The history of mergers and accomplishments in the United States is comprised of a series of five distinct waves of activity. Each wave occurred at a dissimilar time, and each exhibited some distinctive characteristics related to the nature of the activity, the origins of funding for the activity, and to galore extent, differing levels of success from wave to wave. When the volume, nature, mechanisms, and outcomes of these dealings are viewed in an goal to be attained historical context, indispensable lessons emerge.

 

The First Wave

The primary significant wave of merger and acquisition action in the United States occurred amid 1898 and 1904. The normal level of when it comes to 70 mergers per year leaped to 303 in 1898, and crested at 1,208 in 1899. It remained at more than 300 each year until 1903, when it dropped to 142, and dropped back again into what had been a range of normalcy for the period, with 79 mergers, in 1904. Industries comprising the bulk of action for the duration of this initial wave of acquisition and merger action included necessary metals, fabricated metal products, transportation equipment, machinery, petroleum products, bituminous coal, chemicals, and feed products. By far, the greatest motivation for these activenesses was the elaboration of the business into adjacent markets. In fact, 78% of the mergers and accomplishments occurring for the duration of this amount of time resulted in horizontal expansion, and another 9.7% involved both horizontal and vertical integration.

 

During this era in American history, the business environs affiliated to mergers and accomplishments was much less regulated and much more dynamic than it is today. There was very little by way of antitrust impediments, with few laws and even less enforcement. 

 

The Second Wave

The second wave of merger and acquisition action in American businesses occurred among 1916 and 1929. Having become more concerned when it comes to the rampant growth of mergers and acquirements for the duration of the initial wave, the United States Congress was much more wary regarding such activenesses by the time the second wave rolled around. Business monopolies resulting from the introductory wave produced a good deal of market abuses, and a set of business exercises that were viewed as unfair by the American public. Even the Sherman Act proved to be comparatively inefficient as a deterrent of monopolistic practices, and so Congress passed another piece of legislation entitled the Clayton Act to reinforce the Sherman Act in 1914. The Clayton Act was more or less more effective, and proved to be in particular utile to the Federal Government in the late 1900s. However, for the duration of this second wave of action in the years spanning 1926 to 1930, a total of 4,600 mergers and accomplishments occurred. The industries with greatest concentrations of these actions included necessary metals, petroleum products, chemicals, transportation equipment, and feed products. The upshot of all of these consolidations was that 12,000 companies disappeared, and more than $13 billion in summations were acquired (17.5% of the country’s total devising assets).

 

The nature of the businesses formed was more or less dissimilar in the second wave; there was a higher incidence of mergers and accomplishments to achieve vertical integration in the second wave, and a much higher share of the resulting businesses resulted in conglomerates that included antecedently unrelated businesses.  The second wave of acquisition and merger action in the United States ended in the stock market crash on October 29, 1929, and this altered – perhaps for a limitless time – the perspective of investment bankers related to funding these transactions. Companies that grew to prominence through the second wave of mergers and accomplishments in the United States, and that still operate in this country today, include General Motors, IBM, John Deere (now Deere & Company), and Union Carbide. 

The Third Wave

The American economy for the duration of the last half of the 1960s (1965 through 1970) was booming, and the growth of corporate mergers and acquisitions, exceptionally related to conglomeration, was unprecedented. It was this economic boom that painted the backdrop for the third wave of mergers and accomplishments in American history. A peculiar feature of this amount of time was the comparatively mutual exercise of companies targeting acquirements that were more prominent than themselves. This amount of time is once in a while referred to as the conglomerate merger period, owing in huge measure to the fact that acquirements of companies with over $100 million in pluses spiked so dramatically. Compared to the years preceding the third wave, mergers and acquirements of companies this size occurred far less frequently. Between 1948 and 1960, for example, they averaged 1.3 per year. Between 1967 and 1969, however, there were 75 of them – averaging 25 per year.  During the third wave, the FTC reports, 80% of the mergers that occurred were conglomerate transactions. 

