| Title | : | Applied Economics: Thinking Beyond Stage One |
| Author | : | |
| Rating | : | |
| ISBN | : | 0465081436 |
| ISBN-10 | : | 9780465081431 |
| Language | : | English |
| Format Type | : | Hardcover |
| Number of Pages | : | 256 |
| Publication | : | First published November 12, 2003 |
Applied Economics: Thinking Beyond Stage One Reviews
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Thomas Sowell's "Applied Economics" ought to be required reading in every high school and college economics, politics, and English courses. While Mr. Sowell is Ph.D economist and fellow at the Hoover Institute at Stanford, his ideas are useful even to the non-economist. As a society, we tend to be taken in too easily by people who make irrational arguments that sound good at first glance but produce miserable results since no one thought about the next step. Often times, too many words are politically popular but are actually quite harmful. Such words include: "living wage," "consumer protection," "rent control," etcetera. When these ideas are actually applied in practice, the results rarely meet the rhetoric over the long-run. Politicians only tend to care about what will get them re-elected, and as a result, few of them have an incentive to think about what will happen 10 years from now. As a result, many often escape the blame since the poor results will be far removed from their disasterous policies. This, of course, could easily be construed as a problem with democracy, but instead, my feeling is that it is a problem with our educational system. If our educational system actually educated citizens to think deeply about what would be the consequences of certain policies, perhaps the heated irrational logic emanating from certain politicians would cease. Perhaps such rhetoric would continue to work in irrational hotspots such as Berkeley, but rare for it to work elsewhere. One could only hope. This book is a must read for everyone -- regardless of who you are.
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The title would have you believe this would be a more thorough-going followup to Sowell's fantastic "Basic Economics", with a greater emphasis on practical, real-world problems and proffered solutions evaluated by empirical analyses. That is not the case. "Applied Economics" treads a lot of familiar ground for those acquainted with Sowell and makes many of the same arguments found in Basic Economics, only from a more obviously biased perspective. The level of research in the material covered is as usual serviceable, but the general tone is more indoctrinating than illuminating. Anyone who has read the classic "Basic Economics" and is looking for more challenging material will not find it here. This is the fourth Sowell book I've read and is bar none the most disappointing.
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I know people think economics is a boring topic, and it can be. So can anything if it's not well presented. But one of the reasons I'm an economics junkie is that, when it's presented well, it's also a history lesson. But it's not just what happened but *why* it happened. Because fundamentally economics is the study of incentives. It's "people did this because this situation made it appealing." And then economists look at history and, yup, over and over, from one time and place to the next, when the government did A, B followed because, regardless of their intent, they had incentivized the people to do B. That's what I love about economics.
In this book, Sowell talks about something else that frustrates me: people's inability to think beyond stage one. Thinking beyond stage one is what I was taught as critical thinking. There's not a lot of critical thinking done in politics which is why it's so important for people to learn how to do it. We need to know when we're being sold B.S. We need to reason out that it is B.S. for ourselves. So if you want to learn how to think critically, or you just like history, this is a great book for that. -
Applied Economics: Thinking Beyond Stage One by Thomas Sowell demonstrates the application of economics to major contemporary real world problems--housing, medical care, discrimination, the economic development of nations--and is the theme of this book that tackles these and other issues head on in plain language, as distinguished from the usual jargon of economists. It examines economic policies not simply in terms of their immediate effects but also in terms of their later repercussions, which are often very different and longer lasting. The interplay of politics with economics is another theme that explores the often unintended and unexpected consequences of Applied Economics, whose examples are drawn from experiences around the world, showing how similar incentives and constraints tend to produce similar outcomes among very disparate peoples and cultures. As usual, with any book by Thomas Sowell, you will learn something and unlearn things that are just wrong but thought to be true.
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Great book! Sowell has a unique way of simplifying complex economic concept. The section where he compares Social Security to a pyramid or Ponzi scheme was eye-opening. From insurance rates to agricultural Innovation to the differences between prejudice and bias and so much more.
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After chapter upon chapter telling of the counter-productiveness of government intervention in markets, the immigration section is entirely out of place. Apparently there's nothing wrong with heavy regulation and central planning in the case of workers wanting to cross borders. The lack of an appropriately weighty explanation for the inconsistency with the rest of the book casts everything else into doubt. Instead of a coherent and principled set of arguments, all the rest could be cherry picked statistics and anecdotes.
