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Markets And Minorities
- GenresEconomics
156 pages, Hardcover
Published October 8, 1981
4 people are currently reading
248 people want to read
About the author
Thomas Sowell
91 books5,638 followersThomas Sowell is an American economist, social philosopher, and political commentator. He is a senior fellow at the Hoover Institution. With widely published commentary and books—and as a guest on TV and radio—he became a well-known voice in the American conservative movement as a prominent black conservative. He was a recipient of the National Humanities Medal from President George W. Bush in 2002.
Sowell was born in Gastonia, North Carolina and grew up in Harlem, New York City. Due to poverty and difficulties at home, he dropped out of Stuyvesant High School and worked various odd jobs, eventually serving in the United States Marine Corps during the Korean War. Afterward, he took night classes at Howard University and then attended Harvard University, where he graduated magna cum laude in 1958. He earned a master's degree in economics from Columbia University the next year and a doctorate in economics from the University of Chicago in 1968. In his academic career, he held professorships at Cornell University, Brandeis University, and the University of California, Los Angeles. He has also worked at think tanks including the Urban Institute. Since 1977, he has worked at the Hoover Institution at Stanford University, where he is the Rose and Milton Friedman Senior Fellow on Public Policy.
Sowell was an important figure to the conservative movement during the Reagan era, influencing fellow economist Walter E. Williams and U.S. Supreme Court Justice Clarence Thomas. He was offered a position as Federal Trade Commissioner in the Ford administration, and was considered for posts including U.S. Secretary of Education in the Reagan administration, but declined both times.
Sowell is the author of more than 45 books (including revised and new editions) on a variety of subjects including politics, economics, education and race, and he has been a syndicated columnist in more than 150 newspapers. His views are described as conservative, especially on social issues; libertarian, especially on economics; or libertarian-conservative. He has said he may be best labeled as a libertarian, though he disagrees with the "libertarian movement" on some issues, such as national defense.
Sowell was born in Gastonia, North Carolina and grew up in Harlem, New York City. Due to poverty and difficulties at home, he dropped out of Stuyvesant High School and worked various odd jobs, eventually serving in the United States Marine Corps during the Korean War. Afterward, he took night classes at Howard University and then attended Harvard University, where he graduated magna cum laude in 1958. He earned a master's degree in economics from Columbia University the next year and a doctorate in economics from the University of Chicago in 1968. In his academic career, he held professorships at Cornell University, Brandeis University, and the University of California, Los Angeles. He has also worked at think tanks including the Urban Institute. Since 1977, he has worked at the Hoover Institution at Stanford University, where he is the Rose and Milton Friedman Senior Fellow on Public Policy.
Sowell was an important figure to the conservative movement during the Reagan era, influencing fellow economist Walter E. Williams and U.S. Supreme Court Justice Clarence Thomas. He was offered a position as Federal Trade Commissioner in the Ford administration, and was considered for posts including U.S. Secretary of Education in the Reagan administration, but declined both times.
Sowell is the author of more than 45 books (including revised and new editions) on a variety of subjects including politics, economics, education and race, and he has been a syndicated columnist in more than 150 newspapers. His views are described as conservative, especially on social issues; libertarian, especially on economics; or libertarian-conservative. He has said he may be best labeled as a libertarian, though he disagrees with the "libertarian movement" on some issues, such as national defense.
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Displaying 1 - 8 of 8 reviews
May 17, 2015
This is the first time I've ever been able to make the first review of a book on this site, but here we go. The brilliant Thomas Sowell addresses some common questions about markets and minorities using economic analysis. Markets and Minorities is old, but the problems he discusses are still relevant to this day. In fact, they may be even more relevant today with race relations deteriorating in this country.
I won't go into detail about everything he discussed in the book, but I'll mention some things that stuck with me. Sowell dismantles the concept of systemic racism by discussing the current success of the Chinese, Japanese, and Jews. Also, he looks at the economic success of West Indian blacks versus the lower incomes of American blacks as a whole. Other ethnic groups cannot easily distinguish West Indian blacks from other blacks, so how can the relative lack of economic success among blacks be explained by systemic discrimination. If there was systemic discrimination against blacks, wouldn't West Indian blacks be at just as much of a disadvantage?
