Customer Reviews

Applied Economics: Thinking Beyond Stage One

5 star:		(29)
4 star:		(7)
3 star:		(1)
2 star:		(3)
1 star:		(0)

 

 

Thomas Sowell's new book (2004 imprimatur) came to my attention as he was interviewed on radio...I pulled into the nearest (independent) bookstore in the metropolis of Austin, Texas, finding and buying the lone copy back in the dreary Economics section.

I will certainly be reading more of Sowell's writings. Although a sequel to his book Basic Economics, this book stands well alone. In it, he tackles the current problems in this country involving the interaction of the political climate with basic economic principles. These include health care, housing, discrimination, risk, and the problems afflicting so-called third-world nations in economic development.

He takes an interesting historical perspective. For example, his analysis of slavery through the ages, and during the period of the American Colonies and southern United States is particularly cogent, and still of contemporary interest. How could slavery have survived so long? Was there such a variety of slave "status" and freedoms to act as has recently been portrayed, even in such films as "Gods & Generals". During this film, a complicated relationship between General Thomas J. Jackson and his personal cook is portrayed. They have discussions during which it is clear that the slave's status as a well-known cook, and his desire to defend HIS home from invasion as much as Jackson's is remarkable. Within Sowell's analysis of the antebellum South, it is not difficult to understand. In fact, he describes a situation in which slaves were put in less "risky" labor positions than Irish immigrants, a situation derived from their economic value in a cotton baling and transport operation.

I probably have not seen an economic "page turner" since reading George Gilder's "Wealth and Poverty" which was so important to understanding the Reagan era (it was, evidently, the "Bible" of many men responsible for early decisions during the Reagan administration and essential to understanding so-called supply-side economics).

I recommend this book highly. Sowell's insights are well-explained in "plain English." A short read, thoroughly enjoyable, that will stimilate the reader to think more deeply about the current issues that should lead to a more informed discussion outside the academic elite about the problems plaguing our economy.

Sowell takes the key political issues and challenges the reader to analyze not only their short term (Stage One) political impact but to also think ahead to their long term (Stage Two, Three, etc) economic impact. He reminds the reader that politicians do not think beyond Stage One because they will be praised (and elected) for the short term benefits but will not be held accountable much later when the long term consequences appear. He lays out the Stage One benefits of each political issue and then predicts the long term consequences that politicians don't address. Price controls on drugs and health care may have an immediate benefit, but the consumer will pay years later as health care quality decreases and new drug research declines. Reducing the price does not reduce the cost. Does raising the minimum wage really help entry level workers? What happens in the long term when communities raise taxes on businesses? Is free health care really free, or better?
We need to look beyond Stage One and separate politics from economics on the hot election year issues.

Excellent book. The United States as a whole would be far better off if everyone read this book. It would be a lot tougher for demagogues to sway public opinion regarding economic matters.

One reader's criticism was that there were no facts. Those people who do not believe in the free market will not want to accept certain statements from Sowell. If one wants to argue the merits of a free market versus government-controlled markets, this isn't the book. (Yes, unbelievably there are people who still think that socialism; communism and central planning are superior to free markets)

"This book will not satisfy hard-core economic junkies, and Sowell does not pretend it will. His target audience is the average citizen who has little or no economics background, but would like the tools to think critically about economic issues. "

I would also recommend the classic "Economics in one lesson" by Henry Hazlitt and Sowell's "Basic Economics". "Capitalism and Freedom" by Milton Friedman is another great book.

If one wants to read one of the best (and longest) economic books ever written, then I recommend "Human Action" by Ludwig von Mises (downloadable at www.mises.org)

If the United States were to implement a "required reading" prerequisite to voting, this is the book I would choose for such a requirement. Sowell's thinking is crystal clear, his analysis is linear, and his conclusions, once you read them, are hard to argue with. In my opinion, Sowell is dead-on on just about every subject he tackles. This is a brilliant man.

Prof. Sowell's main thesis is simple enough: we must look at the actual consequences of policies rather than merely the intentions. Unfortunately, on issue after issue, Sowell shows us that many of our so-called "elites" focus only on good intentions, because intentions are what the voters see first (the wreckage of bad policy comes later).

