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Sowell breaks down problems from an economist's perspective 2010-05-25

Reviewer: J. Sander

Sowell breaks down topics such as College tuition and funding, urban sprawl, and women's pay inequality from his perspective as an accomplished economist. The book is well written and brought to my attention more factors involved in the economics of everyday life.

Great Book 2010-05-22

Reviewer: TypicalBuyer

Like Basic Economics, it's written in layman's terms. I wish more of the general public would read this and his other books so that they better understood the nature of economics and how poor political choices are often based on a lack of understanding about economic realities. Definitely recommended.

A seriously flawed book 2010-04-14

Reviewer: JG

There are a lot of serious flaws with this book. A lot of oversimplified conclusions based on incorrect assumptions, compounded by what I believe are deliberately misleading, cherry-picked statistics.

Rather than focusing on the chapters on racial and gender issues, which press on emotional buttons too easily, I'm going to focus on the problems with the chapter "Income Facts and Fallacies" since these are flaws that can be more calmly discussed using measurable standards.

EXECUTIVE COMPENSATION: Sowell's position is that CEO pay may seem outrageous to outsiders but is simply the corporation paying the market price for talent. A corporation will act in its own self interest and pay what it deems is the best price for talent. A wonderfully simple explanation based on the flawed assumption that the people deciding CEO pay are the same people who own the company. What Sowell fails to mention is that unlike in small companies that are managed by their owners, the owners of large corporations (shareholders) do not make the decisions about management's pay. Those decisions are made by the board of directors, who are often times chaired by the very same CEO whose pay they are deciding, or filled with board members nominated by that CEO. Often times the salary of the CEO reflects the influence that CEO holds over the members of the board rather than some market determined price for talent.

MEDIAN INCOMES: Sowell argues that the middle class has actually grown wealthier over the years. One of the statistics he sites is that the percentage of households earning over $75,000 has tripled over the past several decades. What he fails to mention is that this statistic is not adjusted for inflation. 75,000 today is worth a lot less than 75,000 was worth in 1970. By comparing nominal amounts instead of inflation adjusted amounts Sowell is comparing apples to oranges, which is something that any freshman statistics student knows is wrong. The only possible reason for using non-inflation adjusted figures like this is to mislead the reader.

REAL INCOMES: Sowell claims that when you factor in non-wage compensation like health benefits and retirement benefits today's workers are earning just as much as those of a generation ago, maybe even more. But compensation is only half of the picture when it comes to real incomes, the other half of the picture is purchasing power that those wages command. Getting a 10% raise sounds nice but if your expenses increase 20% due to inflation then your real income has actually decreased. Sowell addresses this by pointing out how inflation in consumer goods is merely the reflection of improvements in the quality of those goods over time ("if Chevrolets today contain many features once confined to Cadillacs [then that explains why Chevys cost more now than before]"). However, Sowell fails to mention that the largest expenses faced by households today (housing costs, healthcare, tuition, insurance) have all increased beyond the rate of inflation in consumer goods. Who cares if the price of a laptop computer has decreased by 10% if the cost of rent or college tuition or health insurance premiums have tripled during the same time. By focusing only on the nominal wages and benefits of workers while ignoring the purchasing power of those wages Sowell paints a misleading picture of the real incomes of workers today.

If this book was written by some undergraduate political science major then I could dismiss these issues as the sloppy mistakes of an amateur but when a man with Sowell's training makes these mistakes I take a more cynical view. I believe that Sowell is deliberately misrepresenting his facts in order to mislead the reader. He leaves out too many important details that don't fit his narrative. At the end of the day this is not a book about economic "facts and fallacies", instead it is a collection of the author's opinions that he declares to be "facts" based more on ideology than on actual data.

Intellectuals and Society -- captivating and enriching 2010-04-05

Reviewer: Nathan Bowers

This is an amazing book. I found it to be quite captivating and enriching. This book fosters analytical thinking and sheds light on topics that we are so often only exposed to one very biased side of the argument on.

A Call for Us to Go Where the Evidence Leads 2010-04-01

Reviewer: Joel Barnes

_Economic Facts and Fallacies_ (2008, Basic Books) is my first foray into the writings of economist, Thomas Sowell. And I have to say, I'm quite pleased with what I've found.

Sowell states at the outset that many things "are believed because they are consistent with a widely held vision of the world - and this vision is accepted as a substitute for the facts." (p. vii) The rest of his book is really an illustration of this truism along multiple lines.

Sowell challenges conventional/current wisdom on housing and urban sprawl policy, showing that the data tell another story. He also examines income disparities across gender, race, and nations, concluding in most cases that the differences are explained by factors other than discrimination or exploitation contra popular opinion.

_Economic Facts and Fallacies_ is really a call for us to go where the evidence leads and to resist conforming the data to our own preconceived ideas of what reality is. For example, that there is an economic difference between two groups of people does not mean ipso facto that there is a "disparity" or "inequality," the cause of which can be traced back to some pernicious discrimination or exploitation.

Though Sowell's book is about economics, statistics, and data, it is non-technical for the most part. The interested reader will have little trouble making it through the book. While Sowell makes clear his dislike for central planners in several places throughout the book and presents a conservative approach to economic and social policy, the book has value for readers of all political stripes. In my view, the illustrations in the book transcend partisan politics and remind us all that we need to be more honest when interpreting the data.