Applied economics : thinking beyond stage one PDF
Preview Applied economics : thinking beyond stage one
APPLIED ECONOMICS Thinking Beyond Stage One THOMAS SOWELL A Member of the Perseus Books Group New York This page intentionally left blank 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 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 reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information, address Basic Books, 387 Park Avenue South, New York, NY 10016–8810 Books published by Basic Books are available at special discounts for bulk purchases in the United States by corporations, institutions, and other organizations. For more infor- mation, please contact the Special Markets Department at the Perseus Books Group, 11 Cambridge Center, Cambridge MA 02142, or call (617) 252-5298, (800) 255-1514 or e-mail [email protected]. 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—dc2l 2003010562 030405/10987654321 To Professor Arthur Smithies, who taught me to think beyond stage one This page intentionally left blank CONTENTS Preface ix 1 Politics versus Economics 1 2 Free and Unfree Labor 31 3 The Economics of Medical Care 67 4 The Economics of Housing 95 5 Risky Business 127 6 The Economics of Discrimination 161 7 The Economic Development of Nations 193 223 Sources vii This page intentionally left blank 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 x Preface Because this is a book for the general public, the usual footnotes or endnotes are omitted. However, for those readers who want to verify what is said here, or to read further on some of the subjects covered, the sources of the many facts discussed here are listed in the back of the book. THOMAS SOWELL The Hoover Institution Stanford University
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