Thursday, February 9, 2023

Economic Facts and Fallacies

The government, the media and society at large take a lot of stuff for granted in forming their policies and opinions. The problem is that a lot of it is wrong. In Economic Facts and Fallacies, Thomas Sowell refutes a lot of the "conventional wisdom".

I thought the book was very well done. Sowell attacks a lot of misconceptions from a range of topics including the urban/rural divide, inequality, and racial issues. I learned a ton from a it. For example, it's well-known that African Americans commit more crimes than other races; but if you account for the fact that African Americans are more likely to come from broken homes, that racial crime disparity disappears. A cultural holdover from slavery is usually blamed as the cause of so many broken African American homes, but 31% of African American children were born to unwed mothers in the 1930s, while this rose to 77% in the 1990s! Clearly, something else is going on!

Though the book mostly stays clear of any political leanings, I felt like there was some political bias in places, even if unintentional. For example, the fact that academic institutions have bloated cost structures is partly blamed on the fact that the professors themselves are both employees and management, as school boards of trustees (the supposed real bosses) are often far-removed from the day to day and are somewhat dependent on the professors to maintain their prestigious positions. But when discussing CEO pay, Sowell dismisses the idea that weak boards of directors (which suffer from similar issues as school trustees) are letting the executives run the show. (Incidentally, an excellent book on this topic is The CEO Pay Machine.)

I highly recommend Economic Facts and Fallacies so that at the very least, you can get your facts straight.

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