Basic Economics

What It Is

An introduction to economics for people who will never take a course in it, first published in 2000 and now in its fifth edition (Basic Books, 2014), which runs to around seven hundred pages. Thomas Sowell took his doctorate at Chicago under George Stigler and spent most of his career at the Hoover Institution, and this is the distillation of a lifetime of teaching the subject to people who did not want to learn it.

The gimmick, if it is one, is the absence of apparatus. No supply and demand curves, no algebra, no models. Everything is done through examples: rent control in New York and San Francisco, minimum wages, price gouging after a hurricane, agricultural subsidies, health insurance, why some poor countries stay poor. The definition he starts from is the study of the use of scarce resources that have alternative uses, and almost everything in the book falls out of scarcity and incentives.

Why It Matters

Because it teaches one thing better than any book in English: what prices actually do. Almost nobody has had it properly explained, including most of the people who write about policy for a living, and Sowell explains it from the ground up. Once that has properly landed, a great deal of political argument becomes visible as wishful thinking about arithmetic.

The other habit it drills into you is the question, and then what? Sowell's recurring point is that policies have second and third consequences that arrive after the press conference, and that most public debate stops at the first one. It is the habit most readers end up carrying around for the rest of their lives, and it is worth more than most economics degrees.

Now the honesty the title works hard to avoid. This is not a neutral primer. It is the market case, made with unusual clarity by a man who believes it. Market failure, externalities, public goods, monopsony, information asymmetry and behavioural economics receive thin treatment or none; Keynes is dispatched briskly; the examples are chosen. Finish it and you will understand the price system better than most people who write about it for a living. You will not have heard the strongest case against the conclusions Sowell draws from it. Read a counterweight, and read it soon.

Before You Read

Twenty hours or so, but it is not a book you have to read end to end. The chapters are self-contained, and skipping the sections on subjects that do not interest you costs nothing.

It repeats itself, deliberately, because it is teaching. If you already know the material the repetition will grate; if you do not, it is the reason the book works.

Bring a pencil and a habit of scepticism. Sowell's examples are vivid and one-sided, and the right way to read him is to keep asking what he has left out.

Which Edition to Read

• The fifth edition (Basic Books, 2014) — recommended. The current text, the longest and the most complete, with the international chapters expanded and the examples pushed through the financial crisis. If you are buying one copy, buy this. The cost: it is a brick, and the growth from edition to edition has been mostly by accretion. Nothing has been cut, and the book is baggier than the argument requires. View on Amazon →
• The earlier editions (third, 2007; fourth, 2011). Secondhand for very little, and the economics has not changed. The cost: dated examples, and none of the post-2008 material, which is where a reader will most want to test him.
• The audiobook (Blackstone, 2014, narrated by Stefan Rudnicki, nearly twenty-four hours). Well read, and the prose is plain enough to survive listening. The cost: this is a reference book with self-contained chapters, and audio is the one format that will not let you use it as one.

Buy the fifth edition in print. Then buy something written by an economist who disagrees with him. Ha-Joon Chang's Economics: The User's Guide is the obvious pairing, and reading the two together will teach you more than either alone.

Getting the Most From This Book

Take one chapter at a time and stop at the end of each to ask what Sowell has not told you. He is a persuasive writer, which is precisely the reason to slow down.

Apply the and-then-what test to a policy you support. If it survives, you have learned something. If it does not, you have learned more.

Use it as a reference afterwards. The index is good, and this is a book worth keeping within reach of the news.

The commonest mistake is to finish it and believe you have now studied economics. You have studied one economist, an unusually lucid one, with a case to make.