Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly
John Quiggin
A masterful introduction to the key ideas behind the successes—and failures—of free-market economics
Since 1946, Henry Hazlitt’s bestselling Economics in One Lesson has popularized the belief that economics can be boiled down to one simple lesson: market prices represent the true cost of everything. But one-lesson economics tells only half the story. It can explain why markets often work so well, but it can’t explain why they often fail so badly—or what we should do when they stumble. As Nobel Prize–winning economist Paul Samuelson quipped, “When someone preaches ‘Economics in one lesson,’ I advise: Go back for the second lesson.” In Economics in Two Lessons, John Quiggin teaches both lessons, offering a masterful introduction to the key ideas behind the successes—and failures—of free markets.
Economics in Two Lessons explains why market prices often fail to reflect the full cost of our choices to society as a whole. For example, every time we drive a car, fly in a plane, or flick a light switch, we contribute to global warming. But, in the absence of a price on carbon emissions, the costs of our actions are borne by everyone else. In such cases, government action is needed to achieve better outcomes.
Two-lesson economics means giving up the dogmatism of laissez-faire as well as the reflexive assumption that any economic problem can be solved by government action, since the right answer often involves a mixture of market forces and government policy. But the payoff is huge: understanding how markets actually work—and what to do when they don’t.
Brilliantly accessible, Economics in Two Lessons unlocks the essential issues at the heart of any economic question.
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About John Quiggin
Reviews for Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly
-Richard Holden, Inside Story "This is a highly readable introduction to the intellectual framework of modern policy economics, with plenty of lively examples."
-Diane Coyle, Enlightened Economist "His book would be a useful supplement to a principles of economics course, with the advantage of avoiding resort to any graphs or equations . . . . [It] provides an essential completion of the basic story . . . . It is essential reading for anyone interested in the practical side of economic policymaking."
-Max B. Sawicky, Jacobin "The themes are complex, but the writing is clear, and the journey is rewarding."
BizEd
"Quiggin writes well and [this] book is full of useful erudite information."
-Warwick Lightfoot, Financial World "Many economists consider ‘opp cost’ to be the single most important and fundamental concept in economics, and the discipline’s most useful contribution to the betterment of mankind. Indeed, that’s the view Professor John Quiggin, of the University of Queensland, takes in his book Economics in Two Lessons, which I recommend as the best book to introduce you to economics."
-Ross Gittins, Sydney Morning Herald "Quiggin reckons with the incoherence of markets-only thinking in his masterful 2019 book Economics in Two Lessons, which explores the power, limitations and dangers of using markets to solve our problems in a thoughtful and clear way."
-Cory Doctorow, Boing Boing