Basic Economics: A Citizen’s Guide To The Economy, by Thomas Sowell
Economics is one of those subjects that does not always strike readers as a very fascinating one, but this book manages to do a good job at keeping history entertaining. One of the odd factors that made this book particularly entertaining to read was the way that a previous reader had made some comments that indicated he did not understand what Sowell was about. To be sure, a book like this is part of a conversation, as is generally true in economics as well, as Sowell focuses on questions of practicality and results while also promoting a particular view of restraint on the part of government because of what works and what doesn’t. Not all of the time does this become a literal conversation, though, as a reader thinks it fit to write in the margins and in the spaces between lines snarky comments about the author’s statements. For example, the author comments about the worth of building housing, but the anonymous troller writing in the book thought that this was related to the urging of policies related to the housing boom that he said so. And that is only one of the more entertaining comments to be found in reading this copy of a book that is pretty entertaining already.
Overall, this book is a relatively short one for its scope at about 350 pages of writing without economic jargon or the sort of graphs that are most familiar with this subject. This book is divided into seven parts, starting with a preface, acknowledgements, and an answer of the question what is economics (1). The first part of the book contains a discussion of prices (I), with the role of prices (2), price controls and their failure (3), and an overview (4). There is then a discussion of industry and commerce (II), with the rise and fall of businesses (5), the role of profits and losses (6), big business and government (7), and an overview (8). There is a discussion of work and pay (III) with chapters on productivity (9), controlled labor markets (10), and an overview (11). There is a section of chapters on time and risk (IV), with a look at investment and speculation (12), risks and insurance (13), and an overview (14). This leads into a discussion of the national economy (V), with a look at national output (15), money and the banking system (16), the role of government (17), and an overview (18). There is then a discussion of an international economy (VI) with a look at international trade (19), transfers of wealth, and the usual overview (20). Finally, the book ends with a discussion of popular economic fallacies (VII), including “non-economic” values (21), prices and purchasing power (22), business and labor (23), as well as an over (24), after which there are sources and an index.
Why is economics considered to be the dismal science? A great deal of that comes out here, not merely in Sowell’s specific comments about various economic fallacies or various issues that economists have to deal with. What makes economics dismal is that there are practical consequences for the behavior of people. Laws may be passed or regulations may be made with specific goals and intentions in mind of shifting the behavior of people in one direction, but they often create perverse incentives that motivate people contrary to the intentions of the law, leading to much gnashing of teeth on the part of people who would want others to act according to their attentions rather than the incentives set up by laws and regulations. Sowell gives intentions no credit whatsoever and he spends his time discussing the incentives that are created by various policies or various approaches, a rather pitiless but effective way of discussing economics and explaining the behavior of people in different situations.