The Politically Incorrect Guide to Economics, by Thomas J. DiLorenzo, Washington, D.C.: Regnery Publishing, 2022, 242 pages, paperback.
Counting this book, there are 31 books in the Politically Incorrect Guides series published by Regnery. I have read or at least looked through most of the books in this series. Although all of the books are not equal in importance or value, I would only consider one of them to be a bad book (the volume on The Vietnam War). Some of the books are very well done, such as the two by Robert P. Murphy (Capitalism and The Great Depression and the New Deal), the two by Brian McClanahan (The Founding Fathers and Real American Heroes), the book on The Constitution by Kevin R.C. Gutzman, and the first book in the series on American History, by Thomas E. Woods.
Thomas J. DiLorenzo is a senior fellow at the Ludwig von Mises Institute in Auburn, Alabama, a prominent and frequent speaker at Mises Institute events, and former professor of economics at Loyola University Maryland, where he is now professor emeritus. To say that DiLorenzo is a prolific writer is an understatement. Not only has he written hundreds of popular articles for LewRockwell.com and many scholarly articles for academic journals, he is also widely published in national media outlets such as The Wall Street Journal, USA Today, The Washington Post, Barron’s, and many other publications. He is the author or co-author of many books, including Hamilton’s Curse, The Problem with Socialism, and How Capitalism Saved America: The Untold History of Our Country, from the Pilgrims to the Present. He is probably best known for his three critical books on Abraham Lincoln. DiLorenzo is eminently qualified to write The Politically Incorrect Guide to Economics. He holds a Ph.D. in economics from Virginia Tech, has written widely on economics, and taught university economics for 41 years.
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The Politically Incorrect Guide to Economics contains 15 chapters, each of which can be read independently. The chapters are preceded by an introduction and followed by an epilogue, notes, and an index. One of the great features of the book is that every chapter lists books “you’re not supposed to read”; that is, books you should read because they reinforce in more detail the things that DiLorenzo says in each chapter. Here the reader is introduced to great books by Ludwig von Mises, Murray Rothbard, Robert Higgs, Burton Folsom, Henry Hazlitt, and many others that together constitute a politically incorrect economics education that you won’t receive anywhere.
Although “university economics departments are usually where you will find the most conservatives and the least politically correct foolishness,” there are still “plenty of economics departments at American universities where just about everyone is to the left of a Hillary Clinton or a Barack Obama.” DiLorenzo likewise has no confidence in the celebrity economists featured on television and in national media outlets or the mainstream Keynesian economists. He believes that although “leftist ideas have indeed dominated economics for long periods of history,” there “has always been a remnant of influential economic thinkers who, although outnumbered in academe, have been very effective communicators of economic ideas.” Having heard many of DiLorenzo’s lectures, I can say with all certainty that he is one of the remnant’s most effective communicators. The author says that the main purpose of the book is twofold: “First, to explain and criticize many of the false theories that have evolved primarily to prop up government power and enrich the ruling class, not to improve the economy; and second, to help you, the reader, become your own economist — and hence a better citizen.”
The first chapter on the free market is a great overview of sound economics. Here DiLorenzo discusses the division of labor, specialization, the free market, Adam Smith’s invisible hand, competition, entrepreneurship, profits and losses, consumers, private property, the price system, the nature of exchange, and economic freedom. He contrasts the virtues of the free market with the folly of government intervention.
In Chapter 2, DiLorenzo terms government price controls “the worst economic idea in the world.” Here he takes on price ceilings, price-gouging laws, rent-control laws, price floors, and FDR’s New Deal. He concludes that price controls are “legalized theft” that “always and everywhere cause economic chaos and misery.”
In Chapter 3, DiLorenzo is careful to distinguish competition from “the theory of competition taught by the economics profession.” This “Nirvana fallacy” of “perfect competition” is used to prove “market failures” and justify government regulation and intervention to prevent monopolies and ensure competition. DiLorenzo demolishes this bogus theory and shows that predatory pricing laws, anti-dumping rules, and antitrust regulations are anti-competitive and anti-consumer. He also defends Henry Ford and John D. Rockefeller as great American capitalists and entrepreneurs who became wealthy by cutting prices and giving consumers what they wanted. In a related chapter titled “Creating Monopoly with Regulation,” DiLorenzo explains the fleeting nature of cartels, how “a great deal of government regulation of industry has been the result of lobbying efforts by the industry,” and how government regulatory agencies created ostensibly to regulate an industry ‘in the public interest’ because of some kind of alleged ‘market failure’ are routinely captured by the industries that they are supposed to be regulating.”
DiLorenzo’s explanation of “regulatory capture” reminds me to say that he excels at explaining complex economic topics in plain English: things such as rent seeking, asymmetric information, rational ignorance, natural monopoly, the ratchet effect, tax loopholes, social welfare, public goods, the free rider problem, quantitative easing, fractional reserve banking, and opportunity cost.
The Politically Incorrect Guide to Economics contains discussions of important topics that most people would not associate with the “dismal science” of economics. The chapter on pollution is a case in point. Here DiLorenzo destroys the myth that “the root cause of pollution and other forms of environmental degradation is the unregulated pursuit of profit in a free market.” It is socialism that causes environmental degradation because “when all resources are owned by the government, then no one really owns them.” It is free-market competition that conserves resources and drives conservation. It is government bureaucracy that is wasteful and irresponsible. Recycling is a good thing only so long as it is profitable. It is property rights and markets that can solve environmental problems.
And speaking of socialism, DiLorenzo has a whole chapter on what he terms “economic poison.” Aside from being a destroyer of the institutions of society, socialism suffers from an incentive problem, a price problem, and a knowledge problem. But even worse, “The ultimate purpose of socialism has always been the creation of a totalitarian government that will enforce uniformity or ‘equity’ in all aspects of life.” A key point made by DiLorenzo in this chapter is that “fascism is merely a variety of socialism.” He considers the historical national socialists in Germany and the international socialists in Russia to be “ideological blood brothers.”
One of the most important chapters in the book is the one on trade and trade agreements. Here DiLorenzo makes the case for real free trade; that is, trade that is not encumbered by protectionism or trade agreements. Free international trade “expands the division of labor in the world and makes all participating countries more prosperous,” “expands the size of markets for businesses,” and “encourages peaceful relations among people from different nations and cultures.” Protectionism “is always a matter of collusion between businesses (and often their unions) and government to provide financial benefits to a relatively small, concentrated group at the expense of everyone else.” DiLorenzo is adamant that trade agreements are not free trade. He skewers NAFTA for being “some 2,400 pages of bureaucratic regulation and central planning,” including “nine hundred pages of tariffs, the opposite of free trade,” and creating “a gigantic new bloated supranational government bureaucracy to ‘manage’ North American commerce.”
DiLorenzo concludes that “economic common sense is a powerful weapon — arguably the most powerful weapon — in defense of a free and prosperous society,” and I couldn’t agree more. The Politically Incorrect Guide to Economics is certainly one of the best and important books in this series, and I highly recommend it. Everyone who ever took a course in economics needs this book to correct all the fallacies he was undoubtedly taught. Likewise, anyone who gets his economics education from network television, government bureaucrats, or The New York Times. The book is dedicated to DiLorenzo’s friend and colleague, the late, great Walter E. Williams, who taught economics for many years at George Mason University. Having read Williams’ columns in which he addressed many of the same economic fallacies that DiLorenzo discusses, I can say with confidence that Williams would be proud.
This originally appeared on The New American.