He also rails against government intervention in market transactions. Basically, all government intervention takes away choices from the lowest on the totem pole. He uses minimum housing requirements as one example: when "slums" were no longer allowed to be rented, low-income people spent more on better housing that was up to par, but also needed to divert resources from their non-housing expenditures. He also makes the point that minimum wage laws decrease the disincentive to discriminate. In a truly free labor market, there is a higher cost to discrimination because excluding groups of people from a company or industry will force that company or industry to pay higher wages (supply goes down, price goes up). With minimum wage laws, the costs to discriminate for jobs at this wage level are much lower. There are less jobs for the unskilled to work, so the number of applicants for jobs right at the minimum wage level will be artificially high. The company or industry can choose whomever they want out of these applicants; there is little cost of discrimination.
Finally, he has a great chapter on slavery where he discusses the reasons why pure slavery was concentrated in the Deep South and why slaves in northern areas transitioned toward freedom more quickly. In the case of jobs requiring skills or geographic dispersement, slaves would be more productive as free men than as pure slaves. Cotton picking did not require special skills and did not require geographic dispersement (i.e., slaves were relatively easy to patrol due to their close proximity to each other). Cotton growing was also concentrated in the same areas that slavery was strongest - the Deep South. Slavery quickly weakened in other places where there was not a main industry that was so conducive to unskilled, close-proximity labor. Sowell also makes the very interesting argument that slavery may not just have been a net negative for all people, but actually a net negative for white people. He points out the fact that white incomes in the Deep South were the lowest in the country in pre-Civil War times and are still among the lowest in the country today.
All in all, this is a great short introduction to some of the ideas espoused by Thomas Sowell. I only touched on a few of the many ideas he develops in Markets and Minorities. There is a lot of good information in here, and I believe his analyses to be sound and fair.
I won't go into detail about everything he discussed in the book, but I'll mention some things that stuck with me. Sowell dismantles the concept of systemic racism by discussing the current success of the Chinese, Japanese, and Jews. Also, he looks at the economic success of West Indian blacks versus the lower incomes of American blacks as a whole. Other ethnic groups cannot easily distinguish West Indian blacks from other blacks, so how can the relative lack of economic success among blacks be explained by systemic discrimination. If there was systemic discrimination against blacks, wouldn't West Indian blacks be at just as much of a disadvantage?
He also rails against government intervention in market transactions. Basically, all government intervention takes away choices from the lowest on the totem pole. He uses minimum housing requirements as one example: when "slums" were no longer allowed to be rented, low-income people spent more on better housing that was up to par, but also needed to divert resources from their non-housing expenditures. He also makes the point that minimum wage laws decrease the disincentive to discriminate. In a truly free labor market, there is a higher cost to discrimination because excluding groups of people from a company or industry will force that company or industry to pay higher wages (supply goes down, price goes up). With minimum wage laws, the costs to discriminate for jobs at this wage level are much lower. There are less jobs for the unskilled to work, so the number of applicants for jobs right at the minimum wage level will be artificially high. The company or industry can choose whomever they want out of these applicants; there is little cost of discrimination.
Finally, he has a great chapter on slavery where he discusses the reasons why pure slavery was concentrated in the Deep South and why slaves in northern areas transitioned toward freedom more quickly. In the case of jobs requiring skills or geographic dispersement, slaves would be more productive as free men than as pure slaves. Cotton picking did not require special skills and did not require geographic dispersement (i.e., slaves were relatively easy to patrol due to their close proximity to each other). Cotton growing was also concentrated in the same areas that slavery was strongest - the Deep South. Slavery quickly weakened in other places where there was not a main industry that was so conducive to unskilled, close-proximity labor. Sowell also makes the very interesting argument that slavery may not just have been a net negative for all people, but actually a net negative for white people. He points out the fact that white incomes in the Deep South were the lowest in the country in pre-Civil War times and are still among the lowest in the country today.
