Wednesday, January 20, 2010

The Politically Incorrect Guide to Capitalism

This was an interesting primer on free-market economic thinking by Bob Murphy, an economics blogger whom I enjoy. It is not terribly intellectually rigorous; most of the arguments are just appeals to common sense. However, these appeals are quite sensical, and there is ample data to back up many of his points.

A lot of the book was standard stuff, like how minimum wage laws hurt poor workers, or how outsourcing benefits everyone in the long run, or how tariffs hurt Americans as much as they hurt anybody else. But there was one chapter about how the free market prevents racism.

Murphy's major examples of this free market anti-racism were related to slavery. Murphy himself can summarize his arguments better than I can:
If you think about it for a moment, slavery really makes no sense economically. If you're a slave, then your incentive is to produce the bare minimum to avoid a whipping. But if you're a free laborer, you have an incentive to produce more than the guy next to you, because you'll get paid more (or get promoted, etc.).

So in a truly free market -- even if it started out with some people classified as the "property" of other people -- there would be tremendous incentives for the slaves to buy their freedom from their masters. Don't get me wrong, that would be horribly unfair and they shouldn't have to do that in the first place, but nonetheless widespread slavery wouldn't persist if the rest of the economy were a free market.

Yet that's not what happened historically. Indeed, there were all sorts of government interventions that propped up the "peculiar institution." Just a few examples: (1) mandatory slave patrols, in which the local governments forced non-slave owners to defray the costs of the institution, (2) laws against educating slaves, and (3) laws curtailing manumission, i.e. the practice of freeing one's slaves (often in one's will).
Really, this book is pretty good if you are sort of interested in free market thinking, but don't really know much about it. It's an excellent, quick introduction to this type of thinking.

This guy's blog also has an interesting twist. Evidently, he used to be an atheist but has come back to Christianity, an every Sunday he has a long post about applying religion to our daily lives.

1 comment:

Chick in the Czech said...

I agree that this book was pretty good---or at least the part that I listened to in your car was good!