Book Review: Gwartney Assignment 1
Book Review: “Common Sense Economics: What Everyone Should Know About Wealth
and Prosperity” by Gwartney, et. al.
Luke Skywalker
Liberty University
PPOG502-C01-202520
Book Review: Gwartney Assignment 2
“Common Sense Economics: What Everyone Should Know About Wealth and Prosperity” by
Gwartney, et. al.
One of the more impactful books in the world of economics and public policy is the
result of the collective efforts of five noteworthy authors: James D. Gwartney, Richard L. Stroup,
Dwight R. Lee, Tawni H. Ferrarini, and Joseph P. Calhoun. Sadly, two of these authors have
passed away; James Gwartney died in 2021, and Richard “Rick” Stroup died in 2024. However,
the fruits of their labor continue to be enjoyed by those beginning their journey into the world
of economics and public policy. In the preface, the authors acknowledge that the “book explains
why some nations prosper and others do not. The political process is examined and differences
between government and market allocation [are] investigated. Even advanced students of
economics and business will find this book valuable because it pulls together the ‘big picture’.”
(Gwartney et al., 2024). The authors saw themselves as educators and packaged a multimedia
course that would meet K-12 standards as well as offering online courses and special
workshops. After a brief summary of the core material from the book, we look beyond what is
covered in the pages to consider how these lessons correlate with elements of the Bible. The
teachings from a Christian point of view can provide a unique perspective to understanding how
the book can relate to current public policy issues, something to be discussed in the third
portion of this review.
The book itself is organized into four parts: Part one covers the “Twelve Key
Elements of Economics”, Part two covers the “Seven Major Sources of Economic
Progress”, Part three covers the “Ten Key Elements of Economic Thinking About the
Role of Government”, and Part four covers the “Twelve Key Elements of Practical Personal
Finance”. For the purposes of this book review, we are discussing the assigned readings which
do not include part four.
In Part one, the authors provide the twelve fundamental concepts of economics that
emphasize the efficient use of resources, the importance of trade, and the critical role of
Book Review: Gwartney Assignment 3
incentives in shaping economic decisions. They discuss how “life is about choices, and
economics is about how incentives affect those choices and shape our lives”. (Gwartney et al.,
2024). This analysis of the use of costs and benefits can be used to influence a person’s choice.
We often hear the phrase “no such thing as a free lunch” (Gwartney et al., 2024) and the reality
driving it is the scarcity of resources and the need to make choices based on opportunity costs.
The book also discusses the concept that “decisions are made at the margin” (Gwartney et al.,
2024) so that, in order to maximize resources, choices are taken “only when the marginal
benefits exceed the marginal cost”. (Gwartney et al., 2024). The real world examples sprinkled
throughout the book work to further reinforce and, in some cases, better connect the material
for the reader. Comparing how a mere five dollar change in price for a shirt can move a
manufacturer from being in the black to being in the red in one month really serves to
emphasize the point of opportunity costs.
In Part two, we are introduced to seven key sources, including a robust legal system,
competitive markets, and monetary stability, that drive economic growth. “Welldefined and
enforced property rights are crucial for the realization of gains from trade.” (Gwartney et al.,
2024). Property is often mentioned as the vehicle to building generational wealth in today’s
society. Having a well-established system of determining ownership in property will incentivize a
person to maintain that property and utilize it in a manner that will benefit them. “Competition
gives firms a strong incentive to develop better products and discover lower-cost methods of
production.” (Gwartney et al., 2024). These competitive markets are what drive innovation to
bring new products to market, improve efficiency, and to provide the best customer experience.
How many times will someone tolerate bad service from a restaurant before switching to
another establishment? Social media today has proven to be multiplier to the marketplace; a
viral video can drive sales up or down in shorter amount time than was previously capable of.
Behind all of this trade is a stable monetary system; it is what makes the exchange of goods
Book Review: Gwartney Assignment 4
possible. Controlling inflation is a key component to ensuring the designated fiat currency
continues to flow.
In Part three, the authors pivot to examine the role of government as it pertains to the
economy. There are ten elements discussed overall but the discussion on the special-interest
effect and the tendency of governments to run budget deficits is thought-provoking. The
examples used to demonstrate the workings of pork-barrel politics provide a compelling
justification for the support of legislation that limits the influence of special-interest groups. The
subject of budget deficits is nothing more than an exercise in apathy. Short-sighted politicians,
merely looking to the next election cycle, will continuously vote to bankrupt our nation in an
attempt to avoid a recession. This thought process is based on the Keynesian analysis that
“government spending and budget deficits could be used to promote a more stable economy.”
(Gwartney et al.,
2024).
Overall, these five noted economists have provided a valuable resource that explains
complex concepts in a clear and engaging manner. By understanding this comprehensive
overview of economic principles that govern decision-making, resource allocation, and the role
of government in promoting economic efficiency, individuals and policymakers can better
navigate economic interactions and foster environments conducive to growth and prosperity.
When considering the Christian perspective, there is an emphasis on importance of
loving and caring for others. This principle can be applied to economic decisions by ensuring
that policies and practices promote the well-being of all individuals, especially the marginalized
and vulnerable. Justice is a central theme in Christian ethics. This involves ensuring fairness and
equity in all aspects of life, including economic policies. Ensuring that markets are competitive,
and resources are used efficiently, can help promote fairness and equity in economic activities.
Every person is made in the image of God and deserves respect and dignity. A robust legal
system highlights the importance of protecting property rights and enforcing contracts in an
Book Review: Gwartney Assignment 5
evenhanded manner; ensuring that individuals' rights are protected and respected aligns with
the principle of human dignity.
The one area that is of specific importance to me was budget deficits.
Historically, budget deficits can be run at a moderate rate in order to facilitate a healthy
economy. However, it appears that the time of the “whatever-it-takes fiscal policy of the covid-
19 pandemic governments” have not fully retrenched. (The rich world faces a brutal spending
Crunch, 2024). It is estimated that a healthy deficit for a rich country, like the United States,
would be about 2% of Gross Domestic Product (GDP) and still be able to reduce its public-debt-
GDP ratio. Unfortunately, the United States is currently no where near that goal and, while the
reduction efforts of the Department of Government Efficiency are commendable, much of those
savings will be offset by the potential expiring tax cuts being made permanent. Our
policymakers need to focus on the longterm health of the economy and not just the immediate
effects of the taxpayer’s pocketbooks. “Be kind, be fair, be just.” (unknown).
Book Review: Gwartney Assignment 6
References
The Economist Newspaper. (2024, April 9). The rich world faces a brutal spending
Crunch. The Economist.
https://www.economist.com/finance-and-economics/2024/04/09/the-rich-worldfaces-a-
brutal-spending-crunch
Gwartney, J. D., Lee, D. R., Ferrarini, T. H., Calhoun, J. P., & Shaw, J. S. (2024). Common sense
economics: What everyone should know about wealth and prosperity. St. Martin’s Press.
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