 

Although the most recognized conglomerate names from this amount of time were huge corporations such as Litton Industries, ITT and LTV, a lot of little and medium size companies attempted to pursue an boulevard of diversification. The diversification involved here included not only product lines, but also the industries in which these companies chose to participate. As a result, most of the companies involved in these activenesses moved substantially outside of what had been regarded as their core businesses, very often with deleterious results. 

 

It is necessary to understand the divergence amid a diversified company, which is a company with a heap of subsidiaries in other industries, but a majority of it is production or services within one industry category, and a conglomerate, which conducts it is business in multiple industries, without any real adhesion to a single necessary industry base. Boeing, which mainly gives rise to aircraft and missiles, has diversified by moving into areas such as Exostar, an online interchange for Aerospace & Defense companies. However, ITT has conglomerated, with industry leadership positions in electronic components, defense electronics & services, liquid technology, and motion & flow control. While the bulk of companies united or acquired in the long string of action resulting in the current Boeing Company were almost all aerospace & defense companies, the accomplishments of ITT were far more diverse. In fact, just since getting an independent company in 1995, ITT has acquired Goulds Pumps, Kaman Sciences, Stanford Telecom and C&K Components, among other companies.

 

Since the ascension of the third wave of mergers and accomplishments in the 1960s, there has been a great deal of pressure from stockholders for company growth. With the only comparatively easy path to that growth being the path of conglomeration, a lot of companies pursued it. That pursuit was furnished differently in this third wave of activity, however. It was not furnished by the investment bankers that had sponsored the two former events. With the economy in expansion, interest rates were comparatively high and the criteria for obtaining credit also became more demanding. This wave of merger and acquisition activity, then, was executed by the issuance of stock. Financing the activenesses through the use of stock fended off tax liability in a great deal of cases, and the resulting acquisition pushed up earnings per portion even even though the acquiring company was paying a premium for the stock of the acquired firm, using it is own stock as the currency.

The use of this mechanism to boost EPS, however, becomes unsustainable as more prominent and larger companies are involved, because the underlying assumption in the application of this mechanism is that the P/E ratio of the (larger) acquiring company will transfer to the entire base of stock of the newly combined enterprise. Larger accomplishments represent more prominent percentages of the combined enterprise, and the market is in general less more than willing to give the new enterprise the gain of that doubt. Eventually, when a big number of merger and acquisition activenesses take place that are founded on this mechanism, the pool of suitable acquisition nominees is depleted, and the action declines. That decline is for the most part responsible for the end of the third wave of merger and acquisition activity. 

One other mechanism that was applied in a similar way, and with a similar result, in the third wave or merger and acquisition action was the issue of convertible debentures (debt securities that are convertible into mutual stock), in order to gather in the net profit of the acquired firm without being required to reflect an increase in the number of shares of mutual stock outstanding. The resulting bump in visible EPS was known as the bootstrap effect. Over the course of my own career, I have many times heard of similar tactics referred to as “creative accounting”. 

 

Almost certainly, the most conclusive proof that the bulk of conglomeration action achieved through mergers and acquirements is destructive to overall company value is the fact that so some of them are later sold or divested. For example, more than 60% of cross-industry acquirements that occurred amongst 1970 and 1982 were sold or divested in a great deal of other manner by 1989. The widespread failure of most conglomerations has surely been partly the result of overpaying for acquired companies, but the fact is that overpaying is the ominous exercise of a heap of companies. In one recent consultation I conducted with an exceedingly successful CEO in the healthcare industry, I asked him what activenesses he would most strongly commend that others avoid when entering into a merger or acquisition. His response was prompt and emphatic: “Don’t become enamored with the acquisition target”, he replied. ”Otherwise you will overpay. The acquisition has to make sense on assorted levels, including price.” 

 

The failure of conglomeration, then, springs for the most part from another root cause. Based on my own experience and the exploration I have conducted, I am somewhat sure that the most rudimentary cause is the nature of conglomeration management. Implicit in the management of conglomerates is the notion that management may be done well in the absence of specialized industry knowledge, and that just isn’t normally the case. Regardless of the “professional management” business curricula offered by a good deal of originations of higher learning these days, in most cases there is just no substitute for industry-specific experience. 

