Eat the Rich
by P. J. O'Rourke

O'Rourke explains economics by describing the economies of places that represent the main types of economic system: Wall Street (good capitalism), Albania (bad capitalism), Sweden (good socialism), Cuba (bad socialism), Russia (how not to reform an economy), Tanzania (how to make nothing from everything), Hong Kong (how to make everything from nothing), Shanghai (how to have the worst of both worlds).

Wall Street

I finally learned what NASDAQ stands for: National Association of Securities Dealers Automated Quotation system. Basically, it means online trading. And junk bonds:
"Junk bonds are just loans that are risky and therefore pay higher interest rates. The credit debt that you've run up is essentially a junk bond held by Visa." (23)
And derivatives:
"A derivative is a deal about buying or selling rather than the buying or selling proper. When you own a derivative, what you own is a bargain that you've made. You've promised to pay or charge a certain price for a certain thing to be received or delivered at a certain time. Where it gets confusing is that this promise itself can now be bought and sold." (26)
The Great Depression:
"... in 1929 when stocks were crashing, banks were collapsing, and President Hoover was hoovering around. Pretty soon you could buy the New York Central Railroad for a wooden nickel, except nobody could afford wood. People had to make their own nickels at home out of old socks, which had also been boiled, along with the one remaining family shoe, to make last night's dinner. So kids had to walk to school with pots and pans on their feet through miles of deep snow because no one had the money for good weather. My generation has heard about this in great detail from out parents, which is why we put them in nursing homes." (27)
Inside information:
"Asymmetrical information shouldn't be confused with 'inside information' because it's exactly the same thing." (33)

"The proxy statement allows you to give your vote to the people who are paying themselves enormous bonuses." (24)

"The reason you go broke in the commodities market--or die from the cholesterol in sausage--is because you're betting you know more than the actual producers and consumers of the commodity." ... "There are exceptions of course, Hillary Clinton made $99,517 trading cattle futures between October 1978 and July 1979. This could lead to tasteless jokes about Mrs. Clinton getting inside information from the cows at NOW, if one were inclined to that type of coarse, sexist humor." (25)

Albania

"The tribalism that has disappeared from the rest of Europe (or been reduced to what tartan you wear on your golf slacks) is still a prime fact of existence in Albania." (51)

"Albania is remarkable for the number and persistence of its blood feuds. As soon as a boy is of age, he is liable to become a Lord of Blood, a Zot i Gjakut, with responsibility for killing members of the clan who killed members of his clan, who killed members of their clan, and so forth--a sort of pyramid scheme of death, if you will." (52)

"In 1992, a man was beheaded with an ax in a Tirana hotel lobby--revenge for a murder his father had committed in a northern village more than forty years before." (52)

Sweden

"Several things turned this hayseed country in the unheated attic of Europe into a wealthy modern state. Land-reform laws in the early nineteenth century allowed farmers to exercise property rights by enclosing common space, thereby increasing production, though at the expense of the landless rural laborers. The medieval guilds, which gave comfy local monopolies to artisans, were abolished in 1846, and business freedom was guaranteed by law in 1864. Craftsmen could now succeed--or fail--at anything they wanted, anywhere they liked. Sweden also had supplies of timber, iron ore, and other minerals. Since these were export commodities, a policy of free trade was instituted. Thus, Sweden's prosperity was the result of the very deregulation that a socialist government would be expected to abhor." (69)

Now Sweden has welfare-state socialism: "More than half of the GDP goes for taxes. So living in Sweden is like getting a divorce every April 15" (59)

"... there's an astonishing 25 percent national sales tax on almost all goods and services. Every time you order a burger, you buy the government fries and a Coke." (60)

"But the children I observed were well-behaved despite a Swedish law--this is not a joke--against spanking your kids. 'Behave or I'll reason with you,' however, is, from a Swede, a fairly terrible threat. The teenagers weren't too rotten acting, either. They had plenty of snot rings and dummkopf haircuts and worse those European sweaters the color and shape of spilled porridge, but actual rebellious behavior seemed limited to looking mopey." (64)

"Swedish subway stations are each decorated by a different contemporary artist and raise the question, Which is worse: vandalism or modern art?" (73)

The welfare-state type of socialism works, for the time being, in Sweden because Sweden is populated mostly by Swedes: "If they don't work, they get almost what they would get if they did work. And if they do work, their raises and bonuses are all taxed away. Give Americans a situation like that, and we'd be putting all our economic energy into playing cards at the bingo hall. But there was nothing visible in Sweden to indicate much national goldbricking. Mr. Larsson pointed to the window" 'You see how it is outside? It's always like that here.' Over the centuries the Swedish gene stock has been culled. The lazy ones froze." (65)

"A Scandinavian economist once proudly said to free-market advocate Milton Friedman, 'In Scandinavia we have no poverty.' And Milton Friedman replied, 'That's interesting, because in America among Scandinavians, we have no poverty, either.'" (69)

