An easily understood, common sense guide to basic economic principles. Should be required reading at all institutions of higher learning.

"Economic policies need to be analysed in terms of the incentives they create, rather than the hopes that inspire them." page 45

My first observation about most reviewers is that they condemn an author based mostly on his/her political views (Sowell is conservative) and if the reviewers are somewhat intelligent they will hint at a problem or two, offer a few rants about what their "SYMPATHETIC SOCIALIST" leader would do, which turns out to always place more debt, lose more jobs, create less competition and leave everyone worse off... brilliant. Every one is entitled to their opinion but opinions aren't always reality. We have 1000's of years of human history without free markets that are filled with poverty and back breaking work just to exist. People are always at fault, not the idea of capitalism, the system works and has lifted more people out of poverty than any other system. If you are unwilling to admit that then you are intellectually dishonest and should not be taken seriously. If you have an axe to grind, look to the source, DISHONEST PEOPLE!

We have faced a myriad of economic problems in the world, mostly caused by the warped ideology of an interventionist government, stemming from decision makers wrapped in the blanket of Keynesian thought or some form there of. If you are an intellectually honest person, you will find this book beyond helpful in understanding (though introductory) the market place and how the role of prices makes the market a much more moral system (no force used) than a bunch of bureaucrats picking winners and losers. It will allow you to decipher the rhetoric coming to us 24 hours a day from the media and Washington as to whether there is a serious problem or just angst created to get the people to give up more money (by force), liberty and peace of mind.

If you are like me you've seen many things that make you scratch your head in confusion, we don't always understand everything we see in the marketplace, or in banking, insurance, government action and international trade. There is however really good answers to the confusion throughout this book. Many people smarter than us make really poor decisions because they are ruled by their need of a job, ruled by their heart instead of their head and sometimes because they are plain unable to see the unintended consequences of their decisions. We of course absorb the brunt of this in the form of increased taxes, loss of monetary value and freedom to pursue the American dream in the way our forefathers did. This book is not meant to turn over every stone, look to Wealth of Nations (A. Smith) , Human Action (LV Mises), Man Economy and the State (Rothbard), Capitalism, Socialism and Democracy (Schumpter) and Capitalism (Reisman) Road to Serfdom (Hayek) if you want to get deeper into economic thinking. **My bias is libertarian econ.

Mr. Sowell has done a great service for the reader, taking a subject many might stay away from and make it relatively clear. At first I was annoyed by some repetition but then I realized it's easier to hold on to key thoughts when they are repeated a few times, and then after each major section he writes an overview to sum up his thinking on various points and add some new material to the subject at hand. Keep in mind there are several editions of His Basic Economics, in this edition the footnotes are left out which was bothersome when I was looking to read follow up information on certain areas of interest. I did not deduct from the overall value of the book though. A great work for those who want to increase knowledge.

A must-read for any intelligent voter. Sowell clearly explains why the market system is the most efficient method of allocating goods in a world where resources are scarce..... and the negative,and sometimes unintended effects of other methods.

One of my favorite quotes was... "Careful and complex mathematical calculations can make the difference between having an astronaut who is returning to earth crashing in the Himalayas or landing safely in Florida. We have also seen similar social disasters from misunderstanding the basic principles of economics."

In some ways, this makes economic calculation sound frightening, but the good news is that by utilizing the market, the calculations are not dependant on one person's limited knowlege but in the collective knowledge of all market actors. Not only that, but in a market system, mistakes are generally self-correcting. Let's all go to Florida!

And yet a crash in the Himalyas is still a possibility because as Sowell also states, "Politicians understand that there are always more people who do not understand economics than people who do."

I wasn't familiar with Thomas Sowell before this book. I find the book quite good for understanding the basics of economics. However, there are a few caveats. Just like Newton's theory of how the universe works is great for general purpose application, but inexact when talking about particularly extreme cases (very high speeds, very small objects, etc.) the same is true about the "basic" economic theory.

So while I do feel that it is important to understand everything that is written in the book, there are some questions which do need to be addressed, and some caveats. First, the author is a proponent of the free market theory. He makes a very good argument as to why it seems to be working better than socialism. Still, the argument is not really nuanced. Is the role of an intervention of the state always negative in a free market economy? I find it somewhat doubtful.