All in all, this is a great short introduction to some of the ideas espoused by Thomas Sowell. I only touched on a few of the many ideas he develops in Markets and Minorities. There is a lot of good information in here, and I believe his analyses to be sound and fair.
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April 16, 2025based thomas sowell
June 16, 2024
A BOOK FOR UNDERGRADUATE ECONOMICS STUDENTS
Thomas Sowell (born 1930) is an economist, columnist, and author who has long been associated with the Hoover Institution at Stanford University.
He wrote in the Introduction to this 1981 book, “This book applies basic economic principles to the study of racial and ethnic minorities. It is intended for undergraduate economics students familiar with such elementary concepts are supply and demand curves, and profit-maximization conditions… We will.. avoid making ‘the market’ an automatic producer of certain results… Nor will we engage in the fashionable practice of talking about what ‘society’ has decided. The whole emphasis will be on the specific characteristics of particular decision-making processes---not a vague figure of speech called ‘society.’ Theories will be confronted with facts… For example, the degree of racial residential integration in American cities was often far greater in the last quarter of the nineteenth century (when no real effort was made to achieve it) than in the last quarter of the twentieth century… This is difficult---if not impossible---to explain in terms of the more conventional theories of racial relations… the central aim of this book is … to demonstrate the application of an analytical process. The reader can then use the same principles to investigate wherever he chooses and reach his own conclusions.” (Pg. x-xi)
He outlines, “1. Ethnic minorities’ incomes differ do widely among themselves, ranging on both sides of the national average, as to call into question the meaningfulness of the national average itself… 2. Discrimination clearly cannot account for the incomes of minorities who earn MORE than the national average… 3. Disproportionate over-representation of some ethnic minorities in high-level occupations clearly cannot be explained by discrimination… since there is still independent evidence of continuing discrimination… 4. Genetic color differences have not kept Orientals from having higher incomes then the average American nor black West Indians from having incomes that are comparable… [to] the national average, nor has a white complexion spared Puerto Ricans from low incomes.” (Pg. 9-10)
He observes, “Fertility rates vary greatly among ethnic groups… Mexican-American families [earn] significantly higher incomes than black families, but high fertility rates cause Mexican Americans to have lower PER CAPITA income than blacks. Having ‘more mouths to feed’ may be part of the reason why Mexican Americans live in substandard housing more so than blacks and send their children to college less often.” (Pg. 15) He adds, “One of the curious patterns found among low-income ethnic groups is that, while such groups generally have more children than average… the better educated or higher income portions of such ethnic groups have FEWER children than equally well-educated or equally affluent members of the general population.” (Pg. 17)
He argues, “there are costs to the [racial] discriminator, as well as to the victim, and the magnitude of these costs affects the extent to which subjective prejudices produce overt discrimination… Economic competition means that the less discriminatory transactors acquire a competitive advantage, forcing others either to reduce their discrimination or risk losing profits… This in turn means that in less competitive situations, economic principles would predict that MORE discrimination would exist, because its cost would be less… [But] a firm operating under a guaranteed cost pricing arrangement---a regulated public utility, for example---would have zero costs of discrimination. All the extra costs entailed by refusing to hire qualified members of particular groups would be passed on to a consuming public with no alternative supplier.” (Pg. 26-27)
He states, “the history of especially severe discrimination against blacks and Orientals may reflect in part the low cost of policing transactions with people of a different skin color. Perhaps the classic attempts of this sort were post-Civil War coalitions of white employers to keep down the pay of newly freed blacks… Higher paying employers and landowners found more people applying to work for them, and were able to take their pick of the best workers available. Lower paying employers found their vacancies harder to fill… Their choices were to raise pay or lose profits… The net result was that in the period between the Civil War and the end of the nineteenth century, black incomes rose at a higher rate than white incomes.” (Pg. 36-37)