I expected 'thinking beyond stage one' to be about something grand where stage one was the first n-hundred years after the invention of something, but it just means longer term thinking. I got tired of hearing about how voters or elected representatives (Sowell always uses the more pejorative term 'politicians') should have been thinking beyond stage 1 when some law eventually had the opposite effect of intended. He could have dropped the subtitle and used a few other phrases to say the same thing, or better yet let the reader make that conclusion.
Lots of explanations for the status quo, but where Sowell is critical there aren't any suggestions for how to fix things. It's either not broken and trying to fix it will make it worse, or it's just broken- where frequently Sowell implies that democracy itself that is broken.
Over-use of the word 'particular', usually around bland generalizations with very little content- it wouldn't be that hard to substitute some real details.
There isn't any big picture analysis to show the relative economic importance of say driving after age 75 vs. owners of dangerous dogs not paying proportionally vs. government funded health care, it's all put on equal terms. -
An enlightening book that dispels the common tropes bandied about the media and political spectrum these days. Even if you have a hard time agreeing with his research and conclusions, his analysis of 'political action' not thinking beyond stage 1, with respect to long term consequences, is an appropriate critique of all political parties.
Yes, this is an economic book, similar to 'Freakinomics' but more brainy.
I have read two Thomas Sowell books and found both to be incredibly enlightening, he is one of the Giants of our age. -
Must read for anybody interested in economics or social sciences - economics of politics, race, migration, global economics etc.
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simplistic understanding of economics great read.
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As in all Thomas’s books, they are thought out before hand not some ramblings think of every topic just so someone will read your thoughts. Dr. Sowell has a thorough template for all of his books with detailed problem, examples and solutions.
With all ideas there must be the questions of “what then?”and, and, what about as I learned in my MBA an ‘Exit Strategy? What and who does it affect all your wonderful ideas of saving the world? Didn’t even consider those people only yourself huh?! Perhaps as you see all the well fed women protesting fossil fuels not even able to answer the question of simple heating solutions for the poor or transportation of food to the wagon wheels. I specify women because it’s fuels that have allowed economic development of society; a civil society where they can walk to the store unmolested caring for their whims. So what is their plan other than to destroy their own lives but that of everyone else’s.
The conversion of leftist socialist to free thinking marketing driven explanations are all right here as in all of Dr Sowell’s books. He discusses his development and his process of maturity. We ARE the Market.
Read those religious aka historical documents if a man does not work he does not eat, as I have shared the tale of farm animals. You do not take from one man to give to another which is why the treatment of slavery is laid out which I support. Not how to lie and tax people taking from the workers to give to ass kissers or foreign nations so your family line came gain wealthy and prosperity as the rest of the world suffers and dies.
Once again great job Thomas, Thank you ! -
Straight up common sense - highly recommend all around. I look forward to reading more of his books (he only has about a thousand)
I took a ton of notes, but I don’t feel like transcribing all of them. Key takeaways - always think beyond stage one. It’s not just what will happen next. It’s what happens after that and after that and so forth
Four things happen following a price control:
1) increased use of the product
2) reduced supply
3) quality deterioration
4) black markets
So well done - covering healthcare, economics, discrimination, etc etc -
Excellent Read. Over the years, I've read columns and watched interviews of Sowell, but never picked up his books. As a reader, I'm attentive to well reasoned logic and rationale arguments. Sowell turns that into an art form. These types of socio-economic arguments always appeal to me.
What seems so obvious when looking at the data and unpolluted statistics seems so contrast to the gerrymandered version of the issues presented in the journalists today. One might seem to think they might have an ulterior agenda.
I've not encountered the data and arguments for slavery and prejudice in the way Sowell presented. That was unique. I may pick up another economics book again after this. -
Every American voter should read this.
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5 stars for Thomas Sowell — a national treasure.
Plainspoken, interesting, and well-researched. This book has markedly influenced the way I think.
I would commend this book to everyone — especially younger folks. I reckon the conversations in our public square would be considerably more profitable if we were all better informed by Thomas Sowell's writings. If we could all learn the skill and discipline of thinking beyond stage one.
"With nations, as with individuals, not all have had the same opportunities and not all have taken equal advantages of what opportunities they did have." -
Outstanding book. Thomas Sowell explains the dangers of one-stage thinking through a myriad of economic and social examples in a clear, concise way.
