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Applied Economics
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Applied Economics

Thinking Beyond Stage One

Thomas Sowell
Basic Books, 2003
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Editorial Rating

10

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Recommendation

This excellent, short, clear book should be part of everyone’s reference library, particularly those who wish to understand standard conservative economic thought. The distinctions author Thomas Sowell draws between political and economic logic should become a valuable part of each voter’s mental apparatus. Writing to educate the general reader, not to further instruct the sophisticated economist, the author advocates minimal government interference. He calls for as little regulation as possible, mainly because regulations have unintended and usually undesirable economic consequences when seen with a long-range perspective. Sowell’s concise, easy-to-read style cuts through the jargon of most economic discussions to lay bare the underlying, plain heartwood. It is easy to quibble here and there. Sowell doesn’t offer lots of statistics and back-up material. And, he seems to argue against individual economic decision making when he tilts a drug pricing discussion into a sermon against Americans buying medicine at low Canadian prices. However, getAbstract.com finds that his book stands on its merits nonetheless, as long as you understand that the author has a political - as well as an economic - point of view.

Summary

Economic Thinking about Real World Issues

Knowing about economics is one thing, but applying economic thinking to real-world issues is something else again. Many people know the basic facts of economic life - for example, that when supply is low and demand is great, prices rise, and that when prices rise to a certain level, more supply enters the market and prices fall. It’s clear to most people that there is a wage for which they won’t work, a wage at which they will work, a wage at which it makes sense for them to hire help and a wage at which it doesn’t make sense. But even though people may know that refusing to let prices rise will prevent new supply from coming into the market, and that keeping wages artificially high will result in fewer people getting hired, they often advocate policies that make little or no sense in the face of economic reality.

Well, perhaps it’s not quite fair to say that these policies make no sense. They do make some sense, but only for a few people over the short term. For most people, they make no sense over the long term. For example, you may not be willing to make the sacrifices necessary to pay a doctor with your own money. But you...

About the Author

Thomas Sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University. He has written for Forbes, Fortune, Newsweek, TIME and other publications. His previous books include Basic Economics, Knowledge and Decisions, Ethnic America, Race and Culture and The Vision of the Anointed, among others.

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