Basic Economics 5th Edition

by Thomas Sowell (Author)

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in Economic Theory

ISBN-13: 978-0465060733

ISBN-10: 9780465060733

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The bestselling citizen's guide to economics

Basic Economics is a citizen's guide to economics, written for those who want to understand how the economy works but have no interest in jargon or equations. Bestselling economist Thomas Sowell explains the general principles underlying different economic systems: capitalist, socialist, feudal, and so on. In readable language, he shows how to critique economic policies in terms of the incentives they create, rather than the goals they proclaim. With clear explanations of the entire field, from rent control and the rise and fall of businesses to the international balance of payments, this is the first book for anyone who wishes to understand how the economy functions.

This fifth edition includes a new chapter explaining the reasons for large differences of wealth and income between nations.

Drawing on lively examples from around the world and from centuries of history, Sowell explains basic economic principles for the general public in plain English.

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About the Author

Thomas Sowell is a Senior Fellow at the Hoover Institution, Stanford University. He is the author of dozens of books and the recipient of various awards, including the National Humanities Medal, presented by the President of the United States in 2003.

Product details

Hardcover: 704 pages
Publisher: Basic Books; 5 edition (December 2, 2014)
Language: English
ISBN-10: 9780465060733
ISBN-13: 978-0465060733
ASIN: 0465060730
Product Dimensions: 6.5 x 2.1 x 9.5 inches
Shipping Weight: 2.2 pounds (View shipping rates and policies)
Customer Reviews: 544 customer ratings
Amazon Best Sellers Rank: #1,896 in Books (See Top 100 in Books)
- #1 in Political History (Books)
- #1 in Political Ideologies
- #1 in Economic Theory (Books)

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mathematician

Intelligent, insightful, but unbalanced

Reviewed in the United States on October 11, 2018

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Not really an introduction to economics but more like a presentation of a point of view on economics. I enjoyed and learned a lot from this book. His arguments of the dangers/pitfalls of government regulation and interference in the market are convincing and insightful. Unfortunately, this is not a balanced book, but rather one with an agenda of promoting his own point of view. As such, he only presents facts which support his case, mostly omitting anything which would go against it. For example, no mention that historically government regulation has stopped children from working long hours in dangerous factories, or stopped lead in gasoline from poisoning communities. If you accept that "some" regulation in markets is necessary for society, then he doesn't do a good job in explaining what an effective regulation would be. From his arguments I can only surmise that he does not want any government involvement at all. I also don't agree with the perspective that everything in society can be interpreted as a "market", including for example education. Unfortunately in today's climate people seem to take to the extreme. It should be possible to understand and acknowledge a variety of points of view in a complex world, but this book does not present such a balanced perspective. For this reason, I would recommend the reader to think critically while reading and not just accept everything he says as the final word.

107 people found this helpful

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George Willikers

Proof You Shouldn't Judge a Book by its Cover

Reviewed in the United States on January 16, 2015

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What sets Thomas Sowell apart from many economists and intellectuals is his ability to present complex ideas with both clarity and simplicity. As he himself once noted, "If academic writings were difficult because of the deep thoughts involved, that might be understandable, even if frustrating. Seldom is that the case, however. Jaw-breaking words often cover up very sloppy thinking." For Sowell, economics is no exception.

In Basic Economics, he reminds you that economics is the study of the use of scarce resources which have alternative uses. And with this fundamental truth in mind we see a master expositor at work. He derives many economic principles from this easily forgotten fact, offering you real-life examples along the way. This book was, of course, written for the layman. In fact, no prior knowledge of economics is needed before you read it. Yet the book is of such breadth and depth that economist Dr. Walter Williams says "it provides an understanding of some economic phenomena that might prove elusive to a Ph.D. economist."

As you read and become familiar with how Sowell thinks, you will yourself begin to think like an economist. You will learn to judge policies not by their proposed goals, but by the incentives they are likely to create, which may have the opposite effect of their intended goals. You will learn to think about not only a policy's immediate effects, but also its effects in the long run, and not only its effects to a specific group of people, but to everyone. In the process, many of your long-held cherished beliefs may be challenged.

Consider, for instance, minimum wage laws. Sowell explains why increasing the price an employer must pay his employees--though put into law for benevolent reasons--can have unintended bad effects, like an increase in unemployment. He also explains why, for similar reasons, rent control decreases the quality of apartment buildings, or why lowering the price of gas can cause a shortage.

