Eat the Rich
by P.J. O'Rourke
reviewed by Marco den
Ouden
Originally published at About.com - 2/22/99
Also available at
Stocknowledge
They don't call economics the dismal science for nothing.
As P.J. O'Rourke puts it in his
latest book, "Economics is just too complicated. It makes our heads ache." And
no wonder. The economics profs turn simple ideas like people buy less of
something as it gets more expensive into something arcane and incomprehensible
like
Y = [1] [C+I+G+(X-M)]/1-mpc
But for those of us who invest in the capitalist system,
it behooves us to know something about how our system generates wealth. What
better way than to take it with a spoonful of sugar, P.J. O'Rourke style!
O'Rourke, the conservative-libertarian raconteur, sets
out in Eat the Rich, subtitled A Treatise on Economics, to
answer a simple question, "Why do some places prosper and thrive while others
just suck?" He does it by his favorite method, visiting various places around
the world and observing how they work.
If you haven't met O'Rourke before, you are in for a
treat. Possibly America's funniest writer, the Mencken Research Fellow at the Cato Institute and regular
contributor to
Rolling Stone is a brilliant observer of the passing scene wherever he
is and loves to poke fun at humanity's foibles and fads. Eat the Rich
is his ninth book and joins such classics as Parliament of Whores
(where he tries to explain the entire U.S. government) and All the Trouble in the
World
(where he looks at the lighter side of overpopulation, famine, ecological
disaster, ethnic hatred, plague and poverty).
In this new "treatise" he visits such varied places as
Wall Street (good capitalism), Albania (bad capitalism), Sweden (good socialism)
and Cuba (bad socialism). He also takes a stab at actually explaining some
economic concepts such as the law of comparative advantage (using John Grisham
and Courtney Love as his guinea pig examples).
Okay! Okay! You gotta know, right? You see, he
hypothesizes that John Grisham is a better novel writer and a better
composer than Courtney Love. But Courtney is relatively better at song
writing than she is at writing novels. So it pays for Courtney to concentrate on
"caterwauling" and Grisham on "bashing the laptop". Society as a whole benefits
from this. O'Rourke draws up the usual comparative advantage chart to prove that
we get more "benefit to society" units or BS from the duo's specialization.
O'Rourke's trip to Wall Street is a must read for fans of
the stock market. He notes that the stock market has become the darling of the
media. It is in, it is hip, "the New York Stock Exchange
has achieved celebrity status".
O'Rourke spent his first hour at the exchange "fascinated
by the littering". "Stockbrokers," he notes, "are the last nonpsychotic people
in the U.S. throwing garbage over their shoulders" while the rest of us fret
about the environment. Over four thousand pounds
of canceled buy and sell orders and other detritus is swept from the exchange
floor every day.
O'Rourke explains, in his wry way, the inner workings of
the exchange - the floor brokers, the competitive traders, the specialist
brokers and the two-dollar brokers. The language of the exchange
- upticks, downticks, the trading crowd, fill or kill, limit orders and such
oddities as trading in sixteenths of a dollar - called teenies. And, oh yes,
"one of the old-fashioned charms of the NYSE, besides the littering," the
constant use of the F word!
But despite the humor, O'Rourke's observations are quite
intriguing. "When we own any financial instrument," he says, "what we basically
own is an opinion." For example, if the British pound declines, "the number of
pence in a pound doesn't change. We just don't feel the same way about pounds
anymore." Our collective opinions on a stock constitutes its price. So when we
buy a stock, we are of the opinion that someone later on will think the stock is
worth more than we think it's worth now. As O'Rourke observes, "Economists call
this - in a rare example of comprehensible economist terminology - the Greater
Fool Theory."
And as with most working stiffs, ask whether stockbrokers
are of the classical school, Keynesians or a monetarists, the reply will be, as
one broker put it, "I don't think they give two shits!"
But as we learn, economics is important. What
makes our free market economies strong, vibrant and productive, is a combination
of freedom in an environment of the rule of law.
Albania went from communist hell hole to anarchist
hellhole in short order. From total control to no control. A country ruined by
Ponzi schemes. Freedom, but no rule of law. "The Albanian concept of freedom,"
observes O'Rourke, "approaches my own ideas on the subject, circa late
adolescence." When communism was overthrown, the best people "ran like hell"
escaping to Greece, Italy or western embassies. Looting became endemic, finally
stopping when they ran out of stuff to loot.
Sweden - good socialism - is contrasted with Cuba - bad
socialism, though O'Rourke clearly doesn't care for either. "Socialism," he
says, "is inherently totalitarian in philosophy." Every aspect of your private
life can become public property. "Witness Sweden's Minister for Consumer,
Religious, Youth and Sports Affairs." Gee! Don't we have one of those in Canada!
No! Actually we have several!
Cuba is worse. "There is one vibrant, exciting, and
highly efficient sector of the official Cuban economy," he writes. "The police!"
When he made an errant left turn with his rented car, O'Rourke was pulled over a
mile away in a different part of town for the transgression.
He visits a dissident couple, though "they hadn't
actually dissented about anything. They just wanted to leave Cuba." They had
visited Sweden and applied for asylum, but the egalitarian, progressive Swedes
with their generous refugee policy had sent them back! "Now they were in
permanent hot water."