He suggests, “Where the risks of financing a given venture are different to one set of investors (the individual, his family or friends) than to another set of investors (banks and other distant financial institutions), then economic theory would predict that those investors with the least risk would be the ones to make the particular investment. Accordingly, we find most small businesses begin with capital supplied by the individual businessman and those closest to him… Groups with strong family and community ties---such as Chinese, Japanese, and Jews---have been prominent as entrepreneurs… even during their early years in poverty.” (Pg. 63)
He states, “Slaves… represented a substantial investment. Accordingly, slave owners often hired free workers to do hazardous work, rather than use their own slaves… It was a common practice in the South to hire Irishmen for work considered to dangerous for slaves… Economics forced a degree of consideration that humanitarianism had not.” (Pg. 92)
He contends, “in an ideally functioning economy, each slave would be the highest bidder for himself. Each slave would purchase his freedom at a higher price than the slave owner could receive from any other bidder, and the whole system of slavery would be self-liquidating. That the slave has not money is no insurmountable problem… because capital markets exist which can finance all sorts of purchases with all sorts of risks and repayment plans.” (Pg. 96)
He asserts, “The same attitudes that create crime may also create slums… The central role ow people and their values---rather than physical surroundings---raises the question of whether much of the physical deterioration is not itself a result of the same set of values, of lack of values. Brand new government housing projects have become instant slums as former slum dwellers moved in.” (Pg.108-109)
He suggests, “the tendency of compulsory attendance laws is to keep youths in school well past the point where they and their parents would have preferred that they be working, Evidence for this hypothesis includes both high rates of truancy and in-school delinquency in low-income ethnic neighborhoods---much more than in past periods, when the school-leaving age was lower.” (Pg. 112-113)
He summarizes, “There is no compelling reason to believe that government activity has benefitted ethnic minorities on net balance, even when that has been its purpose. The volatility of government policy suggests that determining its purpose over some meaningful span of time is also no easy task.” (Pg. 123)
This book will be of interest to economic conservatives interested in racial/ethnic issues.
Thomas Sowell (born 1930) is an economist, columnist, and author who has long been associated with the Hoover Institution at Stanford University.
He wrote in the Introduction to this 1981 book, “This book applies basic economic principles to the study of racial and ethnic minorities. It is intended for undergraduate economics students familiar with such elementary concepts are supply and demand curves, and profit-maximization conditions… We will.. avoid making ‘the market’ an automatic producer of certain results… Nor will we engage in the fashionable practice of talking about what ‘society’ has decided. The whole emphasis will be on the specific characteristics of particular decision-making processes---not a vague figure of speech called ‘society.’ Theories will be confronted with facts… For example, the degree of racial residential integration in American cities was often far greater in the last quarter of the nineteenth century (when no real effort was made to achieve it) than in the last quarter of the twentieth century… This is difficult---if not impossible---to explain in terms of the more conventional theories of racial relations… the central aim of this book is … to demonstrate the application of an analytical process. The reader can then use the same principles to investigate wherever he chooses and reach his own conclusions.” (Pg. x-xi)
He outlines, “1. Ethnic minorities’ incomes differ do widely among themselves, ranging on both sides of the national average, as to call into question the meaningfulness of the national average itself… 2. Discrimination clearly cannot account for the incomes of minorities who earn MORE than the national average… 3. Disproportionate over-representation of some ethnic minorities in high-level occupations clearly cannot be explained by discrimination… since there is still independent evidence of continuing discrimination… 4. Genetic color differences have not kept Orientals from having higher incomes then the average American nor black West Indians from having incomes that are comparable… [to] the national average, nor has a white complexion spared Puerto Ricans from low incomes.” (Pg. 9-10)
He observes, “Fertility rates vary greatly among ethnic groups… Mexican-American families [earn] significantly higher incomes than black families, but high fertility rates cause Mexican Americans to have lower PER CAPITA income than blacks. Having ‘more mouths to feed’ may be part of the reason why Mexican Americans live in substandard housing more so than blacks and send their children to college less often.” (Pg. 15) He adds, “One of the curious patterns found among low-income ethnic groups is that, while such groups generally have more children than average… the better educated or higher income portions of such ethnic groups have FEWER children than equally well-educated or equally affluent members of the general population.” (Pg. 17)
