Book Review: Basic Economics (1)

Basic Economics:  A Common Sense Guide To The Economy, by Thomas Sowell

This is the second edition of this particular book I have read.  The first edition was a modest sized book of about 300 pages or so, and this book is about twice that size.  Is there an advantage to reading the larger one as opposed to the smaller one?  That depends on your interests and on how much time you want to devote to reading it.  Sowell is the sort of writer who has a very narrow set of interests that he likes to write about at varying lengths, and a great many books that detail slightly different perspectives of these very same interests.  That said, I am the sort of reader for whom there is never such a thing as too much Sowell, so even if this book did take a while to read and even if it is quite long, it was still an enjoyable and worthwhile read, even if the shorter version was far easier to get through and gets the same points across.  It depends on whether you simply want to understand the basic principles of economics or whether you want considerably more detail and more examples to illustrate those principles, which is a decision each reader must make for oneself.

This book is a hefty one at more than 600 pages, divided into 27 chapters in seven parts.  Like its smaller versions, there are no heavy equations or graphs, but there is a lot of text to read.  The book begins with a preface and acknowledgements and then the first chapter answers the question “What is economics?” (1).  The first part of the book then consists of three chapters about prices and markets (I) that look at the role of prices (2), the effects of price controls (3), and an overview of prices (4).  Five chapters make up the next part on industry and commerce (II) with chapters on the rise and fall of businesses (5), the role of profits and losses (6), the economics of big business (7), regulation and anti-trust laws (8), and market and non-market economics (9).  After that the author spends three chapters discussing work and pay (III) with chapters on productivity and pay (10), minimum wage laws (11), and some special problems in labor markets (12).  Three chapters follow on time and risk (IV) that look at investment (13), stocks, bonds, and insurance (14), and some special problems of time and risk (15).  The author then moves from microeconomics to macroeconomics to discuss the national economy (V), with chapters on national output (16), money and the banking system (17), government functions (18), government finance (19), and special problems (20).  There are three chapters after that on the international economy (VI) looking at international trade (21), transfers of wealth (22), and disparities in wealth (23).  After that the book concludes with some special economic issues (VII), namely myths about markets (24), “non-economic” values (25), the history of economics (26), and some parting thoughts (27), after which there are questions and an index.

This is a book that certainly provides a very thorough introduction to the subject of economics, features plenty of thought-provoking questions for readers to ponder, and provides a very detailed look at the author’s own perspective and point of view when it comes to matters of political economy.  The book provides plenty of ways that economics serves as a dismal science, not least in the way that it demonstrates the way that incentives and intentions frequently act at cross purposes and frequently lead people and governments in trouble when laws are poorly made and when politically popular decisions have destructive consequences, such as when the envy-driven hostility towards a wealthy minority leads to predictable declines in wealth, or when the threat of expropriation makes markets nervous and decreases economic performance, or when price controls and wage floors lead to shortages and unemployment, respectively.  If many of the conclusions are somewhat obvious that the book deals with, they have not been obvious enough to many decision makers who continually make the same mistakes over and over again and expect different results than before, which is the clinical definition of insanity in some parts.

About nathanalbright

I'm a person with diverse interests who loves to read. If you want to know something about me, just ask.
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