The Politically Incorrect Guide To Capitalism (2007) - Plot & Excerpts
This is a useful little peek into the wondrous world of capitalism. Robert Murphy is a regular contributor to the Austrian school of economics website www.mises.com who here explains in very easy to read and understand terms the benefits that so many people fail to appreciate about free market capitalism. He exposes common misconceptions and intentional deceptions from Marxist philosophers and big-government supporters of every stripe. I thoroughly enjoyed this book, but admittedly didn't learn much new information since I've read all this elsewhere and agree with the message. In other words, I've been sitting in the choir of Murphy's church for many years and have heard this sermon before. Still, hearing the truth yet again never hurt anyone. This is a great intro to a wide range of topics that will benefit most readers. It is a very easy and accurate look into many economic topics without the grinding effort required to read Friedman or Hayek.The superiority of free markets over government control is so overwhelming and obvious that it manifests itself in a multitude of ways. It increases our lifespans, makes our lives more comfortable, frees up time to do activities beyond mere survival, allows us the option to explore different areas of the world, and type goodreads reviews and distribute the reviews to people across the planet at virtually no cost. Murphy further shows that capitalism combats racism and discrimination, increases product safety, improves the environment, and rewards merit and achievement better than any competing system or conceivable alternative.Murphy provides numerous juicy facts to bolster these arguments. These facts and the soundness of the theory behind them would make me embarrassed to try to contradict the benefits or decry the evils of capitalism. Marxists and other pro-government people evidently haven't the same sense of shame but they can be quite entertaining. They remind me of witchdoctors encouraging the cancer-stricken to drink 3 quarts of virgin female goat's blood in order to cure the brain tumor. At what point do you just recognize that what you're spouting is utter nonsense? Some of the more interesting facts follow.Julian Simon won a bet against Paul Ehrlich over commodity prices. Ehrlich thought that precious metals and other resources were being exhausted by human activity so that the price would increase to reflect the underlying scarcity. Simon believed in capitalism and freedom and thought that increased demand would lead to increased supply and new, cheaper technologies to find and extract the resources. Simon won the bet when every single metal that Ehrlich was allowed to select under the terms of the bet decreased in real (inflation adjusted) prices. Ehrlich evidently learned nothing from the wager and continued to spout nonsense about exhausting precious finite resources.Proven worldwide oil reserves in 1944 amounted to 51 billion barrels. In 2002, after 58 years of "myopic" gas guzzling, proven worldwide oil reserves increased to 1,266 billion barrels. Ronald Reagan's tax cuts increased receipts by the federal government every single year except 1983. The reason the debt increased was not because of the tax cuts, which as already mentioned increased revenue, but because federal spending increased at an even faster rate. Bill Clinton's supposedly balanced budget also increased the debt every single year he was in office, but because of accounting tricks and gimmicks that would be illegal for a private individual or corporation, this fact is largely ignored. To illustrate, imagine you allowed people to begin collecting social security at the age of 40 in the year 2025, there would not technically be a current new outlay of money to influence the annual deficit, but obviously the debt would go up. Slick Willy thus was not nearly as fiscally responsible as some would like to believe.Amtrak is a quasi-governmental agency created in 1971 to bail out the heavily regulated and taxed private rail lines. The federal government owns all shares of preferred stock and the Senate confirms presidential appointments to the board of directors. Amtrak has lost money every single year it has existed, and the taxpayer is forced to subsidize this business to the tune of $1.2 billion per year as in 2005.The United States Post Office with 700,000 employees is the 3rd largest employer in the U.S. behind the Department of Defense and Wal-Mart. In 1981, the price for a first class stamp was 18 cents; in 2007 it is 39 cents, which is an increase of 15% in the real price of stamps over the last 25 years. Has service improved significantly? That's a rhetorical question. By comparison to a private industry, the price of a kilobyte of memory in personal computers in 1981 was $47. Today, it is a tiny fraction of a penny.Standard Oil, the oft-cited example of the evils of monopoly, captured 90% of the market for oil in 20 years. However, it didn't achieve this dominance by gouging the consumer but rather by lowering the price from 58 cents a gallon to 8 cents per gallon. Standard Oil took advantage of economies of scale and received transportation discounts from railroads by delivering large and steady quantities of oil on the railroad tracks. 