Common Sense Economics

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As I’ve been trying to help Iraqis to explain economics to their compatriots, I’ve had the pleasure of reading through an excellent little work, Common Sense Economics: What Everyone Should Know About Wealth and Prosperity, by James Gwartney, Richard L. Stroup, and Dwight R. Lee.

The book has an excellent discussion of the importance of institutions, something that people in this part of the world desperately need to understand. A common myth is that “Iraq is a rich country,” because “we have oil.” In fact, Iraq is not a rich country. As one of the Iraqi bloggers I met today pointed out, if you were to take the income from the oil sales and divide it up by the entire population of Iraq, you’d get about $80 income per month (assuming it were not all dissipated in corruption and that it cost nothing to produce). Not really enough to make Iraqis “rich.” In some of my presentations, I have pointed out that natural resources don’t make a country rich, as shown by the cases of Hong Kong — basically a big rock covered with Chinese people living under British common law — and the Netherlands — a country so resource poor that they have had to manufacture land out of the sea.



18 Responses to “Common Sense Economics”

  1. Tom G. Palmer

    Well, as in Christianity, it’s a matter of interpretation. “Islam” isn’t just one thing, but a religious tradition that requires interpretation. Some Muslims believe in restricting usury, as do some (albeit fewer) Christians and others. A good book on the topic is Timur Kuran’s Islam and Mammon.

  2. Charles N. Steele

    Tom: When you return, you should should write a “lessons learned” from your experiences in arguing for liberty in Iraq; and then make it available here.

    I would be quite interested & I suspect others would as well.

    Best to you.

  3. Jeff Riggenbach

    Soon the Iraqis will enjoy pure economic
    freedom, thanks to the liberating occupation and the lectures given there by libertarians! Oh the joy of seeing such a transformation! If only it (or something like it) could be brought to this country! We would like to go on record as pledging our full and unconditional support to this amazing miracle!

    Jeremy Sapienza
    Justin Raimondo
    Lew Rockwell

  4. Tom G. Palmer

    Thanks to Mr. Guillory for correcting the typo! I’ve fixed it in the post.

    I feel sorry for Mr. Riggenbach, who is so full of bile that it seems that he actually hopes that Iraqis don’t achieve any kind of freedom. Better that they be suffer under a smothering and illiberal government, with no security of life, liberty, or property, than that they create institutions to protect their rights and eliminate those institutions that violate them. Mr. Riggenbach’s infection of ugly nationalism is also quite severe. The people of the countries of central and eastern Europe are fortunate to have had access to translations of the works of Hayek, Friedman, Mises, Heyne, and others, who had a very positive impact on the movement for liberalization in those countries, but Mr. Riggenbach would have denied them that. Not Americans, after all.

  5. Ross Levatter

    Although Tom has known Jeff as long as I, perhaps a more fair reading of JR’s satirical effort was scepticism that military occupation can be trumped by libertarian lectures to the occupied populace, no matter how well done. Further, I see no nationalism is Jeff’s comments, merely a bemusement that one would attempt to achieve liberalism in Iraq when there is so much work to be done here.

    In many ways Americans have lost any semblance of understanding of liberal thought. Recent polls indicate a majority of high school students believe the government should be able to engage in prior restraint of “unfair” news stories, and 2 out of 3 Americans believe health care is a “right”.

    The acrimony between Mr. Riggenbach and Dr. Palmer is saddening, since I think of them both as friends. I am reminded of a passage from Destahl’s “The Red and the Black” which I was assigned many, many years ago in high school. If I recall correctly, there was a dinner party and outside a storm raged, soon to flood the area and kill those at the party. Three groups were described: the first ignored the reality of the situation and besotted themselves with liquor; the second recognized the reality of the situation, judged the situation hopeless and waited stoically for the end; the third also recognized the hopelessness of the situation but nonetheless chose to fight against the storm, though logic told them they had no chance. The assignment was to morally assess the three groups.

    I wonder how Tom would spend his time if he were truly convinced that despite his best efforts it is the tendency of government to grow and liberty to retreat…convinced in fact that it is much more than a tendency, more like a sociological certainty? And I wonder if Jeff, who is a great literary critic, can find anything heroic in efforts to fight for liberty, even when he deems them futile?

