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Common Sense Economics: What Everyone Should Know About Wealth and Prosperity Hardcover – August 3, 2010
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“Economic Journalism is often based on slip-shod analysis; scientific treatises are analytically coherent but unintelligible. This book is an effort to bridge the awesome gap between these levels of discourse. It is solid economic analysis, simply presented.” ―Nobel Laureate James Buchanan
“If this book had been written a century ago the wasteful experiments with command economies might have been avoided. After my college-age children read this new edition, their understanding of how markets create social cooperation and wealth and how they can personally be guided in their finances sharply advanced.” ―Gary M. Walton, Professor of Economics, University of California, Davis and President of the Foundation for Teaching Economics
“I gave a copy of Common Sense Economics to one of my colleagues who teaches accounting here. He read it this weekend and thought it was so good that he is considering paying his students (half the cost) to read it. We both think the lessons are perfect.” ―Kelly Hunter Markson, Ph.D., Instructor of Economics, Wake Technical Community College
“My high school students really enjoy this book. It is easy for them to understand and it presents important economic concepts in plain language using clear, often clever, examples. They read the whole book, and we discuss it page by page during class discussion. I believe they get more out of it than their regular text.” ―David Gardner, Principal and Teacher, Frederica Academy (Georgia)
“Common Sense Economics is about both personal prosperity and the wealth of nations. It explains how and why ordinary people are able to accomplish extraordinary things when they are economically free and when the policies and institutions of their government are supportive of that freedom.” ―Wayne Angell, Member, Board of Governors of the Federal Reserve System (1986–1994)
“Common Sense Economics makes economic principles as obvious and simple as they can be. By weaving careful reasoning with memorable examples and clear writing, the authors explain how economies grow (or don't grow); how prices coordinate economic activity; and how governments promote or deter economic progress. This is an extraordinary contribution to economic education.” ―Kenneth G. Elzinga, Robert C. Taylor Professor of Economics, University of Virginia
“Economics is not only fun and exciting, it's mostly plain common sense. The authors have done a yeoman's job in proving just that. Common Sense Economics is not only a fun, readable read but can serve as a handy and important reference for students, teachers, businessmen, members of the media, politicians, and trained economists.” ―Walter E. Williams, John M. Olin Distinguished Professor of Economics, George Mason University
“Common Sense Economics takes the economic way of thinking to the next level. If every high school graduate understood the principles in this book, people would make wiser choices as consumers, producers, and citizens and the United States would be more prosperous.” ―John Morton, former Vice President for Program Development, National Council on Economic Education
“In a time when public policy is being influenced primarily by need, greed, and compassion, this text sets out, in laymen's terms, the most basic understanding of how the economy really works. Common Sense Economics is a must-read for anyone interested in the truth about wealth creation and effective public policy.” ―J. R. Clark, Probasco Chair, The University of Tennessee and Executive Director, Association of Private Enterprise Education
About the Author
James D. Gwartney holds the Gus A. Stavros Eminent Scholar Chair at Florida State University and is the director of the Stavros Center for the Advancement of Free Enterprise and Economic Education.
Richard L. Stroup is the author of Eco-Nomics and an adjunct professor of economics at North Carolina State University.
Dwight R. Lee is coauthor of Getting Rich in America and holds the William J. O'Neil Chair of Global Markets and Freedom at Southern Methodist University.
Tawni H. Ferrarini is the Sam M. Cohodas Professor of Economics and the Director of the Center for Economic Education and Entrepreneurship at Northern Michigan University.
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Four economics professors (Gwartney, Stroup, Lee, Ferrarini) set out to make economics easy to understand for the layperson, and with Common Sense Economics they have succeeded. This is the book that I will give to my Mom, who wants to understand how markets work but has no interest in reading through the dense academic treatises of Mises. This is the book that I will give to my friend who wants to gain a deeper understanding of the objective facts of economics, but doesn't want the "free market biases" associated with Hayek. This is the book that I would recommend to other college students that want specific examples of how they can use economic analysis to evaluate current public policy decisions without traveling 70 years into the past with Hazlitt to commiserate on FDR's New Deal policies.
Common Sense Economics is split into four parts, titled: (1) Twelve Key Elements of Economics, (2) Seven Major Sources of Economic Progress (3) Economic Progress and the Role of Government, and (4) Twelve Key Elements of Practical Personal Finance. In this review I will cover the first three.
In Twelve Key Elements of Economics, the authors present the basic, fundamental rules of economics. They introduce the key concepts of incentives, marginal analysis, trade, division of labor, specialization, prices, profits and economic institutions. They also use this section to debunk popular economic fallacies; most notably, the myth of the free lunch, and the belief that more jobs, not increased productivity, raise living standards.
In Seven Major Sources of Economic Progress, the authors answer the question, "Why are some countries rich and others poor? They describe how the legal system, competitive markets, limited government regulation, an efficient capital market, monetary stability, low tax rates and free trade are requirements for prosperity. By the end of this section even the Marxist will realize why North Korea is poor and Hong Kong rich.
Economic Progress and the Role of Government is my favorite section because the authors specifically describe the features of government that lead to economic prosperity and the actions it can take to hinder it. Most notably, I learned that certain "public goods", are not easily provided by the market, and that government must do the job. To learn which goods are public goods, you'll have to read the book, but I'll give you a hint: they're not health care and education.
My favorite part of the book comes at the end of this section, when the authors propose eight constitutional amendments that would compose an Economic Bill of Rights. They argue that the Constitutional safeguards on government powers have been imperfect and ineffective, and that only through an amendment process are we to escape the doomed march towards default or hyperinflation. Instead of simply pointing out problems, these suggested amendments give me concrete solutions that I can use as talking points when discussing economic issues with my peers.
I do believe that everyone in the world should read this book, because even if you don't live in a country with free markets, this book will convince you of their merit. However this book is especially important for Americans to read. Consider it a course in economic literacy. Most of our population, and alas, many of our political leaders, are economically illiterate. If every voter had a solid grasp on the ideas presented here, there would be a vast shift in the political discussion. No longer would taxpayers be fooled into supporting the American auto industry or bailing out its banks. No longer would we tolerate pork barrel legislation and restraints on free trade. No longer would we trust the government to control our health care and education industries. No longer would we tolerate the welfare state. No longer would we be ignorant to the dangers posed by soaring budget deficits, a bloated national debt, and runaway inflation.
Instead, Americans will learn again the lesson that many of us have forgotten; that the founding principle of this country is not unrestrained democracy in which the majority votes away the rights of the minority, but a limited government charged with protecting the rights of the smallest minority there is: the individual.
Print quality (paper quality) is not on par with the price.
Otherwise it's good
Those familiar with libertarian viewpoints will recognize that much of the book is themed that way. If you happen to disagree with libertarian thinking, and yet are open to challenging your beliefs, then I recommend trying to understand Common Sense Economics through the lens of logic and math and not from the all-too-common vantage point of political ideology.