Fri Oct 13 05:52:23 UTC 2017
I have gotten a library card and checked out my first book: "Basic Economics"
by Thomas Sowell. I anticipate that I will be very critical of it. Someone who
expresses opinions I disagree with, but in a manner that shows he has put thought
into those opinions thinks highly of this book. From what I understand of the
author, and the book, it will not be a book whose main priority is a
well-rounded introduction to economics, but a book about economics with a
I'm keeping that bias in mind as I head into the book. It will paint my opinion
of the book, and unfairly so, unless I keep the bias in check and properly
balance it out. It can be an exercise in managing first impressions, as "Hire
with Your Head" recommends.
This book is due back at the library on November 2nd. This gives me
22 days (counting today) to 634 pages. So I gots about 30 pages to read per
day. I just read 13 pages in about 15 minutes, so I have a little over a
half-hour of reading to do on average per day.
Though, I must say, I'm already noticing the libertarian slant the book has.
Consider this rather mundane quote: "In a market economy coordinated by prices,
there is no one at the top to issue orders to control or coordinate activities
throughout the economy."
I think, already, I'm noticing a lack of consideration of who controls the
wealth, and the role that leverage plays in economies. Though right on the
cover there is a note about this edition of the book: "See Especially the Newly
Added Chapter on International Wealth Disparities".
So, perhaps I will be happily proven wrong here.
In any case, I'd like to keep a running commentary on this book whilst I read
it. I think it'd prove valuable as a means of keeping track of my reactions to
the book, and whether or not those reactions are fair, or more-importantly if
those reactions are true.
So far, the book started off strong, but has already started implying
libertarianism to be the one true economic strategy. I've liked the definition
of economics, and the statement that: "regardless of our policies, practices,
or institutions [...] there is simply not enough to go around to satisfy all
our desires to the fullest. [...] These various kinds of economies [socialist,
capitalist, feudal, etc.] are just different institutional ways of making
trade-offs that are inescapable in any economy."
I'm thinking that I will gain some good vocabulary, concepts, and valid
economic lenses even if this book ends up painting pure capitalism as the
best economic strategy in every case.
It will be like learning a game from a particularly good player, but that
player only believes in one methodology of playing. As long as I learn good
fundamentals and keep potential flaws in mind, I should still be better off
than starting from scratch, and maybe even better off than reading the opinions
of an expert whose conclusions I agree with or trying to navigate the labyrinth
of blatant and nuanced disagreement amongst experts at once.
In any case, for the two of you who might follow me on this journey, if I
manage to keep posting my thoughts, know that they are a work-in-progress
whilst I read this book, and hopefully I'll come back to these notes after I
finish the book and then consolidate everything into a well-constructed
Having already written a lot today, I'll stop reading for the day. I should
still finish the book if I manage to do a proper 30 pages per day starting
tomorrow. I'm thinking I'll attempt to stop by the library on my way home
everyday for a solid hour of a reading per day. We'll see, though, as I also
want to try running home from work, and carrying a rather large book while
running makes me think that these are mutually exclusive ideas.
I have some thoughts about fixing this exclusivity, but they have pros and cons
themselves. We'll see what I decide to do.
Sat Oct 14 02:31:55 UTC 2017
Moar "Basic Economics" reading!
I have just finished "Chapter 2: The Role of Prices", and it's a well-written
justification of the magic of the free-market. It is well-written in that it is
fun to read and gives valid examples of the impossibility of top-down control,
and how fluctuating prices redistribute resources effectively. It also is
clearly avoiding any of the harder examples that show what happense when the
free market fails.
Monopolies? Conflicts of interest? Really, it seems so far that the concept of
"leverage" is completely ignored. Who has ownership or control and how does
that affect the economic game? It's a really important part of economics, and
a significant reason why a pure free-market simply can not exist. The people
who end up controlling the scarce resources, whatever their means in acquiring
such power, now have arbitrary control over those resources, thus destroying
the free market. They effectively become a government, and there's nothing
stopping them from being a particularly poor government.
