Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly
by John Quiggin  (Author)

About the Author
John Quiggin is the President’s Senior Fellow in Economics at the University of Queensland in Brisbane, Australia. His previous book, Zombie Economics: How Dead Ideas Still Walk among Us (Princeton), has been translated into eight languages.

About this book
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.

Brief contents
Introduction 1
Lesson One, Part I: The Lesson 11
Chapter 1. Market Prices and Opportunity Costs 13
Chapter 2. Markets, Opportunity Cost, and Equilibrium 30
Chapter 3. Time, Information, and Uncertainty 50
Lesson One, Part II: Applications 67
Chapter 4. Lesson One: How Opportunity Cost Works in Markets 69
Chapter 5. Lesson One and Economic Policy 85
Chapter 6. The Opportunity Cost of Destruction 114
Lesson Two, Part I: Social Opportunity Costs 131
Chapter 7. Property Rights and Income Distribution 134
Chapter 8. Unemployment 150
Chapter 9. Monopoly and Market Failure 171
Chapter 10. Market Failure: Externalities and Pollution 196
Chapter 11. Market Failure: Information, Uncertainty, and Financial Markets 214
Lesson Two, Part II: Public Policy 237
Chapter 12. Income Distribution: Predistribution 239
Chapter 13. Income Distribution: Redistribution 270
Chapter 14. Policy for Full Employment 288
Chapter 15. Monopoly and the Mixed Economy 308
Chapter 16. Environmental Policy 328
Conclusion 343
Bibliography 345
Index 371

Pages: 408 pages
Publisher: Princeton University Press (April 23, 2019)
Language: English
ISBN-10: 0691154945
ISBN-13: 978-0691154947