            

The Fourth Wave

The initial indications that a fourth wave of merger and acquisition action was imminent appeared in 1981, with a near doubling of the value of these dealings from the prior year. However, the surge receded a bit, and in truth regained severe momentum again in 1984.   According to Mergerstat Review (2001), just over $44 billion was remunerated in merger and acquisition dealings in 1980 (representing 1,889 transactions), equated to more than $82 billion (representing 2,395 transactions) in 1981. While action fell back to amid $50 billion and $75 billion in the ensuing two years, the 1984 action represented over $122 billion and 2,543 transactions. In terms of peaks, the number of transactions peaked in 1986 at 3,336 transactions, and the dollar volume peaked in 1988 at more than $246 billion. The entire wave of activity, then, is regarded by analysts to have occurred amid 1981 and 1990. 

 

There are a number of distinct features of this fourth wave that distinguish it from prior activities. The basi of those characteristics is the advent of the hostile takeover. While hostile takeovers have been around since the early 1900s, they veritably proliferated (more in terms of dollars than in terms of percent of transactions) for the duration of this fourth wave of merger and acquisition activity. In 1989, for example, more than three times as a great deal of dollars were transacted as a result of contested tender offers than the dollars affiliated with uncontested offers. Some of this phenomenon was almost tied to another characteristic of the fourth wave of activity; the sheer size and industry prominence of acquisition targets for the duration of that period. Referring again to Mergerstat Review‘s numbers published in 2001, the intermediate buy price remunerated in merger and acquisition dealings in 1970, for example, was $9.8 million. By 1975, it had grown to $13.9 million, and by 1980 it was $49.8 million. At it is peak in 1988, the intermediate buy price remunerated in mergers and accomplishments was $215.1 million.   Exacerbating the circumstance was the volume of big transactions. The number of dealings valued at more than $100 million increased by more than 23 times amidst 1974 and 1986, which was a stark contrast to the distinctively small-to-medium size company based activenesses of the 1960s.

 

Another factor that impacted this fourth wave of merger and acquisition action in the United States was the advent of deregulation. Industries such as banking and petroleum were directly affected, as was the airline industry.   Between 1981 and 1989, five of the ten greatest acquirements involved a company in the petroleum industry – as an acquirer, an acquisition, or both. These included the 1984 acquisition of Gulf Oil by Chevron ($13.3 billion), the acquisition in that same year of Getty Oil by Texaco ($10.1 billion), the acquisition of Standard Oil of Ohio by British Petroleum in 1987 ($7.8 billion), and the acquisition of Marathon Oil by US Steel in 1981 ($6.6 billion).  Increased contest in the airline industry resulted in a severe deterioration in the financial performance of a great deal of carriers, as the airline industry became deregulated and air fares became exposed to competitory pricing.

 

An further and added look at the ontology of the ten biggest accomplishments amongst 1981 and 1989 reflects that comparatively few of them were accomplishments that extended the acquiring company’s business into other industries than their core business. For example, amidst the five oil-related acquisitions, only two of them (DuPont’s acquisition of Conoco and US Steel’s acquisition of Marathon Oil) were out-of-industry expansions. Even in these cases, one might argue that they are “adjacent industry” expansions. Other accomplishments amid the top ten were Bristol Meyers’ $12.5 billion acquisition of Squibb (same industry – Pharmaceuticals), and Campeau’s $6.5 billion acquisition of Federated Stores (same industry – Retail). 

 

The final noteworthy aspect of the “top 10″ list from our fourth wave of accomplishments is the characteristic that is exemplified by the actions of Kohlberg Kravis. Kohlberg Kravis performed two of these ten acquirements (both the greatest – RJR Nabisco for $5.1 billion, and Beatrice for $6.2 billion). Kohlberg Kravis was representative of what came to be known for the duration of the fourth wave as the “corporate raider”. Corporate raiders such as Paul Bilzerian, who in the long run acquired the Singer Corporation in 1988 after taking part in a lot of former “raids”, made fortunes for themselves by attempting corporate takeovers. Oddly, the takeovers did not have to be in the long run successful for the raider to net profit from it; they plainly had to drive up the price of shares they acquired as a percentage of the takeover attempt. In a great deal of cases, the raiders were actually paid off (this was called “greenmail”) with corporate sum totals in interchange for the stock they had acquired in the attempted takeover. 

