First of all, let me say that economics has always sounded to me like a subject that would be about as interesting as watching the proverbial paint dry. But I made an impulse buy on Audible about 5 years ago when this book was on sale for a couple of bucks (a good economic choice, right?), and it's been sitting in my audio library ever since, glaring at me every time I've gone in search of a new title. So I finally caved and decided to give it a chance, telling myself I didn't have to finish it if it ended up boring me to tears.

Well, it did nearly bring me to tears a couple times—but not because I was bored in the least but because it made me feel like I'd been robbed by a) the meddlings of economically clueless bureaucrats with good intentions and b) my (otherwise wonderful) education, which never got around to explaining most of this stuff to me.

One danger of reading a book like this is to suddenly fancy oneself an expert on economics. And I confess that this is the first and only book I've read on the topic, so feel free to take this review with a grain—or maybe a dash—of salt. Nevertheless, it's hard for me to imagine a case against free markets that could stand up against both the empirical evidence and the role of basic human psychology that Sowell presents here.

Nearly everything he says about both the data and the personal motivations resonates with my own experiences. For example, I lived in Poland briefly in 1991, when most of the regulations that dictated the communist-era economy were still (practically if not legally) in effect. Despite the snow falling outside when we arrived, our hotel would not turn the heat on until the government had recorded 3 consecutive days of below-freezing temperatures. And clerks in stores regarded customers not as a source of livelihood worth treating well but as a nuisance to be avoided. Customer service was nearly non-existent. And for fairly obvious reasons. All the high-sounded claims about "fairness" and all the good intentions about "guaranteed wages" can't change the fact that people won't do something that they have no incentive to do. Would you want to serve more customers if your job was secure and the amount on every paycheck was fixed by government fiat? Why do additional or higher quality work without any extra incentive attached to it?

In fact, a great deal of my experience reading this book was simply that of connecting dots that were already fairly obvious upon the briefest reflection. What Sowell does so brilliantly is to break down the various factors that affect what we call "the economy" and to demonstrate, again and again, that everything that we call "the market" is ultimately made of people who will, almost without exception, make monetary choices based on what's personally beneficial. This very basic understanding of human motivation explains what underlies the whole vast and complex system.

This also explains why even the best-intentioned economic policies nearly always have unintended negative consequences. No politician can possibly predict the millions of little repercussions that a single regulation may have on other parts of the economy, but he could, at very least, have some clue if he thought for ten seconds about how individual motivations work.

I suppose it should be obvious, but it's easy to forget that "The Market" is not a huge, mysterious impersonal force; it's just you and me and all the other individuals we meet any day of the week, making decisions about how best to spend and invest our money. And the free market does a far better and far more efficient job, according to Sowell, of taking care of its people than any government regulated system can.

Take milk as just one example: if milk production is low and demand is high, prices for milk will rise. And it won't take long for high milk prices to lead some politician to propose price caps on dairy products. It sounds like such a nice thing to do for the little guy, right? But the almost laughably predictable result will be that dairy farmers will discover that price caps mean there's less money to be made in selling dairy, and they will no longer have the financial motivation to continue producing milk. This leads them to offload their dairy cattle in order to re-invest in some more profitable commodities like beef or produce. This, in turn, creates an even shorter supply of a product that was already in high demand, ultimately worsening the supply-and-demand conditions that drove up the milk prices in the first place.

Sowell makes a fairly incontrovertable case that the better alternative to these government-imposed price caps is to simply let "the market" (made up of real live people, remember?) adjust to the higher milk costs. Dairy farmers, seeing more money to be made in the current high prices, will voluntarily invest in more dairy cows, and as their production increases, the high demand will be better met, meaning the prices will gradually drop—often to prices below what the governmentally enforced price caps would have been. This ultimately makes the milk more affordable for consumers. It's the latter free-market policy, and not the former regulatory policy that benefits both the producers and "the little guy" far more in the end.

Throughout the book, Sowell shows that the same basic principle applies to nearly every commodity, whether it be oil or housing or medicine. Controlling prices by fiat in an attempt to make high-priced commodities more "affordable" and therefore more readily available to low-income earners nearly always backfires, producing nearly the exact reverse of what was intended. And the reason it backfires shouldn't be hard to grasp: price controls remove the basic incentive among producers/builders/growers to continue producing, building, or growing something no longer brings in a profit or the prospect of growth. They will, instead, take their business investments elsewhere, thus leaving a greater shortage of that which was intended to become more accessible.

Sowell also demonstrates that these individual motivations can explain why free markets tend to create wealth and higher standards of living while top-down regulations—from rent controls to minimum wage laws to anti-trust regulations to international tariffs to all-out communism—have led to economic downturns, decay, and even total collapse in nearly every instance that they've been attempted.

This book covers so much (the role of jargon in public policy, the way words like "trade deficit" can actually mean something positive, questions over national debt, the role that "greed" play in the marketplace, the complexities of international trade, the implications of for-profit vs non-profit enterprises, and so on.) The book does, however, have its limitations. It's more of a descriptive book than a prescriptive one, explaining how economics works rather than laying out a path for how to proceed. And I suppose that's his point. The primary "ought" to take away from the book is this: Let the market take care of the market without trying to interfere—because however altruistic your intentions may be, interference nearly always makes things worse.

