Book Review: Basic Economics

Economics is a subject that affects all of our daily lives, yet most people don’t recognize how much it impacts every decision we make. Most associate economics with money but in fact, it goes well beyond simple financial matters. Economics is the study of how people use resources. Resources can be financial, intellectual, physical, natural or even something as simple as time. Economics impacts every subject and every decision, whether you’re considering how to invest your savings or deciding whether you should exercise or watch television. The effect is universal; most people just don’t understand it.

Basic Economics by Thomas SowellBasic Economics: A Common Sense Guide to the Economy is a thorough, yet simple guide to one of the most misunderstood subjects in our lives. Very few people actually understand economics, from your average everyday person to the most educated intellectual. This book is written in a way that makes it indispensable to either.

I personally believe that an in-depth course on economics should be part of every school curriculum. The world would benefit greatly from everyone understanding some basic principles that are clearly not understood these days. People seem to think that businesses can charge whatever they want for their product or service, that the economy is a zero sum game where money simply changes hands from one person to another, and that how much someone gets paid is based on their skill or education. The truth is, none of those statements are true.

Following is a short list of the book’s sections and the topics covered by each:

  • Part 1 discusses Prices and Markets, including the role of prices and price controls.
  • Part 2 covers Industry and Commerce, including the rise and fall of businesses, the role of profits and losses, and big business and government.
  • Part 3 is a discussion about Work and Pay, including productivity and pay, and controlled labor markets.
  • Part 4 examines Time and Risk, which includes investment and speculation, and risks and insurance.
  • Part 5 is about the National Economy, covering topics such as national output, money and the banking system, government functions, and government finance.
  • Part 6 expands to discuss the International Economy, including international trade and international transfers of wealth.
  • Part 7 is an examination of Special Economic Issues and includes the topics of myths about markets, “non-economic” values, and the history of economics.

In addition, each part of the book concludes with an overview chapter which each stand on their own. For some, the book may be a bit too long in which case, one could read only the summary chapters and still receive an invaluable lesson in the subject that has the most impact on our daily lives.

Politically speaking, the world would be a much better place if everyone understood economics. First, there would be a lot more Libertarians. There would be far fewer Republicans and NO Democrats. The uber-liberals that dominate today’s Democratic Party would be nothing but an historical curiosity, an unfathomable example of a people gone mad. We would have a booming economy with very low unemployment and a historically high standard of living. The government would be debt free and operating at a deficit would be a concept that our officials wouldn’t dare even think, let alone consider. Social programs would enjoy unprecedented success in dealing with the ills of society, but wouldn’t cost taxpayers anything because they would be fully private, with no government involvement.

Would the world be perfect? Of course not, we would still have many problems. Such is the nature of life, but we would certainly be in much better shape than we are today. If only everyone understood economics… If only there existed a simple guide to educate our society, perhaps written in simple form that could be read by anyone who so chooses, a book perhaps…

Basic Economics: A Common Sense Guide to the Economy

Basic Economics: A Common Sense Guide to the Economy

Book Description

Publication Date: December 28, 2010 | ISBN-10: 0465022529 | ISBN-13: 978-0465022526 | Edition: 4th

The fourth edition of Basic Economics is both expanded and updated. A new chapter on the history of economics itself has been added, and the implications of that history examined. A new section on the special role of corporations in the economy has been added to the chapter on government and big business, among other additions throughout the book.

Basic Economics, which has now been translated into six languages, has grown so much that a large amount of material in the back of the book in previous editions has now been put online instead, so the book itself and its price will not have to expand. The central idea of Basic Economics, however, remains the same: that the fundamental facts and principles of economics do not require jargon, graphs, or equations, and can be learned in a relaxed and even enjoyable way.

About the Author

Thomas Sowell has taught economics at Cornell, UCLA, Amherst, and other academic institutions. He is currently a scholar in residence at the Hoover Institution, Stanford University. He has published in academic journals and in such popular media as the Wall Street Journal, Forbes, and Fortune, and he writes a syndicated column that appears in newspapers across the country.

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Basic Economics: A Common Sense Guide to the Economy


+Kevin A. Nye

“State of the Economy” Image credit: free pictures of money

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