 

Another term that came into the lexicon of the business community for the duration of this fourth wave of acquisition and merger action is the leveraged buy-out, or LBO. Kohlberg Kravis helped invent and popularize the LBO conception by creating a series of fixed partnerships to acquire respective corporations, which they deemed to be underperforming. In most cases, Kohlberg Kravis financed up to ten percent of the acquisition price with it is own capital and borrowed the remainder through bank loans and by issuing high-yield bonds. Usually, the target company’s management was permitted to retain an equity interest, in order to provide a financial incentive for them to approve of the takeover.

 

The bank loans and bonds employed the tangible and intangible sum totals of the target company as collateral. Because the bondholders only received their interest and primary payments after the banks were repaid, these bonds were riskier than investment grade bonds in the event of default or bankruptcy. As a result, these instruments became known as “junk bonds.” Investment banks such as Drexel Burnham Lambert, led by Michael Milken, helped raise cash for leveraged buyouts. Following the acquisition, Kohlberg Kravis would aid restructure the company, trade off underperforming assets, and apply cost-cutting measures. After achieving these efficiencies, the company was commonly then resold at a significant profit.

 

Increasingly, as one reviews the waves of acquisition and merger action that have occurred in the United States, this much seems clear: While it is possible to net income from the originative use of financial instruments and from the clever buying and marketing of companies managed as an investment portfolio, the real and sustainable growth in company value that is available through accomplishments and mergers comes from bettering the newly formed enterprise’s overall operating efficiency. Sustainable growth results from leveraging enterprise-wide summations after the merger or acquisition has occurred. That betterment in asset efficacy and leverage is most oftentimes achieved when management has a rudimentary dedication to the extreme success of the business, and is not motivated strictly by a quick, temporary escalation in stock price. This is related, in my view, to the earlier observation that a heap of industry-specific psychological result of perception learning and reasoning improves the likelihood of success as a new business is acquired. People who are committed to the long-term success of a company tend to recompense more attention to the details of their business, and to broader scope of technologies and trends within their industry.  

 

There were a few other characteristics of the fourth wave of merger and acquisition action that ought to be cited before moving on. First of all, the fourth wave saw the introductory significant crusade by investment bankers and management consultants of respective types to provide counsel to acquisition and merger candidates, in order to earn professional fees. In the case of the investment bankers, there was an further and added prospect around financing these transactions. This chance gave rise, in big measure, to the junk bond market that raised capital for accomplishments and raids. Secondly, the nature of the acquisition – and in particular the nature of takeovers – became more intricate and strategic in nature. Both the takeover mechanisms and paths and the defensive, anti-takeover methods and tools (eg: the “poison pill”) became growingly sophisticated for the duration of the fourth wave. 

 

The third characteristic in this category of “other distinguishable characteristics” in the fourth wave was the increased reliance on the part of acquiring companies on debt, and perchance even more importantly, on huge amounts of debt, to finance the acquisition. A substantial rise in management team acquisition of their own firms using comparatively huge quantities of debt gave rise to a new term – the leveraged buy-out (or LBO) – in the lexicon of the Wall Street analyst. 

 

The fourth characteristic was the advent of the international acquisition. Certainly, the acquisition of Standard Oil by British Petroleum for $7.8 billion in 1987 marked a modify in the American business landscape, signaling a widening of the merger and acquisition landscape to partly include a broader alien buyers and alien acquisition targets. This deal is substantial not only because it involved alien ownership of what had been considered a bedrock American company, but likewise because of the sheer dollar volume involved. A number of components were involved in this event, such as the fall of the US dollar versus alien currencies (making US investments more attractive), and the evolution of the global marketplace where goods and services had become progressively multinational in scope. 

