Books by Sowell, Thomas

Sowell, Thomas. Basic Economics. 2nd. ed. New York: Basic Books, [2004] 2007. ISBN 978-0-465-08145-5.
Want to know what's my idea of a financial paradise? A democratic country where the electorate understands the material so lucidly explained in this superb book. Heck, I'd settle for a country where even a majority of the politicians grasped these matters. In fewer than four hundred pages, without a single graph or equation, the author explains the essentials of economics, which he defines as “the study of the use of scarce resources which have alternative uses”. While economics is a large and complex field with many different points of view, he argues that there are basic economic principles upon which virtually all economists agree, across the spectrum from libertarians to Marxists, that these fundamentals apply to all forms of economic and social organisation—feudalism, capitalism, fascism, socialism, communism, whatever—and in all times: millennia of human history provide abundant evidence for the functioning of these basic laws in every society humans have ever created.

But despite these laws being straightforward (if perhaps somewhat counterintuitive until you learn to “think like an economist”), the sad fact is that few citizens and probably even a smaller fraction of politicians comprehend them. In their ignorance, they confuse intentions and goals (however worthy) with incentives and their consequences, and the outcomes of their actions, however predictable, only serve to illustrate the cost when economic principles are ignored. As the author concludes on the last page:

Perhaps the most important distinction is between what sounds good and what works. The former may be sufficient for purposes of politics or moral preening, but not for the economic advancement of people in general or the poor in particular. For those willing to stop and think, basic economics provides some tools for evaluating policies and proposals in terms of their logical implications and empirical consequences.

And this is precisely what the intelligent citizen needs to know in these times of financial peril. I know of no better source to acquire such knowledge than this book.

I should note that due to the regrettably long bookshelf latency at Fourmilab, I read the second edition of this work after the third edition became available. Usually I wouldn't bother to mention such a detail, but while the second edition I read was 438 pages in length, the third is a 640 page ker-whump on the desktop. Now, my experience in reading the works of Thomas Sowell over the decades is that he doesn't waste words and that every paragraph encapsulates wisdom that's worth taking away, even if you need to read it four or five times over a few days to let it sink in. But still, I'm wary of books which grow to such an extent between editions. I read the second edition, and my unconditional endorsement of it as something you absolutely have to read as soon as possible is based upon the text I read. In all probability the third edition is even better—Dr. Sowell understands the importance of reputation in a market economy better than almost anybody, but I can neither evaluate nor endorse something I haven't yet read. That said, I'm confident that regardless of which edition of this book you read, you will close it as a much wiser citizen of a civil society and participant in a free economy than when you opened the volume.

September 2008 Permalink

Sowell, Thomas. Black Rednecks and White Liberals. San Francisco: Encounter Books, 2005. ISBN 1-59403-086-3.
One of the most pernicious calumnies directed at black intellectuals in the United States is that they are “not authentic”—that by speaking standard English, assimilating into the predominant culture, and seeing learning and hard work as the way to get ahead, they have somehow abandoned their roots in the ghetto culture. In the title essay in this collection, Thomas Sowell demonstrates persuasively that this so-called “black culture” owes its origins, in fact, not to anything blacks brought with them from Africa or developed in times of slavery, but rather to a white culture which immigrants to the American South from marginal rural regions of Britain imported and perpetuated long after it had died out in the mother country. Members of this culture were called “rednecks” and “crackers” in Britain long before they arrived in America, and they proceeded to install this dysfunctional culture in much of the rural South. Blacks arriving from Africa, stripped of their own culture, were immersed into this milieu, and predictably absorbed the central values and characteristics of the white redneck culture, right down to patterns of speech which can be traced back to the Scotland, Wales, and Ulster of the 17th century. Interestingly, free blacks in the North never adopted this culture, and were often well integrated into the community until the massive northward migration of redneck blacks (and whites) from the South spawned racial prejudice against all blacks. While only 1/3 of U.S. whites lived in the South, 90% of blacks did, and hence the redneck culture which was strongly diluted as southern whites came to the northern cities, was transplanted whole as blacks arrived in the north and were concentrated in ghetto communities.

