Naked Economics by Charle Wheelen - Essay Example

Wheelen stressed the importance of innovation in his opening chapter. He says that trade is like innovation. Imagining larger goals such as turning corn into stereo, soybeans into cars, and Windows software into French wine, he says that such a large context innovation is happening in trade in both rich and poor countries. According to him trade makes people richer and brings in more specialization in production. Wheelen argues that trade is mutually beneficial as it is based on the concept of voluntary exchange.  In today’s global trade order innovation has a greater role and helps in the value addition of global trade. The growing competitive environment and the emergence of new industry houses from developing markets are compelling industrial houses the world over and ambitious nations to give the shape of a solid action plan for long-term existence. With the opening up of economies, the capital flow has now become freer and margins have come down significantly. Most of these companies are now working on shoestring margins or carrying out specific cost-saving measures to increase their competitive advantages. Companies from developing nations are also aggressively entering into the markets in the developed world such as the United States, European Union, and the United Kingdom.  While the industry has to decrease the cost of production, it was necessary to improve technology and product quality to sustain in this highly competitive global trade scenario. It is in this scenario that multinational companies are thinking of a new approach to growth. Innovation is considered the major factor in deciding the competitive power of industries and nations. Wheelen says that trade makes the world richer by allowing greater specialization in production. According to Wheelen, the trade will also help the customer's products and services are lower cost. Not yet finished extolling the virtues of international trade, Wheelen turns to say the myths of “sweatshop labor” and a trade-fostered environmental “race to the bottom.”

In the chapter  “The Power of Markets”, he portrays the power of markets to improve the consumer’s life. He describes in the work how markets use “prices to allocate scarce resources,” how “markets are self-correcting,” and how “every market transaction makes all parties better off.”  Trade is an unavoidable necessity in today’s economics. Wheelen is successful in evaluating the strength of the market and trade in improving living standards. He portrays how politics is influenced by trade-related issues. Providing an in-depth analysis of the public choice field of economics, he says that even smaller groups can make political impacts on the economic interest.
In the chapter “The Power of Organized Interests,” he says that farmers and ethanol producers were able to wrangle beneficial legislation with their collective bargaining power. It also gives an idea of rent-seeking and explains how regulations such as occupational licensing can become powerful tools for self-interested individuals to extract rewards that they would be unable to in the marketplace.

After illustrating how free markets are virtually always superior to markets regulated by government intervention, he suggests ways that governments can improve things by intervening in those markets. It may seem that Wheelan is a leftist economist But his actual success is that he was able to give a clear picture of how the market performs in the new economic order. Says that wages of highly skilled workers had grown substantially in the last several decades because the high demand for brains increased substantially.