 

The Fifth Wave

The fifth wave of acquisition and merger action begun without delay following the American economic recession of 1991 and 1992. The fifth wave is viewed by a good deal of observers as still ongoing, with the evident disruption surrounding the tragic events September 11, 2001, and the recovery amount of time without delay following those events. Others would say that it ended there, and after the couple of years ensuing, we are seeing the imminent rise of a sixth wave. Having no strong bias toward either view, for purposes of our discussion here I will adopt the firstborn position. Based on the value of dealings declared over the course of the respective calendar years, the dollar volume of total mergers and acquirements in the US in 1993 was $347.7 billion (an increase from $216.9 billion in 2002), continued to grow regularly to $734.6 billion in 1995, and expanded still further to $2,073.2 billion by 2000.    

 

This group of deals differed from the former waves in assorted respects, but arguably the most essential divergence was that the accomplishments and mergers of the 1990s were more thoughtfully orchestrated than in any former foray. They were more strategic in nature, and better aligned with what appeared to be comparatively sophisticated strategic planning on the portion of the acquiring company. This characteristic seems to have solidified as a primary feature of major merger and acquisition activity, at least in the US, which is encouraging for stockholders looking for sustainable growth rather than a quick – but temporary – bump in share price. 

 

A second characteristic of the fifth wave of accomplishments and mergers is that they were quintessentially more equity-based than debt-based in terms of their funding. In a good deal of cases, this worked out well because it relied less on leverage that required near-term repayment, enabling the new enterprise to be more careful and deliberate with regards to the sell-off of pluses in order to service debt invented by the acquisition.  

 

Even in cases where both of these features were prominent distinct features of the deal, however, not all have been successful. In fact, some of the greatest acquirements have been the greatest disappointments over recent years. For example, just before the formal publi statement of the acquisition of Time Warner by AOL, a portion of AOL mutual stock swapped for regarding $94. In January of 2005, that portion of stock was worth with regards to $17.50. In the Spring of 2003, the intermediate share price was more like $11.50. The AOL Time Warner merger was furnished with AOL stock, and when the expected synergies did not materialize, market capitalization and stockholder value both tanked. What was not foreseen was the devaluation of the AOL shares used to finance the purchase. As analyst Frank Pellegrini reported in Time’s on-line edition on April 25, 2002: “Sticking out of AOL Time Warner’s rather humdrum net income report Wednesday was a very gaudy number: A one-time loss of $54 billion. It’s the biggest spill of red ink, dollar for dollar, in U.S. corporate history and almost two-thirds of the company’s current stock-market value.” 

The fifth wave has also become known as the wave of the “roll-up”. A roll-up is a routine that consolidates a fragmented industry through a series of acquirements by comparatively huge companies (typically already within that industry) called consolidators. While the most widely recognized of these roll-ups occurred in the funeral industry, office merchandise retailers, and floral products, there were roll-ups of significant magnitude in other industries such as discrete segments of the aerospace & defense community. 

 

Finally, the fifth wave of acquirements and mergers was the firstborn one in which a very huge percentage of the total global action occurred outside of the United States. In 1990, the volume of dealings in the US was $301.3 billion, while the UK had $99.3 billion, Canada had $25.3 billion, and Japan represented $14.2 billion. By the year 2000, the tide was shifting. While the US still led with $2,073 billion, the UK had escalated to $473.7 billion, Canada had grown to $230.2 billion, and Japan had reached $108.8 billion. By 2005, it was clear that participation in global merger and acquisition action was now anyone’s turf. According to barternews.com: “There was unbelievable growth internationally in the M&A arena last year, with record-setting volume of $474.3 billion coming from the Asian-Pacific region, up 46% from $324.5 billion in 2004. In the U.S., M&A volume rose 30% from $886.2 billion in 2004. In Europe the figure was 49% higher than the $729.5 billion in 2004. Activity in Eastern Europe almost doubled to a record $117.4 billion.” 

