Basic Economics 3rd Ed: A Common Sense Guide to the Economy
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This completely revised and updated third edition of Thomas Sowell’s instrumental work includes a new chapter on government finance. Basic Economics is a citizen’s guide to economics–for those who want to understand how the economy works but have no interest in jargon or equations. Sowell reveals the general principles behind any kind of economy–capitalist, socialist, feudal, and so on. In readable language, he shows how to critique economic policies in terms of the incentives they create, rather than the goals they proclaim. With clear explanations of the entire field, from rent control and the rise and fall of businesses to the international balance of payments, this is the first book for anyone who wishes to understand how the economy functions.
Basic Economics 3rd Ed: A Common Sense Guide to the Economy
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America First
Thomas Sowell is another autistic free trade economist. His book is a paean to the free market and free trade. Mr. Sowell makes the standard arguments for free markets against socialized and central planning. When dealing with Free Trade he is autistic.
Mr. Sowell states, “Free trade may have wide support among economists, but its support among the public at large is considerably less.” In every country, Britain France, Italy, Australia, Russia and the United States, the citizens favor protectionism.” This Mr. Sowell blames on “…the problem of getting the general public to understand international trade is due to their not having the facts.”
Mr. Sowell should climb out from his ivory palace at Stamford University and visit some ghost manufacturing towns, like Detroit, Syracuse, Bridgeport, etc. These are towns that have become shells of their former selves. No, Mr. Sowell will continue to pontificate, drawing a six figure salary from whom? Who supports the Hoover Institution at Stamford? It is those globalist, multinational corporations who profit from free trade!!!
At what point does Sowell realize he is a paid flack for millionaires, not an economist. And he is certainly not an economist interested in the welfare of America’s workers.
The effect of globalization and free trade is to drive up the value of capital (machinery and the means of production) and to drive down the value of labor (those who operate the machines). A machine in China making 1,000 widgets a day produces a higher return on investment than the same machine in the United States because Chinese labor to operate the machine is lower.
In Rochester, New York, international trade meant that Kodak’s employment went from 125,000 to 25,000 as but one example. Men and women with high paying jobs in manufacturing, now have low paid jobs fixing furnaces. But according to Mr. Sowell, they did not have the facts. This he blames on “business, labor and agriculture, who wish to escape the consequences of having to compete in the marketplace with foreign producers.” But workers ask, “Why should we have to compete with slave labor?”
Mr. Sowell, as the other free trade ideologues, simply ignores the economic history of the United States. The first act of the U.S. Congress was to pass Alexander Hamilton’s protective tariffs, which gave rise to American industry and a country that blossomed economically. These tariffs were whittled away by the Jeffersonian Democrats and the U.S. industry suffered. Basically, the no-tariff Democrats wanted slavery, a small impoverished white middle-class and imported goods at the world’s lowest prices.
When Abraham Lincoln came into office he enacted high tariffs against imported goods and American industry boomed. Those tariffs were essentially in place through the 1960′s when free trade advocates lead by Milton Friedman of the University of Chicago began to peddle free trade.
Milton Friedman dissembled, lied and ignored economic history and reality. Friedman was essentially a globalist with a utopian scheme: all countries would improve their economies. He ignored the economic history of the United States and focused totally on prices.
Free trade economists are autistic by almost totally focusing on one issue. “If an American consumer did not have the lowest world price for a good, he or she was being cheated.” They blithely ignored the impact on employment and ignore the fact that consumers without jobs cannot purchase very much. Milton Friedman is dead, but millions of Americans are bearing the consequences of his delusional economics. Thomas Sowell continues this foolishness.
In explaining NAFTA, Mr. Sowell says that there were no negative effects to American workers because “In, reality, the number of American jobs increased….” He blithely ignores that the United States increase in jobs is a result of an increasing population due to immigration and the jobs that were created were in low wage industries. In other words, he uses gross national figures to mask the underlying loss of high wage jobs. The increases in jobs in the U.S. economy were jobs in retail, service industries and health care. They were not high paid, technical jobs in manufacturing.
In the last two decades, the difference between the mean and median incomes in America has switched. That is millionaires at the top are increasing the average wage, but the majority of Americans are stuck at the same or lower incomes.
