- 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 