Review of Basic Economics Part 2

Basic Economics written by Thomas Sowell

From Basic Economics, the “allocation of scarce resources that have alternate uses”. In part two of this review, I will touch on 3 points out of the last thirteen chapters of the book: resource scarcity, property rights, and trickle down economics. There are a finite amount of resources, such as oil, but we do not know how much oil there is to find.

Resource Scarcity

The cost of finding oil reserves is enormous. An example from the book, which is outdated and does not account for inflation to present day, says that a “major oil exploration venture in the Gulf of Mexico spent … ‘ a total of $200 million’ just to see if there was enough oil to justify continuing further”. If taxes and fees were increased to find the oil, it is less likely that the money would be spent to find that oil. Conversely, if the taxes and fees were lowered, it would be more profitable to search for that oil. In either case, the same amount of oil is in the ground. It is just of difference of money spent and knowledge of the resource.

Property Rights

This is the difference between something being “owned by the people”, and self-ownership. If a farmer owns his property and is paid on the produce that is sold, it’s in the farmers interest to sell a lot of quality produce. That farmer would not ship rotten food next to good food because it would contaminate the whole shipment. However in the Soviet Union since no one owed property or the food produce process, rotten food was often shipped with good food. Everyone was paid the same whether the food was rotten or good. 100% job security with minimal job accountability. When you own your property and products you won’t be working anymore if you ship rotten food.

Trickle Down Economics

Thomas Sowell expressly denounces trickle down economics as a valid economic theory. In order to start a business and investment is made first. Then people are paid to do work. The first people that receive money are the workers. Then after surviving a high rate of failure with new businesses, profits to the business may come back. Generally speaking it takes years to reach a profit on a business. The real benefit from reducing taxes on businesses is that it opens the door to make investments sooner in the future. Workers expect to get paid for every day worked, but profits for companies come years after they are started. Trickle down economics is actually exactly the opposite of the rich get paid then money goes to the workers. In reality, worker gets paid then profits might flow in years later.

I do recommend this book and I hope you will check out part 1 of the review. There is a ton of content and my points about resource scarcity, property rights, and trickle down economics do not even scratch the surface. I hope you will check it out.

You can find the book from his website here: https://www.tsowell.com/basicecon_5.html

Review of Basic Economics part 1

Basic Economics written by Thomas Sowell

From Basic Economics, the “allocation of scarce resources that have alternate uses”. This text is longer and packed with more information than I’m used to reading in a book. Therefore, in part one of this review I will talk about some of what I learned from the first eleven chapters of the book. The rest will be in part two of the review. Starting with the definition of economics, “the study of the use of scarce resources which have alternate uses” we can focus on resources.

Live Modestly

There are no infinite resources. The first point I took away for my personal application of the book is to live modestly, or within your means. A great quote from chapter one, “even millionaires can have a hard time making ends meet if the try to live like billionaires.” No matter how much money I make or wealth I have, if I live like I own more I will eventually loose it all. Additionally, I learned about the true meaning of a price.

The price is right

When two people set a price on an object then trade, both are now better off after the transaction. The first person paid a price for the object and the second person go what they wanted in exchange for the item sold. These items take resources to create and exchange for the money that is used. The price that is agreed upon is what benefits both parties. If the price is too low then the seller would not be able to continue to sell because it would not cover the cost of resources. Conversely, if the price is too high the buyer would not be able to purchase the item. This is the key, if the price is set just right the buyer will only obtain what they need and the seller will be able to reproduce the item by consuming more resources and re-invest the leftovers into producing more of something. This increases the oversize size of the pie (economy). Lastly, what about items that are essential to live, such as housing?

Affordable housing

The last point I’ll highlight is the subject of affordable housing, rent control. Thomas Sowell talks about rent control throughout the book. “The idea that rent control protects poor tenants from rich landlords may be politically effective, but often it bears little resemblance to the reality.” If you price control housing, you reverse the incentive for companies to build quality homes and apartments. The price is the same, so there is no reason to build more than the bare minimum. So why not have the government mandate the quality and production of housing?

If the government mandates the price, quality and building of housing, then you have Russia. With government controlled housing, there often is a shortage of resources. This leads to a shortage of housing or a decline in the quality of housing. It is also worth noting that in most affordable housing scenarios, there is a cap above rent control. Luxury housing is where the super rich can get homes built for lots of money. The rich will always be building additional homes somewhere. Those rich could be business owners or politicians. Rent control only hurts the middle class and poor.

There is more to talk about from Basic Economics. I do recommend this book and I hope you will check out part 2 of the review. There is a ton of content and my points: live modestly, the price is right, and affordable housing do not even scratch the surface. I hope you will check it out.

