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Eat the Rich : A Treatise on Economics
In P. J. O'Rourke's classic best-seller Eat The Rich, he takes on an elusive subject, but one that is dear to us all--wealth. What is it? How do you get it? Or, as P.J. says, "Why do some places prosper and thrive, while others just suck?"
The obvious starting point is Wall Street. P.J. takes the reader on a scary, hilarious, and enlightening visit to the New York Stock Exchange, explaining along the way stocks, bonds, debentures, commodities, derivatives--and why the floor of the exchange is America's last refuge for nonpsychotic litterers.
P.J. then sets off on a world tour to investigate funny economics. Having seen "good capitalism" on Wall Street, he looks at "bad capitalism" in Albania, views "good socialism" in Sweden, and endures "bad socialism" in Cuba. Head reeling, he decides to tackle that Econ 101 course he avoided in college. The result is the world's only astute, comprehensive, and concise presentation of the basic principles of economics that can make you laugh, on purpose.
Armed with theory, P.J. ventures to Russia in a chapter entitled "How (or How Not) to Reform (Maybe) an Economy (If There Is One)," and discovers that Russia is a wonderful case study--unless, of course, you're Russian. P.J. then goes to Tanzania, a country rich in resources that is utterly destitute, before arriving in Hong Kong, which even as the British prepare to hand it over to the communists is a shining example of how unfettered economic activity can "make everything from nothing." P.J. ends up in Shanghai, observing a top-down transition to capitalism, a process he describes "as if the ancient Egyptians had constructed the pyramid of Khufu by saying, 'Thutnefer, you hold up this two-ton pointy piece while the rest of the slaves go get 2,300,000 blocks of stone.' "
P.J.'s conclusion in a nutshell: the free market is ugly and stupid, like going to the mall; the unfree market is just as ugly and just as stupid, except there's nothing in the mall and if you don't go there they shoot you.
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September 01, 1999
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Excerpt from Eat the Rich by P. J. O'Rourke
I had one fundamental question about economics: Why do some places prosper and thrive while others just suck? It's not a matter of brains. No part of the earth (with the possible exception of Brentwood) is dumber than Beverly Hills, and the residents are wading in gravy. In Russia, meanwhile, where chess is a spectator sport, they're boiling stones for soup. Nor can education be the reason. Fourth graders in the American school system know what a condom is but aren't sure about 9 ? 7. Natural resources aren't the answer. Africa has diamonds, gold, uranium, you name it. Scandinavia has little and is frozen besides. Maybe culture is the key, but wealthy regions such as the local mall are famous for lacking it.
Perhaps the good life's secret lies in civilization. The Chinese had an ancient and sophisticated civilization when my relatives were hunkering naked in trees. (Admittedly that was last week, but they'd been drinking.) In 1000 B.C., when Europeans were barely using metal to hit each other over the head, the Zhou dynasty Chinese were casting ornate wine vessels big enough to take a bath in--something else no contemporary European had done. Yet, today, China stinks.
Government does not cause affluence. Citizens of totalitarian countries have plenty of government and nothing of anything else. And absence of government doesn't work, either. For a million years mankind had no government at all, and everyone's relatives were naked in trees. Plain hard work is not the source of plenty. The poorer people are, the plainer and harder is the work that they do. The better-off play golf. And technology provides no guarantee of creature comforts. The most wretched locales in the world are well-supplied with complex and up-to-date technology--in the form of weapons.
Why are some places wealthy and other places poor? It occurred to me, at last, that this might have something to do with money.
But I didn't know anything about money. I didn't know anything about money as a practical matter--did I have enough to pay the mortgage? And I didn't know anything about money in a broad or abstract sense. I certainly didn't know anything about economic theory. And I wasn't alone in this.
I couldn't answer the central question of this book because I was an economic idiot. I got to be an economic idiot by the simple and natural method of being human. Humans have trouble with economics, as you may have noticed, and not just because economic circumstances sometimes cause them to starve. Humans seem to have an innate inability to pay attention to economic principles.
Love, death, and money--these are the three main human concerns. We're all keen students of love. We are fascinated by every aspect of the matter, in theory and in practice--from precise biological observations of thrusting this and gaping that to ethereal sentimentalities marketed in miles of aisles at Hallmark stores. No variety of love is too trivial for exegesis. No aspect of love is so ridiculous that it hasn't been exhaustively reviewed by the great thinkers, the great artists, and the great hosts of daytime talk shows.
