Monday, June 21, 2010

A Great New Introductory Economics Book

When Andrew and Peter Schiff were young, their father, Irwin Schiff, taught economics to them using fish tales. The result of those tales is a book written by Andrew and Peter, How an Economy Grows and Why It Crashes.

It is by far the best introductory book for anyone who has no understanding of economics (Or has been poisoned by Keynesian economic thought) and wants to learn what economics is really all about. Using fish tales, the book simply and clearly explains such economic concepts as the importance of savings, the importance of the division of labor, the importance of trade and how an economy grows.

On these topics, the book is simply the best introductory text I have ever read. As far as I am concerned, the book even surpasses, Henry Hazlitt's Economics in One Lesson. For me, How an Economy Grows is my new recommendation for anyone who is just starting out to learn economics, and Hazlitt's book is the second book I recommend, as a supplement.

My only qualm with the book is the way monetary inflation is explained.  The Schiff's are not wrong in their description of monetary inflation, but they tend to jumble monetary inflation caused by debasement of gold coins by cutting the gold content of the coins, with monetary inflation caused by the printing of paper money.

They are just not clear that these are two separate methods of inflation  and they will certainly lose readers who are coming to the topic for the first time. I would have simply cut out any reference to coin type debasement, since this is an introductory text and coin debasement isn't really going on these days (outside of small change coins).

Outside of the mixing of the two forms of monetary inflation, the book is spot on. From the basics to the business cycle, to the explanation of why the housing market crashed. It's all there in a fun and easy to read style.

If you are trying to understand economics for the first time, if you have only been exposed to economics in college with its Keynesian slant, or if you would like to provide to someone an introductory book about economics, this is the book.


  1. I have to say I have read the original book and its wonderful. I have a pdf copy saved to show to my child when I have them. I have also seen the first chapter of the new edition, and it follows the same idea closely.

    That said, it might be that I am over 30 now, but I like more the old drawings. Probably because they are more clasic.

    Anyway, highly recomended.

  2. Is this just an updated Kingdom of Moltz?

  3. I haven't read the book, so RW you might be right that their treatment is confusing, but I have seen Carlos Lara give his inflation talk to businesspeople etc., and he starts out explaining currency debasement under Caesar. It works wonders. He has also used that same technique in grade schools, and I've seen the letters that the students write to him, saying they really liked the stories about Caesar and the gold coins.

    I think it's effective because people have a hard time understanding fiat money and our modern financial system. It's also hard for most Americans to accept that their officials could be ripping them off.

    But when you start out with an emperor who's been dead for 1000+ years, it's a lot easier to see what's going on. And it also helps when you start off with a hard money, to see how debasement works.

    Anyway, like I said I haven't read the Schiff book so maybe it is confusing there, but in general I think the approach of warming people up with a "distant" example is a good technique.

  4. I agree with Hugo, I have a copy of the original by Irwin Schiff and believe the art work is better. The presentation worked quite well introducing economics to college freshman. Highly recommend either version.

  5. Would you be willing to provide a link to where the difference in types of inflation is well explained?