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on 18 March 2008
Long before Freakonomics hit the bookstores, Thomas Sowell was popularizing economics in simple plain language. In his latest book, he continues to illuminate the dismal science cheerily, shining his flashlight on a handful of fallacies common to policy makers and even some professional economists. After describing these fallacies, Sowell shows them at work in discussions of urbanization, gender equality, education, income, race and economic development. The result is a bracing tonic that will almost certainly change your views on some of the most emotional issues of the day. getAbstract recommends this slim, fast-moving read to those who are unafraid to subject their convictions to the light of the economic evidence.
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Conservative economist Thomas Sowell is worried about the plausible-sounding misconceptions about financial issues that persist in American politics. "Some things are believed because they are demonstrably true. But many other things are believed because they are consistent with a widely held vision of the world--and this vision is accepted as a substitute for facts." His goal is to educate readers about some general fallacies of thought and how they lead to misconceptions about economics.

Sowell describes four general fallacies:

The Zero-Sum Fallacy implies that in every economic transaction someone gains and someone loses. In fact, a free market is driven by win-win transactions which occur because the participants value goods and services differently.

The Fallacy of Composition is the belief that what is true of a part is true of the whole. This can lead us to believe that providing benefits to a particular group or special interest automatically benefits society as a whole. We don't recognize that we are actually "robbing Peter to pay Paul."

The Chess-Pieces Fallacy imagines that individual actors can be repeatedly manipulated like pieces on a gaming board. This can lead decision makers to conduct economic policy by trial-and-error, hoping for eventual success. They fail to appreciate the long-term loss of confidence this creates. And the resulting lack of cooperation.

The Open-Ended Fallacy ignores the fact that resources are inherently limited and have alternative uses. This can lead to an open-ended pursuit of a perfect solution for one issue at the expense of others. Government policy could wage an open-ended "war on poverty," for example, that never diminishes while there is a single poor family. Instead, resource limits and points of diminishing returns should be recognized.

Sowell applies his analysis to social issues as diverse as urban planning, gender differences, academic policies, income differences, racism and international relations. Along the way he identifies additional fallacies that underlie misconceptions in these areas. This is a well-written and interesting book. Readers may also be interested in the author's Basic Economics: A Common Sense Guide to the Economy and On Classical Economics.
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Economists are driven crazy by the misleading conclusions that journalists and politicians draw from using numbers in the wrong way. Dr. Sowell uses this book as an opportunity to challenge some of the conclusions that abound concerning cities, male-female incomes, academia, middle-class incomes and size of the group, racial differences, and characteristics of the third world versus the developed countries. It also points out that these errors have consequences in misallocating resources that could be better applied elsewhere.

If you have never sat through a class on what it takes to make a valid comparison, this book is one long essay on that point. That's the meta-message.

The micro-messages relate to suggesting that problems aren't as large and serious as they seem from frequently quoted statistics. I thought that Dr. Sowell was at his best in describing mismeasurements about middle class income in Chapter 5.

In several of the other chapters, especially Chapter 3, it seemed to me like he was over arguing about statistics at the expense of drawing the right conclusion from looking at the context of what is going on. There seemed to be a desire to show virtuosity that appeared to get in the way of answering the question posed in the chapter.

Of course, it's absurd to say that if half of an employer's employees are women that management positions should also be 50 percent female. But if the management positions are only held by women 13 percent of the time, it does seem like something else might be going on (including possible discrimination against women). Dr. Sowell would prefer to leave the argument at the apples and oranges stage.

Some of the historical comparisons are interesting (such as how the percentage of highly educated women in the workforce has changed in the last 110 years). Parents who resent the high tuition their children's colleges charge will resent those charges even more after understanding more how those high prices are reached and maintained.

The book would have been a lot better if it had included a more solid description of what questions we should be asking and answering in each of these areas to understand what's going on. Without that fully developed foundation, even after reading this book many will be at sea in understanding what's going on in society and the world.
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on 3 May 2015
Everything you believe about the world is wrong. That's the way I'd sum up this book.

Dr Sowell shows clearly how most of the beliefs circulating in our society have no basis in truth or facts. Reading this book is enraging, enlightening, despairing, and motivating all at once (and yes, enjoyable).

There's two ways to walk away from this book: 1) To believe that humanity is doomed, or 2) To believe that whilst people are so very wrong about a lot of things, we can help them see the light. I fall into the latter camp. And I hope you will too.

Overall, a tour de force from Dr Sowell. If you only read one book this year, make it this one. You will never look at the world the same way again.
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TOP 500 REVIEWERon 7 September 2008
Because Dr. Sowell writes so very well it is easy to get swept up in his arguments. And because he is so edifying even to those with some expertise in economics, it is easy for us to put aside our critical faculties and go blithely along without noticing some unstated assumptions and what he leaves out.

