.

“The book is good for an overall understanding of economics. Why does economics start with Adam Smith? Until capitalism came into being, there was no need for any economic theory. The monarch called the shots. Economics came from making sense of society and society came into the picture when capitalism came into being.  This was a revelation to me. Initially, we had philosophers; now we have worldly philosophers. The book puts things in a historical perspective and for that reason I recommend it.”

Other books about economics? The Cash Nexus: Money and Power in the Modern World, 1700-2000 by Niall Ferguson and Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt (or the Chetan Bhagat version of economics as one reader said) are good places to start. The economic discussion ended with the well-intentioned but problematic Midday Meal scheme. You can read about it here.

More books in Part 4.


Investment and Inequality @ BYOB Party at the Takshashila Institution in Nov 2018 (Part 2)

Image result for Investment Philosophies aswathRalph spoke economics at the BYOB Party this time. The book he focused on this time was Investment Philosophies by Aswath Damodaran, a well-known academic and practitioner in finance.

It’s a very interesting book, a reference textbook for management students too. There are some very descriptive exercises which I didn’t do as I was intimidated by the prospect. It’s the perfect guide for investors who want a better understanding of investment strategies including indexing, passive and activist value investing, growth investing, chart/technical analysis, market timing, arbitrage, etc. It’s no book for a novice and is based entirely on empirical studies. No gut feel or magic wand here.

You can follow Damodaran’s YouTube channel here:

Image result for The Price of Inequality amazonThe economics trend continued with Devanshu who talked about The Price of Inequality by Nobel Laureate Joseph Stiglitz. Turns out inequality doesn’t help the privileged either in the long run. Stiglitz does an in-depth study of what leads to inequality- unpredictable markets and faulty political systems. Adam Smith was discussed as is the case when economics is brought up. Indira mentioned an insightful book called The Growth Delusion by David Pilling, a revelatory and entertaining book about the pitfalls of how we measure our economy and how to correct them. If you are looking for the equivalent of Strunk and White of Economics, look no further than the book Economics in one Lesson by Henry Hazlitt- another good book to understand the economy. To understand the story of runaway capitalism, watch The Lorax.

More books in Part 3.