What makes this more than an anthropological and historical footnote is, that as Sowell describes, the redneck culture does not work very well—travellers in the areas of Britain it once dominated and in the early American South described the gratuitous violence, indolence, disdain for learning, and a host of other characteristics still manifest in the ghetto culture today. This culture is alien to the blacks who it mostly now afflicts, and is nothing to be proud of. Scotland, for example, largely eradicated the redneck culture, and became known for learning and enterprise; it is this example, Sowell suggests, that blacks could profitably follow, rather than clinging to a bogus culture which was in fact brought to the U.S. by those who enslaved their ancestors.

Although the title essay is the most controversial and will doubtless generate the bulk of commentary, it is in fact only 62 pages in this book of 372 pages. The other essays discuss the experience of “middleman minorities” such as the Jews, Armenians in the Ottoman Empire, Lebanese in Africa, overseas Chinese, etc.; the actual global history of slavery, as a phenomenon in which people of all races, continents, and cultures have been both slaves and slaveowners; the history of ethnic German communities around the globe and whether the Nazi era was rooted in the German culture or an aberration; and forgotten success stories in black education in the century prior to the civil rights struggles of the mid 20th century. The book concludes with a chapter on how contemporary “visions” and agendas can warp the perception of history, discarding facts which don't fit and obscuring lessons from the past which can be vital in deciding what works and what doesn't in the real world. As with much of Sowell's work, there are extensive end notes (more than 60 pages, with 289 notes on the title essay alone) which contain substantial “meat” along with source citations; they're well worth reading over after the essays.

July 2005 Permalink

Sowell, Thomas. Dismantling America. New York: Basic Books, 2010. ISBN 978-0-465-02251-9.
Thomas Sowell has been, over his career, an optimist about individual liberty and economic freedom in the United States and around the world. Having been born in the segregated South, raised by a single mother in Harlem in the 1940s, he said that the progress he had observed in his own lifetime, rising from a high school dropout to the top of his profession, convinced him that America ultimately gets it right, and that opportunity for those who wish to advance through their own merit and hard work is perennial. In recent years, however, particularly since the rise and election of Barack Obama, his outlook has darkened considerably, almost approaching that of John Derbyshire. Do you think I exaggerate? Consider this passage from the preface:

No one issue and no one administration in Washington has been enough to create a perfect storm for a great nation that has weathered many storms in its more than two centuries of existence. But the Roman Empire lasted many times longer, and weathered many storms in its turbulent times—and yet it ultimately collapsed completely.

It has been estimated that a thousand years passed before the standard of living in Europe rose again to the level it had achieved in Roman times. The collapse of civilization is not just the replacement of rulers or institutions with new rulers and new institutions. It is the destruction of a whole way of life and the painful, and sometimes pathetic, attempts to begin rebuilding amid the ruins.

Is that where America is headed? I believe it is. Our only saving grace is that we are not there yet—and that nothing is inevitable until it happens.

Strong stuff! The present volume is a collection of the author's syndicated columns dating from before the U.S. election of 2008 into the first two years of the Obama administration. In them he traces how the degeneration and systematic dismantling of the underpinnings of American society which began in the 1960s culminated in the election of Obama, opening the doors to power to radicals hostile to what the U.S. has stood for since its founding and bent on its “fundamental transformation” into something very different. Unless checked by the elections of 2010 and 2012, Sowell fears the U.S. will pass a “point of no return” where a majority of the electorate will be dependent upon government largesse funded by a minority who pay taxes. I agree: I deemed it the tipping point almost two years ago.