His arguments against top-down control are valid, but they are not complete.
The system we have currently arrived at is still imperfect. There are flaws,
and how we go about addressing the flaws may indeed require retrying strategies
that didn't work universally, but may work in specific situations.
There are 27 chapters in the book. So either I'll need to be comfortable
stopping in the middle of a chapter, or some days I need to read more than
We'll see what I do.
The next chapter is "Price Controls". I'm sure I'll enjoy that.
Sat Oct 14 22:05:04 UTC 2017
Reading a bit of "Basic Economics" at the Seattle Indies Meetup.
I already have a bunch of problems with the "Price Controls" chapter. The
problem isn't that what he saying isn't true, the problem is him leaving out a
bunch of details that make the whole situation a lot more complicated than it
For example, price controls are not just a government thing. People who own the
supply can very well work towards price controls. This is the reason monopolies
are bad. But I wonder if monopolies will ever be mentioned in this book at all.
I keep coming back to the lack of consideration of "leverage". I mean, I
haven't read much of the book, but if leverage isn't ever brought up, I won't
be surprised, and the book will be missing an important part of economics
because of it.
And leverage is an important concept, because it's a part of how governments
influence economies, and noting that leverage isn't only a tool of governments
is an important means of considering why economies are fragile and need
purposeful direction at times.
Mon Oct 16 01:25:25 UTC 2017
Finished chapter 3 "Price Controls". It's really weird to me that he doesn't
mention price controls via monopolies. He even mentions governments that make
prices artificially high, but doesn't mention monopolies.
Otherwise, it is indeed a very convincing chapter. But his focus on government
inefficiencies and not other inefficiencies makes me pretty confident that he's
leaving out key information that doesn't maintain his argument that pure
capitalism is best economic system, period.
It's something I'll need to come back to after doing research outside this book.
Though, a lot of reading this book makes me think that maybe basic income
really is a more effective solution than government subsidies.
That's a thought to also revisit later.
Tue Oct 17 03:15:33 UTC 2017
More "Basic Economics".
Falling behind the planned pages-per-day. Hopefully I'll catch up on some
flights starting this Sunday.
In any cases, "Basic Enconomics" has brought up a common argument against
socialized medicine in this chapter (Chapter 4: An Overview of Prices). Well,
two common arguments:
- Socialized medicine ends up more expensive
- Socialized medicine has longer wait times
For 1, to be fair, he says "more expensive than anticipated", instead of
"overall more expensive for society". That's just a nature of doing things,
it's almost always more expensive than anticipated. Things are complicated.
But, as it stands, the United States spends more on healthcare than any other
nation. I'llneed to refind my sources, and also make sure those sources aren't
playing with numbers to get to this conclusion, I also will need to see how the
US fared pre-ACA, but considering the fact that the ACA was super pushed for,
I wouldn't be surprised that healthcare spending was spiraling out-of-control
before its inception.
As for 2, I will also need to refind my sources, but as far as I can tell it
simply isn't true. Wait times vary for the large variety of different kinds of
medicine appointments from country-to-country with generally little correlation
with that country's method of paying for healthcare.
Further, many of the studies that measure "wait times" measure from the setting
of the appointment to its proper execution. These studies simple do not count
people who need medical care but can not set an appointment due to cost. Those
people's wait times are essentially inifite.
But, again, this is something I'll need to refind sources on, properly vet
those sources, and maybe even make a more formal bit of writing for my argument
In any case, still this book only ever mentions the government mucking up the
economy. I wonder if it'll ever mention other forces breaking the economy. My
understanding of this book as libertarian propaganda makes me think it will
Note: I still find a lot of the arguments and concepts within these books well
written and valid. It's just clearly missing additional details necessary for
rounded economic thinking, I think. My lack of rounded economic education may
make that assertion unfounded, however.
