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A review by notwellread
Basic Economics: A Common Sense Guide to the Economy by Thomas Sowell
3.0
First I should clarify that I’m a novice to the field of economics (which is why I read this), and so am not really qualified to give an economist’s view of this book, though I do have my own thoughts on the arguments nevertheless. This review should be read accordingly.
Basic Economics is Thomas Sowell’s effort to present the essential facts and principles of economics in layman’s terms for a general audience, without the use of jargon, graphs, or equations. In this sense the book’s approach to economics is rather ‘orthodox’, given that this was the approach Adam Smith and co. used to discuss economic phenomena that could be easily observed at the time.
However, this book is very politicised — and not always objective! It’s clear that Sowell’s agenda is not purely to educate his reader on the basics of economics, but also to persuade them to his way of thinking, which is arguably rather insidious since it’s marketed as a book for total beginners, i.e. new customers entering the marketplace of ideas. To his credit, he does cover the very most basic economic concepts — scarcity, supply and demand, price allocation, return on investment/sales — in a clear and impartial way, but covers more controversial issues — minimum wage, anti-trust laws, government interventions etc. — from a clearly right-wing position, often accompanied by mischaracterisations of the left. The failures of the Soviet Union cannot discredit every possible use of socialised programmes, especially when successful implementations of such policies in e.g. Scandinavian countries are ignored. Beyond the fact that these misrepresentations mean the book cannot be taken as a sincere attempt to resolve these differences of view, tackling these debates from such a one-sided perspective is (in my view) inappropriate for an introduction to the subject, and is the main fault of this otherwise-useful book. He explains the right-wing position well enough, but without including both sides of the argument fairly it can’t really be considered a freestanding, “everything you need to know about economics” sort of book.
Some parts I have mixed feelings about because of the more controversial points not really being appropriate for a beginner. For instance, I thought the discussion of rent controls were particularly interesting as something that seems like a good idea on the surface but actually causes a lot of problems (this is central to Sowell’s message, which basically amounts to “facts over feelings”). Sowell makes the case that rent controls lead to shortages in housing, and therefore to higher rents elsewhere. Without rent controls, rents still rise when there is a shortage of housing, but this creates an incentive to build more housing, which then reduces the shortage and allows rents to drop again — basic supply and demand. I wonder if it is really this simple? However, I reject his conclusion that a planned economy inevitably fails because those doing the planning can’t possibly anticipate the issues facing every group within the economy: if the principles of economics are as clear-cut as Sowell likes to portray, then the lack of tailoring to individualised experience shouldn’t be such an issue. His argument elsewhere in the book that the Soviet Union failed fundamentally because of the lack of incentive to produce seems a better (and more conventionally cited) explanation.
Another caveat I would include is that my edition was slightly out of date in places (Germany has a minimum wage now, since 2015), but seemed to be updated in others (I was caught off-guard by a reference to the 2008 crash). The defence of globalisation is interesting in this context as well, given that these days this is hardly the consensus on the right, and many otherwise-‘free market’ economists seem to avoid the subject. I think this reinforces my view that the discussions of the basic principles are fine, but that some of the more controversial material should be taken with a pinch of salt.
As I’ve said, I’m no expert, but I remain convinced that the principles of a totally free market without a guiding authority are not enough: I still believe a regulated market, correcting against the sources of market failure, produces better results. Government interventions, such as those seen in the American stimulus bill after the 2008 financial crash, are necessary in such situations. Sowell’s intellectual arguments within the field of economics may be coloured by his own biases and ideological stances more generally, but the cause and effect could also be the reverse (i.e. that his right-wing economic views led him to all-round right-wing politics), so I don’t feel the book can be judged purely on this, nor is it directly relevant to the material. I still think the book is a decent portrayal of a right-wing economic perspective, so I don’t wish to mark it down too harshly on this basis. In the conclusion, Sowell stresses that we should always put the facts of what actually works over what we wish to be the case or what sounds nice from the mouths of politicians — this is clearly his principle message. However, I can’t see a partisan effort such as this as the result of an earnest pursuit of truth.
