“Basic Economics” has to be one of the worst titles ever developed for a book that contains so much useful information. Actually the full title is “Basic Economics: A Citizen’s Guide to the Economy” which still doesn’t quite do this book justice.
What makes this book unique is that the author, Dr. Thomas Sowell, states that as one of his primary objectives in writing the book was to introduce the subject of economics without any mathematical formuals or charts. Instead he talks about economics as it applies to everyday life. He isn’t attempting to make the reader into an economist. His goal is simply to transfer enough knowledge so people can avoid making false assumptions about the world they live in.
None of that may sound very exciting but I would guess that most people who take the time to read this book will come away with a different view of the world. Sowell has written several books and his main themes tend to be on shooting down social myths. This book, while firmly about economics, is really about removing the covers of what the media and the politians tell you. Why has rent control ALWAYS resulted in housing shortages? Why have we not run out of oil despite the fact that “experts” have been predicting for the last 30 years that the world only has enough oil reserves to last 10 years? Why do minimum wage laws increase unemployment?
While Sowell claims that his goal is to educate people about economics his real goal is to arm people with the ability to understand the concept of incentives. One of his closing remarks in the book is:
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. There are dry empirical questions which are seldom as exciting as political crusades or moral pronouncements. But they are questions which must be asked, if we are truly interested in the wellbeing of others, rather than in excitement or a sense of moral superiority for ourselves.
For instance, 85% of Canadian economists and 90% of American economists (as well as a majority of economists in other industrialized nations) agree that minimum wage laws increase unemployment for low skilled workers. Yet, every politician who advocates raising the minimum wage sells it as a way to help those very same unskilled workers. Regardless of the intentions of those who advocate higher minimum wages the consequences are well documented throughout history and across such a diverse number of world economies that it’s difficult to argue that a different outcome will result.
I think that like many of Sowell’s other books people will either read this book and come away with a feeling better educated about the world around them or they will read this book and become very angry because it challenges many of the core assumptions they have based their political and world views on. In my mind, that’s the best kind of reading.