Basic Economics by Thomas Sowell

Bart Simpson defining economics on the chalkboard
Not the basic cover

Disclaimer: I know next to nothing about economics, which is why I read a book called ‘Basic Economics’. I wrote down a sliver of what is in the book, mainly what is new and/or interesting to me. A key takeaway, if you don’t even want to skim this sliver, is that Economics, like life, is not a zero sum game.

Chapter 1: What is Economics

See image above.

Scarce: want > available.

A focus on consequences rather than intentions.

Chapter 2: The Role of Prices

Prices are like messengers of news.

Prices act as incentives to allow resources to flow to their most valued uses

Chapter 3: Price Controls


Fixed rent
-Less people to a living space because they can afford the controlled rent -> Higher          demand for housing and increased prices
-Less profitability for builders so they stop building -> Lower supply of housing.
-Homes not under rent control (larger, more expensive ones) stay profitable, so supply      rises and the rich get a discount.

Chapter 4: Overview of Prices

Incremental substitution: Band-aids are essential for health and more important than music in general. But having music is more desirable than a 20 year supply of band-aids.

Principles of economics are obvious, but the implications are not.

Chapter 5: The Rise and Fall of Businesses

The fit survive and more people benefit because of it:
Big groceries destroyed small groceries with the advent of refrigerators and cars.      Consumers got cheaper food and more options.

Chapter 6: The Role of Profits and Losses

Socialism removes the incentive to be efficient…the weak survive and more people suffer because of it. (Not weak in the sense of children and the elderly…but activities that use resources inefficiently)

Not clear about these
Cost = The sum of gains and losses
In capitalism, cost is profit
In socialism, cost is innovation

Advertising can enable economies of scale and actually bring down prices

Diseconomies of scale: A point from which scaling up will make prices rice

Inventory: It is a waste to have large inventory sitting around being unused. That is why infrastructure is essential, knowing you will have x part arrive on y day means less inventory sitting around doing nothing.

Chapter 7: Economics of Big Business

ltd: limited liability: Corporation’s legal liability is limited to its own corporate assets…If your company goes bust, you shouldn’t necessarily go bankrupt. This encourages risk taking.

Giving regular (those who don’t own much stock) shareholders more power leads to bad business because they have less to lose.

Monopoly vs Cartel: Monopoly is when one business has dominant control over an industry. A cartel is a group of businesses that agree to act as a monopoly (keep prices high)

Cartels rarely succeed because cheating the members of the cartel is incentivized (if you secretly lower your prices, you sell more).

Chapter 8: Regulation and Anti-Trust Laws

Commissions set up to regulate industries often end up being controlled by those industries themselves. It makes sense so have power over the thing that has power over you.

It is hard to define competitors. 1. Air and train travel compete for business even though they are not obviously in the same industry. 2. Golf clubs and strip clubs…

Predatory pricing (the act of reducing your prices so much that your competitors go out of business and then you raise the price to higher than previous levels) almost never works. It is extremely risky and even if your competitors go out of business, your business is far weaker and therefore susceptible to new competitors or other risks that would otherwise not be an issue.

Chapter 9: Market and Non-Market Economies

Capitalism is basically consumerism…there are incentives to please the customer See Amazon’s guiding philosophy to know this is true

Chapter 10: Productivity and Pay

Income differences are more due to age rather than class, and this is not reflected in most news stories. Different ethnic groups are often of different age spreads.

Massive incomes that put people in the .1% in a given year are often due to temporary spikes, like getting an inheritance or selling a house.

Chapter 11: Minimum Wage Laws

Labor, like any other resource, will face a surplus with minimum wage laws (price up -> demand down).

Older people benefit from these laws: when you have to pay extra you might as well get someone more experienced. Makes it harder for the young to get their foot in the door.

42% of minimum wage workers are dependents; this makes the living wage argument less convincing.

Chapter 12: Special Problems in Labor Markets

Labor is more complicated than inanimate resources. Consider conditions, security, collective bargaining, exploitation.

Mandatory benefits can lead to a preference for overtime rather than hiring more employees.

