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Basic Economics: A Common Sense Guide to the Economy Hardcover – April 3, 2007
"The Industries of the Future"
Innovation expert Alec Ross explains what’s next for the world. Learn more.
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The strength of Basic Economics lies in the way Dr. Sowell takes the inherently complex nature of macroeconomics and breaks it down into digestible, easy to understand parts. Naturally a scholar of Dr. Sowell's caliber is well-versed in the minutia, the formulas, and general complexities of economics, but his straight-forward approach reveals his passion for instilling in the so-called "everyman" a working foundation in the economic structure he/she is a part of every day. Naturally one may think a book about economics to be "boring", but this is far from the truth. He continually relates abstract theories into concrete examples, allowing the reader to relate to real-life scenarios many of which we deal with on a daily basis.
Politics and economics are inevitable dance partners, and Dr.Read more ›
The first and most important lesson in economics is this: incentives matter. What is an incentive? It is something that people want, and that usually means money. Making money is an incentive. The nice thing about free markets is that the incentives lead to efficient outcomes. That's what Adam Smith meant when he talked about the invisible hand. Markets are more than self-regulating. They are self-regulating and lead to outcomes that are good for everyone.
A good way to appreciate the invisible hand is to look at what goes wrong when the government interferes in markets. The classic case is rent control. That's when the government passes a law making it illegal for landlords to raise the price of rent. Normally when a bunch of people move to a city there is a temporary squeeze on housing. The demand goes up so the price goes up too. That's where the wisdom of "incentives matter" comes into the picture. High prices mean high profits. Entrepreneurs who build new apartments will get a chance to cash in on some of those windfall profits. High prices lead to an increase in the supply of apartments. The supply goes up and the price goes back down.
What happens with rent control? Since it is illegal to raise prices there is no incentive (there's that word again) for entrepreneurs to build new apartments. The supply can't go up to meet the demand. In fact the supply may go down because landlords may take existing rental units off the market because they are unprofitable. Now let's consider the demand side of the equation. Rent control perversely makes the demand go up. With high prices consumers have to economize. Rent a studio instead of a one-bedroom. Empty nesters may move into a smaller apartment.Read more ›
Most Recent Customer Reviews
One of my top 3. I refer back to one of these principles almost weekly; maybe daily. Why don't we teach these concepts to middle and high schoolers? Read morePublished 5 months ago by AJ3
I was disappointed with the cleanliness of the book. It had a lot of markings in it.Published 5 months ago by Susan
Read this and you will never give socialism another thought. Free enterprise, free markets and capitalism is where it is at. Easy read and understand........... Read morePublished 6 months ago by T. Paine
Following Amazon’s decision to maintain political correctness by refusing to sell any products portraying the Confederate Battle Flag, I hereby state that I will no longer purchase... Read morePublished 7 months ago by Don R
A literal - everyone absolutely must read this in their lifetime - book. This is the truth of how things work, not what you're told, feel, or think. Read morePublished 8 months ago by AmazonBuyerX
good information but pretty boring read (what did I expect...:) )Published 10 months ago by Mark Twain