Quotes and Excerpts from Thomas Sowell
Basic Economics 4th Ed. - Thomas Sowell#
consequences matter more than intentions
Nothing is easier than to have good intentions but, without an understanding of how an economy works, good intentions can lead to disastrous consequences for a whole nation
inefficiencies in turning inputs into outputs translated into a lower standard of living
But life does not ask us what we want. It presents us with options. Economics is one of the ways of trying to make the most of those options.
Without the role of prices, imagine what a monumental bureaucracy it would take to see to it that the city of London alone is supplied with the tons of food, of every variety, which it consumes every day
Even if the government were to decree that beach-front homes were a “basic right” of all members of society, that would still not change the underlying scarcity in the slightest.
Prices not only guide consumers, they guide producers as well
Markets coordinated by price movements - capitalism, as it is called - is the natural way of things
Although a free market economic system is sometimes called a profit system, it is in reality a profit-and-loss system—and the losses are equally important for the efficiency of the economy, because losses tell producers what to stop doing—what to stop producing, where to stop putting resources, what to stop investing in.
“Losses force the producers to stop producing what consumers don’t want” - they don’t even have to know why.
The staggering number of economic transactions, on ever-changing terms as supply and demand vary almost continuously, is beyond the knowledge and capacity of any individual or any manageable-sized group of planners to direct in any economy, much less in the world market
The significance of free market prices in the allocation of resources can be seen more clearly by looking at situations where prices are not allowed to perform this function
While telling people what to do might seem to be a more rational or orderly way of coordinating an economy, it has turned out to be far less effective in practice.
The sight of aisle after aisle of shelves neatly stacked with every conceivable type of foodstuff and household item, each in a dozen varieties, both amazed and depressed him. For Yeltsin, like many other first-time Russian visitors to America, this was infinitely more impressive than tourist attractions like the Statue of Liberty and the Lincoln Memorial
The market is cordinated by prices - automatically. Human intervention is only required at the most basic level raising and lower you bid and ask prices.