Applied Economics: Thinking Beyond Stage One, by Thomas Sowell, read by Bill Wallace
This book was a joy to listen to, as I had the chance to do so during my recent trip to California with a couple of friends/relatives. A large part of what made the book a joy was the way that the author thoughtfully examined various subjects of political interest in a way that allowed his insights to easily supplement that of the reader or listener (as the case may be) in their own conversations on political matters. Additionally, the book as a whole is full of the sound reasoning and attention to detail and nuance that makes Sowell’s works as a whole a joy to read. In this particular volume the author is on sound ground not only as an economist, but also someone whose knowledge social and political issues around the world is deep and profound and whose understanding of cultural patterns is similarly impressively deep. Yet despite the author’s considerable knowledge, he shows a great deal of patience in methodically demonstrating how it is that good intentions and efforts at dealing with unpleasant realities often make those realities worse as a result of a lack of wisdom and attention when it comes to the perverse incentives that are created by one’s interventions.
This particular book is organized in a thematic fashion over nine discs, with the author examining in turn the economics of politics, housing, medical care, crime, discrimination, and the economic development of nations, among other subjects. Throughout the course of these discussions the author looks at the difference between political and economic aspects of reality and the way that attempts to ameliorate conditions can often lead to negative externalities that exacerbate the original problem one was trying to solve. For example, laws that seek to control rent prices lead to a reduction in housing stock as fewer rental units are built and maintenance decreases in existing housing in a predictable fashion. The reduction or removal of such maladroit policies then leads, almost as if by magic, to more housing being built because it is again profitable to do so. Throughout the book the author contrasts the great mass of people, especially leftist politicians, who are only able to think in stage one terms, and those whose knowledge extends to an understanding of the responses that people are going to make to given policies and regulations that allows them to thoughtfully oppose such follies and to seek to properly harness the motivations that exist in beneficial directions.
And ultimately that is what this book succeeds at the best, the conveyance of the difficulty of managing social change in a way that benefits society as a whole as well as its members. It is easy to conceive of interventions that to those who lack knowledge and insight can coerce desired social change, but it requires more thoughtfulness to recognize the way in which those actions may lead to a decline in the well-being of those groups that one claims a desire to support. The author is, as usual, unsentimental in his approach and unsparing in his criticism, commenting on the way that we prefer socially beneficial agents to be in competition with each other but prefer criminal elements to be in cartels where the anarchic violence of individual members of the criminal class can be restrained by the rational calculations of crime lords who do not wish for scrutiny on their profitable but socially undesirable operations that would be inhibited by popular hostility to their firms. Not everyone is amenable to thinking in a sound economic fashion, but for those who are, this book is definitely an achievement.