Basic Economics: A Citizens Guide to the Economy, Revised and Expanded

Rating:
Summary: Brilliant articulation of conservative economics
Review: If you have liberal leanings, and you are interested in reading a challenging right-wing book that won't waste your time, pick up Basic Economics.

This book is simply the best political manifesto I've ever read. It's a no-nonsense articulation of the right-wing view of economics. Sowell phrases it as a primer in economics, which is true (and it is very effective at that); but it is certainly a laissez-faire flavor of economics that's presented.

If you get nothing else out of the book, you'll at least get an intuitive feel for how price, supply, and demand interact over time. After reading this book I started seeing the economic principles it describes at work in the real world, almost every time I turned on the news. I also found myself aghast whenever I saw news reports from journalists that clearly didn't understand basic economics.

Don't get me wrong--there are problems with this book. Sowell himself is a partisan, a right-wing think-tanker. Some of his arguments are thin (something he never acknowledges). The writing is at times a bit odd. But this book is so worth your time that it gets five stars anyway. I only wish I knew of an equally compelling tome articulating the opposing view.

(This review is about the un-revised, non-expanded version.)

Rating:
Summary: Economics based in the real world
Review: Economics, like other fields of inquiry, has its basics and its advanced concepts. However, writers on the subject seem to have a lot of trouble making that distinction.

A physicist knows that first you explain the basics - the law of gravity, laws of motion, concepts of weight and mass, and so forth. Then, for those who really need to know, you go on to optics, relativity, quantum mechanics, etc.

Unfortunately, most economics texts insist on delving right into the equivalent of quantum mechanics. The result is both soporific and deceptive. It gives the reader the idea that this stuff is really too hard to understand except for "professionals". (I sometimes wonder if they're poor writers, or if they are just trying to set themselves above the masses.)

Sowell does the best job I've ever seen of explaining the basics in a lucid, engaging style. We're talking basics of supply and demand, why subsidies cause oversupply, while taxes and controls cause undersupply. Comparitive advantage and why free trade between nations helps both sides overall (though individuals may suffer).

I've seen reviews that blast this presentation as "biased". I think such criticism is misplaced. Economics is about what happens under various conditions, and doesn't pretend to make political or moral judgements about the outcome.

For example, economics says clearly that having a forced "high-risk" pool for automobile insurance causes distortion in the price of automobile insurance policies - some drivers end up subsidizing those with bad records. That's a simple prediction, akin to saying that if you drop a hammer, it will fall downwards, not hover or rise. It does *not* indicate whether or not such a pool is a good or bad idea. It just lets you know something about the costs of the law, and allows some cost-benefit analysis to see whether it's worth it (perhaps society comes off better because there are fewer uninsured drivers, for example).

Where Sowell does become impatient is when advocates of governmental intervention (read: liberals) fail to acknowledge the realities of economics. Many politicians and activists would really rather not look at the economic results of a policy, because it might turn out not to be such a stellar idea after all. Take rent control. By holding prices below market level, basic economics says it will cause supply to run under demand, thereby causing a housing shortage. That's not a moral judgment on rent control - it's just the way the market behaves. It's not being biased to point out that policies have economic costs. It's just reality.

If you are ready to gain a decent understanding of the basics, this is the place to get it. If you have an ideological ax to grind concerning how you think the economic world *ought* to work, instead of the way it does work, then you probably won't care much for this book.