Multinational companies that hire low wage workers in third world companies are often demonized for treating their workers like shit. But they are better than the alternative, working for local companies that most of the time pay far less, or no job at all.

Exploitation: Difference between wealth an individual creates and is paid. Not always intuitive, ex: some basketball player generates 50 million in profit for Nike, but his contract ‘only’ pays him 30. He is exploited for 20 million.

Chapter 13: Investments

Investing: Sacrificing real things today in order to have more real things in the future.

Financial institutions, and often the entire ethnic group that tend to run them, are often viewed negatively by the public. On the surface it can seem like they are just hoarding money. The truth is, financial institutions are, generally, economic lubricant that take on risk.

Speculator: Agrees to buy something at a fixed rate later. ex. Buy peas at $2/lb and sell at market rate after the worldwide harvest determines price. Assumes risk from the farmer.

Inventory is a substitute for knowledge. ex. No food would need to be thrown out if it was known how much everyone would eat.

Annuity: ex. 70 year old man buys annuity for 100k and receives $700 a month for life.

Chapter 14: Stocks, Bonds, and Insurance

Bonds are legal commitments to pay fixed amounts of $ on a fixed date.

Bond prices and interest rates are inversely correlated. If you can get a good rate of return, bond prices have to be lowered to incentivize people to buy them over stocks.

Moral Hazard: people do riskier things knowing they are insured.

Government insurance tends to be worst than private since there is less incentive. ex: If State Farm shows up first to the scene of a hurricane, the news crews will be all over them and they will acquire more customers. If FEMA shows up first they will get positive press, but monetarily nothing significant will occur.

Chapter 15: Special Problems of Time and Risk

Time is $: House builders keep paying interest on their loans while waiting for government approval. This extra cost is passed on to home buyers.

Uncertainty leads to a decrease in investing…who knows if you will get positive returns.

People have foresight. ex. When South Africa’s government decided to redistribute land from white folks to black folks, the landowners heavily neglected their land before they were forced to hand it over. The new black owners often faced more financial difficulties than before

Chapter 16: National Output

Fallacy of composition: what applies to a part applies automatically to the whole. ex: Massive unemployment in the coal industry does not mean mass unemployment as a whole.

Gross Domestic Product (GDP): Sum of everything produced within a nation’s borders.
Gross National Product (GNP): Sum of everything produced by a country’s people, regardless of where they are.

Quality of output is not usually reflected in statistic. ex. a 2018 car is WAY better than a 1998 car bought for the same amount of $ then. This is true for most things we buy.

Chapter 17: Money and the Banking System

Gresham’s Law: Bad $ drives good $ out of circulation. ex. Cigarettes used as currency in prison: the good ones are smoked while the bad ones stay currency.

Inflation is like a bad alternative to taxes: just print more money. This affects the rich less since asset prices increase with inflation.

Doubling the $ supply will probably more than double prices as people spend as much as they can, losing confidence in the currency.

Fractional reserve banking: Holding a fraction of the reserves needed to cover deposits. Economic Lubricant!

Federal Reserve: Tells banks what % can be kept fractional and sets the interest rate on its loans to banks.

Chapter 18: Government Functions

What government can (not necessarily does) do well:
-Charge external costs. ex. Using coal will lead to external parties paying when climate change kicks in. The government can charge the responsible party for this in the present.
-Mandate external benefits. ex. Mud flaps on cars prevent shit from flying onto other cars.
-Indivisibilites: Military protection

Chapter 19: Government Finance

Tax revenues and bond sales are the largest source of $ for the US government.

Balanced budget: All current spending covered by taxes
Budget surplus: Tax Revenue  > Spending
Operating at a deficit: Tax revenue + bond sales cover spending
National Debt: Bonds to pay back

Lower tax rates can lead to increased tax revenues as people invest more.

Regressive tax: Taxes that collect a higher % from the poor than the rich. ex: Sales tax as opposed to property tax.

In 2011, 46% of US national debt was owned by foreigners.

Chapter 20: Special Problems in the National Economy

Political choices are offered less often and are ‘package deals’. ex. I can buy a blue bike with a red bell with glowing rims. Meanwhile I can vote for guy a, b, or c, each of whom is a package of shit.

