|name||Common Sense Economics|
|author||James Gwartney, Richard L. Stroup, Dwight R. Lee|
|publisher||St. Martin's Press|
|pages||208p. (first edition, hardback)|
|isbn||ISBN 031233818X (first edition, hardback)|
Part I: The Key Elements of Economics
- Incentive matter.
- People care about personal costs and benefits.
- Applies to economical, political and social situations, selfish and altruistic acts.
- There is no such thing as a free lunch.
- Everything has a cost, direct or opportunity cost.
- Decisions are made at the margin.
- The cost and benefit of “one-more”.
- Trade promotes economic progress.
- Trade moves goods from people who value them less to people who value them more.
- Trace makes larger outputs and consumption levels possible because it allows each of us to specialize more fully in the things that we do best.
- Voluntary exchange makes it possible for firms to achieve lower per-unit costs by adopting mass production methods.
- Transaction costs are an obstacle to trade.
- Not all middlemen are obstacles; sometimes they reduce transaction costs by brokering deals.
- Profits direct businesses toward activities that increase wealth.
- People earn income by helping others.
- Economic progress comes primarily through trade, investment, better ways of doing things, and sound economic institutions.
- Investments in productive assets (e.g. tools and machines) and in the skills of workers enhance our ability to product goods and services.
- Improvements in technology spur economic progress.
- Improvements in economic organization can promote growth.
- The “invisible hand” of market prices directs buyers and sellers toward activities that promote the general welfare.
- Too often long-term consequences, or the secondary effects, of an action are ignored.
Part II: Seven Major Sources of Economic Progress
Part III: Economic Progress and the Role of Government
- Government promotes economic progress by protecting the rights of individuals and supplying goods that cannot be provided through markets.
- Government is not a corrective device.
- The costs of government are not only taxes.
- There is the loss ofprivate-sector output that could have been produced with the resources that are now employed producing the goods supplied by the government.
- There is the cost of resources expended in the collection of taxes and the enforcement of government mandates.
- There is the cost of price distortions resulting from taxes and borrowing.
- Unless restrained by constitutional rules, special interest groups will use the democratic political process to fleece taxpayers and consumers.
- Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.
- Government slows economic progress when it becomes heavily involved in trying to help some people at the expense of others.
- The costs of government income transfers are far greater than the net gain to the intended beneficiaries.
- An increase in government transfers will reduce the incentive of both the taxpayer-donor and the transfer recipient to earn income. Economic growth will thereby be retarded.
- Competition for transfers will erode most of the long-term gain of the intended beneficiaries.
- Programs that protect potential recipients against adversity arising from their imprudent decisions encourage them to make choices that increase the likelihood of the adversity.
- Central planning replaces markets with politics, which wastes resources and retards economic progress.
- Central planning merely substitutes politics for market verdicts.
- The incentive of government-operated firms to keep costs low, be innovative, and efficiently supply goods is weak.
- There is every reason to believe that investors risking their own money will make better investment choices than central planners spending the money of taxpayers.
- There is no way that central planners can acquire enough information to create, maintain, and constantly update a plan that makes sense.
- Competition is just as important in government as in markets.
- Constitutional rules that bring the political process and sound economics into harmony will promote economic progress.