You are, of course, familiar with the German word schadenfreude – the malicious joy one gets on hearing of the misfortune suffered by others. I can’t deny that there were times while listening to this book this week – a week in which the US decided to pour $700 billion into the black hole that is the ‘credit crunch’ – that this word popped unbidden to the front of my mind. Listening to the rants of a radical free market economist in the week that the world is forced to pay for the excesses of market capitalism does induce some schadenfreude – except that the joy at the harm is limited by the realisation that the harm caused by these bastards is going to be felt by me as much as by them.

I don’t think anyone could make the mistake of believing that this is a nuanced discussion of economics. Basically, this is a man on a mission who is in possession of ‘the truth’ and that truth is an absolute belief that anything, ANYTHING that gets in the way of the free operation of market forces is always and invariably bad, counter-productive and the cause of all of the harm in the world.

This book is presented as a citizen’s guide to the economy. Its major theme is that politicians have reasons to lie to you – but once you have a grounding in basic economic theory you will not be so easy to dupe.

We are told early in this book that Economics is a science and that economic methods are used in the same ways by Marxists as they are by free market radicals like the author. That this, in fact, is what this book is going to be about – the stuff all economists agree about. On that basis the strongest criticism of this book I can make is how little someone reading it comes away knowing anything about basic economics. You may get indoctrinated, but how much you are likely to learn is open for debate.

For example, one might think that after reading a book setting out to explain basic economics one would come away knowing how the share market works – I mean, beyond a bland assertion that shares are different from bonds in that the holder of a share in a company is a part owner of that company. If you want to know about the relationship between shares, futures, derivatives and foreign currency exchange rates or what short selling is or why it might be that banks not lending money to each other might require tax payers’ dollars to be poured down the toilet to seek to prop them up – this book is not for you.

If you want to know why decades of the US running up huge deficits and owing the rest of the world trillions of dollars is really not a problem – this is a great book. And I hope the rest of the world agrees with Sowell’s commonsense approach.

This book presents as absolute economic ‘facts’ a number of assertions that are, at best, the strongly held opinions of the author, at worst simply false. For example, one of Sowell’s favourite examples is the harm done to everyone by governments imposing rent controls. He asserts that these invariably lead to a shortage of housing and therefore to higher rents. His solution is to allow the market to fix these problems. If there is a shortage of housing then rents will rise. When rents rise more investors will rush (not walk) into the market to build new housing for those not able to afford housing, thereby rents will drop and everyone will be happy.

One of the examples Sowell gives is the housing crisis that afflicted Melbourne, Australia for 9 years following the end of World War Two in which not a single new building was built in Melbourne. This Sowell attributes solely to rent control laws in Melbourne making it unprofitable to build new buildings in Melbourne. At least, one assumes there must have been a crisis in Melbourne at the time as Melbourne is the capital city of Victoria and between 1945 and 1954 Victoria’s population increased by 250,000 people (or by one quarter). How did Melbourne cope with this crisis at a time of mass influx to the city not witnessed since the gold rush? Well, it all depends on what you call Melbourne. I’m assuming Sowell is talking about the City of Melbourne – what North American’s might call Down Town Melbourne.

It is actually true that virtually no new buildings were put up in Melbourne at this time – it is much harder to say why than Sowell glibly assumes, though. In Melbourne, The City’s History and Development Miles Lewis points out that there were a complex of reasons for so little building development occurring at this time in the golden mile – but none of these reasons are related to rent controls. In fact, I’ve yet to find any evidence Melbourne had rent controls at this time. Rather the huge growth in housing needed in suburban Melbourne to meet the influx of so many migrants from Europe after the war and the post-war rationing of building materials accounted for most of the reason no building works occurred in the central city.

The ‘shocking fact’ that is presented by Sowell as conclusive proof that free markets always provide better solutions than ‘socialist’ alternatives such as rent controls evaporates with just a little knowledge of the actual situation. Funny how that works. One does then wonder why he used the history of building development in Melbourne as his example in the first place. Surely it couldn’t be the problem this would cause most of his audience to check is supposed facts? No, surely not.

If Sowell’s economics is a science then it seems to be one that has more in common with Creation Science than Biology. That is, it seems to be wishful thinking designed to reinforce predetermined conclusions – rather than, say, the systemic testing of a hypothesis to expand human knowledge.

The favourite punching bag here is the Soviet Union and its misadventure with a socialist planned economy. What is remarkable in his description is that the Soviet Union lasted the 70 odd years it did. It seems its economy had nothing going for it. All it had were disincentives to production and absolutely no incentives.

