Applied economics

257 Pages·10.877 MB·English

by  Sowell, Thomas

APPLIED ECONOMICS
BY THE SAME AUTHOR
Basic Economics: A Citizen's Guide to the Economy
Classical Economics Reconsidered
Knowledge and Decisions
Marxism: Philosophy and Economics
Say's Law
APPLIED
ECONOMICS
Thinking Beyond Stage One
THOMAS SOWELL
A Member of the Perseus Books Group
New York
Copyright © 2004 by Thomas Sowell
Published by Basic Books,
A Member of the Perseus Books Group
All rights reserved. Printed in the United States of America. No part of this book may be
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Set in 12-point Adobe Caslon by the Perseus Books Group
Library of Congress Cataloging-in-Publication Data
Sowell, Thomas, 1930-
Applied economics : thinking beyond stage one / Thomas Sowell
p. cm.
Includes bibliographical references and index.
ISBN 0-465-08143-6 (alk. paper)
1. Economics—Political aspects. 2. Economic policy—Social aspects. 3. Equality.
4. Social problems. 5. Economic development. 6. Economics. I. Title.
HB74.P65S66 2003
330—dc21
2003010562
03 04 05 / 10 9 8 7 6 5 4 3 2 1
To Professor Arthur Smithies,
who taught me to think beyond stage one
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CONTENTS
Preface ix
1 Politics versus Economics 1
2 Free and Unfree Labor 31
3 The Economics of Medical Care 69
4 The Economics of Housing 97
5 Risky Business 129
6 The Economics of Discrimination 161
7 The Economic Development of Nations 193
Sources 223
Index 241
vii
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PREFACE
It is one thing to know the basic principles of economics. It is an-
other to apply them to the problems of the real world. Yet that is
ultimately what these principles are all about. Instead of focussing
on establishing the principles of economics, as I did in Basic Eco-
nomics, here the focus will be on dealing in depth with particular
real world problems, using economic principles to clarify why and
how things have happened the way that they have. This is a book
to enable the general reader, with no prior knowledge of econom-
ics, to understand some of the key economic issues of our time—
medical care, housing, discrimination, and the economic
development of nations, for example. Because these are political,
as well as economic issues, some political principles will need to be
considered as well. That is, we will need to consider what incen-
tives and constraints apply to political decision-making, as well as
those which apply to economic decisions-making.
Neither economics nor politics is just a matter of opinion and
both require thinking beyond the immediate consequences of de-
cisions to their long-term effects. Because so few politicians look
beyond the next election, it is all the more important that the vot-
ers look ahead.
It is helpful to have something of a sense of humor when con-
sidering economic policies. Otherwise, the study of these policies
and their often painful unintended consequences can get to be too
depressing or you can get too angry. Save your anger until you are
in the voting booth on election day. In the meantime, enjoy the
process of getting more understanding of issues and institutions
that affect your life and the future of the country.
ix