Max Planck once observed that a new truth (or in the case of an economics, an old truth revisited) does not see the light because of conversions holders of the incorrect, but established truth. They go to their graves first. Milton Friedman went to his grave ignoring the fact that free trade is destructive to all citizens, but enriches the international elites.
Mr. Sowell will go to his grave holding the same erroneous belief in free trade. But what does he care, he is happy in his autistic world, rocking back and forth, singing the mantra of Free Trade.
Paul Streitz, author of AMERICA FIRST, Why Americans must end free trade, stop outsourcing and close our open borders.
Rating: 1 / 5
The author has a very engaging way to say that economics is really an intelligent decision making process with the underlying assumption resources are scarce and have alternative competing use. And he somewhat purposely suppresses the role of man-made money/currency and banking/finance into the economic decision making equation and examples. If resources (natural and man-made) are really scarce, how come man-made fiat currency has no limit and produced abundantly as debt-based usurious (coumpound interest bearing) commercial bank credit?
How the western colonial institution of centralized fractional-reserve based banking and monetarization of economies and global central banks like world bank figure into the mayriad ills of globalization we see around the world today? How wealth accumulated and concentrated in few hands and why the symptoms of delusional economics and finance creating currency war and famine simultaneously? Search for Deep conscious capitalism and may be you will have another deep view of economics.
Rating: 3 / 5
i agree wholeheartdly with the other reviewers, this book takes a complicated subject and explains it in a commonsense way. however, whenever a complicated subject is made basic there is a LOT of room for subtle biases to injected, which may not be noticeable without questioning on the readers’ part.
for example, in explaining the relationship of supply/demand, scarcity, and pricing, this scenario is cited: a natural disaster occurs, and people in the area need to use hotels. the hotel owner raises the price of the rooms.
so, is the owner exploting the situation and making as much profit as possible because the patrons are in a vulnerable position and will pay a temporary, though drastically inflated price? not according to Sowell, who deflty explains that the hotel owner is doing the patrons a favour. price control is used here to manage the way that the patrons share a scarce resource. if the prices were kept low, a family of 4 would be more likely to to get 2 rooms, but the high price influences them to get a single room, ths leaving more of the scarce resource available for other patrons (who are willing to pay an inflated price).
many of the explanations in this book intuitively seemed twisted to me, and ultimately i believe that the authour’s writing is manipulative. reading the book, though, really helped me appreciate his logic and way of reasoning. before reading this, i did not know anythign about economics and now i feel i have a much better grasp of what it involves.
ultimately, a great book… but it was tedious to read because there are so many redundant examples used in it. a difficult way to get through an easy way to explain a difficult subject!
Rating: 3 / 5
If you are trying to pass high school economics, this book may give you some intuition as to the way of thinking required to pass the tests.
If you are actually trying to understand modern economic policy issues, especially in international trade/balance of accounts/monetary economics, you are better off lighting $40 on fire and getting a library card to the nearest research university.
Yes, Tommy, we know Communism sucks. It doesn’t mean all regulation is bad, or more importantly, that all countries play by the exact same legal system. Looks like its been a few decades since you hit the theory.
Rating: 2 / 5
What many call by the name of Delayed Gratification, Cause and Effect, or the Law of Unintended Consequences is demonstrated by this author as the playing out of “Stage One” and Stage Two. One of his examples would be: A politician gets elected on a “Tax the Businesses More Platform”, to lower the taxes on the people (voters), this is Stage One; the result is the community becomes flush with money, as the new resource is tapped. Then Stage Two; Tax revenue diminshes as the years go by, the politician gets elected to a higher office, and the business community has taken actions to move its operations to lower tax areas, expand its subsidiaries in those areas and the community has lost its chance to foster new business because the startups do not even consider starting in a high tax community.
This book has its purpose if this is the only economics book one will be exposed to, then the Stage one/Stage two concept is a good principle through which to view the financial and political workings of the world, in effect “watch where the money goes”.
The author does make an economics book interesting, which is no easy task, by mentioning examples such as these: The high probability of guns in American households versus British households results in the American criminal casing and planning there targets much more extensively than their British counterparts. The simplistic nature of this book may be good for a certain target readership, but this reader wishes the author had addressed the secondary questions the arise from his examples.
Rating: 3 / 5
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