The Wisdom of Thomas Sowell

by Burt on August 23, 2011

Economist Thomas Sowell is famous for his accurate analysis and for expertly separating fact from fiction. Let’s ponder some provocative statements from his book Controversial Essays.

“The strongest argument for socialism is that it sounds good. The strongest argument against socialism is that it doesn’t work.”

Yes, it sounds good to say that industries will be run by the state in the public interest, but such industries always fail, or perform badly. The Russians under Lenin virtually abolished private farms and created state-owned cooperatives to feed their population. The result: famine, and large imports of food from abroad. On a lesser scale, when FDR promoted minimum wage laws, he did so by saying that poor people should have some guarantee of a living wage to support themselves. That sounds good, but in reality the American employers who first faced a national minimum wage law often had to lay off employees because the high labor costs that resulted turned their small profits into losses. Unemployment in 1938 and 1939—the first years of minimum wage in the U.S.—shot up to over 20 percent, in part from layoffs because of minimum wage. The law sounded nice, but didn’t actually work well in the real world.

“Because of the neglect of history in our educational system, most people have no idea how many of the great American fortunes were created by people who were born and raised in worse poverty than the average welfare recipient today.”

Absolutely true. For example, John D. Rockefeller, according to Investors’ Business Daily, was the wealthiest person in U.S. history, but his father was an itinerant peddler who deserted his family. Andrew Carnegie, the man who made American steel competitive, was a poor immigrant from Scotland. Robert Morris, the indispensable man in financing the American Revolution, was an immigrant from England. Henry Ford lost his father at a young age and so did Kemmons Wilson, who started Holiday Inn. Many of the greatest entrepreneurs in U.S. history started life desperately poor but they valued the freedom they had to create new products. While socialism is busy sounding good but not working, it is also robbing capital and freedom from the very people who can create new jobs if given the chance.

“It is amazing how many of the intelligentsia call it “greed” to want to keep what you have earned, but not greed to want to take away what somebody else has earned, and let politicians use it to buy votes.”

Sowell is right again. Many politicians yell at “big oil” for obscene profits, but few notice that Washington makes more in taxes on a gallon of gas at the pump than any of the oil companies. And how are those federal dollars spent? The cash in the stimulus package of 2009 often went to state and local bureaucrats. In the 1930s, FDR carefully calculated how much federal cash went to various congressmen and used that money to make sure the politicians voted his way on key bills in the House and Senate. Few historians call FDR “greedy,” but most historians use that term to apply to many American businessmen of the day. Is it greedier to make a profit, or to tax that profit and spend it on a program to attract votes?

Sowell lived through the Great Depression and later studied economics at the University of Chicago. He knows what works and what doesn’t work—wisdom which our nation’s leaders need to acquire if the U.S. is to remain a world power.

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