Doctor Sowell seems to come from the proud and great tradition of liberalism, pioneered on the works Hobbes, Locke and Adam Smith. As such, they considered that very few things can be done by the state which are good. However, it is difficult to say as to whether this is actually true. They were after all writing out of self interest. Particularly Locke's works are propaganda for the rising merchant classes of his time. Such ideas were part of the movement that mostly disempowered aristocracy and empowered the merchant class which brought on the modern era.

That is not to say that the ideas discussed are wrong. Rather sadly, most people ignore them at their own peril, and Doctor Sowell does a great job at discussing how and where most people do go wrong.

However, I do feel that the arguments presented in the book are at times one sided. They seem to be lacking an analysis of the scale effects. While it is true that the so-called Invisible hand works great when talking about small economic agents in a free market, does the invisible hand work similarly well in the case of huge corporations which often have assets much larger than any country?

Let's consider the case of France whose biggest 3 banks have assets which are two and a half times its GDP. In UK the banking sector owns 131 the GDP of the country. Is such a bank under similar control by the invisible hand as the small baker in Adam Smith's vision? I find it highly unlikely. I believe that such a huge economic agent is actually acting de facto as a state. Similar discussions can be applied to other enormous companies like Amazon or Facebook, and so on.

What I am trying to say here is not that the book is flawed in and of itself. However, it seems that it could be a bit more nuanced at times. I am not sure if this is discussed in later books.

4.5 stars. Karl Marx was not a scientist. Nor was Adam Smith before him. They were philosophers. Theorists. Idea men. That’s what all economists in those days were. They had little tested knowledge, and so which economic system was best was all a matter of opinion.

But things are now much different. Nations and local governments tried the various theories. And we’ve seen the results. We now have a whole century of data. Furthermore, economists now are scientists. They use scientific methods and deal with tested knowledge. Sure, there are still controversies, just as there are in any science, but the basic principles of economics today are NOT matters of opinion.

For example, we know what happens when governments impose price controls in all their many varieties—rent caps, minimum wages, laws against price gouging, and medical care cost limits. These last few years we’ve seen a dramatic demonstration of what happens when they meddle with the prices of home loans. We know what happens when they impose tariffs or give subsidies to special groups like farmers or steel producers. We know what happens when they create barriers to people entering a market to compete, like they’ve done with immigrants. We know what taxes do.

The unfortunate thing is that many of these principles seem to be ignored by our politicians. And by those who vote them in. And so we can have a Congress pass massive health care legislation that will cause health care shortages just as similar laws caused shortages in other countries. This is how we have a president who in a recent speech to the U.S. Chamber of Commerce suggested, in good Marxist fashion, that it was business owners who kept the American workers down by hoarding all the profits. Has he not looked at the data which shows that huge profits invite more competition, which tries to get ahead of the leader by cutting prices, which allows the American workers to get more for less, thus raising their standard of living?

In the 1980′s and 1990′s India and China began to make fundamental changes to their economic policies, doing the things that have been proven to work. Suddenly, the economies of those nations started to grow. It’s estimated that 20 million people in India rose out of poverty in a decade. In China, more than a million people rose out of poverty EACH MONTH.

But this seems lost on a number of politicians. Don’t let it be lost on you. We have critical elections coming up. One of the best things we can do is educate ourselves about these basic economic principles so we can cut through all the political blarney. I haven’t found a better, more enjoyable book on the subject than Basic Economic Principles: A Common Sense Guide to the Economy by Thomas Sowell. Sowell is an economist and Senior Fellow on Public Policy at the Hoover Institution at Stanford University. His book is written for the general public and so foregoes dry charts and lots of theoretical ho-hum for lots of real-life examples and straight-forward explanations. There are times when I wish he would have gone into more detail on a few subjects, but what he lacks in depth in a handful of areas, he makes up with breadth. Furthermore, the way he presents the topic was interesting enough to make me stay up late a number of nights well past my bedtime.

Thomas Sowell is a generational thinker. Friedman is gone, Sowell is basically retired. And what's left of the Austrians, really? I guess we're all safe to assume Keynes, flawed as some of his theories may be, will at least be the last book tossed onto the fire.

