Applied Economics: Thinking Beyond Stage One
by Thomas Sowell

In Applied Economics: Thinking Beyond Stage One, Sowell discusses how basic economics is generally misapplied because politicians think only in Stage One. Stage One is the immediate result of an action, without determining what happens then. He argues that many politicians cannot see beyond Stage One because they do not think beyond the next election. He gives as an example of Stage One Thinking, a State government which raises taxes on a business. The immediate result is more revenue for the State government. However, over the course of time, that business might move bits and pieces of the company to another state or new businesses may choose another state to place a new factory. Over the course of time, the State will lose revenue because businesses will go to other states.

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Selected Quotes

Thomas Sowell
The feeling that the government should “do something” has seldom been based on a comparison of what actually happens when government does and when it does not “do something.” view tweet
Thomas Sowell
The real question is not which policy or system would work best ideally, but which has in fact produced better results with far from ideal human beings. view tweet

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