A common theme in Sowell's writings of the last two decades has been how public intellectuals and leftists (but I repeat myself) attach an almost talismanic power to words and assume that good intentions, expressed in phrases that make those speaking them feel good about themselves, must automatically result in the intended outcomes. Hence the belief that a “stimulus bill” will stimulate the economy, a “jobs bill” will create jobs, that “gun control” will control the use of firearms by criminals, or that a rise in the minimum wage will increase the income of entry-level workers rather than price them out of the market and send their jobs to other countries. Many of the essays here illustrate how “progressives” believe, with the conviction of cargo cultists, that their policies will turn the U.S. from a social Darwinist cowboy capitalist society to a nurturing nanny state like Sweden or the Netherlands. Now, notwithstanding that the prospects of those two countries and many other European welfare states due to demographic collapse and Islamisation are dire indeed, the present “transformation” in the U.S. is more likely, in my opinion, to render it more like Perón's Argentina than France or Germany.

Another part of the “perfect storm” envisioned by Sowell is the acquisition of nuclear weapons by Iran, the imperative that will create for other states in the region to go nuclear, and the consequent possibility that terrorist groups will gain access to these weapons. He observes that Japan in 1945 was a much tougher nation than the U.S. today, yet only two nuclear bombs caused them to capitulate in a matter of days. How many cities would the U.S. have to lose? My guess is at least two but no more than five. People talk about there being no prospect of a battleship Missouri surrender in the War on Terror (or whatever they're calling it this week), but the prospect of a U.S. surrender on the carrier Khomeini in the Potomac is not as far fetched as you might think.

Sowell dashes off epigrams like others write grocery lists. Here are a few I noted:

  • One of the painful consequences of studying history is that it makes you realize how long people have been doing the same foolish things with the same disastrous results.
  • There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs.
  • Do not expect sound judgments in a society where being “non-judgmental” is an exalted value. As someone has said, if you don't stand for something, you will fall for anything.
  • Progress in general seems to hold little interest for people who call themselves “progressives”. What arouses them are denunciations of social failures and accusations of wrong-doing.
      One wonders what they would do in heaven.
  • In a high-tech age that has seen the creation of artificial intelligence by computers, we are also seeing the creation of artificial stupidity by people who call themselves educators.
  • Most people on the left are not opposed to freedom. They are just in favor of all sorts of things that are incompatible with freedom.
  • Will those who are dismantling this society from within or those who seek to destroy us from without be the first to achieve their goal? It is too close to call.

As a collection of columns, you can read this book in any order you like (there are a few “arcs” of columns, but most are standalone), and pick it up and put it down whenever you like without missing anything. There is some duplication among the columns, but they never become tedious. Being newspaper columns, there are no source citations or notes, and there is no index. What are present in abundance are Sowell's acute observations of the contemporary scene, historical perspective, rigorous logic, economic common sense, and crystal clear exposition. I had read probably 80% of these columns when they originally appeared, but gleaned many new insights revisiting them in this collection.

The author discusses the book, topics raised in it, and the present scene in an extended video interview, for which a transcript exists. A shorter podcast interview with the author is also available.

October 2010 Permalink

Sowell, Thomas. The Housing Boom and Bust. 2nd. ed. New York: Basic Books, [2009] 2010. ISBN 978-0-465-01986-1.
If you rely upon the statist legacy media for information regarding the ongoing financial crisis triggered by the collapse of the real estate bubble in certain urban markets in the United States, everything you know is wrong. This book is a crystal-clear antidote to the fog of disinformation emanating from the politicians and their enablers in media and academia.

If, as five or six people still do, you pay attention to the legacy media in the United States, you'll hear that there was a nationwide crisis in the availability of affordable housing, and that government moved to enable more people to become homeowners. The lack of regulation caused lenders to make risky loans and resell them as “toxic assets” which nobody could actually value, and these flimsy pieces of paper were sold around the world as if they were really worth something.

Everything you know is wrong.

