Basic Economics - A Review

Thomas Sowell recently announced his retirement from writing regular columns. As an advocate of realistic economics with a free market emphasis who dealt with facts rather than political talking points, his common sense approach that relies on economic realities rather than wishful thinking made him a helpful voice in contemporary economic discussions.

Having just finished reading the fifth edition of Sowell’s Basic Economics: A Common Sense Guide to the Economy, I would advocate that this book be read widely. For those unschooled in economics (or who haven’t read anything about it since High School), I would recommend beginning with Henry Hazlitt’s Economics in One Lesson, followed closely by Gwartney and Stroup’s Common Sense Economics. Those books are helpful because they are much shorter and even more basic than Basic Economics, but Sowell’s volume belongs on the reading list because it more closely follows the syllabus of a basic economics course and is thus more comprehensive.

As an economics textbook, Basic Economics does not differentiate itself by having a unique table of contents. Sowell covers prices and markets, industry and commerce, work and pay, time and risk, national economics, international economics, and some select special economic issues. This is little different than any other college level text.

Sowell distinguishes his volume in three ways:

(1)      There are no equations in this volume. Even my high school economics course (which was a while ago) included graphs and equations that were supposed to demonstrate the validity of what the author(s) were writing. However, Sowell is not equipping his readers to become economists, but to become economically literate. For some who learn better through visual representation, the absence of graphs may make this book a bit less helpful.

(2)      To compensate for the absence of graphs, Sowell includes a multitude of plain language, everyday examples to illustrate the principles he is describing. Given the number of examples and the basic connections he makes with every day concepts, the absence of graphs and equations is well compensated for. Rather than leaving the concept in the abstract, Sowell makes the effort to give concrete examples, which helps convey the message more clearly than other texts I have read.

(3)      Sowell’s Basic Economics is written largely in plain language. Certainly there are terms that have particular meanings that Sowell takes pains to define. However, the number of those terms is small. This is a book that, despite its impressive length, is intended to communicate economic reality to an audience that is not familiar with the terms. Sowell does quite well in writing so that even a theologian or an ethicist with little training in economics can understand the concepts.

These distinctions make Sowell’s book a great way for non-economists to learn about the principles that undergird financial systems, markets, and political decisions related to the economy.

As the number of advocates for socialism rise, having people that understand economics and why socialist systems inevitably collapse will be increasingly necessary. Sowell provides the tools that help the reader understand why rent control creates housing shortages, minimum wage hikes keep low skilled workers unemployed and impoverished, and general attempts to establish government control of markets tend to have deleterious effects in the long term on everyone. These aren’t political statements as much as evidential arguments from historical data. Sowell’s book helps to provide a framework and language so that everyday people can understand why government interference in markets tend to make things worse.

Basic Economics is a book for our times. It is somewhat imposing with over 600 pages of content, but there’s a lot to talk about. The chapters are fairly evenly divided with enough headings and subheadings that the book is readable in short sittings. And this is a book that deserves to be read.

Basic Economics
By Thomas Sowell