Home
Arts
Book Reviews
Economics
Ethics
History
Investing
Miscellaneous
Music
My Books
Newsletters
Politics
Real Estate
Travel

My Writing

 
Book Review

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!

Book Cover

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.

 

Contents copyright Marco den Ouden       All Rights reserved
Typewriter graphic courtesy Stockfreeimages.com