America's most provocative satirist reads Adam Smith's The Wealth of Nations so you don't have to.
Adam Smith's The Wealth of Nations was first published in 1776 and almost instantly it was recognized as the fundamental work of economics, as important to the development of this field as Darwin's The Origin of Species would be for natural history eighty years
later. The Wealth of Nations was also recognized as being really long; the original edition totaled over nine hundred pages in two volumes. And as P. J. O'Rourke points out, to understand The Wealth of Nations, you also need to read Smith's first doorstopper, The Theory of Moral Sentiments. But now you don't have to read either.
That's because P.J. has waded through all of Smith's dense work, including Wealth's sixty-seven-page "digression concerning the variations in the value of silver during the course of the four last centuries," which, says O'Rourke, "to those uninterested in the historiography of currency supply, is like reading Modern Maturity in Urdu." In this hilarious and insightful examination of Smith and his groundbreaking work, which even intellectuals should have no trouble comprehending, P.J. puts his trademark wit to good use, and shows us why Smith is still relevant, why what seems obvious now was once revolutionary, and why the pursuit of self-interest is so important.
P.J. ON OUTSOURCING:
"Some jobs require protection, to ensure they are performed locally in their own communities. My job is to make quips, jests, and waggish comments. Somewhere
in Mumbai there is a younger, funnier person who is willing to work for less. My job could be outsourced to him. But he could make any joke he wanted. Who would my wife scold? Who would my in-laws be offended by? Who would my friends shun?"
ON THE SERVICE ECONOMY:
"Later economists, such as, in the early nineteenth century, J. B. Say, felt that Smith undervalued the economic contributions of services. And he did. The eighteenth century had servants, not a service economy. It was hard for a man of that era to believe that the semi-inebriated footman and the blowzy scullery maid would evolve into, well, the stoned pizza delivery boy and the girl behind the checkout counter with an earring in her tongue."
ON GRAPHS AND JARGON:
"Unfortunately, Adam Smith didn't have graphs. Hundreds of pages of The Wealth of Nations that readers skim might have been condensed into several pages that readers skip entirely. Another thing Smith didn't have, besides graphs, was jargon. Economics was
too new to have developed its thieves' cant. When Adam Smith was being incomprehensible he didn't have the luxury of brief, snappy technical terms as a shorthand for incoherence. He had to go on talking through his hat until the subject was (and the reader would be) exhausted."
The famous satirist headlines a new series of Books That Changed the World," in which well-known authors read great books "so you don't have to." While irreverently dissecting Adam Smith's 18th-century antimercantilist classic, The Wealth of Nations, O'Rourke continues the dogged advocacy of free-market economics of his own books, such as Eat the Rich. His analysis renders Smith's opus more accessible, while providing the perfect launching pad for O'Rourke's opinions on contemporary subjects like the World Bank, defense spending and Bill Moyers's intelligence (or lack thereof, according to O'Rourke). Readers only vaguely familiar with Smith's tenets may be surprised to learn how little he continues to be understood today. As O'Rourke observes, "there are many theories in [The Wealth of Nations], but no theoretical system that Smith wanted to put in place, except 'the obvious and simple system of natural liberty [that] establishes itself of its own accord." Libertarian that he is, O'Rourke would probably agree that one shouldn't take only his word on Smith. Still, the book reads like a witty Cliffs Notes, with plenty of challenges for the armchair economist to wrap his head around. (Jan.)
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December 04, 2006
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Excerpt from On the Wealth of Nations by P. J. O'Rourke
P.J. on why Wealth is so damn long:
"The simplest reason for Adam Smith's lack of economy with words was, aptly, economic. When Wealth was published it sold for one pound sixteen shillings. By Smith's own estimate the 'ordinary wages of labour' at the time were ten shillings a week. Consumers, even well-off consumers of intellectual luxury goods, demand good weight. Hoist Bill Clinton's apologia pro vita sua, which could have been summed up in a few choice words."
P.J. on trade:
The little fellow with the big ideas chips the spear points. The courageous oaf spears the mammoth. And the artistic type does a lovely cave painting of it all. One person makes a thing, and another person makes another thing, and everyone wants everything. Trade may be theoretically good, or self-sufficiency may be theoretically better, but to even think about such theories is a waste of that intermittently useful specialization, thought. Trade is a fact. Adam Smith saw that all trades, when freely conducted, are mutually beneficial by definition. A person with this got that, which he wanted more, from a person who wanted this more than that. It may have been a stupid trade. Viewing a cave painting cannot be worth 300 pounds of mammoth ham. The mutuality may be lopsided. A starving artist gorges himself for months while a courageous oaf of a new art patron stands bemused in the Grotte de Lascaux. And what about that wily spear point-chipper? He doubtless took his mammoth slice. But they didn't ask us. It is, precisely, none of our business.
P.J. on specialization:
Smith was aware that freedom has its discontents. He was particularly worried about the results of excess in the division of labor: "The man whose whole life is spent in performing a few simple operations generally becomes as stupid and ignorant as it is possible for a human creature to become." (W/L 782) We've seen this in countless politicians as they hand-shake and rote-speak their way through campaigns. But even that is worth it. Productivity of every kind can be increased by specialization. And the specialization of politics at least keeps politicians out of business where their stupidity and ignorance could do even greater harm to economic growth.
P.J. on wealth:
Smith's logical demonstration of how productivity is increased disproved the lamentable idea (still dearly held by leftists and everyone's little brother) that bettering the condition of one person necessarily worsens the condition of another. Wealth is not a pizza. If I have too many slices, you don't have to eat the Domino's box.
P.J. on econometrics:
Where the labor of reading Wealth is not always repaid is in wading through the work Smith had to do to shape his field of thought. It's particularly difficult when Smith the lonely pioneer is sod-busting the vast untilled prairies of econometrics. There was hardly such a thing as a reliable statistic in the 18th century and certainly no set of them that went back for decades. By dint of prodigious reading and protracted correspondence, Smith could find numbers to confirm his theories. But each number had to be examined for quality and weighed for usefulness in comparisons. And we have to stay there with Smith as he sorts through these apples and oranges like the world's pickiest Jewish mother and the world's worst corner grocery.Smith then subjected numerical data to graphical analysis without the one thing you pretty much have to have to do this - graphs. Quesnay's Tableau Economique was the first attempt to make a graph to explain economics. It was a minutely labeled, densely zig-zagging chart - part cat's cradle, part crossword puzzle, part backgammon board. Quesnay may have put Smith off the whole idea of graphic representation.