Read up on the recession – and how to end it

[box]Euan McTear[/box]

If you’re heading out to stock up on books for your beach holiday, or if you’re even just loading up your kindle for a day out at the park, why not try to learn up on the small matter of the most severe recession since the Great Depression. Here is our pick of the best recession-explaining and even recession-solving books out …

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1: ‘End This Depression Now!’ by Paul Krugman

Since winning the Nobel Prize for economics in 2008, Paul Krugman has become one of the most respected and established economists out there – helped not least by his column in the New York Times.

His latest book does exactly what it says on the tin and outlines Krugman’s message to world leaders that austerity is not ending this recession, but instead prolonging it. He claims austerity is a pointless punishment that we are imposing on ourselves, when the solution, which he puts forward in the book, is “incredibly easy.”

Krugman looks at spending, highlighting that one person’s spending is another’s income, while that person’s spending is yet another’s income. There is a huge circle, through which income changes hands, and the more that income moves around the circle, the more GDP will grow. But if everybody stops spending simultaneously, then nobody can receive income.

So Krugman’s point is that somebody must keep up the spending. And the economist believes that must be the government. Governments across the globe should kickstart growth through spending, he says, and tighten the purse strings when things are looking a bit sunnier.

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2: ‘Pinched: How the Great Recession Has Narrowed Our Futures & What We Can Do about It’ by Don Peck.

If Paul Krugman’s book does what it says on the tin, then so does this one. And it’s a pretty wordy tin too.

Don Peck explores the ways in which our Great Recession will change that way we act. He writes about the way we look for work and establish careers and how that looks set to change in an unstable jobs market.

He talks about migration towards the big cities and economic hubs as young people look for whatever opportunities they can find. Unlike after the Great Depression of the 1930s, there is no World War on the cards – at least not yet – so there are not the same opportunities for young people to do something productive as there were at the end of the 30s.

Peck puts forward his recommendations for how governments and societies can evolve from the current sorry state of affairs, drawing on the successful and failed policies employed in past times of economic crisis.

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3: ‘Bust: Greece, the Euro, and the Sovereign Debt Crisis’ by Matthew Lynn

More of a description and explanation of Greece’s woes rather than a solution, Lynn’s book is still a must-read.

He explains how Greece, upon joining the Eurozone in 2001, enjoyed “the greatest free lunch in economic history.” The country made the most of all the benefits of Eurozone membership, culminating in its hosting of Athens’ 2004 Olympic Games. Those stadiums are now empty, while many other venues from those games are literally falling apart.

Bloomberg columnist Lynn focuses not just on the Greeks, but also on the state of the Spanish, Irish and German economies and the impact the Greek crisis is having them and all European countries.
Bust may be a bit too basic for regular followers of economic news. But for those who have never set eyes on page 2 of the Financial Times, this reasonably short book – just 288 pages in total – will quickly get you up to speed on the crisis over in Greece.

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4: ‘Betterness: Economics For Humans’ by Umair Haque

Umair Haque was named the top tweeter in the world of business by The Independent last year and rightly so. @umairh is definitely worth a follow and his book Betterness is definitely worth a read.

Haque argues that we must rethink the way our economies work. He says we are in a trap where we work harder and harder, but for the same results.

Despite that, he believes there are many areas in our economies where we can employ a new type of growth, looking to grow in terms of wellbeing rather than in the number of iPhones we can produce. He charges his readers with the task of transforming the word “rich” to signify a wealth of “relationships, ideas, emotion, health and vigor, recognition and contribution, passion and fulfilment, and great accomplishment and enduring achievement,” rather than simply a monetary wealth.

Before you write this book off as a psychology manual aimed at Occupy protesters, consider the alternative GDP obsessed alternative and how that turned out. At just 64 pages long, you can surely find the time to read it to at least prove your preconceptions right or wrong.

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5: ‘Freakonomics’ by Steven Levitt & Stephen Dubner

Freakonomics was the first economics book I ever read. If you can even call it that. The book has little to do with graphs, numbers or GDP. It is a book in ‘behavioural economics,’which looks at social, rather than financial problems.

Examples include the impact of abortion laws on crime rates 18 years later; the business hierarchy of a drug dealing gang and the importance of a first name on someone’s chance of success in life.

Obviously this has little to do with the current recession, but the book is a useful introduction for developing an economist’s way of thinking. The authors are concerned with establishing ‘causation,’ not just ‘correlation.’ This is one of the key ideas in economic study and Freakonomics introduces this thinking in a light-hearted and often fascinating way.