 

The Lessons of History

Many studies have been conducted that focus on historical mergers and acquisitions, and a great deal has been published on this topic. Most of the focus of these studies has been on more contemporary transactions, probably owing to constituents such as the availability of elaborated information, and a presumed increase in the relevance of more recent activity. However, before sifting through the collective wisdom of the legion of more contemporary studies, I think it’s crucial to look at least briefly to the patterns of history that are reflected earlier in this article.

 

Casting a view backward over this long history of mergers and accomplishments then, observing the relative successes and failures, and the distinctive characteristics of each wave of activity, what lessons may be learned that could improve the probabilities of success in future M&A activity?  Here are ten of my own observations:

1. Silver bullets and statistics. The successes and failures that we have reviewed through the course of this chapter disclose that almost any type of merger or acquisition is subject to incompetence of execution, and to extreme failure. There is no combining of market segments, management approaches, financial backing, or environmental constituents that may guarantee success. While there is no “silver bullet” that may guarantee success, there are approaches, tools, and circumstances that serve to heighten or diminish the statistical prospect of achieving sustainable long-term growth through an acquisition or merger.
2. The ACL Life Cycle is fundamental. The companies who achieve sustainable growth using acquirements and mergers as a mainstay of their business scheme are those that move deliberately through the Acquisition / Commonization / Leverage (ACL) Life Cycle. We saw proof of that action in the case of US Steel, Allied Chemical, and others over the course of this review.
3. Integration failure often spells disaster. Failure to achieve enterprise-wide leverage through the commonization of rudimentary business processes and their supporting systems may leave even the biggest and most established companies vulnerable to defeat in the marketplace over time. We saw a number of examples of this situation, with the American Sugar Refining Company perchance the most representative of the group.
4. Environmental constituents are critical. As we saw in our review of the initial wave, constituents such as the emergence of a robust transportation scheme and strong, resilient manufacturing processes enabled the success of a lot of industrial mergers and acquisitions. So it was more lately with the advent of selective information schemes and the Internet. Effective strategic planning in general, and effective due diligence specifically, will have to always include a indepth understanding of the business surroundings and market trends. Often times, acquiring executives become enamored with the acquisition target (as brought up in our review of third wave activity), and ignore contextual issues as well as rudimentary business issues that will have to be warning signs.
5. Conglomeration is challenging. There were repeated examples of the challenges affiliated with conglomeration in our review of the history of mergers and acquirements in the United States. While it is possible to survive – and even thrive – as a conglomerate, the odds are substantially versus it. Those accomplishments and mergers that most many times succeed in achieving sustainable long-term growth are the ones involving management with substantial industry-specific and process-specific expertise. Remember the observation, for the duration of the course of our review of fourth wave activity, that “the most conclusive proof that the bulk of conglomeration action achieved through mergers and acquirements is destructive to overall company value is the fact that so a great deal of of them are later sold or divested.”
6. Commonality holds value. Achieving significant commonality in rudimentary business processes and the data schemes that help them offers an prospect for authenti synergy, and erects a substantive barrier versus competitory forces in the marketplace. We saw this a number of times; Allied Chemical is exceptionally illustrative. 
7. Objectivity is important. As we saw in our review of the influence of investment bankers vetoing questionable deals for the duration of second wave activities, there is substantial value in the counsel of goal to be attained outsiders. A well-suited advisor will not only fetch a clear head and fresh eyes to the table, but will ofttimes introduce indispensable evaluative skillfulness as a result of experience with other similar transactions, both inside and outside of the industry involved.
8. Clarity is critical. We saw the importance of clarity around the expected impacts of business conclusions in our review of the application of the DuPont Model and similar tools that enabled the ascension of General Motors. Applying similar methods and tools may provide worthful perceptivenesses when it comes to what financial results may be expected as the result of proposed acquisition or merger transactions.
9. Creative accounting is a mirage. The kind of originative accounting described by another author as “finance gimmickry” in our review of third wave action does not generate sustainable value in the enterprise, and in fact, may prove desolating to companies who use it as a basis for their merger or acquisition activity.
10. Prudence is essential when selecting financial instruments to fund M&A transactions. We observed a number of cases where inflated stock values, high-interest debt instruments, and other questionable selections resulted in immense devaluation in the resulting enterprise. Perhaps the most illustrative example was the recent AOL Time Warner merger described in the review of fifth wave activity.

