I Have Read A Most Remarkable Book
August 06, 2007
– Comments (4)
Some times you happen on something wonderful by accident. I had gone to the library looking for some investing books, but only found one of the ones I wanted. As I was looking at other books in the same call number area, a book caught my eye.
It was The Undercover Economist by Tim Harford. I grabbed it on a whim and have been very glad that I did. Tim Harford is an economist who writes for the Financial Times. He has also been in industry and has been an econ tutor at Oxford. What the book is about is how does an economist look at ordinary parts of life. It covers coffee and driving as a way to introduce economic concepts.
The first piece is about "rents" which is what the econ people call a Warren Buffett style moat. He explains how scarcity power of some kind is used to get a higher than expected return for an asset. Thinking about the piece leads to useful ways to think about moats and where to go about finding them.
Another piece is an analysis of the American and UK medical establishments that goes in a very unexpected direction. The analysis was so clear that it has caused me to change my thinking on how best to pay for medical costs.
The best piece is a stirring defense of free trade. I am going to buy a copy and send it to an old friend that I have been fighting about politics with for 30 years. Maybe now she will see the light. (She is a staunch protectionist and doesn't see why this impoverishes the world.)
The book is a delight from start to finish and I recommend it unreservedly. Economists often have a bad reputation with investors as being "academic" rather than "practical", but this book is thorougly grounded in the here and now.
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