I certainly don't have the knowledge to say whether he may be wrong on any given point, but I would say that even those who oppose his views on free-market capitalism should weigh his arguments carefully against real world results and real human beings. To me, Sowell's economic views seem more like simple common sense than an ideology he's imposing on economic data. At the same time, Christians also need to be careful to avoid too much of a "laissez faire" approach. We are called to care for the poor and oppressed, not just to let the market (or the government) take care of the poor. We are called to look out for the interests of others, which may not always lead us to make the most economically efficient choices. We are called to love God and neighbor, even with our bank accounts.

But, if Sowell is right, then one way of loving our neighbors and caring for the poor and oppressed may very well mean doing less—at least at the economic policy level—rather than more.

How do you review a book that has been heralded and scorned for years? It’s not likely that my thoughts are going to add anything to the debate. The argument over free markets or centrally planned economies, open or isolationist policies, government regulated or private contracts has been going on for centuries. Both sides have their eloquent apologists. They have all weighed in on this book at great length.
Unfortunately, it appears that the tyrants are winning in the court of public opinion. This book goes a long way in exposing the fallacies that allow those socialist ideas to sound so good. Sowell uses history, data, and current events to explain the dangers of many popular ideas and policies. It was fascinating.
One thing I did find out…
It’s not intimidating. I’m not even sure why, but I always thought of this as some tome to only be attempted by the incredibly smart or fiercely determined. Instead, I found it a fascinating explanation of the way our world works and as easy to understand as any popular history. So, that was my tiny contribution to the supporting reviews of Sowell’s wonderful work.
Read it. Give it to your teens. Read it to them if you have to. You need it. They need it.

If I had been forced to read this in high school or college I could have been rescued from having a lot of silly thoughts about how things work.

Listened on audio book over the course of a couple months on my way to work, so I probably missed/forgot some stuff. Will have to reread at some point!

This book is for readers of non-economic background and covers macroeconomic aspects of economy. It starts with explanation of economy and moves through explaning politics of price control, subsidy, economics of scale etc. concept.

Author argues for complete freeing of market and criticizes any interference of government. Author opines that imposition of minimum wage policy actually increases unemployment. Similarly he criticizes effort of unions to raise their wages. It has detrimental effect on industries as it increases the cost of production. The capturing of American car industry by Japan is perfect example. Labor unions' hard negotiation for higher wage gave rise to mass lay-off and they were hired by Japanese factories set up in America. A similar live example can be destruction of industries in West Bengal by Communist Party of India (Marxist).

Author's view of child labor and improvement of working condition may be controversial, however, he emphasizes that competition in market will ultimately create safe working environment for workers. Obviously workers will move towards safer environment, hence fear of lossing workforce will compel producer to improve working conditions. Similarly, author challenges the concept of exploitation of labor. Author writes "the growth and development of such non-labor inputs as science, engineering and sophisticated investment and management policies, as well as the institutional benefits of a price-coordinated economy, have given billions of people around the world higher standards of living".

The author is in support of capitalism and shows that socialism can not be cause for economical growth. He quotes often famous Soviet economists Shmelev and Popov, who themselves criticize price control, wastage of valuable raw material, rampant black-marketing etc. in Soviet economy and similarly shows how China has moved towards capitalism. "China’s leader Deng Xiaoping said; let some people get rich first”.

The book is of around 700 pages and need careful active reading.

704 pages or 24 hours of what could and should be a one year course in schools around the world.

This book will give you the basic knowledge about the prices, international trade, investments but also will - probably - make you more sceptic about so called 'information' being produced by the media or the politicians. You will also get a better understanding of why price control on food often led to hunger, rent control led to the housing shortage and how increased minimum wage increased unemployment.

'Much confusion comes from judging economic policies by the goals they proclaim rather than incentives they create [...] Unfortunately little of the knowledge and the understanding within the economics profession has reached to the average citizen and voter, leaving politicians free to do things that would never be tolerated if most people understood economics as well as Alfred Marshall understood them century ago.'

What a great book and a great start to studying economics.

My new goal: read one Thomas Sowell book per year. The man is a logical, brilliant thinker.

Basic Economics should be required reading for all high schoolers - in fact, my used copy that had never been checked out is from a high school library. It is thorough and yet understandable... admittedly, there were parts I had to read a few times to let it sink in. He put names to scenarios I have seen played out and connected many dots. I cannot possibly do justice to this book without my review being more extensive then I have time for. I'll let the book speak for itself:

"The Soviet Union did not lack for resources, but was in fact one of the most richly endowed nations on earth. What it lacked was an economic system that made efficient use of scarce resources. Because Soviet enterprises were not under the same financial constraints as capitalist enterprises, they acquired more machines than they needed, "which then gather dust in warehouses or rust out of doors," as the Soviet economists put it."