Chapter 21: International Trade

Import/Export mismatches are not inherently + or – . ex. During the Great Depression, the US had an export surplus.

Benefits of Int. trade
-Absolute Advantage: ex. Coffee needs a particular climate, and it is far cheaper to grow it there than to generate a similar climate somewhere else.
-Comparative Advantage: ex. A doctor who used to work in fast food might make a better sub more quickly then some teenager at Subway, but it is a far better use of his time to spend a minuscule amount of $ he earned practicing medicine to have the teenager make his sub.

Chapter 22: International Transfers of Wealth

Remittances: $ sent back to home country.

Rich countries tend to invest in rich countries, since they are less likely to lose their $ than poor countries.

The US has been a debtor nation since the beginning, excluding WW1.

Foreign aid is good for physical capital, but human capital is far more important. Europe rebuilt itself very quickly after the world wars. You can’t just throw money at third world countries to fix problems.

Chapter 23: International Disparities in Wealth

Too many factors to pinpoint the exact Whys.

An example of a clearly pro-wealth feature: Geography conducive to connectedness (deep waterways, coasts)

Chapter 24: Market Myths

The ‘market’ is not a thing, it is people engaging in transactions.

Economic myths often survive because economics find them too silly to acknowledge.

Brands are a measure of security: The brand has to be responsible with the product, if their product shits the bed than people won’t buy from them.

General wealth saves lives: Better buildings stay standing after earthquakes. A better transportation infrastructure means ambulances get to the hospital faster.

Chapter 25: History of Economics

Pass…The author doesn’t go too deep here. Rabbit hole for another time.


Neverwhere by Neil Gaiman (In Linear Order)

Always There?

The angel Islington goes crazy and destroys Atlantis. He gets locked up for thousands of years, and the key that can set him free is held by this monklike group called the Black Friars. In presentish day London, Islington is reached out to by Portico, a man with the power to open doors. Portico wants to unite London above and London Below (an alternate dimension/reality London). Islington wants Portico to release him so he can conquer heaven. Obviously Portico is like hell no, so Islington hires two super evil, maybe immortal goons named Croup and Vandemar. The goons kill Portico and his family, except for his daughter Door, who also has the same door opening powers. They leave a note that imitates Portico telling Door to trust Islington.

Meanwhile in London Above, a regular joe named Richard runs into an injured Door who is running from the goons. Richard helps her and then becomes a part of London below; people above do not recognize him anymore. Richard and Door recruit a bodyguard, a girl named Hunter, as they run from the goons and seek Islington. They are also helped by the Marquis, a seedy guy who owes Portico a favor.

Richard, Door, and Hunter eventually meet Islington who instructs them to get the key from the Black Friars. They each succeed in a challenge, most notably Richard who is made to think he is crazy and imagining the whole thing. Meanwhile, Marquis is purposely tortured and ‘killed’ by the goons so he can learn their, and Islington’s, plan.

As Richard, Door, and Hunter head back to Islington, Hunter reveals she is a traitor and surrenders Door to the goons. All she wanted was a spear that would help her slay the Beast of London, a boarlike creature with a legendary and gruesome reputation. The Marquis joins Hunter and Richard and they head towards the labyrinth where the Beast dwells and is, coincidentally, another path to Islington. Even though hunter betrayed them, they still need her to get past the beast.

Through dumb luck, Richard ends up killing the beast as Hunter dies. He attains knowledge of the labyrinth and leads himself and the Marquis to Islington. The Angel tortures Richard in order to make Door open the way to Heaven using the Black Friars’ key. She opens a door with a copy of the key and it turns out to be a gateway to Hell; Islington and the goons are sucked away. Door uses the real key to send Richard back to London Above.

Richard’s brief happiness in being home fades to melancholy as he misses his adventures and friends from below. The story ends with Richard using Hunter’s knife to open a door from which Marquis pops out.

