Customer Reviews

Basic Economics (2nd Edition): A Citizen's Guide to the Economy

5 star:		(105)
4 star:		(18)
3 star:		(6)
2 star:		(5)
1 star:		(6)

 

 

Economic illiteracy (and its political results) may be the single largest cause of avoidable human misery worldwide. Even in the US, (the most advanced market ecomony in the world), it is painful to listen to the daily pronouncements of most politicians and commentators on the subject.

Sowell provides a good complilation of what any educated citizen needs to know. As he admits, there is little in this book that hasn't been understood by at least some economists for decades (and sometimes centuries). But he spices the presentation with many recent examples of political folly.

The author presents a solid synopsis and analysis of economic data that span most of Humanity's history. He uses these data to clearly explain complex economic phenomena as an application of simple, seemingly immutable, economic rules. The consequences of failure to account for these rules by policy makers over both time and distance are well described.

The primary review of this book is objectionable. The reviewer erroneously applies the label "conservative" to Dr. Sowell, lamenting the author's expressed point of view. Dr. Sowell writes the book as an economist, not an ideologue, and the book is simply an economic treatment of evidence, devoid of any political bend. What should be clear to the reviewer is that economics is not a belief system, but rather the study of the allocation of scare resources. A study-of employs scientific method and standard statistical techniques to test hypotheses and to draw inferences. This process, done correctly, must be free from ideology. Therefore, while a liberal might very well continue to support rent control as a policy, he does so in lieu of the demonstrated consequences of such policy. One can disagree with a political or philosophical stance; one cannot "disagree" with accumulated evidence.

There are some annoying typographical errors that should have been culled during editing. However, it is a great work overall. I endorse the sentiment that this book should be required reading for anybody that votes, anybody that holds office, and for anybody that has not given substantial thought or study to the subject of economics, yet considers himself educated.

I wish there were some way to get this book into the hands of every household in America. Someone with the means should fund that project.

The amazing thing is that what Sowell says throughout this book should need saying. Much of what he says is patently self-evident to anyone not blinded by idelogical prejudices. We should not have to continue repeating the mistakes of the past (and present).

Sowell, in his own inimitable style, discusses clearly and concisely all of the basic issues involved in economics. Probably the most important thing he says repeatedly is that economic plans should NOT be evaluateed on the basis of their purported goals. Instead, they should be evaluated on the basis of the incentives they will create. It is a failure to take into account these incentives that explain why so many good intentions have resulted in complete and utter failure. Incentives, not intentions, are what count.

If you want to know why the common analyses of the ecomomy and the common suggestions for improvement that are promoted by politicians, pundits, and professional news anchors are misguided and counter-productive, read this book.

In the textbook industry, "progress" is signified by style over substance, with the goal apparently to achieve the look and feel of "USA Today." Books compete to have more charts, sidebars, highlighted sections, and, of course, the ever-necessary multimedia CD ROM.

Into this wind spits Thomas Sowell, with his delightfully retro attempt to put the "text" back into textbook. Taking us back to the days before Samuelson, and indeed before Marshall, he presents economics in terms of logic, examples, and occasional data.

Turning to substance, one might fairly ask, "Is this book an economics textbook or a right-wing polemic?"

The answer is "yes."

My college economics professor used to point out that the liberal Samuelson and the conservative Friedman believed in the same price theory. However, Friedman applied it to policy more aggressively.

Sowell applies economic theory aggressively to policy, and the chips happen to fall well to the right of center. But what is there in "Basic Economics" to which a liberal economist might object? I can only think of a few things.

1. Sowell takes the monetarist view of macroeconomic fluctuations. He does not mention the savings/investment imbalance theory of Keynes. But even most liberal economists won't stick up for Keynes nowadays (I will).

2. Sowell points out that social security is an intergenerational transfer, and that its feasibility depends on the ratio of workers to retirees. Liberal economists agree with this view. But they still like social security, and Sowell does not deal with their rationale (weak as it may be).

3. Sowell points out that poverty is misrepresented in the media, and that economic growth and changes in lifetime circumstances erase much of what is reported as poverty. Again, liberal economists would have to agree, but nonetheless they would have put the issue of "income distribution" into Sowell's chapter on the proper role of government. He never quite meets them head-on.

But I wish that liberals would learn "Basic Economics." One need only look at the California "energy crisis" to see the consequences of economic ignorance.

Mr. Sowell begins this excellent textbook with British economist Lionel Robbins's classic definition: "Economics is the study of the use of scarce resources which have alternative uses."

