Basic Economics: A Citizen's Guide to the Economy.

• Author: Bastiat, R.
• Position: Applied Economics: Thinking Beyond Stage One - Book Review

Basic Economics: A Citizen's Guide to the Economy Thomas Sowell New York: Basic Books, 2004, revised and expanded ed., 438 pp.

Applied Economics: Thinking Beyond Stage One Thomas Sowell New York: Basic Books, 2004, 246 pp.

I can think of no better way for a conscientious U.S. voter to start out this election year than by reading one or both of these two remarkable books by Thomas Sowell. Taken alone or together, both volumes succeed admirably--each in its own way--in their intention to provide a broad public audience with clear and cogent guidance on how to apply basic principles of economic logic and analysis to a variety of complex issues, many of which are likely to be discussed during the election campaign and beyond.

Over the years, we have come to expect wisdom, ingenuity, broad knowledge, and creative insight from the writings of the prolific Chicago-trained economist who--capping his long, distinguished career as an academic scholar and public intellectual--is now the Rose and Milton Friedman Senior Fellow on Public Policy at Stanford University's Hoover Institution. A new book by Thomas Sowell is always an important intellectual event, and two coming out around the same time--one of them entirely new and the other a substantially enlarged and updated revision of an earlier edition--is an occasion for celebration.

Sowell's writings, both for the profession and for the public, are invariably articulate, relevant, readable, provocative, and persuasive. These latest offerings are aimed more at providing lay readers with an economic perspective--and with some fundamental, nontechnical tools of analysis--than at breaking new ground on intellectual controversies. But they do not disappoint. They will be valuable for undergraduate economics students as well as the general public and, in my view, an instructive treat even for professional economists--who sometimes need to be reminded of how the simple but powerful insights of their profession can be used to clarify complex and confusing public issues.

Each book stands on its own, but they may usefully be considered as complementary or companion volumes. The revised edition of Basic Economics is a substantially enhanced and updated version of the first edition published in 2000, aimed at educating the general public and beginning students of economics about fundamental principles through straightforward narrative. Applied Economies takes its own unique approach, invoking a recurrent theme--what the author terms "thinking beyond stage one"--in employing some of the same principles to analyze policy actions in terms of their ultimate unintended consequences versus their stated immediate goals.

Basic Economics

Basic Economics could in fact be used as the main textbook in a nontraditional course in economic principles aimed at providing students with an intuitive grasp of key analytical tools and the ability to apply them to public policy issues as members of an informed electorate. Such a course, if taught well, would undoubtedly also serve to lure students into further study of the more traditional economics curriculum. If so, then thanks to this book, they would come to the more advanced classes armed with an ability--rare among economics students--to apply the technical abstractions of economic theory to concrete situations.

Like the first edition, the revised edition starts out with a chapter discussing the subject matter and perspective of economics in terms of scarcity and tradeoffs. This is followed by six main topical sections, each subdivided into a few short chapters and concluding with an "overview" that wraps up the main topic of the section. The structure is essentially unchanged from the previous edition, but the narrative has been updated to include recent events through 2003, and it has been substantially expanded to incorporate more international and historical examples informed by basic economic insights.

As before, the six main parts of the book...