“Microeconomics concerns things that economists are specifically wrong about, while macroeconomics concerns things economists are wrong about generally. Or to be more technical, microeconomics is about money you don’t have, and macroeconomics is about money the government is out of.” – P.J. O’Rourke

How, you might wonder, should governments fight recessions? Keynesians suggest that recessions happen because there is too little demand: the answer is to stimulate demand, using government spending and monetary policy. More classical economists suggest it may be because there is insufficient supply: the economy just isn’t producing enough stuff, or has endured a serious shock like a spike in oil prices. To that line, we should stimulate production: reform the economy, increase efficiency.

Undercover Economist Strikes Back is Harford’s attempt to explain macroeconomics, in contrast to his other, microeconomics-focused, books. There’s a lot of solid common sense in it, such as the point that despite Krugman’s bombast, Keynesianism vs classical is almost certainly a false dilemma: in the short run, you should do one, and in the long run, the other.

He also responds well to the concern (often raised by physicists) that the economy simply can’t keep growing because there are finite limits to energy we can use. The second half of that is true, of course, but as Harford rightly points out the first half doesn’t follow. Physicists think about physical processes, and those do require increasing amounts of energy. Economic growth though doesn’t equal energy growth: in the last 30 years in the US, for example, the economy has grown by 2.5% a year, and energy use has actually fallen.

For more wonkish readers, I also learned something amusing: the oft-quoted story about the babysitter group in D.C. usually doesn’t include the ending. They did indeed double the number of scrips as a Keynesian policy, but they then ended up with too many scrips, and the market collapsed again. Not something the proponents of such policies seem to remember when they tell the story.

The book struggles a bit at some points: Harford isn’t a macroeconomist, and it shows. I’m also not sure whether a macroeconomist would be particularly pleased with some of his analysis. Still, if you’re looking for a jovial tour through macroeconomics, Harford is, as always, entertaining, amusing, and enlightening.