A PhD is a Marxist for most of his early years. He pulls himself out of abject poverty and spends his entire career studying "the dismal science." He reaches conclusions that don't make ideologues on either side feel good. That's one unfortunate thing about economics...as far as I can tell, when done properly, it's not in the business of validating peoples policy ideas.
"...(economics) pours cold water on many otherwise attractive and exciting-but fallacious-notions about how the world can be arranged." Should we read his work thoroughly and reach our own conclusions? No, best just to declare him a "conservative" or "right-wing hack" or "pseudo-intellectual" and remain in our untouched bubbles of virtuousness.

Even if you lean left, to pretend that you can take nothing away from one of the most accessible economic texts ever written is silly. We're living in Silly-Town, population: most of America. The principles outlined in this book are very simply laid out, and backed by historically accurate unfolding of events. You could argue that Sowell only uses empirical facts/events that suit his case, and at least that would be an argument worth contending with...but to just declare him a "right-wing" economist is patently absurd. I don't like that kind of narrow thinking.

The basic things I took away from the book:

Economics is the study of the allocation of scarce resources that have alternative uses.

The first rule of economics is scarcity. The first rule of politics is to ignore the first rule of economics.

n  1. The only morally acceptable way to distribute labor and finite resources is through the voluntary interaction and negotiation between informed and consenting adults.n
Even if your basic worldview is that capitalism is an imperfect system, it's STILL hard to disagree with this statement, based on historical evidence that's been repeated over and over again. The free market, warts and all, is the most moral way to conduct transactions among free men in a free society. Capitalism is the least oppressive system for allocating scarce resources. People will, generally speaking, not refuse prosperity because of their dislike of ethnic/racial/religious groups. Milton Friedman, who taught Sowell, talks about this. The free market doesn't care about your skin color or religion...only whether or not you can produce goods or services that the public demands at the price it demands it.

n  2. Every policy and every law that has ever been passed - by either side of the isle - has been voted on based on its INTENDED result. But they all have unintended consequences, and unforeseen results.n
“Economics is a study of cause-and-effect relationships in an economy. It's purpose is to discern the consequences of various ways of allocating resources which have alternative uses. It has nothing to say about philosophy or values, anymore than it has to say about music or literature.”

“Economics is more than just a way to see patterns or to unravel puzzling anomalies. Its fundamental concern is with the material standard of living of society as a whole and how that is affected by particular decisions made by individuals and institutions. One of the ways of doing this is to look at economic policies and economic systems in terms of the incentives they create, rather than simply the goals they pursue. This means that consequences matter more than intentions—and not just the immediate consequences, but also the longer run repercussions of decisions, policies, and institutions.”

n  3. Economics is about trade-offs, not solutions.n
"There is no escaping trade-offs, so long as resources are scarce and have alternative uses."

"By its very nature, as a study of the use of scarce resources which have alternative uses, economics is about incremental trade-offs - not about "needs" or "solutions." That may be why economists have never been as popular as politicians who promise to solve our problems and meet our needs."

The timeline that separates politics and economics is vast. Economics, as defined above, takes time. Time for things to unfold...time to measure data...time to unpack that data...time to make sense of statistics (which are the real 'dismal science') that are generated from this elapsed time.

Politics is a different beast. The timeline involved is often the next election cycle. Governors have created unintended consequences and been in the federal house or senate long before the ramifications of those consequences reach the public. And when your electorate is, in general, ignorant to the basic principles of economics...the incumbent gets blamed for the failures of previous policies.

n  4. The price system in a free market is the most effective and efficient way in human history to quickly convey vast amounts of information from individual consumers to producers.n
Government interference in this price system is almost always the problem. Government overriding the decisions made by millions of individuals, operating autonomously, almost always creates negative 'unintended' consequences. Prices are not costs. Prices are what we pay for costs. The price system is almost too vast to understand, and certainly too vast to cover in this review. Disseminating the decision-making power to *millions* of individuals, acting in self-interest, is so much more efficient that centralized pricing that it's not even really worth belaboring. There is no central power that can determine the prices of *millions* of products and services (as evidenced in the Soviet Union) because the knowledge of even the most Platonic central power cannot match the level of the division of knowledge that a free market price system provides. History has proven this time and time again. "The state does not work on behalf of the people. More often than not,
it works on behalf of itself.”