He argues, “there are costs to the [racial] discriminator, as well as to the victim, and the magnitude of these costs affects the extent to which subjective prejudices produce overt discrimination… Economic competition means that the less discriminatory transactors acquire a competitive advantage, forcing others either to reduce their discrimination or risk losing profits… This in turn means that in less competitive situations, economic principles would predict that MORE discrimination would exist, because its cost would be less… [But] a firm operating under a guaranteed cost pricing arrangement---a regulated public utility, for example---would have zero costs of discrimination. All the extra costs entailed by refusing to hire qualified members of particular groups would be passed on to a consuming public with no alternative supplier.” (Pg. 26-27)
He states, “the history of especially severe discrimination against blacks and Orientals may reflect in part the low cost of policing transactions with people of a different skin color. Perhaps the classic attempts of this sort were post-Civil War coalitions of white employers to keep down the pay of newly freed blacks… Higher paying employers and landowners found more people applying to work for them, and were able to take their pick of the best workers available. Lower paying employers found their vacancies harder to fill… Their choices were to raise pay or lose profits… The net result was that in the period between the Civil War and the end of the nineteenth century, black incomes rose at a higher rate than white incomes.” (Pg. 36-37)
He suggests, “Where the risks of financing a given venture are different to one set of investors (the individual, his family or friends) than to another set of investors (banks and other distant financial institutions), then economic theory would predict that those investors with the least risk would be the ones to make the particular investment. Accordingly, we find most small businesses begin with capital supplied by the individual businessman and those closest to him… Groups with strong family and community ties---such as Chinese, Japanese, and Jews---have been prominent as entrepreneurs… even during their early years in poverty.” (Pg. 63)
He states, “Slaves… represented a substantial investment. Accordingly, slave owners often hired free workers to do hazardous work, rather than use their own slaves… It was a common practice in the South to hire Irishmen for work considered to dangerous for slaves… Economics forced a degree of consideration that humanitarianism had not.” (Pg. 92)
He contends, “in an ideally functioning economy, each slave would be the highest bidder for himself. Each slave would purchase his freedom at a higher price than the slave owner could receive from any other bidder, and the whole system of slavery would be self-liquidating. That the slave has not money is no insurmountable problem… because capital markets exist which can finance all sorts of purchases with all sorts of risks and repayment plans.” (Pg. 96)
He asserts, “The same attitudes that create crime may also create slums… The central role ow people and their values---rather than physical surroundings---raises the question of whether much of the physical deterioration is not itself a result of the same set of values, of lack of values. Brand new government housing projects have become instant slums as former slum dwellers moved in.” (Pg.108-109)
He suggests, “the tendency of compulsory attendance laws is to keep youths in school well past the point where they and their parents would have preferred that they be working, Evidence for this hypothesis includes both high rates of truancy and in-school delinquency in low-income ethnic neighborhoods---much more than in past periods, when the school-leaving age was lower.” (Pg. 112-113)
He summarizes, “There is no compelling reason to believe that government activity has benefitted ethnic minorities on net balance, even when that has been its purpose. The volatility of government policy suggests that determining its purpose over some meaningful span of time is also no easy task.” (Pg. 123)
This book will be of interest to economic conservatives interested in racial/ethnic issues.
December 28, 2022
Pg. 10 - " The point here is to demonstrate the plausibility is deceptive... Particularly likely to be overlooked are systemic variables - variables not designed or intended by anyone to be what they are, but which may nevertheless affect the economic (and other) phenomena we're trying to explain. Among the systemic variables that need to be considered as regards American ethnic groups are (1) age, (2) geographic distribution, and (3) fertility rates."