This 5th edition of Basic Economics includes a new chapter on international disparities in wealth. An insightful chapter, Sowell explains why some countries enjoy luxury while others suffer poverty, pointing to such commonly overlooked factors as geography and culture. Another addition is that this book ends with a section of questions covering important economic issues. If you don't know the answer to a question, it tells you where in the book you can find it. This is especially helpful for someone forgetful like me, who must regularly return to refresh on economics. It's also helpful for quizzing yourself to see how well you understood the information.

To say that Sowell's books have boring covers and titles is an understatement. But they provide strong evidence for the claim that "you shouldn't judge a book by its cover." I recommend this book as a must-read to everyone, not just to aspiring economists. (I also highly recommend Henry Hazlitt's Economics in One Lesson.) However, I would be remiss if I did not include in this review any drawbacks, and there's a big one. Basic Economics will leave you more pessimistic for your country than before you opened it.

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K. Wolf

A must read for literally everyone. Everyone. Everyone.

Reviewed in the United States on February 26, 2018

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Many of the other 5 star reviews explain better in words than I could just how profoundly important, yet easy to read, this book is. My only contribution to these reviews is to say that I see this book as being like "Freakonomics for grown ups". It offers excellent insight into economic phenomenons with relatable examples, without simply scratching the surface of the implications of such, as Freakonomics does.

Basic Economics has mass market value without obvious mass market appeal. A must read for literally everyone. Everyone. Everyone.

67 people found this helpful

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Lawrence akin-odujobi

Good book if you can avoid Thomas

Reviewed in the United Kingdom on April 25, 2019

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okay, let's start with the positives, this book has tons of examples which is what someone new to economics needs to visually understand various aspects of economics. To that point, it is a book worth reading.

However, a word of caution, I wouldn't recommend this book to young children as Thomas lacks a certain... empathy. He starts the book with various ways of saying, "economics doesn't care how you feel.. It is what it is" justifying a lot of his latter cold conclusions like the minimum wage which he is against. Okay, the economy may be more efficient.. but what is the cost if everyone has to work 4 jobs to get by? Points like this Thomas doesn't really care about and the more you read the more his own personal viewpoints damage his "impartial " narrative.

The best way I can describe Thomas is... If he was a Nazi officer during WW2 in charge of the camps, he'd be an advocate for mass gassings because it, "was more cost affective and efficient", as well as mass graves as, "the scarce labor resources of time would be wasted in such ventures as individually burying people so that people have a sense of honour, this is simply an inefficient use of resources resources resources"

Thomas Sowell would argue that Trumps tax cuts for the rich would work out better for the economy overall by making more jobs .... but it didn't, it just lined capitalist pockets with more money. Thomas wouldn't understand how the tax cuts didn't work because his lack of empathy or to be kind, naivety, and a cold nature to economics in my opinion, ruins an otherwise well put together book.

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Miss Jk Atwal

Five Stars

Reviewed in the United Kingdom on November 4, 2017

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This needs to be given to every 18 year old, the future of our economic prosperity depends on it.

18 people found this helpful

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Pete

Subversive

Reviewed in the United Kingdom on June 1, 2016

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This is an utterly fantastic read. Should be required reading in schools, although doubtful. Is probably deemed subversive and dangerous by left leaning institutions, like a modern day version of the bible being written in English and not Latin.

Thomas Sowell is a hero of mine.

25 people found this helpful

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Anon

One of the best books I've ever read

Reviewed in the United Kingdom on October 5, 2018

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Thomas Sowell offers a clear and profound understanding of human society and politics through basic economic principles. Everyone who is of voting age should read this.

9 people found this helpful

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Matthias Missling

Great book. I feel as though Thomas has given ...

Reviewed in the United Kingdom on June 23, 2015

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Great book. I feel as though Thomas has given me a new pair of glasses. I see the world very differently now. Economics is a science not an opinion. This book will de-clutter your thoughts about politics and will help you to make better economic decisions. This book should be a must read for every child.

34 people found this helpful

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David

Just read it✓

Reviewed in the United Kingdom on September 9, 2017

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Threre are two types of people in this modern age: those who have read 'Basic Economics', and those that really need to.
Nuff said

15 people found this helpful

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Lawrence Timme

My first economics book.

Reviewed in the United Kingdom on September 29, 2018

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This was my first book on economics and i have to say it does what is says on the cover. It is in plain English with not much technical language so it is easy to understand. it also builds everything up in a sensible order.

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mister tom

Basic Economics, oder: Was jeder Mensch über Ökonomie wissen sollte!

Reviewed in Germany on September 18, 2018

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(Zum Zeitpunkt der Rezension las ich 50% des Buches;
Negatives kommt am Ende zur Sprache)

Das Buch wurde von Thomas Sowell, der in den 1960ern als Schwarzer an Harvard studierte, und die affirmative actions aufs schärfste verurteilt, geschrieben! Alleine das ist Grund genug das Buch in die Hand zu nehmen.