There are lots of solid things to quote that I agree with in this chapter, is
what I'm trying to say. I'm just not going to because I went on a tangent and
am out of time for today. If future me does more with this book's writing, and
uses my notes here as future reference, make sure to point out that the writing
on "systemic" vs "individual" causes are really greate (and the logic therein
could be applied to a great many things).
Fri Oct 20 00:43:54 UTC 2017
Basic Economics reading.
I've hit a spot where the book mentions John D. Rockerfeller and his role in
lowering the price of kerosene. It seems he has stopped talking about him
without mentioning his role as an oil tycoon and the monopoly that was forced
into being broken up.
I'll read until the end of the chapter before I comment more on this.
No mention whatsoever....
I'm legit surprised. I mean, the chapter is titled "The Rise and Fall of
Businesses". Mentioning Rockerfeller and not his ensuing monopoly and its
legally, not business, enforced breakup into smaller institutions is a
significant socialist talking point, as far as I know (and this book goes out
of its way to criticize solialism).
Rockerfeller's story is a perfect example of non-government price controls in
action. It is a significant thing to bring up. His monopoly lasted decades and
when his businesses were forced to be broken up, he ended up making more money
than before because the economy improved as a whole.
It is both proof of the importance of competition and proof of possible value
from government intervention.
Chapter 6, "The Role of Profits--and Losses", has a bit of splash text
mentioning Rockerfeller. I may have spoken too soon, he may be brought up
regularly. Perhaps he'll give his interpretation of Rockerfeller's monopoly in
this chapter, or at some point in the book.
I don't think Rockerfeller is going to be mentioned again.
I must stress again that I agree with a lot of what this book talks about, and
that it provides insights and examples that I have not come across before, but
it's stuff like that that really makes me think it's philosophy has significant
Perhaps next time I'll focus on some of the stuff I like. It may be prudent to
do so. "Hire with Your Head" taught me to fight against my first-impression and
early biases, and to be honest I'm clearly not doing that in my written
Fri Oct 20 09:32:52 UTC 2017
Getting some more reading of Basic Economics in.
It makes a really neat point about bridges and tolls. The logic goes: bridges
are built with peak hours in mind, and in many other proper businesses, peak
hours are when costs are highest. But because of the nature of
government-controlled things, all users of the bridge are charged the same
amount. (I must note that private roads with tolls also have this problem.)
This is a solid point. If tolls were less during less busy times, people would
be incentivized to travel during less busy times, and this would help alleviate
I've had a similar thought recently, but with non-toll highways. Carpool lanes
are only usable by vehicles with more than one passenger during peak hours. I
think that instead of there being a carpool lane, there should only be one
non-carpool lane during peak hours. The worst lane, the right-most one that is
always the slowest.
I say this because the carpool lane, while cool, isn't even that convenient to
use when I'm elligible, as it's a single lane that limits me to the speed of
the cars behind and in front of me (I do not like tail-gaters nor do I like the
car in front to fell slow). It's also hard to get to, especially during
rush-hour when traffic slows to a drizzle.
But I think the car-pool lane is an excellent idea. When I moved to Seattle, I
paid attention to all the single-occupant vehicles, and they were a good 90% of
vehicles. And rush-hour was crazy packed depending on the direction. I think
harder carpool rules could really put a dent in that and save a lot of people
time, gas, and car maintenance.
Back to reading.
Sat Oct 21 00:33:12 UTC 2017
Basic Economics reading.
Here we go, "Monopolies and Cartels" in Chapter 7, "The Economics of Big
Business". Will I eat my earlier words? I hope so.
Before that though, because I'm already writing, some random thoughts. I am
really enjoying the book's example-based approach to things, in all honesty.
It's pretty solid.
Though, there's a lot of assumption that people whose money are on the line are
more likely to know the value of things. He mentions CEO compensation and
golden parachutes, and says that these things are likely necessary mechanisms,
but (again, I'll have to find and vet my sources here) to my knowledge,
empirical studies show no good evidence that higher CEO pay leads to better
In fact, it often leads to worse results. Perhaps a weakness in the system that
could be overcome with newcomers and the better data.