Some theorists have spoken about the Soviet Union collapsing because it could not compete with the West not just economically, but in part due to having to complete in an arms race that forced it to redirect a huge proportion of its national productive economy towards this dead weight. Like I said, this book does not provide a nuanced discussion at all and so the sole reason for the collapse of the Soviet Union presented here is its lack of a free market.

Ironically, prior to reading this book I probably would have had more sympathy with the view that the Soviet Union could not compete because it lacked incentives to produce. I have less sympathy with that view now that I have finished this book. It is received wisdom that the major failing of the Soviet system was the lack of incentives to production offered, but the fact this is received wisdom does not make it true.

What struck me in this book was that the planned economy of the Soviet Union was always compared with the free market system of the West as if the free market was made up of mum and dad shop owners or little factory owners all of whom had an intimate and immediate knowledge of their local community. We are repeatedly told that a planned economy can’t work because the poor bureaucrat doing the planning can’t possibly know all of the issues that face everyone in every area of the economy. This is contrasted with the glories of capitalism, the decentralisation of knowledge, in which the local gas station knows when road works are going to reduce his ability to sell petrol (an actual example from this book) and so purchases less petrol until those road works are completed.

Except how does that explain Walmart? What sort of decentralised planning does Walmart allow? In answer to this he gives a remarkably bizarre example – Kentucky Fried Chicken – in which (apparently) local franchise holders in the 1950s kept the quality of their cooked chicken up to scratch because they were living in mortal fear of Colonel Sanders turning up at their restaurant and throwing out their less than finger-lickin’ good chicken and then cooking it all again himself. (This is another actual example given in the book). It beggars belief that these could be presented as arguments for the superiority of the free market – but the issue is much worse than this. Surely KFC and Walmart have the same problems in directing their grand empires as the Soviet Bureaucrats had in coordinating theirs. Naturally, there is no discussion of how private ownership over a certain size remains different from socialist ownership and how the disincentives for a Soviet worker are avoided by Walmart – just surreal examples of Colonel Sanders whipping everyone into shape that sound to me to be the sorts of stories one might have heard about the heroes of socialist labour.

I was greatly disappointed in this book – there are so many things I need to learn about economics and none of them were presented here in this overly ideological text. The bottom line? Don’t waste your time.

The book covers a wide range of topics and although not short, I found it concise, to the point, and clear. I liked how dispassionately and logically the author analyzes the problems. The book was amusing for me with many counter-intuitive ideas and insightful examples. I guess for almost any statements in the book there are ardent opponents as well as proponents. But at least for someone like me with little knowledge of economics, they seemed like a good first approximation.

An excellent, thorough economics primer. It’s both long and perhaps consumer-level in a way, but Basic Economics is still accessible and engaging. While many free-market principles repeat throughout, Sowell’s insights don’t get old because of the varied applications rife with historical anecdotes and statistics. It was eye-opening, and it’s one I could learn from by returning for a second listen. Regardless your politics, it’s a must-read.

Almost everyone has been exposed to discussions regarding economics, but almost nobody truly understands it. Thomas Sowell in Basic Economics shows you why economics is something everyone should understand, and something everyone can.

Basic lays out the concepts and foundations of the discipline and then builds on them to paint a vibrant and coherent picture of the workings of the world, letting you view the functioning of society in a whole new way. Reading the book is like putting on glasses for the first time: you see the world more clearly.

Sowell begins by explaining economics to be a study of making choices, and different economic systems as different ways societies choose to allocate resources. A capitalist society is one where the people choose what should be produced by expressing their preference through choosing what to buy, whereas a communist society is one where a central government dictates what is made by deciding what its citizens should have.

He then proceeds by putting forward economic thinking as the solution to getting to the bottom of many issues in public discourse. Far too many arguments regarding how a society should allocate its resources rely solely on emotions and morality, instead of being buttressed by facts and logic. This can lead to counterproductive and drastic consequences – problems which could be solved if only more people could think critically about society. This sentiment is expressed through many examples, such as the one paraphrased below.

Suppose an area is devastated by a hurricane, and the people in the vicinity need food urgently. Due to increased demand and shortages, prices for food have increased. There are calls for the government to impose a cap on prices such that they do not rise, based on the assumption that rising prices would be unfair to people who need food the most. Should the government heed to those calls? To answer this question, we can look at the logical consequences of the decision of the government.

Let’s say the government implements a price ceiling. We can presume that it is more difficult to deliver to the region due to the danger and obstacles caused by the hurricane, the very same causes of there being a shortage in the first place. These problems can be translated into higher costs of delivering the supplies – for instance, food may need to be airdropped instead of delivered by trucks as roads have been destroyed, and airdropping the same amount of food costs more fuel. Since the price of food remains the same while costs increase, profits for firms will decrease or even become losses, resulting in companies becoming reluctant to deliver the food, meaning less supplies will reach the people in need.

