Economics, Anyone?

The other day, a reader e-mailed me to ask for an explanation of the gold standard. He had heard it advocated in one of the political speeches.

Any responsible answer to his question would have taken more time than I could spare, but I looked through several introductory economics textbooks — including my own, Basic Economics — to try to find something that I could recommend that he read. Unfortunately, none of them covered the gold standard in any great detail.

Since then, however, I have gotten around to reading a recently published book titled The Concise Encyclopedia of Economics, edited by David R. Henderson and published by the Liberty Fund in Indianapolis.

Basic Economics by Thomas Sowell

It had an article on the gold standard.

More important, it has articles on all sorts of other economic topics, from advertising to minimum wage laws and from pharmaceutical drugs to foreign aid.

Most of these articles are written by well-known economists and — miracle of miracles — they are written in plain English and can usually be understood by readers with no previous knowledge of economics.

An election year would be the perfect time to get a book like this, so that you can understand some of the economic issues being hotly debated.

The Concise Encyclopedia of Economics by David R. Henderson

However, if you have a favorite candidate, you should be warned that there is nothing like studying economics to make you disillusioned — if not disgusted — with your political hero.

If all the economic fallacies promoted by politicians were taken out of their speeches, many of those speeches would be cut in half, at least.

My own recently published book, Economic Facts and Fallacies, deals with some of the most widely promoted fallacies. But no book can cover all the utter nonsense that politicians talk in an election year.

My hope is that Economic Facts and Fallacies will expose some of the worst fallacies and leave readers sufficiently skeptical that they will take other political “solutions” with a grain of salt and stop to think before they join a stampede.

Fallacies can sound very plausible if you don’t stop to analyze what is being said and don’t bother to check out the facts.

Economic Facts and Fallacies by Thomas Sowell

Some of the fallacies examined in various chapters of Economic Facts and Fallacies include the following:

1. Government programs are needed to create “affordable housing.” (Actually, government intervention is what has made housing so unaffordable in places where even hovels are expensive.)
2. Employer discrimination is the main reason for differences in income between women and men. (Tons of evidence point in other directions.)
3. College tuition is going up so fast because of rising costs. (Only if you call voluntary increases in spending “rising costs.”)
4. Foreign aid helps poor countries become more prosperous. (Only if you don’t look at the evidence.)
5. The rich are getting richer and the poor are getting poorer. (It all depends on whether you are talking about flesh and blood human beings or statistical brackets.)

Economic Facts and Fallacies is not just a demolition derby. It also brings out some facts that seldom get much attention in the media.

1. The poverty rate among black married couples has been in single digits since 1994.
2. The average income of the elderly is several times their earnings, and their wealth is far higher than among younger people.
3. Just as blacks are turned down for mortgage loans more often than whites, so whites are turned down more often than Asian Americans. (What does that do to racism as an all-purpose explanation?)

In any event, here are two books from which people with no background in economics can learn to protect themselves from the economic fallacies which abound in an election year.

Thomas Sowell is a Senior Fellow at The Hoover Institution at Stanford University in California. He has published dozens of books on economics, education, race, and other topics. His most recent book is Economic Facts and Fallacies, published in December 2007.