Book Review: Sowell Assignment 1
Book Review: Applied Economics: Thinking Beyond Stage One by Thomas Sowell
Luke Skywalker
Liberty University
PPOG502-C01-202520
Book Review: Sowell Assignment 2
Applied Economics: Thinking Beyond Stage One by Thomas Sowell
Thomas Sowell, the renowned economist and author of many books, is the author of the
2004 Laissez Faire Books’ Lysander Spooner Award winner titled Applied Economics: Thinking
Beyond Stage One. This award is given by Laissez Faire Books to honor those who continue to
advocate freedom and awarded to the author of the best book on liberty for the year. The
Hoover Institution stated that Sowell “moves beyond the pure economic principles …to focus on
applying economic principles to real- world problems. He explains many points the reader may
not be acquainted with and offers a fresh treatment of familiar points with an abundance of
fascinating illustrations. (Hoover fellow Thomas Sowell receives Lysander Spooner Award for
Applied Economics 2004).
Gwyen Morgan of the Epoch Times shared “This legendary economist, born to North Carolina
sharecroppers in 1930, overcame adversity to become one of the most influential conservative
thinkers of the modern era.” (Morgan, 2025). In this book, Sowell emphasizes the concept of
"thinking beyond stage one." He argues that many economic policies fail because policymakers
focus only on immediate, short-term effects without considering long-term consequences. He
dives into several areas, such as housing, healthcare, education, and international trade, and
illustrates how these economic principles, like supply and demand, have a crucial impact.
The book is broken down into eight chapters beginning with (1) Politics versus
Economics, (2) Free and Unfree Labor, (3) The Economics of Medical Care, (4) The
Economics of Housing, (5) Risky Business, (6) The Economics of Immigration, (7) The Economics
of Discrimination, and finally, (8) The Economic Development of Nations.
For the purposes of this book review, we will only be covering the chapters that were a part of
the assigned readings during this course, which will exclude chapter (2) Free and
Unfree Labor, and chapter (5) Risky Business.
In chapter (1) Politics versus Economics, Sowell establishes that “elected officials’ top
priority is usually getting reelected, and their time horizon seldom extends beyond the next
Book Review: Sowell Assignment 3
election.” (Sowell, 2009). He emphasizes the necessity of examining policies through a broader
lens and using empirical evidence to assess their effectiveness. This serves as a call to action for
policymakers and citizens alike to think more holistically about the far-reaching impacts of
economic decisions.
In chapters (3) and (4), the discussions center on the economics of medical care and
housing, respectively. In regards to intervention in medical care, Sowell states that
“Government-paid medical care is thus often an exercise in price control, and it creates
situations that have been common for centuries in response to price controls on many other
goods and services.” (Sowell, 2009). An example is if a doctor is paid the same no matter what
the visit is for, he would be incentivized to see a single patient multiple times to address
different aliments. This would prolong getting treatment for the patient but increase the
number of visits, and therefore the number of payments, for the doctor. This argument is similar
to his stance on the effect of price controls for housing when he stated, “not only does rent
control reduce incentives to build new housing, [but] it [also] reduces incentives to maintain
existing housing.” (Sowell, 2009). Why would a landlord take better care of his property if there
is never a shortage of renters for the cheap rates he is forced to accept? The broader message
from both chapters is that government intervention to make medical care and housing more
affordable is ultimately reducing housing supply, quality of life, and standards of medical care. It
is imperative for policymakers to consider that every policy comes with compromises that need
careful consideration.
In chapters (6) and (7), the discussions center on the economics of immigration and
discrimination, respectively. Sowell illustrates that both immigration and discrimination are not
solely social or political issues but that they are deeply influenced by economic factors.