Nationalized health care, which is a reality in many liberal democratic states, and something that the United States may be moving towards, epitomizes Sowell's basic thesis. What could involve better intentions than the notion that everyone should be able to receive all the health care resources that they need? Alas for complacency! Sowell makes a pretty strong case that when such policies are put into practice, shortages, a degradation in services, and an end to innovation are the consequences.

Sowell is right-of-center; unabashedly so, and of course this may turn off some readers. But really, anyone will enjoy reading this book because Sowell's clarity of writing equals his clarity of thought--the book is a joy to read simply for its straightforwedness. This is a book capable of challenging one's belief system. Not many books can do that, but this is one of them.

+++++

Have you ever wondered about...

1. California's electricity crisis: how blackouts and higher costs for consumers were the result of the state government's attempt to keep consumer prices artificially
low.
2. Planned economies: how they may turn decent people into criminals.
3. Central planning: how it drove the Soviet economy into the ground and why it doesn't work.
4. A free labor market: how it benefits not only the worker but also the economy.
5. Price controls: why they fail.
6. Geography: the important role it plays in the economies of places around the world.
7. Rent control laws: why cities with them have higher rents than cities that don't.

If you have wondered about such things as well as other economic matters, then this may be the book for you.

This seven chapter (where each chapter averages thirty pages), non-technical, easy-to-read book, by professor and economist Thomas Sowell, has the purpose of focusing on "dealing in depth with particular real world problems [and] using economic principles to clarify why and how things have happened the way they have." The real world economic problems discussed that each have a separate chapter are as follows:

(1) medical care
(2) housing
(3) discrimination
(4) development of nations.

"Because these are political, as well as economic issues, some political principles will need to be considered as well" instead of focusing on the above four economic topics in isolation. Sowell introduces the reader to this idea in his first chapter entitled:

(5) Politics versus Economics.

As well, "neither economics nor politics is just a matter of opinion and both require thinking beyond the immediate consequences of decisions [that is, both require thinking beyond stage one] to their long-term effects." In other words, economic decisions made to improve a problem may make the problem worse in the long-term if proper thinking has not gone into the initial economic decision. Thus, most of the chapters indicated above will discuss thinking beyond stage one.

I have thus far mentioned five chapters. There are two more chapters. One chapter deals with the economics of labor where free labor and labor that's not free are compared. This chapter is entitled:

(6) Free and Unfree Labor.

The other chapter is concerned with the economics of insurance where uncertainty and risk are discussed. This chapter is entitled:

(7) Risky Business.

Five of the seven chapters end with an excellent "implications" section. This is where Sowell takes what has been previously discussed and draws certain inferences and even conclusions.

This book contains no illustrations. I feel simple diagrams would have been helpful in reducing the book's wordiness. As well, a summary listing all the economic principles that were applied in each chapter (perhaps at the end of each chapter) would have been helpful, especially for those unfamiliar with such principles.

Finally, even though I disagreed with Sowell on some issues (such as on safety movements), I still feel that this is a good book that shows how certain economic principles are applied to some basic but important economic issues.

In conclusion, this is an excellent, solidly written book suitable for those who feel that economics is difficult to understand!!

(published 2003; preface; 7 chapters; main narrative 220 pages; bibliographical references; index)

+++++

Throughout "Applied Economics" author Thomas Sowell continually tries to impress the reader of the importance of "thinking beyond stage one". As Sowell so artfully points out "stage one thinking" is part and parcel of a great many politicians these days. As an economics major myself (many years ago) I was anxious to see how Sowell would argue the conservative case on many of these issues. I must say he makes his points eloquently and with great clarity. Readers who tend to be liberal in their thinking should read this book if for no other reason than to understand conservative reasoning. But I do think it quite plausable that Sowells well thought out arguments might just change some minds about some of these basic economic issues.