Mr. Sowell then explains the economic theory of prices, industry and commerce, work and pay, time and risk, the national economy, the international economy, and concludes with popular economic fallacies. He accomplishes this without any graphs or equations to scare some people away.

The reader, no matter his educational level or political persuasion, must come away with one overpowering and disturbing conclusion and that is: When it comes to having the most rudimentary knowledge of economics, the vast majority of politicians and talking heads are either complete idiots or socialists who are still in denial.

This book allows anyone to analyze thorny and difficult economic issues in a relative simple manner by applying basic principles. It allows one to instantly recognize the ridiculousness of so many arguments that are continually put forth.

My only criticism of the book is that the publisher did a very poor job of editing. These errors should be corrected in subsequent printings and there should be many additional ones. This is one of those rare books that everyone should read and is certainly suitable for use as an elementary economics textbook in high school and college. I highly recommend it.

All of Dr. Sowell's books are great but this one is just flat out "head of the class". Despite the rather discouraging (to some folks) title this book is not at all dry or hauty. A great, great book!

Thomas Sowell has two very different styles of writing. One reads like a Ph.D. thesis, with footnotes galore, and the other reads like his columns. Fortunately, this book is written like his columns.

I enjoy learning about economics, especially as it applies to political decisions. I teethed on economics first way back as a teenager reading Milton Friedman's "Free To Choose." Sadly, after that book, I found little else in the past 20 years or so that did anything other than say the same things in different ways. Like the laws of physics, the laws of economics don't change, yet it is entirely possible to find an author who enriches your understanding of these laws in such a way that you find you know more than you used to. Richard Feynman was such an author for physics. I don't want to exaggerate, but while Thomas Sowell is no Richard Feynman, this book is the first time I've learned significantly more about economics and its practical applications since "Free to Choose". Sowell takes ideas and concepts that I thought I knew well and makes them even more clear, and further introduces implications of these concepts (especially from modern examples) that were completely new to me.

Were this all I had to say about the book, I'd give it five stars. The reason for the four-star rating is that it is not nearly as organized as it ought to be. (I'd give it 4.5 stars if I could.) Sowell has a habit in all of his writings (longer than a column) of repeating facts as if he had not referred to them in previous chapters. Now, as I want to go back through the book and look up a decent short example of what I admired, I have a hard time finding them. There is an index, of course, which has its uses, but the titles of various chapters and sections are usually one- or two-word generalities. For example, I'd like to see headings like "Prices measure economic trade-offs," instead of "Prices and Costs." With a few extra words, he could indicate the real topic matter of the subsequent paragraphs rather than a very general indication, and I would be able to look back through the book, reading the large type to remind me what was discussed. Similarly, he has a very good description and explanation of the Great Depression (deflation is quite bad when you don't let wages get lower along with prices), but it's found under "National Economy" not under "Great Depression."

Overall, though, it's a good read. I finished it in about three days, which is pretty fast for me when reading non-fiction. He managed to change my mind on some topics, such as having American companies pay "fair wages" for people they hire in poor countries: is it better for the country in question to hire 1000 people at $10.00 an hour or 10,000 people at $1.00 an hour? The $1.00 is a pittance to an American, but is real wealth in the poor country. At $10 an hour for the 1,000, you leave 9,000 people earning perhaps 10 cents an hour in a local job (if they have one at all), so only a select few benefit from such "fairness." He doesn't actually say that one setup is more fair than the other, but rather that such trade-offs always exist, that economics is precisely about these trade-offs, and the most popular economic fallacies arise from ignoring the trade-offs.

I've read a lot of economics books; some of the "popular" variety and many of the "unpopular?" (maybe they'd call it "technical") sort. In Basic Economics, Sowell does the best job I've seen so far of splitting the difference and presenting a truly readable book that introduces the vital concepts of economics in a way that most everyone can understand.

Sowell's subtitle - A Citizens Guide to the Economy - is perfectly descriptive of what he has created. As I read this book, I couldn't help but think how much better we would all be as voters and free citizens if we all read this book. While forcing people to do anything - even reading this book - goes against the very idea of freedom, I can recommend it very highly.

If you read this book, you will forever read newspapers differently, listen to politicians more intelligently and think through problems more clearly. To me, that is the gift that a training in economics can give anyone. In this well-written and concise book, Sowell offers that gift up to anyone willing to do a little reading to get it.

Highly recommended. The best book I've come across yet for understandably explaining the most important concepts of economics. Please read it and then give it to a friend. Ask them to do the same. Maybe we can get something started.