//Missing the rats, Anaesthesia, Lamia, Hammersmith, Jessica, the Earl, Old Bailey, and much more

Dune by Frank Herbert

Because Dune sounds cooler than Sand

How do you make a story about a desert so good? Well obviously the story isn’t about a desert, it takes place in one; but the setting gets as much ‘screen’time as any other character. This is the best selling sci-fi book of all time, a precursor to Star Wars (one..I.. could say that Star Wars is a loose adaptation of this book), and a damn good book. This was my second time through the book, this time via audible, and it was awesome to hear the sound effects and multiple voice actors.


Paul Atreides is the son of a duke (in the galactic sense) called Leto. His mother Jessica is the only member of Leto’s concubine, he loves her but doesn’t marry in case he can secure a political alliance through another marriage. Jessica is a Bene Gesserit, which basically means shes a jedi, and Paul also has these abilities which is uncommon since he is male. The Bene Gesserit are way more scheming than the jedi however, they have their own plans for the Universe, and are deep into selective breeding…the long game.

The Atreides family and their ‘subjects’ are assigned, by the emperor, reign over the desert planet Arrakis. This is because the Atreides are gaining a ton of power and support, and the emperor is scared. The Harkonnens, already on the planet, have  a long feud with the Atreides and the Emperor hopes for the Atreides to be destroyed by them. The Emperor helps this happen by supplying his own imperial troops, who are super badass and never lose, the Sardaukar.

Ultimately, the Atreides are betrayed by their own trusted doctor Yueh. The doctor hates the Harkonnens because they killed his wife, which is why Jessica’s mind powers don’t discover the betrayal till too late. Yueh allows Jessica and Paul to escape, but captures Duke Leto and gives him to the Harkonnen baron, Vladimir. Vlad is an all around shitty dude, way worst than Darth Vader in that he is nonredeemable (and a child molestor). We also later learn that he is Jessica’s father. Yueh attaches a tooth filled with poison gas to Leto, which almost kills Vlad, and does kill one of his most powerful subjects, Piter.

Meanwhile, Paul and Jessica are stranded in the desert (Yueh didn’t help them out that much). They are eventually found by a tribe of Fremmen, locals of the planet, who decide to kill them for their water, nothing personal. Paul and Jessica use their Bene Gesserit powers to outsmart and outfight the Fremmen tribe’s leader Stilgar. Paul and Jessica are welcomed to the tribe and quickly become leaders.

Jessica becomes the reverend mother, basically their spiritual leader, by going through a ritual called spice agony. The ritual involves drowning a sand worm in water and drinking the poison it spews in death. The drinker must transmute the poison and in doing so will gain the memories of the reverend mothers before her. The kicker is that Jessica was pregnant with a daughter, and she went through the ritual as well. The daughter, Alia is born with the mental abilities of an adult, and the memories of the reverend mothers as well.

Paul in the meantime becomes a leader of the tribe, and even rides a giant sandworm, which is a like a ritual of adulthood for the Fremmen. Paul marries a Fremmen, Chani, and has a child Leto II. The Fremmen expect him to fulfill the prophecy of the Lisan al-Gaib: ruler of the Universe basically. These powers started getting unlocked when Paul started taking spice/melange (product of the sand worms, extends life/health but is also wholly addictive). Paul gains prescience, the ability to see futures, and in many futures sees a mass genocide on billions of people committed by the Fremmen with himself at the helm. He focuses all his efforts on avoiding this future, but only has so much prescience.

Eventually Paul reunites with his old master at arms, Gurney Haleck. Gurney attempts to murder Jessica, whom he wrongly believed betrayed Leto. Paul stops him, but is terrified that he did not see this future, and realizes he needs more power. Paul goes through the spice agony ritual, which is not meant for males. He is out for 3 weeks and barely comes out alive, but his powers have increased immensely and he knows exactly what to do.

The Emperor and his forces, along with the Harkonnens, are waiting above the planet in preparation for assault on the Fremmen resistance. The Emperor discovers where the Fremmen keep the women and children: on the other side of the planet that was assumed uninhabited. The Sardaukar kill Paul’s child, Leto II, and Alia allows herself to be kidnapped. She is not afraid at all and ends up killing Vlad, her grandfather, in the ensuing attack.