I was particularly impressed with Sowell's presentation on health care and housing. Having done a fair amount of reading on how expensive it is for drug companies to develop a new drug I agree with Sowell when he argues against the re-importation of drugs from Canada. Now that may appear cruel on the surface but if drug manufacturers are not allowed to recoup their costs of developing these new drugs then there is really very little incentive for them to develop new drugs. In countries where drug prices are artificially held down by government intervention virtually no new drugs are discovered. Just think of the costs to our people if that were to occur here in the United States. Likewise, Thomas Sowell argues vehemently against policies like "rent control" and excessive "open space" laws in the housing arena. Such policies inevitably create shortages of well maintained rental units and new homes alike. The result: higher prices for those seeking an apartment or new home. This is not rocket science the author is discussing here...just cold hard economic facts.

I tend to part company with conservatives on environmental issues. I am not at all sure that laissez-faire policies are the best way to go. Interestingly enough Sowell does not address the environment in this book. I would love to hear his arguments. All in all, this is a well written and easy to understand book. As another reviewer posited this should be required reading for anyone intending to vote. Highly recommended.

This is Thomas Sowell's amazing companion book to 'Basic Economics'. Applied Economics is his attempt to show the average voter how economic principles are applied to major current issues such as medical care and housing. He discusses what the consequences are when external forces insert constraints on the free market in an effort to 'solve' a problem. He repeatedly demonstrates how the results of a policy can have disastrously different results than from what was originally intended. Often these policies are put in place out of political expediency without considering what the long-term consequences are for the society at large. Sowell challenges the reader to think beyond the intent of a policy and consider what the actual results will be when such a policy is applied against the incontrovertible laws of economics.

What is astounding about Sowell is how his mind appears to be free of the constraints of time, culture and borders. To him the world is one timeless and seamless swirl that is relatively ordered and predictable when you apply the principles of supply and demand. Every thought is supported with a cascade of facts and such impenetrable logic that it can hurt your head. He can speak on virtually any topic with resounding authority. At one moment he can discuss the northern migration of the present day Ibo of Nigeria, shift to the Roman occupation of Britain, then describe the effects of the Gulf Stream on Northern Europe's climate, and then explain how the volume of water in the African Zaire river impacts the region's cultural growth. He does this with amazing fluidity and ease. If the mark of genius is the ability to simplify complex information then Sowell easily stands as one of America's greatest thinkers.

The only downside to this book is that if you're a regular reader of Sowell's columns then much of the information in the book will be very familiar to you. For example, in his review over housing, I skipped over his analysis of the Northern California housing situation. Perhaps it's because he lives in the Bay Area and doesn't like the obscene prices for ordinary homes in his community but Sowell discusses this ad nauseam in his columns. However, if you don't read his columns you'll find his book refreshingly educational.

This is a tremendously insightful and valuable work from a brilliant man. This is a must read for anyone who wants to be a well-informed voter.

This book should be required reading for any freshman course in economics. The author gives well reasoned arguments for the value of long range (beyond stage one) thinking in formulating economic policies. Mr. Sowell effectively contrasts the benefits of carefully thought out economic strategies versus the destructive effects of political expediency. His arguments are forceful but first and foremost rational.

This excellent, short, clear book should be part of everyone's reference library, particularly those who wish to understand standard conservative economic thought. The distinctions author Thomas Sowell draws between political and economic logic should become a valuable part of each voter's mental apparatus. Writing to educate the general reader, not to further instruct the sophisticated economist, the author advocates minimal government interference. He calls for as little regulation as possible, mainly because regulations have unintended and usually undesirable economic consequences when seen with a long-range perspective. Sowell's concise, easy-to-read style cuts through the jargon of most economic discussions to lay bare the underlying, plain heartwood. It is easy to quibble here and there. Sowell doesn't offer lots of statistics and back-up material. And, he seems to argue against individual economic decision making when he tilts a drug pricing discussion into a sermon against Americans buying medicine at low Canadian prices. However, we find that his book stands on its merits nonetheless, as long as you understand that the author has a political - as well as an economic - point of view.

Although Thomas Sowell harbors some conservative views, he does a great job of giving us empirical evidence to back up his theories behind political and economical issues. I am a recent college graduate with a degree in economics; therefore, I have heard a lot of this stuff before. However, Mr. Sowell does an excellent job of persuading his readers due to his articulate writing. For those that enjoy this book I highly recommend reading Mr. Sowell's columns on Townhall.