I'm nearing the end of Thomas Sowell's book, Basic Economics. I will write a (glowing) book review as soon as I'm done and I'm looking forward to moving on to his Applied Economics, the companion book that takes the reader beyond the basics. There are lots of important lessons in this book, but I think the most important points can be summed up in a few "first principles" from which the rest can be derived. Of course, I'm glad Sowell did a lot of the derivation for me! Here are the basics as I got them:
- Economics is the study of the allocation of scarce resources that have alternative uses.
- Trade is not a zero-sum game - in general, both parties to any transaction end up better off.
- Prices automatically adjust to apply resources to the best possible gain when artifical constraints are avoided.
With these three concepts in mind, economic principles prove to be remarkably logical. I'm finding this personal study of economics absolutely fascinating.
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