"The Swedes seem to have no natural distrust of government." ... "The Swedes never had feudalism to build a real Magna Carta hatred of central power." (72) ... "Otherwise a marvelously honest people, the Swedes have a blind spot about taking certain property that isn't theirs, as long as the loot is fairly divided. And come to think of it, the Vikings were the same way. It makes you wonder what was going on in those longboats. Maybe discussions of political economy, Viking style. 'Yah. We pillaged Ireland. Good. But Sven had seven rapes, and Nils only had one, so we all get to rape Sven.'" (72-73)

Cuba

"Habana Centro looked like 1960 Cleveland after a thirty-seven year strike by painters and cleaning ladies." (80) "Outside of the tourist areas, however, there was a fair danger of experiencing some freelance socialism; you might find that you were the local bourgeoisie from which something got recovered." (80)

"Of course the embargo 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." (95)

Russia

"There's also a whiff of highbrow in Siberia. For a hick town, Irkutsk had too many opera houses, theaters, museums, and academic institutes. This is because, for hundreds of years, the smarty-pants reformers, annoying idealists, and know-it-all do-gooders were sent here for life. It's as though everyone who voted for George McGovern was packed off to Lubbock, Texas. A mixed blessing for the locals, as you can imagine." (146)

"Measuring the current Russian economic situation against the old Soviet economy is like trying to do arithmetic by tasting the numbers." (149)

Tanzania

"The Tanzanian men wore shirts and slacks that had a clothing-drive look, but, if so, they were picked from the Goodwill bin with more taste than most Seattle bands show and more use of detergent, too." (163)

Tanzania is the most "aided" country in Africa. "In the cold war days, of course, we were giving money to Tanzania on the theory of: 'Pay them to be socialist so they won't be communist and figure out what the difference is later.' But now, I'm afraid, the ugly truth is that we care about Tanzanians because they have cool animals." (178) "Delivering our cash to a dictatorial and silly government was bad, but even worse was delivering our big ideas about centralization, economic planning, and social justice to a country that had 120 university graduates at the time of independence. Not that Tanzanians didn't understand our big ideas; they understood them too well. They just had no experience with how bad most big ideas are. They hadn't been through Freudianism, Keynesianism, liberalism, www.heavensgate.com, and 'Back to Africa.' They don't have 10,000 unemployable liberal-arts majors sitting around Starbucks with nose rings." (197)

Hong Kong

Honk Kong is 18 times as crowded as New York. But it is so small that it has barely one-tenth of 1 percent of the world's population. Even so, Hong Kong is the world's eighth-largest international trader and tenth-largest exporter of services. "Besides Americans, only the people of Luxembourg and Switzerland are richer than those of Hong Kong. And these are two other places where capitalism is allowed to move and earn freely." (205)

"Why didn't the British government give some other island to China. Britain, for instance. ... England could be turned into a theme park." (211)

"... we could have handed out 6.5 million green cards. Imagine 6.5 million savvy, hardworking citizens-to-be with great cuisine. What a blessing for America. And how we would hate them. Pat Buchanan would hate their race. The AFL-CIO would hate their wage rate. The NAACP would hate their failure to fail as a minority." (211)

Shanghai

Like Hong Kong, Shanghai began as an enclave of market freedom granted by the Treaty of Nanjing in 1842 after the first opium war when "China was experiencing one of its 4,200 consecutive years of bad government." "Until the communist takeover in 1949, Shanghai was the more important of the two cities." (219)

"I don't want to disparage private enterprise. The world has political, religious, and intellectual leaders for that. But when a totalitarian government gets cozy with large financial and manufacturing concerns, it rings a twentieth-century bell. I'm thinking, how a certain 'people's car'--ein Volkswagen--got its start. I'm thinking, 'Made the trains run on time.' I'm thinking, 'Greater Asian Coprosperity Sphere." (217)

"Families dot the streets and parks, always in trio form. China's One Child program has succeeded (though whether at greater social cost than the success of America' One Parent program, I can't say)." (222)

Economic Principles

"'Curing poverty equals allowing people to get rich.' This very simple truth has eluded some of the deepest thinkers in the world's advanced nations." (196)

"The main cost of government expenditures is not taxes, inflation, or interest on the national debt. The main cost is opportunity." (113)

"Government does not cause affluence. Citizens of totalitarian countries have plenty of government and nothing of anything else." (2)

"Our freedom to not use a particular kind of money keeps the issuers of that money--honest wouldn't be the word--moderate in their dishonesty." (122)

"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?" (8)

"The first nine Commandments concern theological principles and social law: Thou shalt not make graven images, steal, kill, etc. Fair enough. But then there's the Tenth Commandment: 'Though shalt not covet thy neighbor's house, though shalt not covet thy neighbor's wife, not his manservant, nor his maidservant, not his ox, not his ass, nor anything that is thy neighbor's.' Here are God's basic rules about how we should live, a very brief list of sacred obligations and solemn moral precepts, and right at then end of it is, 'Don't envy your buddy's cow.' The Tenth Commandment sends a message to socialists, to egalitarians, to people obsessed with fairness, to American presidential candidates in the year 2000--to everyone who believes that wealth should be redistributed. And the message is clear and concise: Go to hell." (243)

Year Read: 1999


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