    Ross Levatter

  6. Tom G. Palmer

    Ross’s comments and challenge are interesting. I do know that sitting stoned in my study and stewing about what other people are doing is not what I would do under any circumstances. Mr. Riggenbach (who tried years ago to convert me to his philosophy of creative brain chemistry; I’m glad I didn’t take him up on the offer) seems able to do little else. Certainly his critical skills have not been much in evidence lately; I cannot imagine a more desperate and sadly feeble rhetorical move than exploiting a typographical error.

    If he wishes to continue to provide evidence of his sad decline, that is up to him. I have other things to do.

  7. Tom G. Palmer

    One more quick comment about Ross’s remarks above before I head out. The very invocation of “so much work to be done here” is itself a tilt toward nationalism. Where is “here”? It’s where I am. Why should I care more about people in Kansas than people in Kenya? Why should I only be concerned about injustice in the USA, and not in North Korea or Rwanda or Bolivia or Iraq?

    I have always been torn between the remarks of Benjamin Franklin (“Where liberty is, that is my country”) and Thomas Paine (“Where liberty is not, that is mine”). Liberty is a right for everyone, not just for people living in America.

    I’ve done my share (although never enough) to advance liberty for people living in America. I also have worked to help libertarians in other countries to diminish coercion and advance freedom and justice there. I don’t believe that the realm of freedom ends at my own doorstep (or even at the outer surface of my head); it is a right of every human being to be free. Believing that is what it means to be a libertarian.

  8. Ross Levatter

    Tom wisely notes, with appropriate and well known quotes from Franklin and Paine, “The very invocation of “so much work to be done here” is itself a tilt toward nationalism. Where is “here”? It’s where I am. Why should I care more about people in Kansas than people in Kenya? Why should I only be concerned about injustice in the USA, and not in North Korea or Rwanda or Bolivia or Iraq?”

    I agree completely. My point was more focused along the lines of economic efficiency. There may also be fantastic restaurants in Baghdad, but it would strike most people as unreasonable to choose to leave DC to eat there when so many wonderful local restaurants are available (technically, Tom can point out that such assessments are subjective, but I trust my focus is clear.)

    It is not that one needn’t or shouldn’t care about right violations further away from whereever one is, but unless those violations are dramatically worse than violations that occur more close to home, or unless one has specific skills (complementary factors of production) that allow one to more effectively deal with problems further away, it is NOT unreasonable to preferentially deal with “local” problems, for reasons of economic efficiency. Several practicalities make this evident, from the fact it is easier to make use of local knowledge to be aware of rights violations close to home to the mundane point that–and I note Tom is an exception here–most people don’t speak several foreign languages, and assisting others in defending their rights is better done when a common language is available.

    As a post of mine several weeks ago noted, the difficulty in quantifying these notions makes it very easy for reasonable people to differ in their assessments, which is why the Riggenbach/Palmer feud seems so silly. Can Tom be absolutely certain that his efforts to arm the citizens of DC will not, at the margin, do more for liberty than his efforts to educate some citizens of Iraq? (I do not mean to imply by this question that I disagree with Dr. Palmer’s reasoned decision and choice; to do so would not only be boorish but incredibly presumptuous. My point is only to try and explain why some, at least, may have difficulty appreciating why this is clearly the right thing to do.)

    Finally, Tom’s rhetorical point (“Why should I care more about people in Kansas than people in Kenya? Why should I only be concerned about injustice in the USA, and not in North Korea or Rwanda or Bolivia or Iraq?”) is well taken, but I ask Tom’s forgiveness in my lack of knowledge as to what he’s personally done to promote liberty in Kenya, North Korea, Rwanda, and Bolivia. I’m also not clear on Kansas, but I *am* quite confident that there are at least 4 states in the Union where Tom has personally labored in liberty’s vineyards. 🙂

    Ross

  9. Charles N. Steele

    Two observations:

    1. There isn’t a country in the world where it is inappropriate to speak out for liberty.

    2. The potential gains from words spoken & lessons delivered in a country that is undergoing rapid change (and a “constitutional moment” at that) are greater than if delivered in a country with an entrenched status quo & generally apathetic (or satisfied) populace.

  10. Tom G. Palmer

    I just got back from speaking in the meeting hall of the Iraqi Transitional National Assembly to 61 elected members. It was a moving experience for me to meet people who had braved the threats of the terrorists to stand for election.