You can find the book from his website here: https://www.tsowell.com/basicecon_5.html

Review of The Dichotomy of Leadership

Book written by: Jocko Willink and Leif Babin

The Dichotomy of Leadership lays out 12 major aspects of leadership where people must find balance. Each chapter touches a dichotomy between taking control in some aspect and letting go. The book is a sequel to their first one “Extreme Ownership”. Throughout the read, the authors reference their first book by showing that being too controlling, taking too much ownership, or basically swinging the leadership pendulum too much in any direction will have a negative effect. Here are three points I want to highlight where I want to improve on.

Big Takeaways

First, an aspect of the dichotomy is to have discipline and structure but with grace. While a schedule and flow that is consistent is helpful, humans are not robots. Too much discipline will cause people to shutdown or leave. It’s counter-intuitive to hear that too much discipline is bad from former military members however, that is the truth.

The second point is to have the same relationship with every boss you’re under. The goal here is to have your boss trust you, have them value your opinion and have them give you what you need to accomplish your mission / tasks / goals. For me, this is the most difficult because it requires me to change and adapt to my boss. If I don’t agree with something, I have to adapt to give my boss what he / she needs so that I can complete the mission while also meeting the requirements of my leadership. This brings me to last aspect of showing humility and strength.

Finally, without humility and strength a leader is hard to follow. It makes me think of a saying popularized by Teddy Roosevelt, “Speak softly and carry a big stick.” This dichotomy truly can apply to all aspects of leadership.

In summary I wholeheartedly recommend this book for all leaders. Every adult can apply principles of this book to their work life, various organizations and their personal relationships.

You can find “The Dichotomy of Leadership” wherever books are sold. Here is the book’s listing at Echelon Front’s website: https://echelonfront.com/dichotomy-of-leadership/. Echelon Front is the name of the organization the authors are from and are the companies founders.

Here you can check out my previous book review post: “8 Seconds of Courage

Review of “8 Seconds of Courage: a Soldier’s Story from Immigrant to the Medal of Honor”

8 Seconds of Courage is short book with a deep inspiring story about Flo Groberg’s life from a child in France to the award ceremony for the Medal of Honor. Step by step you read about the events and people that influenced Flo’s life and decisions towards the Medal of Honor. Truthfully, the meritorious recognition is just the country’s way to recognize the commitment and sacrifice that Flo and his Soldiers already committed. The meat and substance lies in the journey to the heroism and then the recovery afterwards.

Key Components

This book really highlights the journey it takes to move on instinct to protect your comrades. Flo is positively influenced by his uncle, finishes college, then joins the army. He then completes Army ranger school and leads two tours in the Middle East. It’s the memories, good and bad, that help lead him to make the right choices that protect lives. However, the 8 seconds of heroism is not the end of the voyage.

After the 8 Seconds of Courage comes recovery. This is where the battle of regret, self worth, courage to face loss and heartbreak edges on for years. Not weeks or months, it’s years of pain. It’s easy to highlight the act of valor or the ceremony for the Medal of Honor. Yet I found the most value in the story of the path to the salute to courage and the dark recovery within.

I fully recommend this book. It is a quick read but I was not able to put it down. The progression features the important points that the reader needs to understand to appreciate the journey of Flo.

You can find 8 Seconds of Courage anywhere books are sold. Here it is, sold on Amazon: https://www.amazon.com/Seconds-Courage-Soldiers-Story-Immigrant/dp/1501165887

Check out my last book review here.

Review of More Than Enough: Proven Keys to Strengthening Your Family and Building Financial Peace by Dave Ramsey

Copyright 1999, I’m behind the times with this version of “More Than Enough” from Dave Ramsey. What I liked about the book is that you could see the ideas of his later books forming in this one.  I’m not sure I would classify this book as a financial book, it’s more of a behavior text on how to succeed in your aspirations. The entire book is filled with what we now call today (in 2019) Dave Rants.  It provides counseling, quotes and stories touching on good moral values, integrity and character.

Another aspect this book brings is a lot of repetition, however, the repetition tells a story as you read through the chapters. Dave starts with values, vision and goals. He then maps a path that detours into hope, work, diligence, unity, contentment and giving. In between those detours are plenty of stories, quotes and motivational statements to get you fired up.


The Big Picture

Dave’s formula for financial piece starts with a decision to change.  You work on getting better with managing money and get out of debt.  From there, Dave focuses on character and building long term gains with positive moral influences. Surround yourself with who you want to become and be a better spouse, parent, friend, co-worker or citizen. Finally you finish life by serving and giving to others. The financial piece is just a part of the journey to a fulfilling life.

I recommend this book but I should set expectations. This is not just a ‘how to get out of debt’ book. It’s a motivational text on becoming a better person to serve others with a side benefit of financial freedom. It’s Dave’s way of telling you that you can do better and live a more fulfilling life.

Note: the new version, as of 2019, of the book is titled More Than Enough: The Ten Keys to Changing Your Financial Destiny. You can purchase the book here from Dave Ramsey’s store on Amazon: https://www.amazon.com/More-than-Enough-Changing-Financial/dp/0142000477

Check out my last book review here.