Basic Economics is Thomas Sowell’s effort to present the essential facts and principles of economics in layman’s terms for a general audience, without the use of jargon, graphs, or equations. In this sense the book’s approach to economics is rather ‘orthodox’, given that this was the approach Adam Smith and co. used to discuss economic phenomena that could be easily observed at the time.
However, this book is very politicised — and not always objective! It’s clear that Sowell’s agenda is not purely to educate his reader on the basics of economics, but also to persuade them to his way of thinking, which is arguably rather insidious since it’s marketed as a book for total beginners, i.e. new customers entering the marketplace of ideas. To his credit, he does cover the very most basic economic concepts — scarcity, supply and demand, price allocation, return on investment/sales — in a clear and impartial way, but covers more controversial issues — minimum wage, anti-trust laws, government interventions etc. — from a clearly right-wing position, often accompanied by mischaracterisations of the left. The failures of the Soviet Union cannot discredit every possible use of socialised programmes, especially when successful implementations of such policies in e.g. Scandinavian countries are ignored. Beyond the fact that these misrepresentations mean the book cannot be taken as a sincere attempt to resolve these differences of view, tackling these debates from such a one-sided perspective is (in my view) inappropriate for an introduction to the subject, and is the main fault of this otherwise-useful book. He explains the right-wing position well enough, but without including both sides of the argument fairly it can’t really be considered a freestanding, “everything you need to know about economics” sort of book.
Some parts I have mixed feelings about because of the more controversial points not really being appropriate for a beginner. For instance, I thought the discussion of rent controls were particularly interesting as something that seems like a good idea on the surface but actually causes a lot of problems (this is central to Sowell’s message, which basically amounts to “facts over feelings”). Sowell makes the case that rent controls lead to shortages in housing, and therefore to higher rents elsewhere. Without rent controls, rents still rise when there is a shortage of housing, but this creates an incentive to build more housing, which then reduces the shortage and allows rents to drop again — basic supply and demand. I wonder if it is really this simple? However, I reject his conclusion that a planned economy inevitably fails because those doing the planning can’t possibly anticipate the issues facing every group within the economy: if the principles of economics are as clear-cut as Sowell likes to portray, then the lack of tailoring to individualised experience shouldn’t be such an issue. His argument elsewhere in the book that the Soviet Union failed fundamentally because of the lack of incentive to produce seems a better (and more conventionally cited) explanation.
Another caveat I would include is that my edition was slightly out of date in places (Germany has a minimum wage now, since 2015), but seemed to be updated in others (I was caught off-guard by a reference to the 2008 crash). The defence of globalisation is interesting in this context as well, given that these days this is hardly the consensus on the right, and many otherwise-‘free market’ economists seem to avoid the subject. I think this reinforces my view that the discussions of the basic principles are fine, but that some of the more controversial material should be taken with a pinch of salt.
As I’ve said, I’m no expert, but I remain convinced that the principles of a totally free market without a guiding authority are not enough: I still believe a regulated market, correcting against the sources of market failure, produces better results. Government interventions, such as those seen in the American stimulus bill after the 2008 financial crash, are necessary in such situations. Sowell’s intellectual arguments within the field of economics may be coloured by his own biases and ideological stances more generally, but the cause and effect could also be the reverse (i.e. that his right-wing economic views led him to all-round right-wing politics), so I don’t feel the book can be judged purely on this, nor is it directly relevant to the material. I still think the book is a decent portrayal of a right-wing economic perspective, so I don’t wish to mark it down too harshly on this basis. In the conclusion, Sowell stresses that we should always put the facts of what actually works over what we wish to be the case or what sounds nice from the mouths of politicians — this is clearly his principle message. However, I can’t see a partisan effort such as this as the result of an earnest pursuit of truth.