In fact, there never was a nationwide affordable housing crisis. The percentage of family income spent on housing nationwide fell in the nineties and oughties. The bubble market in real estate was largely confined to a small number of communities which had enacted severe restrictions upon development that reduced the supply of housing—in fact, of 26 urban areas rated as “severely unaffordable”, 23 had adopted “smart growth” policies. (Rule of thumb: whenever government calls something “smart”, it's a safe bet that it's dumb.)

But the bubble was concentrated in the collectivist enclaves where the chattering class swarm and multiply: New York, San Francisco, Los Angeles, Washington, Boston, and hence featured in the media, ignoring markets such as Dallas and Houston where, in the absence of limits on development, housing prices were stable.

As Eric Sevareid observed, “The chief cause of problems is solutions”, and this has never been better demonstrated than in the sorry sequence of interventions in the market documented here. Let's briefly sketch the “problems” and “solutions” which, over decades, were the proximate cause of the present calamity.

First of all, back in the New Deal, politicians decided the problem of low rates of home ownership and the moribund construction industry of the Depression could be addressed by the solution of government (or government sponsored) institutions to provide an aftermarket in mortgages by banks, which could then sell the mortgages on their books and free up the capital to make new loans. When the economy started to grow rapidly after the end of World War II, this solution caused a boom in residential construction, enabling working class families to buy new houses in the rapidly expanding suburbs. This was seen as a problem, “suburban sprawl”, to which local politicians, particularly in well-heeled communities on the East and West coasts, responded with the solution of enacting land use restrictions (open space, minimum lot sizes, etc.) to keep the “essential character” of their communities from being changed by an invasion of hoi polloi and their houses made of ticky-tacky, all the same. This restriction of the supply of housing predictably led to a rapid rise in the price of housing in these markets (while growth-oriented markets without such restrictions experienced little nor no housing price increases, even at the height of the bubble). The increase in the price of housing priced more and more people out of the market, particularly younger first-time home buyers and minorities, which politicians proclaimed as an “affordable housing crisis”, and supposed, contrary to readily-available evidence, was a national phenomenon. They enacted solutions, such as the Community Reinvestment Act, regulation which required lenders to effectively meet quotas of low-income and minority mortgage lending, which compelled lenders to make loans their usual standards of risk evaluation would have caused them to decline. Expanding the pool of potential home buyers increased the demand for housing, and with the supply fixed due to political restrictions on development, the increase in housing prices inevitably accelerated, pricing more people out of the market. Politicians responded to this problem by encouraging lenders to make loans which would have been considered unthinkably risky just a few years before: no down payment loans, loans with a low-ball “teaser” rate for the first few years which reset to the prevailing rate thereafter, and even “liar loans” where the borrower was not required to provide documentation of income or net worth. These forms of “creative financing” were, in fact, highly-leveraged bets upon the housing bubble continuing—all would lead to massive defaults in the case of declining or even stable valuations of houses.

Because any rational evaluation of the risk of securities based upon the aggregation of these risky loans would cause investors to price them accordingly, securities of Byzantine complexity were created which allowed financial derivatives based upon them, with what amounted to insurance provided by counterparty institutions, which could receive high credit ratings by the government-endorsed rating agencies (whose revenue stream depended upon granting favourable ratings to these securities). These “mortgage-backed securities” were then sold all around the world, and ended up in the portfolios of banks, pension funds, and individual investors, including this scrivener (saw it coming; sold while the selling was good).

Then, as always happens in financial bubbles, the music stopped. Back in the days of ticker tape machines, you could hear the popping of a bubble. The spasmodic buying by the greatest fools of all would suddenly cease its clatter and an ominous silence would ensue. Then, like the first raindrops which presage a great deluge, you'd hear the tick-tick-tick of sell orders being filled below the peak price. And then the machine would start to chatter in earnest as sell orders flooded into the market, stops were hit and taken out, and volume exploded to the downside. So it has always been, and so it will always be. And so it was in this case, although in the less liquid world of real estate it took a little longer to play out.

