Naked Economics

BY CHARLES WHEELAN

 

SYNOPSIS

Economics can be intimidating to the person who is not well-versed in business and mathematics. This book caters to the “layman” by breaking down the meaning of the terminology used in the subject, along with the psychology of how the free market works. The author expresses why he believes capitalism is superior to communism and other government-controlled markets, as well. This book will help its readers better understand how the economy operates on an aggregate level.

 

SUMMARY

Naked Economics is broken down into many subjects that explain how each aspect of the economy affects the other. Wheelan is a firm believer in Keynes Economics—that the markets should work themselves out—and why he feels the government should not intervene. He informs the reader of why people such as Bill Gates are rich and how they continue to get richer. He clarifies how the Federal Reserve works and why it is needed. There are no supply and demand, mathematical, or other graphs inserted into this read; only clear, concise, and comprehensible language that anyone can understand.

When any government is too involved in the free market, it becomes not so free. The government is already the taxer of the income of corporations and its individual citizens. Additionally, if they become allowed to control how businesses make their money, as well, then that would be called communism. This type of system does not work because it is not progressive enough for a growing economy. The market must be competitive for it to thrive and meet the supply of demand. But some argue that it is an unfair system, rigged only for the few to survive.

The wealthy people of capitalist nations are said to have an advantage over their counterparts. They possess something called “Human Capital.” This means that they are more valued in the community because of their skillsets and professional network. People like Bill Gates will always be able to own companies and find jobs because of their skills. That does not necessarily mean that the skills they possess are any better than the next person with separate skills. It just means that they possess more human capital, which makes them more value to society. Certain skills are valued over others, making the demand for people who possess those skills greater.

The Federal Reserve was created to help control inflation and deflation in the economy. It does this by regulating the interest rates of borrowed money, which alters the amount of capital that flows throughout the economy. Economic growth is stimulated when interest rates are lowered because corporations are more incentivized to borrow money for investment purposes when the money is cheaper. Alternatively, when prices rise too high, too fast, The Fed will raise interest rates to offset borrowing and slow the rising inflation costs.

Naked Economics deciphers the boring and dull, classroom-lectured information to provide a better, more entertaining explanation of the workings of the economy.  Readers will learn the benefits and defects of capitalism and why it is preferred in developed countries over all other markets. They will end this book with a deeper understanding of how the effects of the free market influence everyone in a society.