Review of Thomas Sowell, Economic Facts and Fallacies

Review of Thomas Sowell, Economic Facts and Fallacies

Basic Books (2008)

Herbert Gintis

I preface my review of Thomas Sowell's Economic Facts and Fallacies with two semi-personal accounts. First, many years ago my young wife and I took the subway to Boston Common to a Fair Play for Cuba demonstration (this was before we drove Castro into the USSR's arms with a trade embargo and other hostilities). Pete Seeger sang a Spanish Civil War freedom song, and when he was done, he said "We might have lost the war, but we had all the good songs." The crowd laughed, but I was dumb-struck. I swore that I would never be satisfied having good songs, especially if this got in the way of winning the battle for human rights and dignity. The point is not to be a Good Person with High Ideals. The point is to contribute to making a better society.

Second, all my life I have been a strong admirer of John Stuart Mill (I wrote a chapter of my Ph.D. dissertation on his model of individual utility). One of his most courageous acts was to be arrested for distributing birth control information in the poor neighborhoods of London. Why did he do this? Well, at the dawn of the Industrial Revolution in England, numerous "utopian socialists" had devised plans for human betterment, especially for the elimination of poverty through intentional communities. The great economist Thomas Malthus' Essay on Population purported to show the futility of poverty relief, arguing that increasing the consumption of the masses would simply lead to a higher birth rate, hence more pressure on food sources, leading to a return to poverty, only with a larger population. We know now that Malthus was wrong (Google "demographic transition" and "agricultural productivity"), but his argument seemed cogent at the time. Indeed, economics was called the "dismal science" because economists like Malthus and Ricardo continually developed ingenious arguments as to why social betterment was impossible. However, John Stuart Mill saw the fallacy in Malthus's argument: if increased consumption were accompanied by a means for birth control, then the masses could enjoy a higher standard of living. I admire Mill because he accepted a dismal economic analysis because he thought it correct, and then tried to solve the social problem involved (poverty) even given the veracity of the economic argument.

Thomas Sowell is a serious economist and a fine writer. There is not a single argument in this book that I think is either incorrect or even disingenuous. Everyone interested in economic and social policy should read this, and his other writings. Sowell is best as showing how statistics can mislead. For instance, he says "It is an undisputed fact that the average real income...of American households rose by only 6 percent over the entire period from 1969 to 1996...But it is an equally undisputed fact that the average real income per person in the United States rose by 51 percent over that very same period." (p. 125) Both are true because average household size decreased dramatically over the period, with more elderly couples and fewer children per married couple in the later period.

Nota bene: commentators who give the household change while ignoring the individual change are slimebags. You may say that they are well-intentioned, but that does not change the fact that they are liars out to mislead the uninformed. Sowell often manages to reveal the liars and slimebags for what they are. Moreover, this is a service to us all, for how are we to identify and solve social problems if we do not know what they are? My only serious criticism of Sowell is that he is rather more like Thomas Malthus than like John Stuart Mill in temperament. He repeatedly attempts to say that a social problem is less serious than liberals believe, or that a problem cannot be solved by a social intervention. Sowell's deep understanding of the capitalist system is not deployed to generate novel, effective, solutions to problems. In this, he differs from his mentor, Milton Friedman, whose Capitalism and Freedom contained numerous creative interventions, including the negative income tax and school vouchers.

To whet the reader's appetite, here are a few of Sowell's positions. (1) Rent control is a stupid way to help the poor, because it drives down the supply of affordable housing; (2) Racial discrimination is not the cause of income differences between blacks and whites, which are virtually equal when correcting for IQ, education, experience, and other demographic variables; (3) the same is true for the role of gender discrimination in accounting for the lower incomes of women as opposed to men; (4) Slavery, racism, and discrimination are not the cause of the social pathologies associated with poor black inner-city neighborhoods; rather the causes lie in a variant of black culture inherited from traditional southern poor white culture; (5) Poverty in the third world is not caused by imperialism or wealth in the rich countries. In each of these, and several other areas, I think Sowell's arguments are correct, and should be take serious when proposing vigorous social policies for creating a more equal and fair distribution of the world's resources and produced wealth.