Paul and the Fremmen pull out all their wildcards in the attack. They fire nukes at the enemy force’s shields, which is technically legal since they are firing at a shield not directly at people. Then they all ride their sand worms into battle, which no one knew was possible. Paul confronts the defeated Emperor, kills Vlad’s nephew in a duel, and forces the Emperor to give his wife, Irulan, to Paul in marriage, making Paul the Emperor of the universe. The book ends with Paul consoling his concubine, Chani, that Irulan is only a political move and will receive no love. History will say that Chani was his true partner in the conquest of the universe.

I skipped more than I included. The politics of melange, the spice guild, mentats, Liet-Kynes the ecologist, Duncan Idaho the swordmaster, Thufir Hawat the master of assasins, Feyd-Rautha the cunning Harkonnen, the tribe dynamics, the Fenrings. This book is DENSE.

Ultimately the genocide was not prevented. Even with all that power, Paul could not prevent or even see the death of his child. I guess if he, or anyone, had absolute power that wouldn’t be fair, or fun.

Red Mars by Kim Stanley Robinson

Because orange doesn’t roll off the tongue

I saw Kim Stanley Robinson (KST) at a Q&A with George RR Martin at UCSD in 2016. KST is alum and I enjoyed his A’s, so I figured I’d enjoy his book and do him a solid; my purchase should hopefully get him a good lunch, at least a cookie. Go Tritons!

After reading the book I feel like I witnessed something great, but didn’t really experience it. Like a toddler at game 7 of the NBA finals who is too young to know what the finals are but knows something amazing is happening (do toddlers go to NBA games?) . Or more like myself going to that same game but in the nosebleeds and I forgot my glasses. Here’s a less metaphorical explanation.

This was my first audiobook (clocking in at 24 hours). I struggled with it for a few reasons, mainly related to it coming through my ears and not my eyes.

1. The book has otherworldly descriptions (most of it is on Mars donchaknow) that need some time to be processed, and replaying is finicky and a chore (+- 30 seconds on Audible) relative to moving your eye(ball?)s

2. I found myself imagining a person in a room talking into a microphone while reading, rather than experiencing the actual story

3. It was hard to tell who was speaking without indentations and whatnot; the narrator switches his voice up which works well for two characters speaking, but gets confusing as the people add up

4. I would listen in the wrong places. I read (present tense..english sucks) often right before sleeping and I don’t have much trouble staying up if I’m not tired but audio is completely different…the book became a lullaby

1 and 4 I can avoid on my next audiobook. 2 and 3 I hope to train away by listening to more audiobooks, maybe simpler ones that I have read before.


Below is a bungle of a linear plot summary (or a genius reinterpretation if I may) of KST’s amazing Red Mars. The italic is from wiki research, filling in plot holes and making corrections. Pretend the nonitalic stuff is written by the aforementioned toddler and be amazed…he is growing up so fast!

John Boon is the first person to go to Mars. He is a great American hero and beloved by his countrymen and the world. His trip spurs (along with perhaps a worsening situation on Earth) a huge investment in space and a few years later an international group of 100 scientists is sent to colonize Mars. They got engineers, doctors, and all the ‘ists.

The journey is a few months long and although it starts swimmingly, cracks begin to show. The facade is over when one guy finally clears the air: “We were chosen to get along with each other, to be dutiful scientists who obey the will of those who sent us. But we were smart enough to know that, and crazy enough to go on this mission. Too crazy to obey and too smart to show our true natures”. It’s during this time on the ship that we first learn about many of the main characters, through the perspective of Maya, a highly emotional Russian leader.

-John Boon is the icon he is portrayed to be. Bold, fearless, maybe a bit simple. He is neutral and gets along with everyone, although he has no clear ideology about Mars, or at least he doesn’t show it.

-Frank Chalmers is the designated leader of the Americans. He is a boisterous and intelligent dude, but also has some disturbing tendencies observed by the ever keen Maya. He is very calculative with his actions, everything he does and says has a purpose; not “my purpose in life is to better humanity” but “my purpose is to have things be the way they should be and I am in an endless battle between the right way and other people’s ways”.

