Applied Economics: Thinking Beyond Stage One

You Sowell worshippers just don’t get it do you? Your country is in a truly shocking state. If you measure US performance against any other developed country on virtually any social/health index (homicide rate, obesity, educational performance, life expectancy, teenage births, mental health, drug usage, crime rates, imprisonment… I could go on) you will immediately see that the US performance is nothing short of desperate. It is precisely the policies that Sowell promulgates in this book (more rights for private property, lower and regressive taxation, weak unions and fewer regulations) that cause this state of affairs, and which are tearing your country apart at the seams. Nearly all social and health problems are fundamentally related to the level of inequality in a society. In Scandinavia and Germany – where there are high levels of Government intervention, including strongly progressive taxation to ensure that inequality does not become too great – the performance on these indices is streets ahead of the US (eg. three years higher life expectancy in Sweden, half as many infant deaths per thousand live births in Sweden, three times as many obese adults in the US as compared to Sweden, three times more homicides per million people in the US than in Sweden etc. etc.). Indeed, across the OECD there is an almost perfect linear relationship between inequality and worsening performance on any social or health related index. You may have a (slightly) higher GDP per head than Western Europe (whatever it is that GDP measures), but the USA really is a deeply dysfunctional society.

And what is true for your social infrastructure is just as true for your physical infrastructure. Just try landing at JFK and then taking the New Jersey turnpike – it is literally crumbling in front of your eyes. It is the same story wherever you go in the US (remember the Minneapolis bridge collapse a couple of years ago?). I was genuinely shocked on my first visit to the USA at the poor state of repair of your cities compared to Germany. I could not believe that this was supposed to be the richest country in the world.

Please go and visit Germany or Scandinavia and see for yourself the gaping chasm in the quality of life that exists between the USA and most of Western Europe – you certainly won’t find evidence of it in a Thomas Sowell book. All he can do is offer a more extreme version of the already extreme right wing economic policies that have practically destroyed the social fabric of the USA since the 1980s. This is because Sowell is at heart a dogmatic ideologue who uses highly selective arguments and evidence to promote a deeply unpleasant political philosophy (essentially social Darwinism). For some more specific criticisms of his basic arguments see my review of Sowell’s `Basic Economics’.

Rating: 1 / 5

The book Applied Economics is about thinking beyond the obvious answers to questions of public policy because the obvious answers usually lead to unintneded and costly effects. It is because of the obvious answers that politicians enact policy that produce costly and counterproductive effects.

This book covers a number of the public policy topics, including housing. Note that even though this book covers the housing crash, this book does not replace Sowell’s following book Housing Boom and Bust.

It is a very good and insightful book, typical from Thomas Sowell.

Rating: 5 / 5