I am currently reading "Basic Economics" by Thomas Sowell (pictured above). While the title may sound pretty boring to some of you, the book is a insightful overview of the study of economics. It has been a fascinating read so far. Thomas Sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution. He writes on economics, history, social policy, ethnicity, and the history of ideas. He also contributes to news magazines and newspapers (I've seen his editorials in the Wall Street Journal).
This past Sunday evening, we were sitting around the table with Rob Hartman and a few other people, and I was commenting on a friend of mine who owns several cash advance establishments in Cincinnati. I was advancing my opinion that it's morally wrong to advance a loan to a customer without credit, charging exorbitant interest rates which puts the person even further into debt. In my opinion, it creates a vicious circle which eventually overtakes the person.
Now, I understand and agree that it is the person's responsibility to never put themselves in that type of situation. Personal responsibility is never promoted by social activists; it's always the greedy business. However, I wouldn't make money off of someone else bad choices or misfortune.
He called me on my comments and we debated the topic for a couple of minutes, then he said, "Hold on a minute. I have a book that you need to read." He ran upstairs and returned with "Basic Economics" and said, "Here, take it. It's yours."
It is one of the best books I've read this year. The book begins with an intro to economics, the roles of prices and so on. Using many illustrations from history and the present, Thomas Sowell examines the economic systems of various countries, contrasting their philosophies. So far, I can't put the book down! I highly recommend it.
He has already changed my thinking about pricing. You know when Hurricane Rita was bearing down on Texas, the hotels, gas stations and everyone else were raising their prices dramatically. At the time, my social activist side came up for air, saying why are they doing this to these poor people. They ought to be dropping the price, if anything. Well, Sowell explains that in the US economy, scarcity determines price. So, for instance, if there is a scarcity of hotel rooms, the price should go up. The reason being, a family of four, who could fit in one room, at a lower price will take two rooms, just so they can be "comfortable". That family, however, will stick with one room if the prices go up considerably due to the scarcity of rooms. Scarcity causes us to distinguish between being "comfortable" and what we really need. In fact, scarcity fosters sharing, though we don't realize it. Very interesting!
To read a portion of the book (48 pages) visit http://www.altfeldinc.com/pdfs/BASICECONOMICS.pdf. If you can, read the whole book. You will enjoy it! Thanks, Rob, for the book.
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