Friday, July 14, 2006

Economics 101

An understanding of the basic principles of economics is absolutely essential for all. Almost everybody I know personally are very highly instructed, but poorly educated. They know the features of the latest electronic device on the market, the actors in the latest hit movie, up to the minute scores of their cricket teams and favorite football teams. But when it comes to awareness of the current economic and monetary policies, consequences of certain actions by the government and such, many are totally in the dark. Given the fact that economic policies and their consequences have an affect on the quality of life and prosperity of our country and thus directly on the the quality of life of us individually, shouldn't we invest some of our time understanding the basic issues and principles involved?

For example, does the recently launched National Rural Employment Guarantee Scheme make real economic sense? Should the state control the price of petrol and petroleum products? Is disinvestment in profit making PSU's good or bad? Should the labor laws be liberalized? Why is the growth in agriculture stagnant? What should be done to increase manufacturing activity in our country?

These and a host of other economic issues are too important to be ignored by us and left totally to the politicians and administrators if the well being and prosperity of our country are too be improved. I venture to provide some suggestions about books to read to gain a basic understanding of economic principles. I have taken care to include only such books that make interesting reading and do not bore you with too much technical details.

One of the best books to start with is Basic Economics by Thomas Sowell, which is almost like a novel. India Unbound by Gurucharan Das surveys the Indian economic scenario from Independence to about 2002; it is very well written with plenty of anecdotes. One the best text books on the subject that has been recommended to me is Principles of Economics by Greg Mankiw, who is also a prolific blogger. Then there is the classic by Milton Friedman, Capitalism and Freedom. You might want to read the articles at The Indian Economy Blog and a daily perusal of the stories in Business Line or Economic Times will surely be useful and instructive.

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