n  5. 'Non-economic values' is just unearned moral high-ground.n
You'll often hear someone advocating for a particular policy that is having cold water poured on it by economic analysis say things like this. Economics needs to take into account non-economic values. To the ideologue, economics is AT BEST a nuisance that stands in the way of what they desire. At worst, it's cast as 'morally warped.' But the thing is...economics is not a value in itself. There are no 'economic values.' It's merely a system that provides information by which decisions can be made. Greed has nothing to do with the study of economics. Even if it did, greed for money is far less dangerous than the greed for power (a non-economic value, if ever there was one)...there are a hundred-million corpses from the 20th century who would agree with that statement.

I think this book is a good starting point for anyone either ignorant or interested in economics. Sowell is one of the clearest thinkers of our generation. The book is easy to read, accessible, and easy to relate to. Hazlitt is close, but on the whole I think Sowell writes more clearly. It's an easy read.

I'll end with this quote by Murray Rothbard:

"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."

Както съм казвал много пъти, огромната част от хората нищо не разбират от икономика, вкл. и повечето от завършилите икономика - нямат представа от елементарни икономически принципи и взаимодействия. Може би причината за това е начинът, по който се преподава икономиката, с огромно наблягане на формули, графики и термини и абсолютно пренебрегване на фундаменталните човешки взаимодействия и мотивация, които стоят зад тях.

Резултатът е виден навсякъде - и политици и електорат, че и мнозинството от щатните по сутрешните блокове експерти и икономисти, обсъждат неща като минимална заплата, закони за лихвите и т.н. или на изключително повърхностно, популистично ниво, или на академично-теоретично - и двете еднакво далече от разбирането на реалните проблеми и решения.

Никой от тях няма да ви каже, че като се повиши минималната заплата, се покачва безработицата, примерно. Нито ще ви обясни защо. А Томас Соуел не само ще ви каже, но и ще ви обясни, в това незаменимо ръководство по основи на икономиката и как обикновения човек да разбира икономическите въпроси.

Всъщност, препоръчвам я като основно и първо четиво и на всички студенти по икономика, че и на завършилите я. И на професорите няма да им е излишна, като съм ги слушал какви ги плещят някой път от висотата на академичните си банки :)

This is one the the most important books I have ever read. It is clear, concise, and very pertinent to modern day politics and public policy. It explains economic thinking without any of the math. What this book will give you is a understanding of how to use scarce resources that have alternative uses within an economy. This book scrutinizes policies that are meant to help people, but actually do more damage than good such as rent control, education subsidies, minimum wages, social security, "free" health care, and much more. This book or books like it should be required reading for all college students to inform voters of the dangers of bad policy which masquerade as some type of saving ordinance.

Don't fall in the trap[ of the title the book is n0t basic. The book deals with economic problems without any graphs and statistics that's why the author has coined the term Basic Economics. The book is a general treatise on economics phenomenon that happens around us.
It provides a rudimentary knowledge about economics. It talks about the central problems of economics and some other basic understandings. The book is useful for those who want to step in the world of economics where they will have to face the complexity.

Really good, filled in a lot of cracks for me.

Excellent book! Thomas Sowell delivers on what he promised; a common sense book that describes and teaches economics without graphs or numbers. As you read the book you have no doubt he could use graphs and sheets of numbers to explain himself, and yet he resorts to the language of the common man and appeals to common sense. This might be one of Tom Sowell's greatest tools.

One thing that he brings up over and over is the price of decisions and the importance of knowing who gets to pay the cost. You may have the smartest people in the world but if you cannot ensure that you have decisions made in reference to or by the people who pay the price for their decisions we would have a world that is more accountable.

The book goes into a number of areas and explains why common thought and practice is flawed. Mr Sowell dispatches of the arguments he is facing with great ease and clarity. This book is a masterpiece

I love the way that Thomas Sowell explains economic concepts in such a simple and clear manner. This book is quite book, but it's very thorough and it covers pretty much all economic principles. I wish more people (especially voters) would read this book so that they could become more educated in economics and that they could fully understand the first and second order effects about some political proposals. I highly recommend this book and only wish I had read it sooner.
If you have not read already, I strongly recommend the book "Economics in One Lesson" by Henry Hazlitt