Basic Economics: A Citizen's Guide to the Economy

By Thomas Sowell | Go to book overview

Chapter 21
An Overview

Although the basic economics of international economic transactions is not rocket science, it does take a little more thought than some other economic principles. However, this alone is not enough to explain all the confusion that reigns on the subject. People with special interests to protect, or ideological visions to which they are committed, find international trade and international wealth movements a fertile field for bamboozling a public that has few reasons to pay much attention to international economics.

Most Americans' lives are not likely to be changed in any obvious and fundamental way by international trade or international financial activities. While there are many imported products in the American economy, these are typically products that Americans also make today or have made in the past and could make in the future, if there were no international trade.

There are, however, some important consequences of international economic events that may not be obvious. As already noted, the severe tariff restrictions put in place early in the Great Depression of the 1930s have been regarded by many economists as needlessly worsening and extending the worldwide depression. The last thing needed when the national income is going down is a policy that makes it go down faster, by denying consumers the benefits of being able to buy what they want at the lowest price available.

Even in normal times, the losses associated with producing many goods domestically at higher costs would add up to a loss of real purchasing power and the standard of living dependent on it. Virtually all high-quality cameras in America -- cameras with interchangeable lenses, for example -- are imported, and it

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Basic Economics: A Citizen's Guide to the Economy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Preface ix
  • Acknowledgements xi
  • Chapter I - What Is Economics? 1
  • Part I - Prices 5
  • Chapter 2 - The Role of Prices 7
  • Chapter 3 - Price Controls 21
  • Chapter 4 - An Overview 39
  • Part II - Industry and Commerce 57
  • Chapter 5 - The Rise and Fall of Businesses 59
  • Chapter 6 - The Role of Profits -- and Losses 73
  • Chapter 7 - Big Business and Government 89
  • Chapter 8 - An Overview 105
  • Part III - Work and Pay 125
  • Chapter 9 - Productivity and Pay 127
  • Chapter 10 - Controlled Labor Markets 149
  • Chapter 11 - An Overview 167
  • Part IV - Time and Risk 173
  • Chapter 12 - Investment and Speculation 175
  • Chapter 13 - Risks and Insurance 193
  • Chapter 14 - An Overview 207
  • Part V - The National Economy 213
  • Chapter 15 - National Output 215
  • Chapter 16 - Money and the Banking System 223
  • Chapter 17 - The Role of Government 237
  • Part VI - The International Economy 267
  • Chapter 19 - International Trade 269
  • Chapter 20 - International Transfers of Wealth 283
  • Chapter 21 - An Overview 297
  • Part VII - Popular Economic Fallacies 303
  • Chapter 22 - Non-Economic Values 305
  • Chapter 23 - Prices and Purchasing Power 315
  • Chapter 24 - Business and Labor 329
  • Chapter 25 - An Overview 343
  • Sources 347
  • Index 359
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