"Few things are more simple than the fact that people tend to buy more at lower prices and buy less at higher prices. But putting that together with the face that producers tend to supply more at higher prices and less at lower prices, that is enough to predict all sorts of complex reactions to price controls, as for example in the housing market. Moreover, these reactions have been found on all inhabited continents and over thousands of years of recorded history."

"Perhaps the most decisive evidence of the role of profit as an incentive is the record of socialist economies which have eliminated it. The sums of money saved by eliminating profits have failed to lower prices and make the consuming public better off, because the absence of incentives has allowed many inefficiencies to go unchecked and technological and organizational changes to lag."

"Many policies are made as if he citizens subject to them are like pieces on a chessboard, to be moved here and there as the policy-makers wish. For example, when tax rates are raised 10 percent, it may be assumed that tax revenues will also rise by 10 percent. But in fact more people move out of the heavily taxed jurisdiction, or buy less of the heavily taxed commodity, so that the revenues received may be disappointingly far below what was estimated."

"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. These are dry empirical questions which are seldom as exciting as political crusades or moral pronouncements."

As someone who did his masters in international political economy, I am not impressed by Sowell.

This book presents mix of pretty conventional mainstream economics that at best help you understand the concept of the market economy and at worst provide the reader with an extremely inaccurate understanding of the market economy based on flawed and utopian conceptions and assumptions of theoretical economics. The biggest problem with this is that, in my opinion, this book is clearly appealing to average people with no formal economic training and will provide a narrative that is scarily simplistic and extremely outdated.

Secondly, Sowell mixes basic mainstream and non-mainstream economics (particulaly that of Milton Friedman, who has had a significant downfall since the 90s and is largely now distanced from most modern economics academia for his flawed theories and teachings) along with real world applications of these theories he is trying to teach the reader about. While he provided some educated insights, he far too often provides extremely flawed and absurd analyses that will leave the reader more uneducated on economics than before reading this book.

In conclusion, I would consider this book an absolute disaster. It is arguably the worst economics based book I've ever read. Would never recommend to anyone.

This book is freakin' great. It gives a very solid foundation on economics. It covers things like unintended consequences, how the free market operates, rent control, etc. Highly recommended. Changed how I see the world.

Remember back in school (further back for some than others) when our favorite classes were economics and history? Yeah, me neither from way back. Why weren't there people like Dr. Thomas Sowell and his counterparts teaching economics and history. Today these are my favorite genres to read. Obviously, the subject matter hasn't changed all that much even with today's PC spin, so it mostly comes down to HOW it is taught. In Basic Economics: A Common Sense Guide to the Economy by Thomas Sowell we are treated to clear and concise descriptions of basic economic principles along with many real world examples and results showing us the impact of supply and demand, minimum wage legislation, wage and price controls, and comparative advantage. Most of us understand the basics because just sitting through boring lectures still results in some learning by osmosis. The author makes these principles come alive with easy-to-understand examples and explanations. If we could have a Dr. Sowell clone in every high school economics class, we wouldn't have half of the idiotic proposals being pushed by political actors trying to win over constituents who also don't understand basic economic principles; especially from former bartenders and communists! An informed and educated populace will always make better choices. If we must continue to have the same boring Econ101 classes, at least we should follow it with Econ102 based on this book. Who knew economics could be this interesting and fun. Read this book and then amaze your friends and family!

This is one of handful premier introductions to neoclassical economics, specifically the "Chicago School." There are some obvious limitations to the work, which is true of any popular work on macroeconomics. The works of Keynes, Hayek, Friedman, etc are have significant limitations too.

One of the great contributions from this work is mapping out the malign economic incentives created by rent control and other local regulation that disrupt residential development. This is a pressing political issue today, which could have been avoided by heeding Sowell's argument (not that he was the only one making it, but still a very prominent voice).

I wanted a clearer version of the Econ 101 I muddled through in college, and I admired Sowell's work, so I started reading this book. Then I found out it's not about M1 and M2 and how the Fed works. Rather, it's about really meaningful economics -- the kind every adult should understand.

To a large extent, Sowell was preaching to the choir with me. I already understood why rent control is bad and how the minimum wage contributes to unemployment. I knew that cuts in the tax rate tend to increase -- not decrease -- tax receipts. And I've never let my envy of the rich get in the way of my appreciation of them as the ultimate source of my livelihood.

But Sowell still taught me plenty: Like how statistics really CAN be made to say anything. What does the growth of the poor class mean? Quite possibly that the poor are simply living longer and having more children, thanks to better living conditions for poor people. Is "the poor" a static category of people with zero upward mobility? Some are, but most are simply the young, who haven't yet had time to gain the work experience they need to make more money.

Sowell's main thrust is that an informed voting public who understand basic economic principles is vital to curb the excesses of politicians whose economic decisions tend to look no farther ahead than the next election, leaving their successors to deal with the fallout from their counterproductive actions.

Basic Economics should be required reading for any American seeking to register to vote.

Definite must read. Sowell has the ability to take what many would label as complicated and translate it into the jargon of everyday people. This is a tremendous overview of economics and the issues pertaining to it that are relevant in our present political discourse.