Sunday, February 6, 2011

GoodReads Review - Applied Economics, Thinking Beyond Stage One

Applied Economics: Thinking Beyond Stage OneApplied Economics: Thinking Beyond Stage One by Thomas Sowell

My rating: 3 of 5 stars

I remember reading several articles/essays/excerpts from Thomas Sowell in undergrad. He has the great ability of making economics accessible though his clear writing style and simple presentation of ideas. However, in this particular book, it was just that - the simplicity - that bothered me.

The whole premise of the book is that we should "think beyond stage one" and consider long-term effects of policies and practices. Sowell describes the (usually unintended) negative effects of certain policies such as insurance, government-run health care, and anti-discrimination laws. Unarguably, there have been downsides to all of these. People abuse health care and use it differently when they are not the ones directly paying for it. As mentioned by a friend last week, instead of expanding female sports, some colleges eliminated certain male sports as a result of Title IX.

While Sowell was able to shed light on these issues, he writes from an extreme laissez-faire perspective and the one-sidedness of the arguments often seem too simple. Rarely (in this book) does he expand discussions of cost and benefits beyond monetary or time costs to include health, social capital, fulfillment, etc. Nor does he always elaborate on the full issue.

For instance, on the discussion of the effects of land use on housing prices, he mentions a very limited application of land use regulation that is often touted in the realm of planning as ineffective. I agree with Sowell in that exclusionary land use policies or residential zoning that requires half acre lots is counterproductive. However, he doesn't mention land use policies that attempt to integrate transportation with land use, create mixed-use communities, and provide certainty to developers. His aversion to open space regulations does not take into account a complete costs and benefits analysis either. While housing is limited in NYC and housing prices would drop if given more developable land, could you imagine NYC without Central Park? Privately owned public spaces have been produced in a variety of ways, through mandates and incentives. Rather than blasting all of these initiatives, why not compare? Sowell has written numerous books and articles, so perhaps he has made this comparison in other writings.

I will definitely continue to read Sowell, but I think it would be unwise to only read from this perspective.

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