“Prejudice, bias, and discrimination are too often confused with one another” stated Sowell,
and the application of these terms occurs in both the economics of immigration and the
economics of discrimination. (Sowell, 2009). He emphasizes that immigrants bring both benefits
Book Review: Sowell Assignment 4
and challenges, affecting labor markets, public resources, and social cohesion. For example, “45
percent of the immigrants from Asia had a college degree compared to just 4 percent among
immigrants from Mexico” during the early twenty-first century. (Sowell, 2009). Policies that
failed to account for these complexities, such as those that encouraged unchecked immigration,
often resulted in unintended consequences, like wage suppression for low-skilled workers or
increased strain on public services. When it comes to prejudice and bias, it is important to know
that both of these are attitudes. While these conditions are taking place in a person’s mind, and
is no less hurtful, it is the overt act, or discrimination, that occurs outside the mind, and in the
real world, that harms the most. Sowell also makes a very interesting point when considering
the use of life chances as part of the equation for empirical evidence. Sowell asks the question
“Do we mean life chances mere statistical probabilities in general, or do we mean likelihood that
a given attempt, with a given effort, will succeed? What if very few black boys want to become
ballet dancers or are prepared to endure peer disapproval if the persist in their efforts in this
direction?” (Sowell, 2009). This is not an attempt to dismiss discrimination but instead to ensure
the proper use of data collection to support a stated claim. The point Sowell is trying to
emphasize is that “those who do not think beyond stage one may assume that
antidiscrimination laws reduce it” and they would be incorrect in that assumption. (Sowell,
2009).
In the final chapter, the economic development of nations is discussed. Sowell focuses
on how economic development is influenced by a combination of historical, geographic,
cultural, and institutional factors, rather than a one-size-fits-all formula. Specifically, property
rights, legal systems, and government policies have a major impact on economic growth.
Property rights are a nation’s greatest asset and having a legal system that supports this will go
far in unlocking potential economic growth as well as furthering foreign investment. “Well-
defined and enforced property rights are crucial for the realization of gains from trade.”
(Gwartney et al., 2024).
Book Review: Sowell Assignment 5
When examining Applied Economics through a Christian perspective, it is readily
apparent that both Sowell and Christianity emphasize the importance of good stewardship.
Sowell advocates to think beyond the first stage and Proverbs 21:5 states “The plans of the
diligent lead surely to abundance, but everyone who is hasty comes only to poverty” (King
James Bible, 2008). He points out that while many policies are intended to help, they can
inadvertently harm disadvantaged populations and in Matthew 25:40 it states, “Truly I tell you,
whatever you did for one of the least of these brothers and sisters of mine, you did for me.”
(King James Bible, 2008). When comparing Sowell’s book and Chrisitan ethics, it is apparent that
wisdom, justice, and compassion are at the forefront in all decision making. Both of these views
encourage careful planning and the consideration of the long-term impacts when developing
policies so that there is a reflection of both moral and practical principles.
When considering the lessons from Applied Economics against current public policy
issues, one that comes to mind is the recent spate of Presidential Executive Orders on
Immigration. One of these orders “establish federal homeland security task forces to enable
federal, state, and local law enforcement to cooperate in removing gang members, criminals,
and undocumented individuals.” (Ombok, 2025). The addition of “undocumented individuals” to
the list of justified removals will have a significant impact on the available labor pool. Industries
reliant on immigrant workers will be forced to turn to domestic workers, who will command
higher wages, but this could also increase costs for businesses and consumers.
Book Review: Sowell Assignment 6
References
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.
Hoover fellow Thomas Sowell receives Lysander Spooner Award for Applied Economics. Hoover
Institution. (2004, March 11). https://www.hoover.org/pressreleases/hoover-fellow-
thomas-sowell-receives-lysander-spooner-award-appliedeconomics
King James Bible. (2008). Oxford University Press. (Original work published 1769)
Morgan, G. (2025, January 30). A mind that matters: Why everyone should know Thomas Sowell.
Aristotle Foundation. https://aristotlefoundation.org/columns/amind-that-matters-why-
everyone-should-know-thomas-sowell/
Ombok, O. B. (2025, January 21). President Trump’s executive orders on immigration and what
they mean for employers. Legal News & Business Law News.
https://natlawreview.com/article/president-trumps-executive-orders-immigrationand-
what-they-mean-employers
Sowell, T. (2009). Applied Economics: Thinking Beyond Stage One, revised and enlarged edition.
Basic Books.
