Licence to be Bad: How Economics Corrupted Us, by Jonathan Aldred

Economics is like a mystery to me, it's a subject I've never formally studied but it never fails to spark my curiosity. It's like a chameleon, on one hand it's considered a science, on the other it delves into the complexities of social behavior. It's a subject that touches on so many disciplines, from neuroscience to political science, from mathematics to sociology and psychology. Understanding economics is like solving a puzzle and then I ended up reading Licence to be Bad" by Jonathan Aldred. The book is an interesting critique of modern economics and the Homo economicus model drawing up on the history of this subject evolution and how each change has affected humanity and our collective thought. The book critiques financial concepts and principles, and delves into how they can be fragile and inaccurate.

In chapter one the author examines the history of economic theory, starting with post-WWII, the rise of Keynesian economics and the emergence of free-market ideologies. He uses real-life cases, such as the 2008 economic downturn, to show how financial reasoning plays out in reality. The author argues that current accepted norms in regards to economic principles may not be valid, also discussing the futility of bribery and the importance of autonomy in business.

In chapter 2 the author examines game theory and how it can lead to a self-oriented outlook. He explains that game theory is a common approach to examining potential conduct based on sensible decisions, but it assumes that everyone acts selfishly. The author uses the example of the Prisoner's Dilemma to show how game theory can lead to egoistic conclusions, but also notes that there is evidence that individuals can work together to produce the best outcome.

In chapter 3, the author discusses the Coase Theorem, an idea in economics, and its relation to the Illinois joblessness project of 1984. He explains that the Illinois system was based on the Coase Theorem, which posits that financial efficiency is more important than legal matters and that the question of who is in the right legally is secondary.

In chapter 4, the author critiques how financial ideas have been inaccurately used to criticize the government. He references the Improbability Theorem and public choice theory, which suggest that democracy is impossible and that all political decisions are driven by selfishness, respectively. The author questions their validity and highlights their inconsistencies and self-fulfilling effects.

In chapter 5, the author highlights the dangers of a lack of restriction and how it can result in negative consequences. He uses examples of individual responsibility and free-riding to show how it can lead to negative effects on society.

The next chapter discusses a shift towards a macroeconomic view of the world in the late 1970s, led by American analyst Howard Becker. Some of Becker's ideas such as border policies focused on financial stability and lengthening terms in the judicial process to save funds have become standard procedures. However, the author also points out that Becker's theories which assume that individuals make logical choices have been met with failure, and that his approach to viewing the world through the lens of economic man can be problematic.

In chapter 7 the author discusses the use of rewards and sanctions in daycare facilities in Aviv and the UK government's introduction of a packaging waste tax to reduce the consumption of plastic bags. The author notes that while the UK's approach was successful due to a significant public outreach effort, the daycare facilities in Aviv were not successful because they did not explain the rationale behind the fines.

In chapter 8 the author, discussing the events of July 2008, when Barclays' CFO Daniel Viniar referred to price fluctuations as "20-standard deviation shifts" that occurred "many days straight", argues that such occurrences were unlikely to happen by chance and suggests that the analysis method used in the financial sector was flawed. He explains that the normality test, which has a bell-shaped curve, is the most frequently used method for computing chances, but that events like the economic meltdown occur at the extremes of the curve, far enough away to be insignificant. He suggests that this points to a more general fact about the possibility: some aspects are unclear and that it is important to acknowledge the boundaries of possibility and that there are some issues we have no idea about.

The last chapter discusses the issue of inequality and how it is cyclic and can be found in many different forms, such as income and wealth distribution. The author also challenges the common belief that people get what they deserve and that cutting taxes leads to increased productivity and argues that this is a flawed logic. The author suggests that moral judgments are often disguised as factual statements in contemporary theoretical approaches and it is important to stop assuming how people behave and to stop listening to economics.

In conclusion, "Licence to be Bad" by Jonathan Aldred is an insightful and thought-provoking book that critiques the modern economics and the Homo economicus model. The author delves into the history of economic theory, and how it has evolved over time, and how it has affected humanity and our collective thought. The book is well-written, and the author uses real-life examples to support his arguments. I found the book to be very engaging, and it has made me think more critically about economics as a subject. It is a book that I would recommend to anyone who is interested in understanding the complexities of economics and its impact on society.