TANSTAAFL Redux

An awful lot of what goes on in politics these days is pretending to give people something for nothing. It depends for its effectiveness on the nearly total ignorance of the American people about economics and the idea, embedded in the popular mind, that if you don't have something it is because someone else has it. (zero sum game thinking)

You owe it to yourself to get informed about economics and I can think of no better way than to pick up Thomas Sowell's clearly written and informative book "Basic Economics." I recently picked up a copy of the new 4th edition. Thomas Sowell has been one of my heroes since I first heard of him when he would appear occasionally on William F. Buckley's "Firing Line."

I've only read the first three chapters so far, so I'm not too far ahead of you if you have not picked up the book. In those first few chapters Sowell deals with some foundational ideas and illustrates them with down to earth examples. Of particular interest is the negative examples he gives of societies that have tried to circumvent basic economics with the result, in my words, "You can't fool Mother Nature." Examples drawn from the former Soviet Union which attempted to run a planned economy are constantly used to reveal how ineffective such a strategy is.

The first topic is Prices , which in a free market quickly signal the needs of the economy. Rising prices signal increasing demand and falling prices signal softening of demand. These signals inform both suppliers and consumers who independently adjust their activities to reflect the prices which themselves are not "set" but the result of free transactions.

Meddling on the part of government with the prices simply dislocates the market by sending "false" signals to all concerned. Sowell illustrates market behavior with copious examples from the housing markets subjected to rent controls and various other illustrations drawn from government intrusion into the market with price controls, price floors, price ceilings, government subsidies, etc. All these send false signals (i.e. signals that don't actually reflect the market) and result in massive dislocations, surpluses of goods whose prices are artificially high, and shortages of goods where the prices are set too low.

The usual mantras of good intentions on the part of government are shown to be illusions since the interference in the markets can be shown to generally not accomplish the expressed intent. If you don't know and understand this then you are an unwitting accomplice to a fraud, perhaps an unintended fraud, but no less a fraud for that. The educated citizen needs to understand economics in some depth or the politicians will continue to charm us with their good intentions while they bankrupt us with the costs and the cruel fact that the thing doesn't work.