Byline: Stephen Goode, INSIGHT
Thomas Sowell makes use of this pithy quotation from his fellow economist Steven E. Lansburg at the opening of Basic Economics: "A few lines of reasoning can change the way we look at the world." It is an apt epigraph for a book in which Sowell accurately notes that "the basic principles of economics are not hard to understand." The problem is that "They are easy to forget, especially amid the heady rhetoric of politics and the media."
The word "Economics" in the book's title and in the title of another of Sowell's recent works, Applied Economics may scare readers off, suggesting dull pages packed with academic jargon and difficult-to-absorb graphs and equations. But jargon and impenetrable graphs are not Sowell's method. His prose is clear and direct and he is the most meticulous of writers, making his arguments incrementally and dispassionately through skillful use of vivid detail and example.
In the early pages of Basic Economics, Sowell says that he's writing for the general public and for students in introductory economics courses. Tongue-in-cheek, he notes that two other groups might benefit from the book journalists, "who often comment on economic issues without having any background in the subject," and scholars. Or, as Sowell puts it, "Even scholars with Ph.D.s in other fields are often uninformed or misinformed about economics, though that seldom deters them from having and voicing opinions on economic issues."
A knowledge of basic economics is needed by everyone in ways that a grasp of other fields is not, Sowell argues. Most people know little about botany or brain surgery and don't comment on them. But economics affects everyone, and this means you "cannot opt out of economic issues."
What is an economy? And what does it mean to study economics? "The Garden of Eden was a system for the production and distribution of goods and services, but it was not an economy," Sowell writes, "because everything was available in unlimited abundance. Without scarcity there is no need to economize and therefore no economics."
The handling of scarcity is central to economics, but he expands on his definition. Economics is "about the material well-being of society as a whole. It shows cause-and-effect relationships involving prices, industry and commerce, work and play, or the international balance of trade all from the standpoint of how this affects the allocation of scarce resources in a way that raises or lowers the material standard of living of the people as a whole."
It is a first-rate overall description of what economics is all about, and Sowell follows it with his rich trove of examples. Basic Economics is divided into sections on subjects such as "Price and Markets" and "Industry and Commerce" and "The National Economy," and each section concludes with an "Overview" chapter, pulling together what's been discussed.
Sometimes Sowell's examples don't seem immediately pertinent to economics, but he shows how they are. He tells, for example, how during World War II, "American pilots were systematically taken out of combat after flying a certain number of missions, and were then used as instructors who could spread some of their experience to new, inexperienced pilots being trained for combat." This seems so reasonable as to be hardly noteworthy. But, he notes, "Japan followed policies similar to those of its German ally, whose motto was 'Fly till you die' a macho approach to war that ignored economic principles."
The economic principles the Axis powers ignored were to deal wisely with scarcity by anticipating what would happen if a scarce resource wasn't handled economically. "The military policies were also economic policies," Sowell explains, "because aerial-combat experience is a scarce and valuable resource which has alternative uses either in continuing to fly combat missions or training others to fly them. …