Applied Economics by Thomas Sowell

(New York: Basic Books, 2008), 352

Chapter 1

Politics and economics are separate, but must be considered together
We need to think about economics in terms of both goals and incentives (which may be different)
We need to think beyond just "state 1" in making policies (thinking ahead)
The truth emerges over time, even though politicians often take politically positive short term action even if it is economically damaging over the long term (Nixon price controls)
We need to be pragmatic rather than idealistic in economic policy

Greater importance of human capital: it accrues to those who continually grow their skills
Removing low wage jobs has a bigger impact than just the lost wages, but also lost experience for later jobs
Long discussion of slavery and other forms of forced labor m

Who pays for what greatly influences demand for medical care
How pharmaceutical companies must recoup billions in development costs on low marginal cost drugs

Basically he argues against land use regulations, which lead to increased housing costs
"Politics offers attractive solutions, but economics offers only trade offs"
Insurance reduces overall contingency for risk because risk is aggregated
Shame around having a child out of wedlock disappeared after the costs associated with raising the child shifted from the parents to the government

Nothing is 100% safe; the real question is cost/benefit of reducing probability of failure
"Everything is unsafe if you disregard questions of degree and alternatives"
Reinsurance companies further spread risk
Subsidizing car insurance can have unintended consequences of raising prices for all drivers and increasing rates of pedestrian injuries and deaths
Government retirement plans are like a Ponzi or pyramid scheme: first in, first out

Topic: Economics

Source: Dad?

Bibliography

file:(2017-08-01-Applied Economics)

Created: 2021-03-06-Sat
Updated: 2022-12-31-Sat