Reviews for The economy, media, and public knowledge

The average rating for The economy, media, and public knowledge based on 2 reviews is 3 stars.

Review # 1 was written on 2014-10-19 00:00:00 Lawrence Egbert You are, of course, familiar with the German word schadenfreude - the malicious joy one gets on hearing of the misfortune suffered by others. I can't deny that there were times while listening to this book this week - a week in which the US decided to pour $700 billion into the black hole that is the 'credit crunch' - that this word popped unbidden to the front of my mind. Listening to the rants of a radical free market economist in the week that the world is forced to pay for the excesses of market capitalism does induce some schadenfreude - except that the joy at the harm is limited by the realisation that the harm caused by these bastards is going to be felt by me as much as by them. I don't think anyone could make the mistake of believing that this is a nuanced discussion of economics. Basically, this is a man on a mission who is in possession of 'the truth' and that truth is an absolute belief that anything, ANYTHING that gets in the way of the free operation of market forces is always and invariably bad, counter-productive and the cause of all of the harm in the world. This book is presented as a citizen's guide to the economy. Its major theme is that politicians have reasons to lie to you - but once you have a grounding in basic economic theory you will not be so easy to dupe. We are told early in this book that Economics is a science and that economic methods are used in the same ways by Marxists as they are by free market radicals like the author. That this, in fact, is what this book is going to be about - the stuff all economists agree about. On that basis the strongest criticism of this book I can make is how little someone reading it comes away knowing anything about basic economics. You may get indoctrinated, but how much you are likely to learn is open for debate. For example, one might think that after reading a book setting out to explain basic economics one would come away knowing how the share market works - I mean, beyond a bland assertion that shares are different from bonds in that the holder of a share in a company is a part owner of that company. If you want to know about the relationship between shares, futures, derivatives and foreign currency exchange rates or what short selling is or why it might be that banks not lending money to each other might require tax payers' dollars to be poured down the toilet to seek to prop them up - this book is not for you. If you want to know why decades of the US running up huge deficits and owing the rest of the world trillions of dollars is really not a problem - this is a great book. And I hope the rest of the world agrees with Sowell's commonsense approach. This book presents as absolute economic 'facts' a number of assertions that are, at best, the strongly held opinions of the author, at worst simply false. For example, one of Sowell's favourite examples is the harm done to everyone by governments imposing rent controls. He asserts that these invariably lead to a shortage of housing and therefore to higher rents. His solution is to allow the market to fix these problems. If there is a shortage of housing then rents will rise. When rents rise more investors will rush (not walk) into the market to build new housing for those not able to afford housing, thereby rents will drop and everyone will be happy. One of the examples Sowell gives is the housing crisis that afflicted Melbourne, Australia for 9 years following the end of World War Two in which not a single new building was built in Melbourne. This Sowell attributes solely to rent control laws in Melbourne making it unprofitable to build new buildings in Melbourne. At least, one assumes there must have been a crisis in Melbourne at the time as Melbourne is the capital city of Victoria and between 1945 and 1954 Victoria's population increased by 250,000 people (or by one quarter). How did Melbourne cope with this crisis at a time of mass influx to the city not witnessed since the gold rush? Well, it all depends on what you call Melbourne. I'm assuming Sowell is talking about the City of Melbourne - what North American's might call Down Town Melbourne. It is actually true that virtually no new buildings were put up in Melbourne at this time - it is much harder to say why than Sowell glibly assumes, though. In Melbourne, The City's History and Development Miles Lewis points out that there were a complex of reasons for so little building development occurring at this time in the golden mile - but none of these reasons are related to rent controls. In fact, I've yet to find any evidence Melbourne had rent controls at this time. Rather the huge growth in housing needed in suburban Melbourne to meet the influx of so many migrants from Europe after the war and the post-war rationing of building materials accounted for most of the reason no building works occurred in the central city. The 'shocking fact' that is presented by Sowell as conclusive proof that free markets always provide better solutions than 'socialist' alternatives such as rent controls evaporates with just a little knowledge of the actual