    So, just a quick note before I attend to some other things I have to do. And that is that there’s no “Riggenbach/Palmer feud.” Mr. Riggenbach posts snippy and hateful notes on my blog comments and I occasionally respond. For there to be a “feud” both parties have to be involved in it, and I’m not. Mr. Riggenbach can spit venom all he wants. It’s all the same to me. I respond on my own blog only because he puts his comments there; other than that, I could not care less what he thinks or does.

  11. Jeff Riggenbach

    I agree wholeheartedly with Tom G. that “there’s no ‘Riggenbach/Palmer feud.'” As he puts it, “For there to be a ‘feud’ both parties have to be involved in it, and I’m not.”

    Neither am I, actually. I just jerk Tom G.’s chain from time to time, for the sheer entertainment of watching him lose it completely, go ballistic, and start foaming at the mouth in that fabulously amusing way he has. It’s somewhat like the pleasure H.L. Mencken used to take in what he called “stirring up the animals.” (If you think the comments Tom G. posts to me on his blog are over the top, you should see some of the e-mails he sends me privately. One wonders whether the expression on his face changes when he’s doing writing of this sort, or whether it just sort of cracks, like paint on an old car.)

    Tom writes: “I do know that sitting stoned in my study and stewing about what other people are doing is not what I would do under any circumstances.” And yet — and yet! — what does Tom G. in fact do, in those brief, fleeting moments he is able to spare from his bizarre obsession with Lew Rockwell, Justin Raimondo, and Jeremy Sapienza and his busy schedule of saving the world by lecturing to it? Why, he sits sober in his office, stewing about what other people are doing — namely, sitting in their studies stoned!

    JR

  12. Right. I wonder, why is it a ‘bizarre obsession’ to criticize people who call for attacking coalition (notably American) soldiers and Iraqi police officers? It hardly seems ‘bizarre.’

    I’ve found Mr. Palmer’s reporting on what such people really think eye opening. If reporting the truth is a ‘bizarre obsession,’ we could use more of it.

  13. Bill Woolsey

    To read Riggenbach’s remarks, one might think that the Sunni triangle represents all of Iraq. I think something like 80% of Iraqis
    are pleased that the U.S. deposed Saddam. Of
    course, most wanted the U.S. to leave some time ago, and most of the rest want the U.S. out soon.
    Support for having the U.S. run Iraq until its
    people will democratically elect a government like that in Great Britain or Poland is slim to
    none. Fortunately, Bush gave in to Sistani and
    there is a government that represents the large
    majority of Iraqis. Fantasies that the U.S. will
    rule until the majority of Iraqis support something the U.S. likes seem to have flown away.

    I think there is much to be said for the “Constitutional moment,” even if I hold out little hope that Tom’s effort will have much impact on the new Constitution or the policies of the Shia government. It is, however, possible that the secularist Arabs (who are not in the rebellion,) might be open to liberal ideas. Secularist rule (mixed in with Pan arabism and socialism) didn’t work all that well. Whatever they are promoting now lost out to religious Shiites. So, maybe there is an opening for a liberal opposition. In other words, at least some minds may be opened during this “Constitutional moment.”

  14. Ross Levatter said: “It is not that one needn’t or shouldn’t care about right violations further away from whereever one is, but unless those violations are dramatically worse than violations that occur more close to home, or unless one has specific skills (complementary factors of production) that allow one to more effectively deal with problems further away, it is NOT unreasonable to preferentially deal with ‘local’ problems, for reasons of economic efficiency. Several practicalities make this evident, from the fact it is easier to make use of local knowledge to be aware of rights violations close to home to the mundane point that–and I note Tom is an exception here–most people don’t speak several foreign languages, and assisting others in defending their rights is better done when a common language is available.”

    Ross, I think you’ve answered your own question here. I think Tom is guided (consciously or not) by the principle of comparative advantage.

    The friends of liberty in the United States, of whatever stripe, are many. But how many of those are willing and able to inject libertarian ideas into the other nations that so desperately need them? Perhaps years of smuggling libertarian works behind the iron curtain led to Tom’s comparative advantage in this particular endeavor. But whatever the reason, if Tom is willing and able to do it, then it’s probably a good idea for him to focus on Iraq.