O'Rourke writes about the history of Cuba - the
concentration camps, the executions. Cuba, according to the Americas Watch human
rights group, holds "more political prisoners as a percentage of population than
any other country in the world." And he writes in detail about the economic
mess. The American embargo on trade with Cuba, he notes, is stupid. "It gives
Castro an excuse for everything that's wrong with his rat-bag society. And free
enterprise is supposed to be the antidote for socialism. We shouldn't forbid
American companies from doing business in Cuba, we should force them to do so."
But Cubans, he argues, are also stupid for rising to
Castro's propaganda bait. Another little island country embargoed by her large
neighbour and threatened with invasion has done quite all right for itself.
That, of course, is Taiwan.
After an interlude with economics proper, including his
"Ten Less-Basic Principles of Economics", O'Rourke takes us on the best part of
the journey - trips to Russia, Tanzania, Hong Kong and China. The Tanzanian and
Hong Kong experiences are a study in contrasts. Tanzania has everything -
beautiful landscapes, verdant forests, rich agricultural land - and extreme
poverty. Hong Kong has nothing - little land, no natural resources - and
fabulous wealth. Why? Appropriately the chapters are titled "How to make nothing
from everything" and How to make everything from nothing".
Tanzania was a victim of the egalitarian Julius Nyrere
and his ujamaa vijijini or villagization program. It didn't work. But
the worst thing about it is that we, meaning the western democracies, paid for
it. "There's a certain kind of gullible and self-serious person who's put in
charge of foreign aid," writes O'Rourke, and "this type was entranced by the
modest, articulate Julius Nyrere and the wonderful things he was going to do."
Aid amounted to $20 a head and O'Rourke speculates that that is how much it cost
"to build a vijijini hovel, catch a Tanzanian, and stick him inside."
Although O'Rourke is a humorist, it is clear that he
writes with great passion for the people he visits (from whatever country) and a
great empathy for the hardships they suffer at the hands of professional
do-gooders like Nyrere. He genuinely likes the people he meets and we feel his
pain and anger as he describes how his guide's five year old daughter died a few
months before his visit from the gross incompetence and backwardness of the
country.
At the same time, he is fascinated by the beauty, customs
and uniqueness of each place he visits. Besides exploring the economies of
Sweden, Russia, Tanzania and Shanghai, he takes us on visits to some of the
interesting sights like a jungle safari, or a trip to an exotic Chinese
restaurant serving Cobra blood as an appetizer. They keep live cobras for that
purpose in glass aquariums just like western restaurants keep live crabs and
lobsters. He has an eye for the intriguing and unusual and gives us descriptions
that put Fodor's travelogues to shame.
O'Rourke becomes particularly incensed when he visits
Hong Kong during the British surrender of "the best contemporary example of
laissez-faire" to "the biggest remaining example of socialist totalitarianism,"
an act he sees as craven and cowardly, "a shameful moment." And yet, the people
of Hong Kong celebrated. Why? Because they hate the English. O'Rourke asked why
that should be. The Vietnamese have forgiven the Americans, surely Hong Kongers
could forgive "the odd opium war."
"It's different," his Hong Kong friend told him, "You
just killed the Vietnamese; you never snubbed them." Canadians take
note! Understand the significance of that remark and you understand Quebec
separatism.
He explores Hong Kong's history and economy. The hero of
this economic miracle is John Cowperthwaite, the young colonial officer sent to
oversee the colony in 1945. He found it recovering nicely from the war without
him and so "took the lesson to heart, and while he was in charge, strictly
limited bureaucratic interference in the economy." The result? "A stewing
pandemonium: crowded, striving, ugly, and the most fabulous city on earth."
In a 1961 budget speech, Cowperthwaite spoke words that
O'Rourke says should be "engraved over the portals of every legislature
worldwide" or better still "tattooed on the legislators' faces:"
... in the long run the aggregate of decisions of
individual businessmen, exercising individual judgment in a free economy, even
if often mistaken, is less likely to do harm than the centralized decisions of a
government; and certainly the harm is likely to be counteracted faster.
O'Rourke's last stop is Shanghai, China, where the
government is trying to impose a free market using totalitarian means. It can't
be done and he calls this chapter "How to have the worst of both worlds". Yet in
spite of the horror of the home of Tiannenmen Square, he keeps his sense of
humor. "Omnipresent amid all the frenzy of Shanghai," he writes, "is that famous
portrait, that modern icon. The faintly smiling, bland, yet somehow threatening
visage appears in brilliant hues on placards and posters, and is painted huge on
the sides of buildings. Some call him a genius. Others blame him for the deaths
of millions. There are those who say his military reputation is inflated, yet he
conquered the mainland in short order. Yes, it's Colonel Sanders."
O'Rourke is a very funny writer. At the same time, he
writes with passion and conviction. His travelogues are filled with facts and
figures (though not in a stuffy way). The book is short on what professional
economists would consider economics. But it is full of the stuff of life - the
real story that gets you an understanding of economics on a gut level. And that
is that "poverty is hard, wretched and humiliating. Poverty is John (his guide)
driving around in the Tanzanian night looking for the doctor while his daughter
dies."
On the other hand, "Making money through hard work and
wise investment is a fine thing to do." And so it is. "Economic liberty makes
wealth," concludes O'Rourke. "Economic repression makes poverty."
So have a laugh or two, be enthralled by exotic and
fascinating places, and learn a few lessons about life and the blessings we gain
from liberty. This is a superb book. Read it.
Selected Related Links
P.J.
O'Rourke's Home Page
Copyright Notice:
The dust jacket graphics of
Eat the Rich are copyright by Atlantic Monthly Press and used by
permission.
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