situation. Funny how that works. One does then wonder why he used the history of building development in Melbourne as his example in the first place. Surely it couldn't be the problem this would cause most of his audience to check is supposed facts? No, surely not. If Sowell's economics is a science then it seems to be one that has more in common with Creation Science than Biology. That is, it seems to be wishful thinking designed to reinforce predetermined conclusions - rather than, say, the systemic testing of a hypothesis to expand human knowledge. The favourite punching bag here is the Soviet Union and its misadventure with a socialist planned economy. What is remarkable in his description is that the Soviet Union lasted the 70 odd years it did. It seems its economy had nothing going for it. All it had were disincentives to production and absolutely no incentives. Some theorists have spoken about the Soviet Union collapsing because it could not compete with the West not just economically, but in part due to having to complete in an arms race that forced it to redirect a huge proportion of its national productive economy towards this dead weight. Like I said, this book does not provide a nuanced discussion at all and so the sole reason for the collapse of the Soviet Union presented here is its lack of a free market. Ironically, prior to reading this book I probably would have had more sympathy with the view that the Soviet Union could not compete because it lacked incentives to produce. I have less sympathy with that view now that I have finished this book. It is received wisdom that the major failing of the Soviet system was the lack of incentives to production offered, but the fact this is received wisdom does not make it true. What struck me in this book was that the planned economy of the Soviet Union was always compared with the free market system of the West as if the free market was made up of mum and dad shop owners or little factory owners all of whom had an intimate and immediate knowledge of their local community. We are repeatedly told that a planned economy can't work because the poor bureaucrat doing the planning can't possibly know all of the issues that face everyone in every area of the economy. This is contrasted with the glories of capitalism, the decentralisation of knowledge, in which the local gas station knows when road works are going to reduce his ability to sell petrol (an actual example from this book) and so purchases less petrol until those road works are completed. Except how does that explain Walmart? What sort of decentralised planning does Walmart allow? In answer to this he gives a remarkably bizarre example - Kentucky Fried Chicken - in which (apparently) local franchise holders in the 1950s kept the quality of their cooked chicken up to scratch because they were living in mortal fear of Colonel Sanders turning up at their restaurant and throwing out their less than finger-lickin' good chicken and then cooking it all again himself. (This is another actual example given in the book). It beggars belief that these could be presented as arguments for the superiority of the free market - but the issue is much worse than this. Surely KFC and Walmart have the same problems in directing their grand empires as the Soviet Bureaucrats had in coordinating theirs. Naturally, there is no discussion of how private ownership over a certain size remains different from socialist ownership and how the disincentives for a Soviet worker are avoided by Walmart - just surreal examples of Colonel Sanders whipping everyone into shape that sound to me to be the sorts of stories one might have heard about the heroes of socialist labour. I was greatly disappointed in this book - there are so many things I need to learn about economics and none of them were presented here in this overly ideological text. The bottom line? Don't waste your time.

Review # 2 was written on 2016-04-17 00:00:00 Janet Nourse Thomas Sowell is a god. I'm a big fan of his writing style because it's clear and concise. Basic Economics is highly informative and easily accessible. This book should be required reading, not just for econ majors or business majors, but everyone. Big ideas: 1. Economics is about trade-offs, not solutions. 2. Every policy or law has consequences, many of which are negative and unforeseen. 3. Capitalism is the least oppressive or racist system for allocating resources; very few people will refuse to prosper because of their dislike of an ethnic group. 4. Economic efficiency is critically important to increasing standards of living and general happiness. 5. Government interference in free markets is almost always bad because it overrides millions of people's decisions and creates unintended negative consequences. 6. Transactions among willing, informed participants are mutually beneficial. 7. The price system conveys information more quickly and efficiently than any alternative. 8. Economics is about the allocation of scarce resources that have alternative uses. 9. Economics is not about money; it's about the underlying resources that money and prices represent. 10. There are only noneconomic values because economics is not a value in itself; rather, it is a system that supplies information by which decisions can be made.