As for death, such is the public appetite for investigation of the subject that the highest-rated television program in America is about an emergency room. The most hardheaded and unspeculative of persons has his notions of eschatology. The dullest mind can reason extensively about what causes kicking the bucket. Dying sparks our intellectual curiosity.
But money does not. All we care about is the thing itself, preferably in large amounts. We care a very great deal about that. But here our brain work stops. We don't seem to mind where our money comes from. And, in an affluent society, we don't even seem to mind where our money goes. As for larger questions about money, we shrug our shoulders and say, "I wish I had more."
Why is it that we are earnest scholars of amorosity and necrosis but turn as vague and fidgety as a study hall in June when the topic is economics? I have several hypotheses, none of them very good.
Love and death are limited and personal. Even when free love was in vogue, only a certain number of people would allow us to practice that freedom upon them. A pious man in the throes of Christian agape may love every creature in the world, but he's unlikely to meet them all. And death is as finite as it gets. It has closure. Plus the death ratio is low, only 1:1 in occurrences per person.
Economics happens a lot more often and involves multitudes of people and uncountable goods and services. Economics is just too complicated. It makes our heads ache. So when anything economic goes awry, we respond in a limited and personal way by searching our suit-coat pockets to see if there are any wadded up fives inside. Then we either pray or vote for Democrats, depending on our personal convictions of faith.
Or maybe economics is so ever present, so pervasive in every aspect of our lives that we don't really perceive it. We fail to identify economics as a distinct entity. We can watch a man slip and fall and almost never hear him say, "God-damned gravity!" And we can watch a man fall ten times and not see him become interested in how gravity works. Almost never does he arise from the eleventh tumble saying, "I went down at a rate of 32ft./sec.2--the force being directly proportional to the product of the earth's mass times my weight and inversely proportional to the square of the distance between that patch of ice on the front steps and my butt." And so it is with economics. No amount of losing our jobs or our nest eggs sends us to the library for a copy of John Maynard Keynes's The General Theory of Employment, Interest, and Money.
The very pervasiveness of economics keeps us from getting intellectual distance on the subject. We can view death from afar for an average of 72.7 years if we're a male American, and 79.5 years if we're a female. Although love is notorious for fuddling the brain, there is matrimony to cool the passions or, failing that, sexual climax will work in the short term. But there is no such thing as a dollargasm. Money is always with us. What am I going to do to take my mind off money? Go shopping? Drink and drugs will cost me. I suppose I can play with the kids. They need new shoes.
Constant money worries have a bad effect on human psychology. I'd argue that there is more unbalanced thinking about finance than about anything else. Death and sex may be the mainstays of psychoanalysis, but note that few shrinks ask to be paid in murders or marriages. People will do some odd things for political or religious reasons, but that's nothing compared to what people will do for a buck. And if you consider how people spend their dough, insane hardly covers it.
Our reactions to cash are nutty even when the cash is half a world away and belongs to perfect strangers. We don't ridicule people for dying. Or, in our hearts, despise them for fooling around. But let a man get rich--especially if it happens quickly and we don't understand how he did it--and we can work ourselves into a fit of psychotic rage. We aren't rational and intelligent about economics because thinking about money has driven us crazy.
I'm as much of a mooncalf as anyone. I certainly had no interest in economics as a kid, as kids don't. Children--lucky children at least--live in that ideal state postulated by Marx, where the rule is, "From each according to his abilities, to each according to his needs." Getting grounded equals being sent to a gulag. Dad in high dudgeon is confused with Joseph Stalin. Then we wonder why so many young people are leftists.
I had no interest in economics at college, either. I belonged to that great tradition of academic bohemia which stretches from the fifteenth-century riots of Fran?ois Villon's to the Phish tours of the present day. For university hipsters, there is (no doubt Villon mentions this in his Petit Testament) nothing more pathetic than taking business courses.
My friends and I were above that. In our classes we studied literature, anthropology, and how to make ceramics. We were seeking, questing, growing. Specifically, we were growing sideburns and leg hair, according to gender. It did not occur to us that the frat-pack dolts and Tri-Delt tweeties, hurrying to get to Econ 101 on time (in their square fashion), were the real intellectuals. We never realized that grappling with the concept of aggregate supply and demand was more challenging than writing a paper about "The Effects of Cool Jazz on the Poetry of Edgar Allan Poe." What the L-7's were being quizzed on was not only harder to understand than Margaret Mead's theories about necking in Samoa, it was also more important. The engine of existence is fueled by just a few things. Unglazed pottery is not among them.