Pg. 31 - " It is tempting to say that each individual should be judged as an individual. But however desirable that might seem in the abstract, no one actually does that in real life, because costs of knowledge make it prohibitive... How far should presorting go before judging individuals? There is no categorical answer. It is an incremental decision, based on the changing incremental costs and incremental benefits of doing so."
Pg. 47 - " Economic theory would predict that employment discrimination would be at its peak in non-profit organisations. That is also what the historical record suggests. Discrimination levels in colleges, universities, hospitals, and the government itself were, past eras, greater than competitive industries at the same time."
Pg. 48 - "... non-profit organisations, regulated utilities, and the government have been relatively free of economic constraints... What this means is that the cost of being either discriminatory or preferential towards minorities is especially low for such institutions... Indeed, discrimination and preferential treatment are simply two ways of looking at the same phenomenon: being preferential to A, B, and C is the same as being discriminatory to X, Y, and Z."
Pg. 54 - "... the 'old' immigrants... were as a group economically, educationally, and socially well in advance of the 'newer' immigrant groups. Such intergroup disparities were commonly attributed, at the time, to genetic differences - and, later, to discriminatory treatment. The further passage of time tended to reduce these disparities, suggesting that it was a transitional phenomenon..."
Pg. 31 - " It is tempting to say that each individual should be judged as an individual. But however desirable that might seem in the abstract, no one actually does that in real life, because costs of knowledge make it prohibitive... How far should presorting go before judging individuals? There is no categorical answer. It is an incremental decision, based on the changing incremental costs and incremental benefits of doing so."
Pg. 47 - " Economic theory would predict that employment discrimination would be at its peak in non-profit organisations. That is also what the historical record suggests. Discrimination levels in colleges, universities, hospitals, and the government itself were, past eras, greater than competitive industries at the same time."
Pg. 48 - "... non-profit organisations, regulated utilities, and the government have been relatively free of economic constraints... What this means is that the cost of being either discriminatory or preferential towards minorities is especially low for such institutions... Indeed, discrimination and preferential treatment are simply two ways of looking at the same phenomenon: being preferential to A, B, and C is the same as being discriminatory to X, Y, and Z."
Pg. 54 - "... the 'old' immigrants... were as a group economically, educationally, and socially well in advance of the 'newer' immigrant groups. Such intergroup disparities were commonly attributed, at the time, to genetic differences - and, later, to discriminatory treatment. The further passage of time tended to reduce these disparities, suggesting that it was a transitional phenomenon..."
July 14, 2020
Definitely written more for college students taking economics (in the 1980s), Markets and Minorities nonetheless speaks to the same issues we wrestle with today.
And Dr. Thomas Sowell was still a brilliant man back then, making it one of the most exceptional books of it's kind (in my humble experience.)
And Dr. Thomas Sowell was still a brilliant man back then, making it one of the most exceptional books of it's kind (in my humble experience.)
March 7, 2024
Outstanding. Our elected officials should take the time to read this slim yet powerful volume prior to taking any action to assist groups the officials deem to be disadvantaged.
April 20, 2017
Fantastic book. Sowell lays aside rhetoric and emotional arguments and addresses axioms as they should be, empirically testable hypotheses. He uses cause and effect to analyze beliefs. If anyone had right to make an emotional case, as a black man, Sowell would have one. However, he rather looks as the ideas of privilege with reason and data. I've spent a lot of time thinking upon such things and found numerous points to which Sowell enlightened me.
The copy I read was copyrighted 1981. I don't know if other updated versions have been released. Granted that a publish date of 36 years ago leaves the modern statistics out of date, much of the data Sowell uses is historical, making publication date irrelevant. This was written before "privilege" was a buzz word, but nearly every point made relates to the modern accusations of privilege.
The copy I read was copyrighted 1981. I don't know if other updated versions have been released. Granted that a publish date of 36 years ago leaves the modern statistics out of date, much of the data Sowell uses is historical, making publication date irrelevant. This was written before "privilege" was a buzz word, but nearly every point made relates to the modern accusations of privilege.
Displaying 1 - 8 of 8 reviews