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This book was a joy to listen to, as I had the chance to do so during my recent trip to California with a couple of friends/relatives. A large part of what made the book a joy was the way that the author thoughtfully examined various subjects of political interest in a way that allowed his insights to easily supplement that of the reader or listener (as the case may be) in their own conversations on political matters. Additionally, the book as a whole is full of the sound reasoning and attention to detail and nuance that makes Sowell's works as a whole a joy to read. In this particular volume the author is on sound ground not only as an economist, but also someone whose knowledge social and political issues around the world is deep and profound and whose understanding of cultural patterns is similarly impressively deep. Yet despite the author's considerable knowledge, he shows a great deal of patience in methodically demonstrating how it is that good intentions and efforts at dealing with unpleasant realities often make those realities worse as a result of a lack of wisdom and attention when it comes to the perverse incentives that are created by one's interventions.
This particular book is organized in a thematic fashion over nine discs, with the author examining in turn the economics of politics, housing, medical care, crime, discrimination, and the economic development of nations, among other subjects. Throughout the course of these discussions the author looks at the difference between political and economic aspects of reality and the way that attempts to ameliorate conditions can often lead to negative externalities that exacerbate the original problem one was trying to solve. For example, laws that seek to control rent prices lead to a reduction in housing stock as fewer rental units are built and maintenance decreases in existing housing in a predictable fashion. The reduction or removal of such maladroit policies then leads, almost as if by magic, to more housing being built because it is again profitable to do so. Throughout the book the author contrasts the great mass of people, especially leftist politicians, who are only able to think in stage one terms, and those whose knowledge extends to an understanding of the responses that people are going to make to given policies and regulations that allows them to thoughtfully oppose such follies and to seek to properly harness the motivations that exist in beneficial directions.
And ultimately that is what this book succeeds at the best, the conveyance of the difficulty of managing social change in a way that benefits society as a whole as well as its members. It is easy to conceive of interventions that to those who lack knowledge and insight can coerce desired social change, but it requires more thoughtfulness to recognize the way in which those actions may lead to a decline in the well-being of those groups that one claims a desire to support. The author is, as usual, unsentimental in his approach and unsparing in his criticism, commenting on the way that we prefer socially beneficial agents to be in competition with each other but prefer criminal elements to be in cartels where the anarchic violence of individual members of the criminal class can be restrained by the rational calculations of crime lords who do not wish for scrutiny on their profitable but socially undesirable operations that would be inhibited by popular hostility to their firms. Not everyone is amenable to thinking in a sound economic fashion, but for those who are, this book is definitely an achievement. -
Some quotes I liked:
"The economics of housing can only make us aware of the costs of our goals—and that these costs are inescapable, whether or not we acknowledge their existence or assess their magnitude.
Politics offers attractive solutions but economics can offer only trade-offs. For example, when laws are proposed to restrict the height of apartment buildings in a community, politics presents the issue in terms of whether we prefer tall buildings or buildings of more modest height in our town. Economics asks what you are prepared to trade off in order to keep the height of buildings below some specified level."
"The central question of how much risk is to be reduced at what costs is usually not raised at all by third-party safety organizations or movements. Nor are alternative risks weighed against one another. Instead, the theme is that something is “unsafe” and therefore needs to be made safe. The argument is essentially that existing risks show that current safeguards are inadequate and/or the people in control of them are insufficiently conscientious, or both. Therefore power and money need to be vested in new people and new institutions, in order to protect the public—according to this argument.
This kind of argument can be applied to almost anything, since nothing is literally 100 percent safe. It has been used against medications, pesticides, nuclear power, automobiles, and many other targets. Where the issue is the safety of nuclear power plants, for example, the answer to the question whether nuclear power is safe is obviously No! If nuclear power were safe, it would be the only safe thing on the face of the earth. This page that you are reading isn’t safe. It can catch fire, which can spread and burn down your home, with you in it. The only meaningful question, to those who are spending their own money to deal with their own risks, is whether it is worth what it would cost to fireproof every page in every book, magazine, or newspaper.