If the Rah-Rah Bobs and Pin-Me Sallys had been taking Love or Death courses, we would have been right there with them. But money was a different matter. We weren't interested in money. Actually--what we weren't interested in was work. Maybe we guessed that it would be a lot of work to b.s. our way out of memorizing such formulae as:
Not that we weren't up to the task: "Like, price--that equals wasting natural resources and the pollution thing, if you're into the whole capitalist, monopoly rip-off, man."
And, of course, we were interested in money. I remember we'd get excited whenever we had any. It's just that we were determined not to earn it. We would never go in search of money. Money was something that would come looking for us after we'd choreographed our world-shattering modern-dance recital or mounted our famous empty-gallery show of preconceptual post-objectivist paintings or when our folk-rock group, Exiles of Dayton, learned to play "Kum Ba Ya." And we weren't going to "sell out" no matter how much money was lavished upon us.
Business majors intended to (it was a loaded phrase in those days) "make money," and they were going to do this even if it involved some activity that wasn't a bit artistic, such as running IBM. We artsy types would have been shocked if anyone had told us (and no one had the nerve) that making money was creative. And we would have been truly shocked to learn that a fundamental principle of economics--"Wealth is created when assets are moved from lower- to higher-valued uses"--is the root of all creativity, be it artsy, IBMsy, or whatever.
"Putting money first" was crass. It was as if you'd gone to a party with dozens of wild, swinging chicks and, instead of drinking Mateus and making small talk about Jean-Paul Sartre, you just whipped out your unit. Except we would have thought that was a blast. But go into business? Never.
If you don't count selling drugs. Which we were all doing. We knew everything about price elasticity when it came to pot, not to mention aggregate supply and demand. In point of fact, we hirsute weirdos probably had more real business experience than any business major on campus. And one more thing--we all fancied ourselves to be marxists. As a philosophic recipe, marxism is a cannelloni of the economical, stuffed with economics, and cooked in economic sauce.
Still, we were not interested in economic ideas. And, to be fair, the business majors weren't, either. Econ was not something they took because they were fascinated by the elegant complexities of economic relationships or because mankind cannot survive without economic activity. They took Econ and forgot everything in the text so they could get a job from somebody else who took Econ and forgot everything in the text.
I turned into a square myself, of course, as everyone who lives long enough does. I got a job as a journalist--but without ever considering that journalism was a business. (Although I would have been unpleasantly surprised to get a hug instead of a paycheck at the end of the week.) And I continued to ignore economic issues even though I had a press pass to the most spectacular extravaganza of economics in this century.
It was the. 1970s, and the economy was changing almost as often as bed partners. The Great Depression may have been more dramatic, but it was a one-trick pony. In the '70s, globalization suddenly included the other three-quarters of the globe. The places that used to make our windup toys were making our automobiles. Everything was being imported--except oil, which had hitherto been given away free with a windshield wash and a set of highball glasses at most brand-name gas stations. Then, one day, you couldn't buy oil for money. Not that there wasn't plenty of money around in the '70s. It just didn't happen to be worth anything. We had a previously unimaginable combination of fever inflation and hypothermia business slump. You could make more money buying Treasury bills than you could make breaking into the Treasury. The gold standard disappeared from the scene. Maybe it joined a cult. International currency-exchange rates were determined with mood rings. The most powerful nations in the world had, at their helms, an amazing collection of economic nincompoops--Nixon, Carter, Mao, Harold Wilson, Georges Pompidou, Leonid Brezhnev. And the electronic-media revolution was under way so that bad ideas about economics were spreading around the world at neural speed.
I dozed through it. And I was covering politics, too. Even I realized that money was to politicians what the eucalyptus tree is to koala bears: food, water, shelter, and something to crap on. I made a few of the normal journalistic squeaks about greed and self-interest, and let the thing slide.
It wasn't until the 1990s, when I'd been a foreign correspondent for ten years, that I finally noticed economics. I noticed that in a lot of places I went, there wasn't anything you'd call an economy. And I didn't know why. Many of these countries seemed to have everything--except food, water, shelter, and something to crap on.
I decided to go back to the Econ texts I'd finessed in college and figure things out. And my beatnik loathing returned full-blown. Except this time it wasn't the business majors I despised; it was the authors of the books they'd had to study. It turns out that the Econ professors were economic idiots, too.
