Applied Economics: Thinking Beyond Stage One
Encyclopedia
Applied Economics: Thinking Beyond Stage One (ISBN 0-465-08143-6) is a 2003 nonfiction work by economist Thomas Sowell
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Sowell discuss 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 tax
es 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.
Thomas Sowell
Thomas Sowell is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a libertarian perspective...
.
Sowell discuss how basic economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
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
Election
An election is a formal decision-making process by which a population chooses an individual to hold public office. Elections have been the usual mechanism by which modern representative democracy operates since the 17th century. Elections may fill offices in the legislature, sometimes in the...
. He gives as an example of Stage One Thinking, a State government which raises tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es 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.