As you'll note in these comments, and also in Sowell's book, the words “politicians” and “government” appear disproportionately as the subject of sentences which describe each step in how a supposed problem became a solution which became a problem. The legacy media would have you believe that “predatory lenders”, “greedy Wall Street firms”, “speculators”, and other nefarious private actors are the causes of the present financial crisis. These players certainly exist, and they've been evident as events have been played out, but the essence of the situation is that all of them are creations and inevitable consequences of the financial environment created by politicians who are now blaming others for the mess they created and calling for more “regulation” by politicians (as if, in the long and sorry history of regulation, it has ever made anything more “regular” than the collective judgement of millions of people freely trading with one another in an open market).

There are few people as talented as Thomas Sowell when it comes to taking a complex situation spanning decades and crossing the boundary of economics and politics, and then dissecting it out into the essentials like an anatomy teacher, explaining in clear as light prose the causes and effects, and the unintended and yet entirely predictable consequences (for those acquainted with basic economics) which led to the present mess. This is a masterpiece of such work, and anybody who's interested in the facts and details behind the obfuscatory foam emerging from the legacy media will find this book an essential resource.

Dr. Sowell's books tend to be heavily footnoted, with not only source citations but also expansions upon the discussion in the main text. The present volume uses a different style, with a lengthy “Sources” section, a full 19% of the book, listing citations for items in the text in narrative form, chapter by chapter. Expressing these items in text, without the abbreviations normally used in foot- or end-notes balloons the length of this section and introduces much redundancy. Perhaps it's due to the publisher feeling a plethora of footnotes puts off the causal reader, but for me, footnotes just work a lot better than these wordy source notes.

March 2010 Permalink

Sowell, Thomas. Inside American Education. New York: Free Press, 1993. ISBN 0-02-930330-3.

February 2001 Permalink

Sowell, Thomas. Intellectuals and Society. New York: Basic Books, 2009. ISBN 978-0-465-01948-9.
What does it mean to be an intellectual in today's society? Well, certainly one expects intellectuals to engage in work which is mentally demanding, which many do, particularly within their own narrow specialities. But many other people perform work which is just as cognitively demanding: chess grandmasters, musical prodigies, physicists, engineers, and entrepreneurs, yet we rarely consider them “intellectuals” (unless they become “public intellectuals”, discussed below), and indeed “real” intellectuals often disdain their concern with the grubby details of reality.

In this book, the author identifies intellectuals as the class of people whose output consists exclusively of ideas, and whose work is evaluated solely upon the esteem in which it is held by other intellectuals. A chess player who loses consistently, a composer whose works summon vegetables from the audience, an engineer whose aircraft designs fall out of the sky are distinguished from intellectuals in that they produce objective results which succeed or fail on their own merits, and it is this reality check which determines the reputation of their creators.

Intellectuals, on the other hand, are evaluated and, in many cases, hired, funded, and promoted solely upon the basis of peer review, whether formal as in selection for publication, grant applications, or awarding of tenure, or informal: the estimation of colleagues and their citing of an individual's work. To anybody with the slightest sense of incentives, this seems a prescription for groupthink, and it is no surprise that the results confirm that supposition. If intellectuals were simply high-performance independent thinkers, you'd expect their opinions to vary all over the landscape (as is often the case among members of other mentally demanding professions). But in the case of intellectuals, as defined here, there is an overwhelming acceptance of the nostrums of the political left which appears to be unshakable regardless of how many times and how definitively they have been falsified and discredited by real world experience. But why should it be otherwise? Intellectuals themselves are not evaluated by the real world outcomes of their ideas, so it's only natural they're inclined to ignore the demonstrated pernicious consequences of the policies they advocate and bask instead in the admiration of their like-thinking peers. You don't find chemists still working with the phlogiston theory or astronomers fine-tuning geocentric models of the solar system, yet intellectuals elaborating Marxist theories are everywhere in the humanities and social sciences.