In the case of nuclear power, the question of safety, in addition to cost, is Compared to what? Compared to generating electricity with hydroelectric dams or the burning of fossil fuels or compared to reducing our use of electricity with dimmer lights or foregoing the use of many things that are run by electricity and taking our chances on alternative power sources? Once the discussion changes to a discussion of incremental trade-offs, then nuclear power becomes one of the safest options. But neither it nor anything else is categorically safe." -
Pro
This is Thomas Sowell so you know what to expect. High quality writing, deep intellectual thinking, rational look at everything, calculated and meticulous arguments. And first and foremost you can expect one of the greatest economics philosophers of our time. Thomas Sowell is equal rationality in the 20th and 21st century.
It's the typical Sowell stuff with needed critical arguments pro liberty and anti top-down management that often is too expensive and constricts the freedom to express yourself. Basically, freedom makes us all rich. Brutal leadership makes us all poor.
The race chapter is a great one and feels new and fresh compared to his former books. In that he argues for the state being responsible for creating racist systems as if you just let the market decide most often people would be too profit focused to let some weird emotion rule them all together as one. If one single IT company starts hiring East Asians while all other companies are racist and don't then you end up with one company dominating the IT market with cheaper and better workers. Basically, unless all move as one any one company can just break the bad system and get rich. But the state can create a system where no one can hire those workers so the companies just compete in an unfair market - equally. Systemic racism can therefore not easily sustain itself in a free market.
This book is basically about "stage one" economics meaning planned economy and top-down and short term view on things by the government. So the government will raise taxes and control the market to gain profits now. While in reality they are destroying the market. The current leaders are just not focused on something they can't measure right now or gain something from right now. They will try to abuse the system if they can.
Con
Now, let's get into the bad parts. Firstly the audiobook I had had a narrator I didn't like. He was shouting everything with a monotone voice. I just couldn't concentrate for over 5 minutes listening to these arguments.
Secondly, Sowell makes some libertarian fallacies. Universal healthcare is just explained away as bad with anecdotes. So we read that Canadian citizens travel to USA to use their healthcare system while it doesn't happen the other way around. But wouldn't rich people better afford to travel? Isn't Canada's system better for poorer people? Meaning rich Canadians travel to USA for expensive quality healthcare but poor Americans can't afford to travel to Canada even if their system may be cheaper - or not. I'm not sure. I'm not saying the American system is bad, but Sowell's short arguments are just not convincing. And it's the same in all his books. He just does not seem to explain the healthcare system from a libertarian point of view in a way that can make me agree with him as I don't get enough info here. Just small examples mean nothing to me here because they are not a fair dollar to dollar comparisons. I need many, many more numbers and then counter-examples too. Not just anecdotes pro his points. I do think USA's healthcare system is very impressive in some parts but I'm not sure the Western European system is as bad as he makes it out to be. It does actually work well in many countries. And the potential bankruptcies are at least not here yet. So maybe Sowell is just plain and simply wrong on this. It's hard to say how much a free healthcare system helps vs. how much it is abused counter the private system.
Then later Sowell is explaining away Africa's low SES without going into IQ. This made it a chapter I just ignored. I really don't care what people say about black people or Africa unless they start their argument with the heritability of IQ. Anything about water canals and animals or whatever is just small things that may have changed the evolutionary trajectory of races but you can't really use it to explain all of Africa today. That's just silly.
But overall I just found myself zoning out one too many times. Both because of the bad narrator/sound quality and just his repetitive arguments. All his books feel similar. It's always the same ideas, the same topics, and the same arguments. I had to keep reading for a long time to get to something new here and at that point I was often too tired to fully enjoy the clever argument. Sowell unfortunately wrote a lot of books that feel too similar to each other. I think this is my third one of his but I have also listened to a ton of his interviews on YouTube. I want more facts per argument. Instead he has some great facts surrounded by many pages of argument. Not really a proper mix if you want to fully convince me. Before Stefan Molyneux went batshit crazy and was banned from YouTube his interviews and libertarian videos were actually better structured than many of Sowell's arguments. Unfortunately the way Sowell remains unbanned is to make overarching vague arguments and seldom go into details like Molyneux did. Anyone can be safe that way. And it often feels like Sowell is trying to say something but then doesn't quite say it. When he talks about the fair number differences between blacks and whites in NBA he doesn't explain athletic genes. Again, safe side. When he talks about gender wage differences he ought to go into evolutionary psychology but yet doesn't. Safe side. It's all morally good arguments but then where is the proof itself? Sowell feels like he can convince all readers with simple number facts and deep moral arguments. But he is missing the scientific psychology argument. That's a strong argument too as it proves that the differences are fair and not caused by any top-down force as long as we are talking about most free markets. If he dared he could go an extra step. Into the things he is hinting at.