Looking into a college textbook as an adult is a shock (and a vivid reminder of why we were so glad to get out of school). The prose style is at once puerile and impenetrable, Goodnight Moon rewritten by Henry James. The tone varies from condescension worthy of a presidential press conference to sly chumminess worthy of the current president. The professorial wit is duller than the professorial dicta, and these are dulled to unbearable numbness by the need to exhibit professorial self-importance. No idea, however simple--"When there's more of something, it costs less"--can be expressed without rendering it onto a madras sport coat of a graph and translating it into a rebus puzzle full of peculiar signs and notations. Otherwise the science of economics wouldn't seem as profound to outsiders as organic chemistry does. And then, speaking of matters economical, there's the price of these things--$49.95 for a copy of Economics, fifteenth edition, by Paul A. Samuelson and William D. Nordhaus.
Economics has been, as its edition number indicates, in use as an Econ text forever--that is, since 1948, which counts as forever to the baby-boom generation. The book is considered a fossil by many economists, but it has been translated into forty-six languages, and more than 4 million copies have been sold. Economics was what the current leaders of international business and industry were afflicted with in school. And here was another shock. Professor Samuelson, who wrote the early editions by himself, turns out to be almost as much of a goof as my friends and I were in the 1960s. "Marx was the most influential and perceptive critic of the market economy ever," he says on page seven. Influential, yes. Marx nearly caused World War III. But perceptive? Samuelson continues: "Marx was wrong about many things . . . but that does not diminish his stature as an important economist." Well, what would? If Marx was wrong about many things and screwed the baby-sitter?
Samuelson's foreword to the fifteenth edition says, "In the reactionary days of Senator Joseph McCarthy . . . my book got its share of condemnation." I should think so. Economics is full of passages indicating that Samuelson (if not William-come-lately Nordhaus) disagrees with that reactionary idea, the free market. The chapter titled "Applications of Supply and Demand" states, ". . . crop restrictions not only raise the price of corn and other crops but also tend to raise farmers' total revenues and earnings." Increase your corn profit by not growing corn? Here's a wonderful kind of business where everybody can get rich if they'll just do nothing.
In the chapter "Supply and Allocation in Competitive Markets," the book seems to be confused about the very nature of buying and selling. "Is society satisfied with outcomes where the maximal amount of bread is produced," it asks, "or will modern democracies take loaves from the wealthy and pass them out to the poor?" Are the rich people just going to keep those loaves to grow mold? Why would they produce "the maximal amount of bread" to do that? Or are we talking about charity here? If so, let us note that Jesus did not perform the miracle of the loaves and taxes. We all know how "modern democracies take loaves from the wealthy." It's the slipups in the "pass them out to the poor" department that inspire a study of Econ.
It was not reassuring to learn that the men who run the companies where our 401(k)s are invested have minds filled with junk from the attic of Paul A. Samuelson's Economics.
There were newer texts than Economics for me to look at, and what they said wasn't so obviously wrong. But then again, what they said wasn't so obvious, period. Here are the first three sentences of Macroeconomics by David C. Colander (donated by Eric Owens, who lives next door to me and is taking Econ at the University of New Hampshire): "When an artist looks at the world, he sees color. When a musician looks at the world, she hears music. When an economist looks at the world, she sees a symphony of costs and benefits." Somebody change the CD, please.
The textbooks weren't good. This sent me to the original source material, the classics of economic thought. But here I had to admit, as I was tacitly admitting thirty years ago, that I don't have the brains to be a Tri-Delt. The Wealth of Nations, Das Kapital, The General Theory of Whatchmacallit were impressive works and looked swell on my bookshelf, but they put me to sleep faster than the economic news of the '70s had.
There were, of course, popular books on economics, but the really popular books were about extraordinary people doing extraordinary things and getting fabulously wealthy or going to jail--preferably both. I was interested in ordinary people doing ordinary things and getting by. And the less popular but more worthwhile books on economics all seemed to presume that I'd made it through something like Economics without blowing a fuse.
So I gave up trying to be smart about economics. I decided that if I wanted to know why some places were rich and other places were poor, I should go to those places. I would visit different economic systems: free market, socialist, and systems nobody could figure out. I'd look at economically successful societies: the U.S., Sweden, Hong Kong. I'd look at economically unsuccessful societies: Albania, Cuba, Tanzania. And I'd look at societies that hadn't decided whether to be successful or not: Russia and mainland China. I'd wander around, gape at things, and simply ask people, "Why are you so broke?" Or "How come you're shitting in high cotton?"