Rethinking economics

In Taking Economics Seriously, Dean Baker shows what is at stake when government policy ignores economic principles, instead structuring markets to benefit wealthy interests. To this end, he unpacks the government-granted monopolies to drug developers and medical-equipment makers, which mainstream reporting rarely covers. This policy harms consumers by hiking drug prices up to 100,000 percent over the “marginal cost of production—the cost of producing one more unit of the good.” Baker brings marginal-cost pricing, an economic principle of efficiency in trade, from the shadows to center stage of the debate. Speaking of debates, he counsels against falling for the false one about government regulation vs. the market. The former’s presence with the latter defines the economy. Who benefits is what matters. On that note, Baker’s five reforms for the financial industry would force it to serve instead of prey on consumers and investors.