Basic Economics by Thomas Sowell

Continuing my efforts to better understand the economy as a whole, and make up for some of the things I didn’t study during undergrad, I spent a pleasant hour flipping through various books on the economy. This one seemed the most complete and most basic at the same time.

Six months later, I finally finished The Big Book of Economics! At six hundred pages of not-that-dense economic theory for beginners, this one took a while. Certainly not as long as if I’d read a complex book of economic theory for smart people, but still an accomplishment of sorts.

Dr. Sowell of Stanford University is a dedicated scholar of Milton Friedman and similar schools of thought. He’s bright and his style feels approachable without being overly dimmed down.

In twenty-five chapters he covers such topics as Prices & Markets, Industry & Commerce, Work & Pay, Time & Risk, National Economies, International Economies.

The book was informative, and I now feel like I have a much firmer grasp of basic economics. I’d be remiss not to mention a few problems though. First, the book has a particularly right-leaning conservative bent and occasionally gets on a high-horse. Second, the organization is odd, such that section overviews come at the end of the section, with the sections themselves preferring to jump straight into sub-topics without any preamble or indication as to the fascinating twists and turns the subject matter will take.

Rich Dad Poor Dad by Robert Kiyosaki

Felt a little bit guilty reading this one, as if I wanted to put a brown paper book-cover over it, so people couldn’t see me reading a pop-finances book For Dummies™. For whatever reason, though I enjoyed some of Kiyosaki’s articles in the past, I wanted to avoid feeling like a chump, so I avoided this book.

Finally though, I broke down and decided to read it in October. Like many of us, I suspect, finances and the economy are much on my mind in these troubled days.

Kiyosaki’s trope is simple; he had two father figures, one of whom was highly educated, the other of whom was an aggressive, successful businessman. Kiyosaki clearly learned more from the rich dad than from the educated dad. He tries to impart some of these core philosophical differences to the reader in two hundred pages of tortured English.

The core point here is: invest your money in assets which will return money to you. Don’t invest your money in expenses. Then, work to grow your assets, and be smart about using a corporate structure to avoid as many taxes as possible. It’s sound advice.

Key points:

1. You must think differently about money, about investing, about assets and liabilities than most people do if you want to get out of the rat race.

2. Your job, no matter how well it pays, is unlikely to ever make you rich. The nature of the deal is such that your cost of living is likely to increase with your wages, you pay so much to the government, and no matter how hard you work, there are only so many hours in a day.

3. By being smart about taking advantage of various tax structures, the power of incorporation, etc. you can help avoid some taxes, and help pay your expenses with pre-tax instead of post-taxed money. This will help.

4. You must above all understand the difference between an asset, which is something that returns you money without any effort from you, and liabilities, which are anything that cost you either time or money in upkeep. (Your home being the principal thing most people mistake for an asset.)


Overall, I agree with most of the lessons in this book. Money is power, though not an end unto itself. In order to get free from the rat race, one needs more than just the income they can derive from employment.

Now, my ability to put some of these lessons into practice is what I really need to spend time on instead of this navel gazing blog.

Confessions of an Economic Hit Man by John Perkins

This non-fiction account of a contractor for the World Bank could best be filed under Rants Against US Imperialism in the Third World. Perkins worked from 1962 until 1982 as an economic analyst, whose job it was to create projections which provide rationale for Worldbank and IMF to give huge loans to third world countries.
According to Perkins, there’s a shell game going on, by which these giant loans are made to countries like Ecuador, for giant infrastructure projects (dams, refineries, etc.) Apparently, giving these projects to US companies like Bechtel or Haliburton is a condition of the loan. Now, everyone knows that these countries will never be able to pay back the loans, and will have to default. And that’s great, because the US can then magnanimously agree to ‘forgive’ a small amount of the interest in exchange for, say, permission to build a military base (Saudi Arabia), or votes in a UN Security Council.

Perkins claims to have been involved in this insidious system for three decades, in Saudi Arabia, Ecuador, Panama, and Pakistan. He claims that when world leaders, like Torrijos in Coloumbia, refuse to agree, they are assassinated by the CIA. (He has some pretty convincing examples of this in South America in the years leading up to the Contra affair.)

Taken as a whole, Perkins book is persuasive, in that it certainly convinced me that the basic nature of the system he describes is pretty much the way things work. Do I believe this is all part of some giant conspiracy? No. But do the mechanics of world back loans tend to work this way and are US international agendas at play in the use of sanctions or granting of loans? Sure.

Perkins’ ultimate conclusion is what makes him come across as a bit of a new age whack-job, unfortunately. Because according to Perkins, the nature of loans, infrastructure improvements, globalization and modernization as a whole are just plain bad for the hardworking local peoples of wherever. Now, while this MIGHT be true on many occasions, I’m not sure that I can agree with the basic nature of the anti-progress argument. Electricity, schools, flood control, hospitals, and modernization of water treatment plants are GOOD things. Or at least, they can have good effects. Add Perkins status as a leader of something called the Dream Change group, which mostly takes rich white people to go live green among the natives of South America, and what you’ve got is a guy who sounds right, but then reveals a bit of his inner flake. Include still more pointless wailing and gnashing of teeth from Perkins about the moral implications of his job, throw in a dash of self-aggrandizement, (“hit-man”? Really?), and an overemphasis on Perkins’ extra-marital sexcapades throughout the years, and what you get is a fascinating autobiography of a very bright, once influential man, who now comes across as pretty self-absorbed and overly idealistic.

Confessions of an Economic Hitman is fascinating. It provides some valuable insight into the nature of global economies. But it’s not gospel, and its conclusions sound a bit naive.

-tf