With the emergence of mass media in the 20th century, the “public intellectual” came into increasing prominence. These are people with distinguished credentials in a specialised field who proceed to pronounce upon a broad variety of topics in which their professional expertise provides them no competence or authority whatsoever. The accomplishments of Bertrand Russell in mathematics and philosophy, of Noam Chomsky in linguistics, or of Paul Erlich in entomology are beyond dispute. But when they walk onto the public stage and begin to expound upon disarmament, colonialism, and human population and resources, almost nobody in the media or political communities stops to ask just why their opinion should be weighed more highly than that of anybody else without specific expertise in the topic under discussion. And further, few go back and verify their past predictions against what actually happened. As long as the message is congenial to the audience, it seems like public intellectuals can get a career-long pass from checking their predictions against outcomes, even when the discrepancies are so great they would have caused a physical scientist to be laughed out of the field or an investor to have gone bankrupt. As biographer Roy Harrod wrote of eminent economist and public intellectual John Maynard Keynes:

He held forth on a great range of topics, on some of which he was thoroughly expert, but on others of which he may have derived his views from the few pages of a book at which he happened to glance. The air of authority was the same in both cases.
As was, of course, the attention paid by his audience.

Intellectuals, even when pronouncing within their area of specialisation, encounter the same “knowledge problem” Hayek identified in conjunction with central planning of economies. While the expert, or the central planning bureau, may know more about the problem domain than 99% of individual participants in the area, in many cases that expertise constitutes less than 1% of the total information distributed among all participants and expressed in their individual preferences and choices. A free market economy can be thought of as a massively parallel cloud computer for setting prices and allocating scarce resources. Its information is in the totality of the system, not in any particular place or transaction, and any attempt to extract that information by aggregating data and working on bulk measurements is doomed to failure both because of the inherent loss of information in making the aggregations and also because any such measure will be out of date long before it is computed and delivered to the would-be planner. Intellectuals have the same conceit: because they believe they know far more about a topic than the average person involved with it (and in this they may be right), they conclude that they know much more about the topic than everybody put together, and that if people would only heed their sage counsel much better policies would be put in place. In this, as with central planning, they are almost always wrong, and the sorry history of expert-guided policy should be adequate testament to its folly.

But it never is, of course. The modern administrative state and the intelligentsia are joined at the hip. Both seek to concentrate power, sucking it out from individuals acting at their own discretion in their own perceived interest, and centralising it in order to implement the enlightened policies of the “experts”. That this always ends badly doesn't deter them, because it's power they're ultimately interested in, not good outcomes. In a section titled “The Propagation of the Vision”, Sowell presents a bill of particulars as damning as that against King George III in the Declaration of Independence, and argues that modern-day intellectuals, burrowed within the institutions of academia, government, and media, are a corrosive force etching away the underpinnings of a free society. He concludes:

Just as a physical body can continue to live, despite containing a certain amount of microorganisms whose prevalence would destroy it, so a society can survive a certain amount of forces of disintegration within it. But that is very different from saying that there is no limit to the amount, audacity and ferocity of those disintegrative forces which a society can survive, without at least the will to resist.
In the past century, it has mostly been authoritarian tyrannies which have “cleaned out the universities” and sent their effete intellectual classes off to seek gainful employment in the productive sector, for example doing some of those “jobs Americans won't do”. Will free societies, whose citizens fund the intellectual class through their taxes, muster the backbone to do the same before intellectuals deliver them to poverty and tyranny? Until that day, you might want to install my “Monkeying with the Mainstream Media”, whose Red Meat edition translates “expert” to “idiot”, “analyst” to “moron”, and “specialist” to “nitwit” in Web pages you read.

An extended video interview with the author about the issues discussed in this book is available, along with a complete transcript.

July 2010 Permalink

Sowell, Thomas. The Quest for Cosmic Justice. New York: Touchstone Books, 1999. ISBN 0-684-86463-0.

October 2003 Permalink