ECONOMIC FREEDOM
Why a Korean publisher paid $100,000 for my new book, EconoPower

�Economics must not be relegated to classrooms and statistical offices. It is the philosophy of human life and action and concerns everybody and everything.�
�Ludwig von Mises, Human Action

Last month, my publisher at Wiley & Sons called me with some astonishing news: A Korean publisher, Crudo, paid $100,000 for the Korean rights to my new book, EconoPower: How a New Generation of Economists is Transforming the World. It was some kind of a record.

Why the strong interest? EconoPower is different from the other financial bestsellers, such as Freakonomics, which limits itself to explaining curiosities in the marketplace (such as why drug dealers live at home on a minimum wage). Mine is more ambitious. It focuses on a new group of economic experts, most of whom are free-market economists, who are solving real-world problems such as road congestion, health care, public education, crime, world poverty and other issues high on the public�s list. 

Asian policy makers are keen on taking advantage of these new tools and techniques. Watch out, America! 

I start my book by discussing the new field of behavioral finance. Top economists such as Richard Thaler (Chicago), Robert Shiller (Yale) and Jeremy Siegel (Wharton) are showing consumers how to easily reduce and get out of debt, double their saving rate, and improve their investment performance without taking greater risk. 

For example, Richard Thaler has developed a �nudge� theory, demonstrating that a small institutional change can dramatically alter behavior. Thaler proposed a simple policy change to triple the average worker�s saving rate. How? He convinced five corporations in the Chicago area to offer �automatic 401k plans.� Normally, workers are asked if they want to invest in the company 401k plan. On average, only 30 percent say yes. Thaler suggested that the companies automatically sign up their new employees with a 401k plan, with an option to drop out. The result: Now more than 80 percent sign up for 401k plans! As a result of Thaler�s work, Congress passed the Pension Reform Act of 2006, making 401k plans automatic for all workers. It could go a long way in reversing the savings crisis in the United States. 

Siegel, the premier professor at Wharton, has also investigated the advantages of dividend-paying stocks, especially companies that pay rising dividends. He was surprised to learn that over long periods of time, dividend-paying stocks outperform non-dividend paying stocks. David Swenson, long-time manager of the Yale Endowment Fund, also demonstrates the advantages of investing in a well-diversified portfolio of �non-correlated stocks,� including foreign companies, real estate and natural resources. You can beat the market with less risk!

In Chapter 5, I highlight the Chilean economic miracle and how labor secretary Jos� Pi�era organized the first private Social Security system. Today, according to Jos� Pi�era, there are 31 nations that have some form of privatized Social Security. He thinks the next big country to privatize Social Security will be China. I hope so. 

I also have a chapter on Market Based Management, a new management technique inspired by Austrian economists Ludwig von Mises and Friedrich Hayek. Billionaire Charles Koch applied their theories to build up his empire, Koch Industries, into the world�s largest private company. 

Economic freedom is a major theme of successful policies. Chapter 29 focuses on the economic freedom indexes created by Jim Qwartney (Florida State) and published by the Fraser Institute, as well as a similar index created by the Heritage Foundation and published by the Wall Street Journal. These remarkable studies show a close link between economic freedom and standard of living. Countries with low economic freedom (Iran, Cuba and the Congo) have a low standard of living, while countries with high degrees of economic freedom (Hong Kong, United States, England) have high living standards. 

There are 37 chapters in all. I was surprised to learn that economists are in the forefront of using auctions to take companies public (such as Google), eliminating traffic congestion through peak pricing (Singapore is the best example), and solving the health care crisis (through health savings accounts). In short, economics is enjoying a �golden age of discovery.