About Economics: A Précis of Basic Economics by Sowell [1]

Basic Economics: A Common Sense Guide to the Economy
by Thomas Sowell (conservative/laissez-faire/libertarian)

Sowell constantly tries to show the virtues of the free market. He doesn’t claim that it has a social conscious but he does claim that it has positive consequences that could be seen as an invisible social conscious.
[Please note: Thomas Sowell is informed by libertarian principles]

• What is Economics? Economics is the study of the use of scarce resources which have alternative uses. A country’s legal and political system decides how their economic system functions and effects the all-important standard of living.

• The best example is the battlefield where medical personel must choose to use their resource between alternative uses. There will always be unmet needs. Some soldiers will need immediate attention in order to recover, some will recover on their own and some are too far gone to expend any energy on.

• Scarce = Reality. Scarcity is about the constraint on an individual institutions actions. Reality prevents us from building five swimming pools beside eachother. Reality constrains us. Scarcity constrains us.

• The basic tools and principles to analyse economics are shared between Oskar Lange and Milton Friedman. This book is about those principles. Economics can explain how the reforms in India and China have lifted 20 million and 1 million per year (respectively) out of poverty.

• Money doesn’t determine the standard of living (SoL) but the amount of exchange of goods and services does. Resources aren’t as important as the GNP. That is why Japan has a high SoL (with limited resources) and Urguay has a low SoL (with large resources).

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