Underlying Sowell's approach to economics are two main assumptions:

One, when it comes to humans, more is good. Conservatives tend to believe this because they fear that stagnant or shrinking populations will lead to stagnant or depressed economic growth.

Two, problems of depleted resources can be solved by human ingenuity. Essentially this is the position championed by the late Julian Simon who espoused a belief in endless resources and unlimited population growth made possible by scientific and technological progress. What this approach to economics ignores is quality of life and the cost to future generations.

In the chapter on "Urban Facts and Fallacies," Sowell criticizes "smart growth" laws, "open space" laws, eminent domain laws, and other restrictions placed on development by cities and counties. He demonstrates that such actions raise the price of existing housing while preventing developers from building more housing. Consequently, the average person can't afford to buy a house in places like San Francisco, Monterey or San Mateo counties in California, or Montgomery County in Maryland and elsewhere. On page 26 he gives the contrary example of Houston, Texas which "does not even have zoning laws, much less the array of severe housing restrictions found in some other cities." On the next page he notes "severe building restrictions began in" Palo Alto, California during the 1970s, "but not in Las Vegas, where builders could simply construct new homes as the demand for housing increased."

In addition to asking rhetorically "Where would you rather live?" I would note that it normal and historically sanctioned for people to protect the value of their property by preventing the growth of anything nearby that might lower that value. What Sowell is really objecting to is the influence of property owners on local governments. I don't know where Sowell lives, but I doubt if he would be pleased with the construction of a Soviet-style high rise housing development next door. Indeed I think he would use whatever political influence he has to prevent such a development.

The chapter on "Racial Facts and Fallacies" is fascinating and Sowell makes some excellent points. He rejects the idea that the reason for poverty in black ghettos is the "legacy of slavery." He shows statistically that things have gotten worse over time in black neighborhoods rather than better as we have gotten more removed from the time of slavery. What he doesn't do is account for this other than to note that fatherless families living on welfare produce children that do not do well economically. The implication might be that, well, they're black and not made of quite the right stuff. Sowell doesn't say this. Instead he blames "Southern culture" as he contrasts the attainment and quality of life of northern blacks with that of both whites and blacks from the South. He writes, "the regional culture of the South existed in particular regions of Britain in centuries past, regions where people destined to settle in the American South exhibited the same behavior patterns before they immigrated to the South. They were called 'crackers' and 'rednecks' before they crossed the Atlantic--and before they ever saw a slave." (pp. 165-166)

The hard-to-escape implication is that ultimately it is the inheritance of some kind of British subculture that is continuing to hold Afro-Americans down. This conclusion is further developed on page 187 where Sowell writes, "What lower-class white communities in Britain and black ghettoes in the United States have in common is a pattern of social pathologies that became pronounced in the latter half of the twentieth century, when similar ideas and polices became dominant in both countries." He concludes vaguely: "In both countries, politicians, activists, and ideologues who claimed to have solutions instead made many problems worse than before." Somehow I doubt that he was thinking about the leadership of Ronald Reagan and Margaret Thatcher, although this nebulous statement doesn't rule that out!

Sowell points out that there is a whole lot of land in this world that is not developed. He notes (p. 10) that "more than nine-tenths of the land" in the United States "remains undeveloped." What he glosses over is the fact that the land that is developed is the best land, and that much of the undeveloped land cannot at present be profitably developed. Again in the conservative economic mindset there are always more resources to be developed by clever and industrious humans. Indeed, one cannot help but think that Sowell in particular believes that poverty is the end result of unclever and unindustrious humans. Again and again he points to great economic advances made by some particular group--the Chinese in Singapore, the Jews in New York, the Germans in Argentina, etc. And in this he is undoubtedly right. Indeed, this is one aspect of conservative economic thought that I find irrefutable.

Another major detriment to economic well being, as Sowell notes again and again, are corrupt and lawless governments. He cites many examples around the world demonstrating this truth.

Less convincing is his argument that slavery came first and racism later as a justification for slavery. (See page 162.) True, slavery is thousands of years old, but xenophobia, which is at the heart of racism, is even older. Furthermore it is easier to take and keep slaves that are of a different color or culture than that of the slave holders, both psychologically and as a practical matter. The man of color stands out in a white community, and a blue-eyed European would be conspicuous in ancient Egypt.

Having said all this I want to emphasize that this is an excellent book by a distinguished economist well worth the reading.
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on 29 September 2015
Everyone should read this book. The good doctor is, as usual, lucid and easy to follow.
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on 7 March 2016
Sowell learned, intelligent, spiritual and humoristic, as usual.
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on 19 October 2015
great for aspiring economists
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on 26 February 2015
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