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.

The Shock Doctrine by Naomi Klein


Milton Friedman, economic godfather of the modern neoconservative movement preached an extremist form of lassiez-faire capitalism. Friedman and his disciples from the Chicago School of Economics have shaped the growth of the modern free trade movement in countries from Chile to Russia to South Africa to the Maldives. But is the Chicago school doctrine, which calls for flat taxes, globalism, multinational corporations which replace most traditional functions of the state actually good for the citizens of those countries in which it has been implemented? Naomi Klein definitely doesn’t think so.

Klein’s work here is brilliantly researched and painstakingly footnoted. Her arguments are generally persuasive. She tracks Friedmanism and a corresponding destruction of democracy and worsening welfare of the body politic from Pinochet’s Chile to the corporatized Green Zone of modern day Iraq.

I can’t help but feel that Klein could have benefitted from a slightly tighter focus. Her attempts to draw a parallel between the sensory-deprivation, LSD and shock treatment experiments of Dr. Donald Ewen Cameron and MKULTRA and the economic “shock therapy” of Friedmanic capitalism seems strained. Indeed, the whole metaphor of extremist capitalism as torture writ large upon a population ends up seeming weak. It presupposes the value judgment that Dr. Klein hopes to lead the reader to, weakening her arguments. This lack of focus occasionally pokes it’s head up in other ways as well – as with Klein’s comments about the benefits of the Canadian health care system, which, while accurate, end up reminding the reader that Klein is anything but open minded about her topic. As an avid anti-globalist, and a democratic socialist, Klein has wonderful insights, and has done great research; let them stand on their own. Descending into rhetoric which is outside the scope of the core argument distracts the reader, and ultimately slightly tarnishes Klein’s credibility.

This mild criticism aside, the book is a fascinating five hundred page tour through failed experiments in capitalism by the World Bank, IMF, and the US military-industrial complex. Klein walks the same halls as did Perkins in Confessions of an Economic Hitman. But where Perkins came across as a bit of a self-aggrandizing hack, Klein is an eloquent, thorough scholar.

This book is a fascinating expose into the economic theory which has driven a particular brand of US foreign policy over the last half-century. If half the goateed teenagers protesting the WTO talks in Seattle had been even slightly as bright and well informed as is Dr. Klein, it’s likely that the world might have paid a lot more attention to their protests. This is the most articulate anti-globalism screed I’ve ever read.

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