"A distinguished British economist named Lionel Robbins have the classic definition of economics: Economics is the study of the use of scarce resources which have alternative uses." p. 2
Sowell focuses quite often, as in his other books, on the importance of looking beyond intent to actual consequences, especially regarding legislation restricting free trade. Many regulations and laws passed with the professed intent to help "the poor" in fact hurt their interests. He uses minimum and maximum wage laws, rent control and price controls as examples.
Prices aren't arbitrary; they're means of allocating scarce resources. Costs are different from expenditures, especially for the government.
Many words and phrases commonly used in the media and by politicians are misleading or based on fallacies. Examples include "fairness," "redistribution of wealth," "greed," and "exploitation."
The combined knowledge of a society is greater than the combined knowledge of a small group of experts. The failed communist experiment in the Soviet Union is used to show the importance of knowledge regarding inventory. Industry leaders like Roy Krone and JC Penney are held up as examples of simple people with great ideas who had opportunities to use their knowledge and foresight in a free market, when they wouldn't have in a government controlled economy.
"When the United Nations announced in 2000 a goal to reduce the number of people living [on a dollar a day or less] by 2015 to one-half the level that had existed in 1990, it turned out that this goal had already been achieved - apparently unknown to the UN officials. The effectiveness of the market does not depend on officials understanding it."
Tax rates and tax revenue should not be confused. Labor costs, labor wages and production costs should not be confused.
People's incomes usually change over their lifetime, placing them in different categories from rich to poor depending on the year. Therefore, the people who make up these groups will change depending on the year.
Speculation lowers risk. Managers and investors "produce" as concretely as workers; it just took place years before or in much less visible ways.
Third World countries remain poor through a lack of investment due to restrictions, regulations and red tape, uncertainty of the ability to keep profits earned when private property isn't protected by law, a lack of financial institutions that turn natural resources into wealth, and widespread corruption.
Profits provide incentives which have proven to be more effective than other incentives at creating wealth for a greater number of people.
Unrestricted international trade is a rising tide that lifts all boats. Tariffs might save some jobs but ultimately, a net number of jobs are lost as higher costs are passed on to other industries. Absolute advantage, comparative advantage, and economies of scale are important in reducing costs and increasing productivity which both lead to greater wealth for all countries involved in international trade.
"Trickle-down theory" is not and has never been a true economic theory, but a straw man argument used by those advocating against the free market.
As a professor, Mr. Sowell would offer an A to any student who could find a positive comment about businessmen in Adam Smith's "Wealth of Nations." No one ever did. Businessmen are interested in what raise their profits and reduce competition, not necessarily what will protect the free market. Therefore, they are often advocates of government intervention.
Losses are just as important as profits in the workings of the free market, but are not as fun for businesses to talk about.
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