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A review by jamie_o
Basic Economics: A Common Sense Guide to the Economy by Thomas Sowell
5.0
My new goal: read one Thomas Sowell book per year. The man is a logical, brilliant thinker.
Basic Economics should be required reading for all high schoolers - in fact, my used copy that had never been checked out is from a high school library. It is thorough and yet understandable... admittedly, there were parts I had to read a few times to let it sink in. He put names to scenarios I have seen played out and connected many dots. I cannot possibly do justice to this book without my review being more extensive then I have time for. I'll let the book speak for itself:
"The Soviet Union did not lack for resources, but was in fact one of the most richly endowed nations on earth. What it lacked was an economic system that made efficient use of scarce resources. Because Soviet enterprises were not under the same financial constraints as capitalist enterprises, they acquired more machines than they needed, "which then gather dust in warehouses or rust out of doors," as the Soviet economists put it."
"Few things are more simple than the fact that people tend to buy more at lower prices and buy less at higher prices. But putting that together with the face that producers tend to supply more at higher prices and less at lower prices, that is enough to predict all sorts of complex reactions to price controls, as for example in the housing market. Moreover, these reactions have been found on all inhabited continents and over thousands of years of recorded history."
"Perhaps the most decisive evidence of the role of profit as an incentive is the record of socialist economies which have eliminated it. The sums of money saved by eliminating profits have failed to lower prices and make the consuming public better off, because the absence of incentives has allowed many inefficiencies to go unchecked and technological and organizational changes to lag."
"Many policies are made as if he citizens subject to them are like pieces on a chessboard, to be moved here and there as the policy-makers wish. For example, when tax rates are raised 10 percent, it may be assumed that tax revenues will also rise by 10 percent. But in fact more people move out of the heavily taxed jurisdiction, or buy less of the heavily taxed commodity, so that the revenues received may be disappointingly far below what was estimated."
"Very often either history or economics could have told us what to expect, but neither was consulted. It does not matter that a law or policy proclaims its goal to be "affordable housing," "fair trade" or a living wage." What matters is what incentives are created by the specifics of these laws and how people react to such incentives. These are dry empirical questions which are seldom as exciting as political crusades or moral pronouncements."
Basic Economics should be required reading for all high schoolers - in fact, my used copy that had never been checked out is from a high school library. It is thorough and yet understandable... admittedly, there were parts I had to read a few times to let it sink in. He put names to scenarios I have seen played out and connected many dots. I cannot possibly do justice to this book without my review being more extensive then I have time for. I'll let the book speak for itself:
"The Soviet Union did not lack for resources, but was in fact one of the most richly endowed nations on earth. What it lacked was an economic system that made efficient use of scarce resources. Because Soviet enterprises were not under the same financial constraints as capitalist enterprises, they acquired more machines than they needed, "which then gather dust in warehouses or rust out of doors," as the Soviet economists put it."
"Few things are more simple than the fact that people tend to buy more at lower prices and buy less at higher prices. But putting that together with the face that producers tend to supply more at higher prices and less at lower prices, that is enough to predict all sorts of complex reactions to price controls, as for example in the housing market. Moreover, these reactions have been found on all inhabited continents and over thousands of years of recorded history."
"Perhaps the most decisive evidence of the role of profit as an incentive is the record of socialist economies which have eliminated it. The sums of money saved by eliminating profits have failed to lower prices and make the consuming public better off, because the absence of incentives has allowed many inefficiencies to go unchecked and technological and organizational changes to lag."
"Many policies are made as if he citizens subject to them are like pieces on a chessboard, to be moved here and there as the policy-makers wish. For example, when tax rates are raised 10 percent, it may be assumed that tax revenues will also rise by 10 percent. But in fact more people move out of the heavily taxed jurisdiction, or buy less of the heavily taxed commodity, so that the revenues received may be disappointingly far below what was estimated."
"Very often either history or economics could have told us what to expect, but neither was consulted. It does not matter that a law or policy proclaims its goal to be "affordable housing," "fair trade" or a living wage." What matters is what incentives are created by the specifics of these laws and how people react to such incentives. These are dry empirical questions which are seldom as exciting as political crusades or moral pronouncements."