Sowell erklärt sehr genau (teilweise zu genau) wie die Wirtschaft funktioniert, bzw. wie sich verschiedene Eingriffe des Staates in die Wirtkschaft auswirken. Er zeigt mit einer unglaublichen Anzahl an Beispielen aus den verschiedensten Teilen der Welt und zu unterschiedlichsten Zeiten, wie das Prinzip von Angebot und Nachfrage bis ins Detail funktionieren.
Man merkt ihm dabei an, dass er seine Theorien nicht auf Ideologien basiert, sondern auf Beobachtungen des Marktes.

Ein Beispiel: Mietpreisdeckelung. Es hat mich zutiefst erstaunt, wie Sowell mit Beispielen erklärte, dass eine staatlich verordnete Mietpreisbremse mehr negative Konsequenzen nach sich zieht, als wenn man den Markt freie Hand lässt.
Noch mehr erstaunte mich, dass alles was er über Mietpreisdeckelung in seinem Buch vorhersagt 1:1 in Wien beobachtbar ist!
Wenn ein Staat die Mieten deckelt passieren mehrere Dinge:

1. Bauträger nehmen Abstand vom Bau neuer Immobilien, da der Immobilienmarkt einen der langsamsten Umschlagraten hat, Kapital also tröpfchenweise (über mehrere Jahre und durch kleine Zahlungen (Mieten)) wieder reinbekommt. Deckelt man Mieten, dauert der Umschlag noch länger. Und Bauträger bauern entweder in anderen Gegenden (wo sie entsprechende Miete für ihre Leistung bekommen), oder sie bauen Eigentumswohnungen (wo sie das Kapital sofort wieder bekommen, und das verlangen dürfen, was die Wohnung wert ist).
Mittel- und Geringverdiener können sich Eigentumswohnungen nur schwer leisten. Zudem werden kaum neue Wohnungen gebaut und die Meite in bestehenden Wohnungen ohne Mietpreisdeckelung steigt.
Lässt man hingegen dem Markt freie Hand, steigen die Mieten, aber dadurch steigen auch die Neubauten, weil Bauträger sehen, dass sich in dieser Stadt mehr Gewinn durch Mieten erwirtschaften lässt, als wo anders. Es wird mehr gebaut. Der Markt sättigt sich langsam und die Mieten fallen wieder. Bis der Bedarf wieder steigt. Simples Gesetz von Angebot und Nachfrage.

2. Bestehende Wohnungen werden nur mehr an Menschen vermietet, die zuverlässig ihre Miete zahlen (können). Das heißt, dass man Nachweise über Einkommen vorlegen muss. Auch bevorzugen Vermieter höher Gebildete und höher Verdienende grundsätzlich, weil diese Gesellschaftsschicht am zuverlässigsten Miete bezahlt. Und diejenige, die eigentlich von der Mietpreisbremse profitieren sollten (Mittel- und Geringverdiener) bekommen erst recht keine Wohnung.

3. Wohnungen, die durch die Mietpreisdeckelung unrentabel werden, weil die Betriebs- Renovierungs- und Erhaltungskosten die Mieteinnahmen übersteigen, werden nichtmehr vermietet. Die Vermieter wollen verständlicherweise nicht ins Minus wirtschaften. Dadurch verfallen Häuser und Wohnungen, die von Mietpreisbremsen betroffen sind. Die Stadt Wien löst dieses Problem zum Beispiel durch Strafen auf Leerstand.

Warum werden also überhaupt Mietpreisdeckelungen von der Politik gefordert? Vassilakou forderte 2013 eine Miepreisdeckelung und Kern forderte sie 2018. Warum? Weil man mit dieser Polemik auf jeden Fall gutes politisches Kleingeld schlagen kann. Niemand zahlt gern Miete. Aber man sollte es als Service betrachten. Ich zahle schließlich nicht für ein Zugticket, weil ich keine Strafe zahlen will, wenn ich beim Schwarzfahren erwischt werde. Ich zahle für ein Zugticket, weil ich einen Service in Anspruch nehme. Aus dem selben Grund zahle ich auch gerne Miete, weil ich nicht auf der Straße schlafen will und dem Vermieter für seine Bereitstellung seines Wohnraumes an mich einen fairen Preis zahlen möchte.
Und das bringt mich zum letzten Punkt:

Sowell lässt sich in einem Satz gut zusammenfassen: The allocation of scarce resources with alternative uses.
Diesen Satz liest man alle paar Seiten einmal. Er wird zum Mantra. Das erste Mal habe ich ihn noch unterstrichen, aber weil ich ihn so oft las, ging er mir in Fleisch und Blut über.
Im Endeffekt geht es in der Wirtschaft um die Verteilung von begrenzten Resourcen, die auch andere Verwendungen haben.
Beispiel Wohnraum. Nicht jeder kann in der Haupstadt leben! Warum? Weil es nicht genug Platz für alle gibt. In einem marktwirtschaftlichem System regelt der (fluktuierende) Preis die Verteilung. Eine Wohnung auf der Kärtnerstraße ist nunmal teurer als eine Wohnung im 10ten. Weil die Nachbarschaft anders ist, weil die Lebensqualität anders ist, weil das Angebot unterschiedlich ist.
Eine Mietpreisdeckelung setzt mit einem Schlag alle Wohnungen auf das gleiche Preisniveau. Es ist nichtmehr der Einzelne, der mit seinem Geld abstimmt, sondern der Staat nimmt die Entscheidung, was eine Wohnung zu kosten hat, ab. (Hier lassen sich die sozialistischen Tendenzen der Abhanme von Verantwortung gut erkennen.)

Ein zweites (kurzes) Beispiel:
Ich las Marx' Kapital (in Auszügen). Er setzt den Wert von 1 Rock und 20 Ellen Leinwand gleich. Laut ihm kann man die Gleichung auch beliebig oft umkehren, also: 1 Rock = 20 Ellen Leinwand; und 20 Ellen Leindwand = 1 Rock.
Das stimmt aber mit nichten.
Sowell lehrt: Dem Käufer einer Zeitung ist die Zeitung mehr wert als der eine Euro den er Zahlt. Und dem Verkäufer ist der eine Euro mehr wert als die Zeitung.
Es gibt einen Moment des Profits, den Marx für gierig und ungerechtfertigt hielt (Denn warum soll ich mehr für ein Produkt zahlen, als es tatsächlich kostet?!), und Sowell für notwendig erklärt (Weil Gewinn/Profit Incentives sind um überhaupt Handel zu treiben!).

Insgesamt gehört Basic Economics zu den drei besten Büchern, die ich je gelesen habe und die absolut jeder Mensch einmal pro Jahr lesen sollte!
-Basic Economics; Thomas Sowell
-Explaining Postmodernism; Stephen Hicks
-Gulag Archipelago; Alexander Solschenytzin

Negatives:
Zwei negative Anmerkungen zu Basic Economics:
Erstens, es ist extrem lang und es wir repetitiv (aber nicht weniger spannend), vor allem auch, weil die Mechanismen großteils die selben bleiben. Aber man könnte das Buch gut auf ein drittel zusammenkürzen und hätte trotzdem das meiste abgedeckt.

Zweitens, Kapitalismus hat nicht überall seine Berechtigung. Ich würde zu Sowell ergänzen, dass Privatisierung überall positiv ist, außer in Quasi-Monopolen, wie Wasserversorgung, Stromversorgung, Universitäten, Schulen, Krankenhäusern, Straßenbau u.ä.
Ich bin schon sehr froh darüber, dass ich in Österreich gratis in die Schule und die Universität gehen kann, und nicht 100.000de Euro Schulden machen muss, um mir eine tertiäre Bildung leisten zu können.

Und trotzdem finde ich das Buch ein MUSS für jeden mündigen Bürger! Allein schon um die Mechanismen und die Konsequenzen des Marktes verstehen zu können.

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James Chambers

An excellent foundation economics study covering in depth all of the ...

Reviewed in the United Kingdom on October 21, 2015

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An excellent foundation economics study covering in depth all of the basic tenets of economics suitable for everybody from school age to old age.

11 people found this helpful

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rojovasq

great read!

Reviewed in the United Kingdom on September 25, 2016

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This is one of the most inspiring reads I have come across in a long time. It is insightful. It is not dry, filled with stark facts and figures with sometimes-confusing bar graphs and charts, but is full of understandable illustrations which help me as the reader to relate to the points being made.

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Amazon Customer

excellent book

Reviewed in the United Kingdom on January 9, 2019

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best book on economics one could find

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AAM

finally Economics decoded

Reviewed in the United Kingdom on February 17, 2016

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Excellent book, for those who want to understand economics but don't have time nor understand the jargon. I will definitely recommend to tge businessmen so they can understand how economics affects their business

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John G Bell

Essential Reading

Reviewed in the United Kingdom on January 31, 2020

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This weighty tome should be required reading for every politician.

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Five Stars

Reviewed in the United Kingdom on September 29, 2017

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Essential reading

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Liz

Four Stars

Reviewed in the United Kingdom on October 21, 2017

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Very readable, straightforward explanations of how economics works in the real world.

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