Many of these lessons from history are closely related, and tend to reinforce one another. Together, they provide an important framework of understanding regarding what types of acquirements and mergers are most likely to succeed, what methods and tools are likely to be most useful, and what activenesses are most likely to diminish the company’s capability for sustainable growth following the M&A transaction.

Economic Facts And Fallacies Second Edition

• Amazon Sales Rank: #14706 in Books
• Published on: 2011-03-22
• Original language: English
• Number of items: 1
• Dimensions: .90″ h x 5.50″ w x 8.10″ l, .65 pounds
• Binding: Paperback
• 304 pages

• ISBN13: 9780465022038
• Condition: New
• Notes: BRAND NEW FROM PUBLISHER! 100% Satisfaction Guarantee. Tracking provided on most orders. Buy with Confidence! Millions of books sold!

212 of 229 people found the following review helpful.
Excellent Reference…
By Stephen Dean
I got this book to check out Sowell’s take on the “Vanishing Middle Class.” In just a few paragraph’s he is able to completely turn that notion on it’s head… and show why the oft repeated claim is jibberish. I now know this book will be an excellent resource for fighting commonly held economic fallacies. Yesterday I read the chapter on Men vs. Women pay. The commonly held belief is that women don’t make as much as a man because of discrimination. While keeping an open minded view that discrimination could come in to play, Sowell delivers an extremely convincing alternative argument for the discrepancy in pay. This book really is an eye opener.

246 of 272 people found the following review helpful.
Willful Error…Forever.
By Bernard Chapin
Economic Fallacies is the third book by Thomas Sowell I’ve read this year and it continues to illustrate why he is one of the most important conservatives in America today. His writing beams with scholarship and clarity. There are no wasted words and the work is an arsenal of information. These chapters should be read and reread as they thoroughly refute the positions of those who irrationally regard America as being a racist, sexist and corrupt state.

84 of 94 people found the following review helpful.
If only Sowell’s knowledge and wisdom were more widely known
By Jerry Saperstein
There is no end to the exposure of crackpot left-wing theorists in the media. Happening upon an appearance of a conservative economist like Thomas Sowell in the media, however, is extraordinary, which is the nation’s loss.

Sowell is a prolific writer, but I doubt he reaches a fraction of the audience of a crank like Paul Krugman.

In this slim volume, Sowell exposes, refutes and debunks six of the major economic fallacies of our time:

1. Urban Facts and Fallacies
2. Male-Female Facts and Fallacies
3. Academic Facts and Fallacies
4. Income Facts and Fallacies
5. Racial Facts and Fallacies
6. Third World Facts and Fallacies

As you’ve probably noticed, these are six of the major flashpoint issues of our times – and Sowell knocks down the myths and lies the left-wing has worked so hard to spread.

For example, Sowell shows how elitists have made the most desirable areas of California unaffordable for all but the very rich through restrictive policies. This results in various hypocrisies, such as driving out poor blacks from places like San Francisco and also contributes to the fallacy of a lack of “affordable housing”. The latter is not the fault of evil conservatives, but of very selfish left-wingers.

Sowell applies his truly formidable knowledge and scalpel-like logic to each of these six fallacies, slicing away the untruths and revealing that the United States is not a nation of massive inequalities, but is in fact still the land of opportunity.

As Sowell puts it so well, “[s]ome things are believed because they are demonstrably true. But many things are believed because they are consistent with a widely held vision of the world – and this vision is accepted as a substitute for facts.” For those willing to learn, Sowell demolishes six major myths here. Would that there were more like Sowell – and those willing to learn from him.

Jerry

See all 105 customer reviews…

Economic Facts And Fallacies Second Edition Photo

Economic Facts And Fallacies Second Edition Pic

Economic Facts And Fallacies Second Edition Image

Economic Facts And Fallacies Second Edition Image

Economic Facts And Fallacies Second Edition Photo

Economic Facts And Fallacies Second Edition Picture