60 carloads per day allowed the railroads to offer bulk discounts to its largest and most reliable customer who then passed those savings onto the final consumers.Murphy offers the following 12 step plan to understanding the free market. These are just ideas to keep in mind when contemplating any political "solution."1. Admit that government "solutions" are a problem2. Have faith that human beings can interact peacefully, and that economic blessings are available for all.3. Surrender to the fact that certain social ills cannot be eradicated by force or political "will."4. Ask yourself, "Do I want to advocate self-sufficiency and voluntary means, or do I want to look to politicians every time I don't like something?"5. Survey the past record of governments when it comes to economic "planning" or other alleged improvements.6. Learn to look for the hidden costs of government intervention, rather than the superficial benefits.7. Understand the role of market prices, and why tampering with them interferes with the job they have to perform.8. Study history. Examine whether governments that violated private property rights stayed out of their citizens' other affairs.9. Before condemning a market outcome as unjust, first understand why it occurs.10. Study other "spontaneous" social institutions, such as language and science, where no one is "in charge" and yet the outcome is quite orderly.11. When politicians propose a new program, remember how much they said it would cost at the outset. Compare that number to the actual amount spent.12. Go through the newspaper and discover how government meddling causes or exacerbates the conflict in virtually every story.
It's a good primer on basic free market oriented capitalism, though I thought some of his arguments supporting the principles were a bit thin. For example he says CEOs should get big golden parachutes because they take on big risk to create major advances, whether they succeed or not. He says if you were a factory line worker you wouldn't agree to large pay if the company sells all the products or no pay if it doesn't. I agree that CEOs should be paid well but that they get large basic pay commensurate with their job already and perhaps should only get high bonuses or parachutes for success. Perhaps company directors should reconsider the contractual agreements they are making with CEOs. EVERY one might work harder if there was some base pay and some merit pay involved, but that's another issue. He also uses the example of Microsoft and the lawsuits levied for MS's including Internet Explorer and excluding other internet browsers. I agree that Windows is Microsoft's product and they should be able to include or exclude anything they want. Murphy uses the analogy that an auto manufacturer includes the engine and tires on a car and you wouldn't want one without them. I say the engine and tires are much more critical to the operation of the car than Internet Explorer is to the operation of Windows. He has the right idea but the wrong analogy.This is an easy read, but I liked the short read ECONOMICS IN ONE LESSON by Henry Hazlitt much better.
What do You think about The Politically Incorrect Guide To Capitalism (2007)?
This book scratched the surface of the majority of free market concepts that are lost on most of today's general population. As with most of the P.I.Guides, it lays out a great foundation for future research and understanding for the beginner in economics. I found myself skipping some parts because I had studied his main points in other works, but It did explain the function of many "bad" market players such as speculators, middle men, futures traders and corporate raiders (hostile takeovers) that people usually look at with disdain. In a free market these market actors play an important and misunderstood role. I would definitely recommend this book to any economic beginners, and will keep my copy on the bookshelf for a helpful reference. Great read!
—William
Robert Murphy's "Politically Incorrect Guide to Capitalism" is a serviceable introduction to the ideas of free market capitalism. The writing is clear and even entertaining throughout. Murphy manages to cover most of the more important aspects of how free markets work.That said, even though I agree with most of his conclusions, I found the arguments to be somewhat weak in several areas (e.g. his section on Austrian Business Cycle Theory is more or less a paragraph long). I realize this may be an unfair criticism for a book that is designed to be an introduction, but I felt like he could have done a little more.Overall, I still enjoyed the book, and I think the positives outweigh the negatives. For anyone wanting a slightly more in depth look at economics, I'd recommend Economics in One Lesson (Hazlitt), Basic Economics (Sowell), or Common Sense Economics (Gwartney).
—Ross
The book is a summary view of "capitalism" or free market. Which is not always consider the same thing by all people. I found the book to be informative and educational and even helpful to shape some of my thinking. Having said that, I am distinctly uncomfortable with "free market" being considered as the force that should cure and maintain the world. From a Trinitarian standpoint, this cannot be and is not the overarching view of how the world works. I would love to see a book written on the free market with the furthering of the Kingdom in mind and that discusses the impact of the last shall be first principle to economics.
—James
