Economics Does Not Lie

Contents

Sorman provides an overview of economics as a social science based on empirical hypothesis-testing and factual observations. He details research such as work by Edward Prescott of taxation on economic growth, by Jagdish Bhagwati on the benefits of international trade, by Milton Friedman and Robert Lucas on the effects of inflation, and by Avner Greif on the value of strong social institutions. He writes about economic progress in the developing world, particularly the nations of India, China, and Brazil, which he credits to reforms such as opening borders to allow greater foreign direct investment.

Sorman refers back to the 2008 financial crisis and the Great Recession, and he argues:

He writes that the response of U.S. and European governments to the 2008 financial crisis, by saving some banks and not others, created an aura of regulatory uncertainty that made things worse. He describes a potential free market solution of simply shuffling severely affected banks through organized bankruptcies to write off toxic debts. Although praising U.S. and European efforts to avoid protectionism post-crisis, he asserts that his recommended approach "could have brought a more severe recession, but a shorter one, followed by a quicker rebound."

Reviews

Journalist Stephen Spruiell wrote a positive review for the conservative news and opinion website National Review Online. Spruiell stated that Sorman made a compelling case in favor of free markets, and Spruiell stated that "the only flaw" was that Sorman seemed to overestimate "at times the degree to which economists have reached a consensus." Spruiell remarked in his review, "Economics does not lie; on this point, Sorman is correct. But we must contend with the fact that economists sometimes do."

References

References

1. Stephen Spruiell. (July 14, 2009). "Lies, Damned Lies, and Economics".
2. "Defense of Free Market". [[Manhattan Institute]].
3. Guy Sorman. (Summer 2008). "Economics Does Not Lie".