Now say the government allows prices to rise. Firms will see a chance at higher profit, and they will rush to deliver supplies through dangerous routes and other obstacles. As a result, more people will get what they need.

To think economically is the ability to distinguish ideals from incentives. It is ideal for people who need something the most to not have to pay dearly for it, but the incentives caused by the ideals have unintended consequences. Capping prices and then expecting the same amount of food to be delivered is equivalent to trusting hundreds of companies to keep doing something that causes them to lose money.

It would be ideal if businesses weren’t motivated by profit but by kindness, but in practice profit provides a higher incentive for things to get done, as shown through history by the effectiveness of companies compared to humanitarian aid.

Many more topics spanning from the wage gap to the importance of the banking system are touched by Sowell, using engaging examples illustrated through simple language and sound logic, backed by facts. Reading this book gives you the satisfaction of feeling like you have deciphered some secret code, and also a sense of wonder like when Neo took the red pill.

A downside is that though the examples are easy to understand, they present too simple a view, sometimes bordering on bias. The economics Sowell teaches is clearly of the classical variety, as demonstrated by his love of free markets, disdain for government, and curious decision to ignore advances in behavioral economics and their findings on the irrationality of human behavior, amongst other ideas. Another problem is that the book is quite repetitive. The same concepts are used over and over, and the once interesting examples can get boring and predictable as you progress.

But as you come to realise, economics is about tradeoffs: Sowell elected to make things easy to understand over inundating the reader with complicated nuance. The word basic is in the title for a reason.

In conclusion, Basic Economics is an excellent entry point into the field of study that is economics. This book expresses passion for not only the subject itself but also for disseminating it, the two most important things that are so often lacking in textbooks. Even to a person who is majoring in economics, it is a refreshing read. Basic Economics has reignited my love of economics, impacted my thinking in daily life, and helped me make better decisions.

And that is what economics is about: making choices.

A must read!
Such a shame that due to the useless left-right dichotomy of the modern politics lots of people will dismiss Sowell as an ideological enemy.
Most of the people who could benefit from reading this book will probably never read it.
But for those who are not slaves to the tribal wars of politics: this is a book full of enlightened wisdom and, obviously, common sense, plus lots of relevant information.
I love graphs and formulas but so often we are lost in the scrupulous study of details, never grasping the essentials and understanding the big picture.
That is precisely what this book helps us to avoid.

One of my favorite and probably one of the best books I've ever read!!! Thomas Sowell is an absolute American gem! Can't wait to read more of his books.

Fascinating, edifying, accessible, and insightful. An invaluable book for understanding an important topic. Everyone who intends voting ought to read this book so that they understand economic issues.

Fantastic! Hands down!

I learned so incredibly much and thought Sowell did such a fabulous job of writing each economic concept in a clear, concise, informative and non-condescending manner. And I listened to the audio and still got everything (which for those who know me are already aware, I have a harder time grasping things from audios). Not this listen!

I would HIGHLY recommend this book to anyone wanting to learn economics from a logical, conservative point of view; and actually think this should be required reading for high schoolers. My future high schooler will be reading it.

*Note: I listened to the audio version of this book so this Cleanliness Report may not be as thoroughly detailed as other reports are. Also, some inappropriate content may have been forgotten/missed and not included in the report.

**Like my reviews? Then you should follow me! Because I have hundreds more just like this one. With each review, I provide a Cleanliness Report, mentioning any objectionable content I come across so that parents and/or conscientious readers (like me) can determine beforehand whether they want to read a book or not. Content surprises are super annoying, especially when you’re 100+ pages in, so here’s my attempt to help you avoid that!

So Follow or Friend me here on GoodReads! You’ll see my updates as I’m reading and know which books I’m liking and what I’m not finishing and why. You’ll also be able to utilize my library for looking up titles to see whether the book you’re thinking about reading next has any objectionable content or not. From swear words, to romance, to bad attitudes (in children’s books), I cover it all!

If you want an overview of economics without graphs and charts, this is the book for you. Sowell uses historical evidence to prove his points. Here is a quote from the book on why you should read it:

“Perhaps the most important distinction is between what sounds good and what works. The former may be sufficient for purposes of politics and moral preening, but not for the economic advancement of people in general or the poor in particular. For those who are willing to stop and think, basic economics provides some tools for evaluating policies and proposals in terms of their logical implications and empirical consequences.”

Basic (free-market) economics.

A very compelling argument for a free-market economy.

Should be required reading for everyone especially anyone who holds public office.

This is a book that anyone who works, spends or saves in today's world should read before doing any of those activities.

I also think that it should be mandatory reading for anyone who does or plans to vote.