Why are the lights going out in California? Why were there lines at gasoline stations in the '70s? Why is it so difficult to find a decent appartment in NY city? How can nations with less natural resources be so much more wealthy than others? Why can't Russia and China feed it's own people even though they have tremendously rich farmland? Thomas Sowell answers these and a million more questions in this easily read book on economics. This is not a text book! Sowell spent 10 years writting this book that reads like a cross between a public policy paper and a novel!

Economics is the study of the allocation (economization) of SCARCE resourses (time, money, labor, services, natural resources, etc.) with alternate uses. How efficiently a society allocates these scarce resourses utilmately determines the standard of living of it's citizens. When citizens lack the basic understanding of these principles, they typically are indifferent to detrimental governmental action and often actually encourage it! For example, price controls have a history of producing shortages back to the Roman Empire. Why then would politicians continue to institute such disatuours policies? Because there are more consumers (voters who think they benefit) than producer (voters who get punished) and Economists (voters who know the whole thing is a losing proposition).

Dr. Sowell uses copious examples to demonstrate as he makes each point. Early on he uses the example of a Protestant and Chatholic church each pursing a building program. In a free market economy, these churches are bidding against each other for scare building materials. Based on the level of funding, the churches may decide volutarily to scale back on their building programs. But, because the competition is systemic, there is no animosity between the churches. If, however, the government determines the allocation of resources, then the Protestant and Catholic churces come into direct competition with each other and animosity will develop as any extension of resources to one church will be seen as a direct reduction of resources to the other. Additionally, neither will have any reason to scale back voluntarily.

This book will make you look very differently at the economy and consumer choices. It should be mandatory reading for all highschool students. I've been buying this book and giving it to all my family and friends. You should too!

Note: Sowell is from the Monetarist branch of economics as most associated with Miton Friedman (He is the Friedman Fellow of the Hoover Institute). While definitely better than than the long discredited Keynesian wing, I disagree with some of the premises of the monetarists (I am more aligned with the Von Mises theories), but it is irrellevant at this basic level.

I liked this book a lot. It was written foremost for people with little or no understanding of economics, so even I sometimes had to wade through a lot of informantion I was familiar with to find something new and interesting, but I'd consider this an excellent read for almost anyone. Is this a political book by the way? It is NOT political any more than can possibly be helped. Obviously, no author is entirely capable of supressing their political beliefs on any subject 100% of the time, and I will tell you before you pick this book up that Sowell has a libertarian outlook (use the word conservative, the phrase far-right, or something else like that if you want, but I'm trying to put a neutral label on his beliefs), and you will get a little of that. However, most of what one or two of the above readers might see as far-right or laize-fare propaganda are one of 2 things-
1- Showing evidence to support the conclusion that the laize-fare approach produces more WEALTH than a system with more controls. Though Sowell has his own opinions, he goes out of his way to avoid expressing them in this book. Nor do you exactly have to read a 350 page book about ANYTHING to know that freer markets=higher per capita GDP's.
2- Attacking numerous misconceptions about why various things happen. The 1973 gas shortage for example. The person who complained Sowell ignored the fact that OPEC imposed an embargo that year apparenlty has a reading comprehension problem as Sowell DOES mention this and ALSO mentions that OPEC imposed a similar embargo in 1967 (anyone remember a gas crisis that year? Thought not.). The difference being that government imposed rationing of gasoline in 1973. The Nixon cabinet member who was in charge of the rationing HIMSELF said that the shortage was artifically induced by our govt. and not merely a product of what OPEC with-held. Also, Sowell does NOT ignore that supply can be manipulated. There are chapters dealing with every possible restriction of the free market- outright monopolies, government intervention, cartels, and labor unions. Reaching a conclusion on a subject that does not agree with your own is entirely different from ignoring that subject.
In conclusion, the there are 2 ultimate lessons to be learned from this book.
1- Do not accept at face value what ANYONE says about any economic issue. The odds are overwhelming that they are ill informed or manipulating what they tell you for their own purposes. Find your own figures, and ask a lot about the way THAT information was compiled. (you do not need Sowell or any other specific author to tell you this by the way. All you need is to be a reasonably intelligent person)
2- Like Sowell himself said over and over again in this book- Economcis is the study of allocating scarce resources that have alternative uses. So there is going to be a trade-off in every decision anyone makes about the use of any of them. In short, it is impossible to get something for nothing, so any time ANY person promises to get or do something for you, you must ask yourself what you have to exchange for it.