Conclusion
Yet another Sowell book. At this point I expect new arguments but it's largely more of the same libertarian macroeconomy ideas I've read about before. And what I haven't read about already I just could as easily logically conclude myself. So for me all his books feel too similar which does make me feel like this book is not giving me enough new info. Maybe I'm just much better at structuring all these arguments in my head today. 10 years ago this book would probably have blown my mind as these moral arguments are not easily found in mass media or on social media.
I don't think it's his best book. And I think many rationalists will feel like it's a bit too simple and too loose argument focused to be great. On the other hand if you are new to the thinking community this may be a huge information boost for you. It just tells me that I'm getting old and grumpy and that I need to interact with more young people because I'm kinda feeling like I've learned most of the basics in philosophy and am seeking more concrete evidence and fewer loose arguments. I don't need to be sold on the freedom argument anymore. And if Sowell or anyone else wants to sell me on the libertarian argument they need to have much more data.
If you have a hard time understanding basic freedom and instead support a big state in any way you need to read this book. If you are not in the center politically grab this book and read it. You won't regret it. -
Reinforces the idea that working hard in America leads to success. Like it or not, those who are poor or fail almost certainly made a series of wrong choices throughout their lives. There is simply too much opportunity in our country. Incentives are everything.
Memorable quotes:
"Even the top FIVE percent of households by income had more heads of household who worked full-time for 50 or more weeks a year than did the bottom 20 percent. In absolute numbers, there were 3.9 million heads of household working full-time and year-round in the top 5 percent of households and only 3.3 million working full-time and year-around in the bottom 20 percent. There was a time when it was meaningful to speak of 'the idle rich' and the 'toiling poor' but that time has long past. Most households in the bottom 20 percent by income do not have ANY full-time, year-round worker and 56 percent of these households do not have anyone working even part-time." - Thomas Sowell, Economic Facts and Fallacies, pg. 127 -
Sowell's points are ludicrously grounded and clear, which is perfect for not only a parsimonious read but also in understanding dense economic theory in context. His treatment of the housing bubble is stellar as is his insistence in looking beyond the initial stages of policy. Looking at reverberations and side effects of well meaning legislation is something that is rarely considered, but Sowell does it masterfully here, to the point that his pronouncements seem like common sense; this is the making of a great thinker and writer. Someone who is so lucid and clear, that they can change opinions by making their position seem entirely justified and normal, based on the evidence.
A minor critique is that his focus on laissez faire economics can at times feel a tad utopian, in assuming that the market will enforce and maintain regulations that are required in maintaining safety standards for example. -
While this purports to be a follow-on to the author's
Basic Economics: A Citizen's Guide to the Economy, it felt more like a re-hashing of the supporting from that earlier volume.
That's not necessarily a bad thing, as we almost all need to "think beyond stage one" in our quest to achieve economic and/or political goals. Sowell treats this problem well, generally avoiding saying what is 'right' versus 'wrong' in a moral sense, but instead focuses on explaining the trade-offs and knock-on effects (the "stage two" effects, which most tend to ignore).
Worth reading more as a standalone book than to read if you've already taken in
Basic Economics: A Citizen's Guide to the Economy or some other basic/intro economics book. -
I read a decent range of material I think and ive taken economics classes in college and I enjoy reading about economics, but I hated this book. Sowell is a white man who can't see past his own privilege, who pulls bunk out of his ass thinly veiled as economics to explain away problems that clearly exist for reasons beyond just that. His explanations are overly simplistic as he cycles through three reasons for every theme he addresses. Slogging through this book it felt like all those puss bags on Fox who had one economics class and think they're experts.
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Good, common sense stuff on the economics of such things as insurance, the development of nations, labor (free and paid), and housing, and how economics relates with such things as politics and discrimination. His argument is that many, especially politicians, don't think past the immediate payoffs of economic decisions to the long-term consequences. Many helpful examples populate the book.
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Masterful practical explanation of Economics as applied to various aspects of Civilization over time. Brilliant use of practical economics to illustrate how it has impacted civilizations development or lack thereof. I must read more of Sowells work.