-Arcadi is the crazy Russian dude. He is a wildcard who reveals his intentions at the end of the trip. He wants to make Mars a better world than Earth ever was and can be. Rather than just do scientific experiments and prepare the way for future inhabitants, he wants to setup a whole new system based on science. Arcadi is not clear on what that means, but he doesn’t try to be clear; he is trying to convince the others, each of which is smarter than him in some field, through basic logic and pathos. It helps that Arcadi is very passionate and has a huge heart. He and his followers end up on the moon Deimos.

-Maya is the crazy shrewd Russian gal. She pays close attention to how the 100 behave on the ship and she doesn’t like how they break up into ideological groups. She doesn’t really do anything to stop it from happening…besides one thing. She sleeps with Frank a lot because she reasons that they are leaders of different nations and their closeness will get the two nations to be closer. As she learns about Frank’s nature she regrets sleeping with him, but continues to do so to not make him feel bad. She slowly weans him off by being more distant and friend zoning him, while proceeding to sleep with John whom she finds boring but safe. Maya came off as very similar to Frank, only she doesn’t realize it.

-Heroku is the reclusive Asian botanist. Although she doesn’t speak much, she has gathered a large following because of her smarts and work ethic.

-Nadia is a stout middle aged Russian woman who works really hard and has no patience for bullshit

When the 100 land on Mars they are relieved to work. The work consists of harvesting raw materials and using them to build settlements. They also begin some light terraforming. We follow Nadia and Arcadi (who are now a thing) in a flying contraption putting heaters around Mars that will gently warm the planet. Eventually they discover that someone has planted plant seeds (genetically engineered to survive) in the heaters. They suspect Heroku and it is pretty much confirmed when she later goes into hiding. The 100 was divided over whether to keep the planet sterile till they could learn more (the majority) or whether to terraform AQAP. Heroku decided for them.

Flash forward 50 years and most of the 100 are still kicking thanks to advancements in science (not available to the poor of course). Many thousands more people are living on Mars and the 100 are important, almost legendary leaders. John is investigating a series of sabotages on construction. Some group doesn’t want more people coming to Mars. Someone tries to murder John, a few times, but he keeps on with the detective work in heroic fashion. A police investigation team (which turns out to be corporate.. transnational/transnat) suspects John. Eventually the culprits reveal themselves to John, they till him to stay out of it and that they are keeping Mars free and good. John realizes, based on the resemblance of one of them to himself, that Heroku has been breeding the 100 (by collecting their hair?)

//This is where I began to get really lost

John goes to Arcadi, who reveals he is orchestrating a resistance against the transnats and can connect them to John. John embraces Arcadi’s vision of a Mars that is better than Earth. John goes and visits many of the resistance and hears them out. Basically the transnats are evil.

There is a party where a lot of the 100, including Heroku, are together. John makes a big reveal of what Heroku has done (people don’t seem to care beyond this one scene) and says the transnats need to be stopped and the 100 need to be united for Mars and form a MarsUnited party. There is enormous support for John, and things are looking up (idk where up is).

Fast forward maybe a few months and Frank is furious with John. This is a major event of the story (the book opens with it), but I can’t recall why exactly Frank wants John dead. Part of it is John and Maya are together, and John is more admired and powerful than Frank. Frank uses his silver tongue to convince an Arab kid that John is anti-Arab (it is partially true, John doesn’t like how separate the Arabs are from everyone, and how distant their culture is from his ideal Mars culture). The Arab kid kills John and the 100 are left headless.

Fast forward 20ish years and the 100 are playing politics with the Transnats, who are gaining more power. Frank tries to appease both sides, but the Transnats end up having the upper hand and many Martians, including Maya, resent him. There are many revolts happening across settlements and Frank goes to many, trying to appease them. Eventually he gets so frustrated he makes a threat that if they don’t stop, bad things could happen, and he destroys a settlement by doing something as simple as “popping a baloon”. Now Maya is super into him again (Maya annoys me to no end), but Frank is distrustful of everyone but they make it work.

The transnats are building a space elevator but Anne and her followers blow it up and a shitton of people die as the pieces land across Mars. Nadia and Maya and some others barely make it to the south pole where Heroku has been hiding out with a bunch of rebel scum. It’s a somber, hopeful ending…I think.


Now forget what you read, take a cold shower, and read the book or a proper summary.