Economic and Business

The name of the "chess-pieces fallacy" derives from Adam Smith's description of the person who "seems to imagine that he can arrange the members of a great society with as much ease as the hand arranges the different pieces on a chess-board." This fallacy underlies the "smart growth" movement now underway in California and elsewhere, which assumes that central planning can yield results that are somehow superior to those produced by decisions manifesting tastes and preferences of individuals pursuing their own self interest. Blaming the ubiquitous ownership of automobiles for urban sprawl and lack of popular use of public transportation reminds Sowell of the Duke of Wellington blaming nineteenth century railroads for encouraging "the common people to move about needlessly."
A common fallacy motivating a major portion of the discussion is that of assuming sameness when there is no reason to expect sameness. This fallacy typically underlies conclusions based on gross statistical comparisons of gender earnings differences, and economic differences between racial and ethnic groups. Sowell invokes history, statistics, and economics to show that most such disparities have explanations other than discrimination.
Similarly, certain changes shown by comparison of statistical categories over time are invalid because changes in composition of the categories are not taken into account. For example, the often-made claim that the bottom 20 percent of households has fallen behind those in upper income brackets does not take into account the fact that most of the people in the bottom bracket move into higher brackets over time. Moreover, most of such comparisons are faulty due to bogus statistics that leave out both taxes on people in upper brackets and transfers to people in lower brackets, exaggerating inequality at any point in time.
The major theme of this book is that fashionable ideas are seldom scrutinized in the light of the facts. When exposed to the facts, most do not withstand scrutiny. Numerous ideas and assertions are pummeled with facts throughout the chapters, which are essentially essays on urban issues, higher education, gender and income comparisons, racial issues, and economic development. The book is not an easy read because of the concentration of the arguments, but it is well worthwhile for business economists.