The best-selling book Good Economics for Hard Times by Nobel Laureate Abhijit Banerjee is a work of economic non-fiction about how economics can help to alleviate poverty, inequality, and economic stagnation. Through case studies and research, Banerjee presents data-driven recommendations for developing nations and other governments as well as for policymakers, academics, and laypeople.
Banerjee elucidates his argument in detail, explaining not only the importance of economics in solving global problems, but also the need for an updated, “humanitarian” version of economics that is grounded in social justice, rather than in concepts like the supply and demand. He explains how this new approach can bring progress to those in poverty, with concrete examples and case studies of countries that have implemented it successfully.
Banerjee sets forth his argument by introducing readers to the concept of “trickle-down economics,” which he characterizes as a largely ineffective way to distribute wealth. He then proposes a more efficient alternative: a system based on the “trickle-up” capture of wealth that economically empowers those among the most vulnerable communities. This system of economic development that Banerjee outlines is founded upon providing resources, such as access to education, health care, and business opportunities, to those within the lowest-income groups in society.
The author then delves into the various inequalities that exist in the world today, and how economics can be utilized to address them. One particular consequence of rising global inequality is the emergence of a new class of ultra-wealthy individuals, and Banerjee steps back to examine how wealth is distributed unevenly within some countries—what he terms “domestic” inequality. He then moves forward again to analyze a more widespread phenomenon: the emergence of countries with stagnant or declining economic growth, known as “zombie” economies.
Banerjee then moves on to discuss the role of the state in fostering economic growth, emphasizing the need for social policies that create opportunity and leverage the talents of citizens. He argues that while the market is unable to resolve the social and economic challenges of the 21st century without assistance, governments can use fiscal policy, including cash transfers and other investments in infrastructure and human capital, to stimulate economic growth. He also encourages policymakers to employ effective regulation, as well as international coordination between states, to make sure that economic policies are implemented responsibly and maximally promote human development.
The book culminates in an expansive analysis of poverty and inequality, in which Banerjee suggests concrete solutions to be applied to many of the world’s most pressing economic issues. He advocates for a focus on equity and inclusion, describing various interventions such as cash transfers, job training, access to credit, and business regulations that could greatly reduce poverty and hunger. He closes with a reminder of the role of economics in developing nations and nations facing economic stagnation, emphasizing that only through focusing on equity and good economic analysis can poverty be alleviated and economic growth be achieved.
Good Economics for Hard Times by Abhijit Banerjee is a lucid and ultimately hopeful work of economics, exploring the challenges of both developed and developing nations and offering a convincing vision of social justice and economic prosperity. Banerjee’s clear and easy-to-follow analyses make this book excellent reading for any student of economics or policymaker looking to understand the implications and solutions of modern economic challenges.
