David R. Henderson  

Goodwin's Economix: A Graphic Novel

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I haven't received a review copy of Michael Goodwin's Economix yet, but I'm not hopeful that it will be good. The first thing I noticed is that in the praise for Economix, only one of the five "praisers" he highlighted on his web site is actually an economist.

But I didn't stop there. Next I looked at Goodwin's sample pages. An author typically wants to put his best foot forward and so I thought I would get a hint from those samples. The first sample is hopeful: he does a nice job of Adam Smith's pin factory, making it, correctly, entirely about division of labor, as Smith did, rather than, incorrectly, about comparative advantage, which came along decades later with David Ricardo. Score one for Goodwin.

But by the third sample page, though, he goes off the rails, talking about corporations: they get big and take over [bold his.] Take over what? He doesn't say. But the picture shows a big corporation stomping on people. My guess is that Goodwin wants us to imagine corporations exploiting consumers. But it's only a guess. If my guess is right, though, Goodwin might want to read about what the trusts in the late 1800s actually did, namely pass on the huge cost savings from economies of scale to consumers. He can see a short summary here.

That, then, motivated me to look at the reference books he relied on, along with short summaries of each, when researching for his book. Look at it for yourself but here are a few things that caught my eye:

. Milton Friedman's Capitalism and Freedom. "A defense of the free market, based more on how it works on a blackboard than how things happen in the real world." Hmmm. Would he say that Friedman's explanation of how free markets make it easier to have free speech or how free markets make racial discrimination costly are examples of "blackboard" economics rather than explanations of how things happen in the real world?

. John Kenneth Galbraith's The New Industrial State. "As close as anyone's ever come to nailing down the modern industrial economy like Adam Smith nailed down the economy of his day." Really? Here's an excerpt from Galbraith's book:

The mature corporation has readily at hand the means for controlling the prices at which it sells as well as those at which it buys. . . . Since General Motors produces some half of all the automobiles, its designs do not reflect the current mode, but are the current mode. The proper shape of an automobile, for most people, will be what the automobile makers decree the current shape to be.

Here's part of what I wrote in my 2006 article, "John Kenneth Galbraith: A Criticism and an Appreciation:"
Well, not quite. Although GM would have loved to "decree" the shape of automobiles in the 1980s, it seems consumers had different ideas. That is one reason why GM, which did produce about half of all U.S.-bought autos in the 1960s, sells only a quarter of all U.S.-bought autos today.

Even Galbraith, though, saw that he had vastly overstated GM's power. I wrote:
To his credit, Galbraith ultimately admitted, with a 15-year lag, the major problem with his thesis. In July 1982 the steel and auto companies he had claimed were immune from competition and recessions were laying off workers in response to both foreign competition and recession. Asked on "Meet the Press" whether he had underestimated the extent of risk that even large corporations face, Galbraith paused and replied, "Yeah, I think I did."

. Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism. "How the same free-market ideology was forced on country after country, and the insane consequences."

. Paul Krugman, The Great Unraveling: Losing Our Way in the New Century. "How the Bush administration dismantled the New Deal." The New Deal that included Social Security but not a Medicare prescription drug benefit and not even Medicare and Medicaid? The New Deal that included the SEC? The New Deal that had modest welfare spending? The New Deal that included the minimum wage law? That New Deal?

HT to Freakonomics.


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COMMENTS (6 to date)
Ted Levy writes:

This is how Goodwin describes himself on his own website:

"Michael Goodwin is a freelance writer who has always loved comics and history. His interest in history led him to an interest in the economic forces that underlie much of history, and he eventually started reading up on economics. In his initial reading, Mike thought he caught glimpses of a story, a story nobody seemed to be telling."

Well, gee...in his INITIAL reading of economic history (summary texts for laymen? primary sources? something in between?), someone untrained in economics "caught glimpses of a story...nobody seemed to be telling." And you say it's NOT likely very good?? :-)

caltrek writes:

I have read a few articles by Naomi Klein and seen her interviewed. She is awesome.

David R. Henderson writes:

@Ted Levy,
Well done.

Otto Maddox writes:

Naomi Klein is awesome? Her "Shock Doctrine" got it exactly backwards.

John Fast writes:

I will definitely continue to use The Cartoon Introduction to Economics by Yoram Bauman in my Intro Mac and Intro Mike courses, and not use this piece of work.

caltrek: What impresses you about Naomi Klein? I am particular impressed by her lack of understanding of basic economic theory. It is possible to understand basic economic arguments and still disagree with them, and she doesn't even seem to understand them clearly, or at least the versions that she gives in her books are not accurate.

Jeremy H. writes:

A review at Wired has some more sample pages:

http://www.wired.com/geekdad/2012/09/economics-with-economix/

The "Roaring Twenties" page contains a few factual errors. The clearest one is that "[in 1914] a steelworker made one dollar for twelve hours." A quick check of Historical Statistics shows that in 1914, iron and steelworkers averaged $0.266/hour and averaged 10.12 hours/day (series Ba4313 and Ba4567). So he understates hourly earnings by over 3-fold and overstates hours worked by 20%.

It is also unlikely that Ford's motivation for raising wages was to lower quit rates (see Taylor 2003). And finally, does anyone know the context of the WSJ supposedly claiming Ford's high-wage policy was an "economic crime"? It is often repeated, though I've never seen an actual citation and can't find anything myself in ProQuest's Historical Newspapers.

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