Anyways, back to reading.
He's blaming governments for monopolies. I guess that's technically accurate,
but he's blaming not a lack of laws but the creation of laws that help
monopolies exist. The latter is possible, mind you, but the former is also very
possible. A free market is a vacuum, and businesses can create their own
pseudo-governments quite easily. It's just asking for the creation of a
No mention of Rockerfeller in the section. The closest the book comes to
admitting that privately created monopolies could require political
intervention is: "In the absence of government prohibition against entry into
particular industries, various clever schemes can be used privately to try to
erect barriers to keep out competitors and protect monopoly profits. But other
businesses have incentives to be just as clever at circumventing these
barriers. Accordingly, the effectiveness of barriers to entry has varied from
industry to industry and from one era to another in the same industry."
The book goes on to note computers as an example. When they were big and
costly, not that much competition, but as innovations made them cheaper,
competition seeped in.
Perhaps foundational costs are a weakness in a purely free-market economy, and
alternative methods of initial ground-breaking research is warrented? That's my
That's the end of chapter 7, and the end of my reading for today. Tune in
tomorrow for "Chapter 8: Regulation and Anti-Trust Laws". The title seems
Sat Oct 21 01:35:39 UTC 2017
Friend running late, getting some extra reading in before heading over to his
There's a really good bit in this chapter already:
"The economic complexities involved when regulatory agencies set prices are
compounded by political complexities. Regulatory agencies are often set up
after some political crusaders have successfully launched investigations or
publicity campaigns that convince the authorities to establish a permanent
commission to oversee and control a monopoly or some group of firms few enough
in number to be a threat to behave in collusion as if they were one monopoly.
However, after a commission has been set up and its powers established,
crusaders and the media tend to lose interest over the years an turn their
attention to other things. Meanwhile, the firms being regulated continue to
take a keen interest in activities of the commission and to lobby the
government for favorable regulations and favorable appointments of individuals
to these commisions.
"The net result of these asymmetrical outside interests on these agencies is
that commissions set up to keep a given firm or industry within bounds, for the
benefit of the consumers, often metamorphose into agencies seeking to protect
the existing regulated firms from threats arising from new firms with new
technology or new organizational methods. [...]"
The book goes on to give an example in the Interstate Commerce Commission. My
mind, however, went to the FCC and the recent appointment of a leader
completely uninterested in maintaining Net Neutrality.
Sat Oct 21 23:55:53 UTC 2017
Chapter 8: Regulations and Anti-Trust Laws.
This book is very convincing, I must say. It is only once it breaches subjects
that I am more familiar with that I am reminded that this philosophy isn't
perfect nor does its understanding of reality always properly reflect reality.
The book lists anti-trust actions against Microsoft as an example of bad
anti-trust laws. I simply do not agree. Microsoft had a true monopoly. If this
writing becomes a proper review of the book in the future, again I'll have to
"find my sources" (probably how I'll search for writing that needs citations
when I review these writings later), but off the top of my head Microsoft
forced hardware manufacturers to exclusively bundle its operating system with
their computers (no other OS bundling allowed), would annonce the development
of software that it had no intention of devloping to deter competitors from
developing that same software (aka annouce vaporware).
It was so bad that Microsoft was forced to invest in Apple (for a variety of
reasons) such that they had a proper competitor. And until Apple grew in
popularity, Apple basically stayed the only competitor. If not for that
requirement, Microsoft could well have had a stranglehold on the market for
quite some time.
And the example given in the book was about an anti-trust law that required
Microsoft to allow competitors to develop software applications for its OS.
Definitely a major win that allowed true competition in the variety of possible
software a user has access to on their computer. Something that very likely
improved Microsoft's quality to users, and set a standard for potential
competing OSes to follow.
Businesses do things against their own interest for greedy reasons all the
time. When forced to do a thing that fosters competition, it often improves the
anti-competition businesses bottom-lines. It happened with Rockerfeller, and it
probably happened with Microsoft.