Eat the Rich

by P.J. O'Rourke A Treatise on Economics GOOD CAPITALISM: Wall Street "Debt means that you're renting your money to someone. Equity means you're buying something from him. If you buy a share of a corporation's common stock rather than buying its corporate bond, you own part of the corporation. You don't get a mere loan payment, you get the profits. Specifically, you get the profits that are left after the corporation settles its tax bill, pays off its bond debts and other prior obligations, gives enormous bonuses to its top executives, uses part of its earnings to buy other corporations and Indonesian real estate, and retains another part of its earnings in case it needs to buy more Indonesian real estate. You get those profits, or, rather -- since there are, say, a couple million shares of common stock outstanding --you get 1/2,000,000 of those profits." "This is your 'stock dividend.' Oh, and because you're one of the owners of the corporation, you get to vote. This means that once in a while you receive something in the mail called a 'proxy statement.' The proxy statement allows you to give your vote to the people who are paying themselves enormous bonuses. Either that or you can travel to the corporation's annual meeting (held in Indonesia this year) and stand up in the back and holler shrill questions like some Ralph Nader fruitcake." "You rarely buy common stock for the dividend and almost never (unless you're buying 1,000,001 shares) for the voting rights. You buy stock because you have one of those opinions mentioned earlier. You think other people will think this stock is worth more later than you think it's worth now. Economists call this -- in a rare example of comprehensible economist terminology -- the 'Greater Fool Theory.'" "Speaking of folly, you can also invest in the commodities market. This is where you buy thousands of pork bellies and still don't know what you're going to have for dinner because, in first place, you're broke from fooling around in the commodities market and, in the second place, you're not completely insane. You didn't actually have those pork bellies delivered to your house. What you did was buy a 'futures contract' from a person who promises to provide you with pork bellies in a couple of months if you pay him for pork bellies today. You did this because you think pork belly prices will rise and you'll be able to resell the delivery contract and make out like a ...perhaps 'make out like a pig' is not the appropriate simile in this case. Of course, if prices fall you've still got the pork bellies, and won't your spouse be surprised?" "This is how booms and busts develop in the marketplace. And these booms and busts can have larger consequences such as 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 the 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 our parents, which is why we put them in nursing homes." BAD SOCIALISM: Cuba "The big restaurants were nationalized and in a nation that's suffering severe food shortages, this meant that only rice and beans were available to foreigners who had dollars. Ha-ha-ha. Hard-currency joke. I could get anything I wanted-lobster, steak, Cohiba cigars actually made by Cohiba and rum older than the prostitutes sitting at all the other tables with German businessmen." "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. We shouldn't forbid American companies from doing business in Cuba, we should force them to do so. Bring them ashore with Marines if necessary. Although I guess we've tried that." "And the Cubans are stupid for rising to the bait. There's another little island next to a gigantic, powerful country that threatens to invade and enforces an embargo. And Taiwan has done okay." FROM BEATNIK TO BUSINESS MAJOR: Taking Econ 101 for Kicks "When economists say, 'distribution,' however, they mean the distribution of everything, not just the distribution of such finished products as the pizzas and the microwave ovens to thaw them. There is also the distribution of raw materials-the seeds and fertilizer needed to grow the pizza toppings and the petrochemicals necessary to make the woodgrain plastic laminates decorating the ovens. Then there's the distribution of labor-the effort required to freeze the pizza and round up all the microwaves. And the distribution of capital-the money required to buy plastic laminates and to market pizzas that taste like them. There's distribution of ideas, too. (Whose idea was it to put pineapple chunks on a pizza?) And there's even distribution of space and time which is what grocery and appliance stores really sell us. They gather the things we want in a place we can get to on a day we can get there and, voilá, a fattening midnight snack." "The example of efficiency that economists usually give is guns and butter. A society can produce both guns and butter, they say, but if the society wants to produce more guns it will have to -- because of distribution of resources, capital and labor -- produce less butter. Using this example you'll notice that, at the far reaches of gun-producing efficiency, Howitzers are being manufactured by cows. And this is just one of the reasons we can't take economists too seriously." HOW (OR HOW NOT) TO REFORM (MAYBE) AN ECONOMY (IF THERE IS ONE): Russia "Russia does not yet have an effective system of civil law. The only way to enforce a contract is, as it were, with a 'contract'-and plenty of enforcers. What would be litigiousness in New York is a hail of bullets in Moscow. Instead of a society infested with lawyers they have a society infested with hit men. Which is worse, of course, is a matter of opinion." "In the old days, the soda pop tasted like soap, the soap lathered like toilet paper, the toilet paper could be used to sand furniture, the furniture was as comfortable as a pile of canned goods, the canned goods had the flavor of a Solzhenitsyn novel, and a Solzhenitsyn novel got you arrested if you owned one. Now the Russians have discovered brand names." "The New Russians are an amazing bunch. Their neckties are as wide as their wives. These wives have, I think, covered their bodies in Elmer's Glue and run through the boutiques of Palm Springs buying whatever stuck." "My six-hour flight to Siberia took two days. Airline employees circulated with walkie-talkies. Not satisfied with individual screw-ups, they apparently wanted to coordinate them. 'Everything's unready to go in the cockpit.' 'Roger that. We've got the baggage lost.' 'Seat selection's a mess.' 'Wait a minute. Wait a minute. Catering's not ****ed up yet.'" HOW TO MAKE NOTHING FROM EVERYTHING: Tanzania "The Greek Cynic philosopher Diogenes is said to have slept in a barrel. And supposedly it was a happy revelation to him that he could drink out of his cupped palms and thus throw away one more possession: his mug. But Diogenes had a barrel, a fairly complex piece of technology. Compared with the way some Tanzanians exist, Diogenes was a Sharper Image customer." "Statistically, there are poorer countries than Tanzania; that is, countries so chaotic that all their statisticians have been chased up trees-Liberia, Somalia, Congo-and countries which are so reclusive-North Korea-that it's impossible to tell what's going on. But Tanzania is right at the bottom of the aforementioned barrel, which would probably have to be imported from an industrially advanced nation." "There's a sad little econometric debate about Tanzania's per-capita gross domestic product. Tanzanian government figures (given foggy population projections and a Tanzanian-shilling with an exchange rate that varies between worth-little and worthless) work out to approximately $128 U.S. a person a year. The World Bank believes it's about $117. The CIA, in its 1995 World Factbook, estimates Tanzanian per-capita GDP at $750. But this is from the organization that-as late as 1989-thought the Soviet Union's per-capita GDP was nearly as high as Britain's. The CIA is using something called the purchasing-power-parity (PPP) method to measure gross domestic product. PPP is supposed to compensate for the lower living costs found in poorer countries. It's like having your boss tell you, 'Instead of a raise, why don't you move to a worse neighborhood-your rent will be lower and so will your car payments, as soon as someone steals your Acura.'" "John did tell me, however, that nobody even thought about trying to put the Maasai into ujamaa villages. Say what you will against the blood sports, people who spear lions for fun are well-prepared for political rough and tumble." "Still, trade does happen. I went to the largest and most prosperous-looking store in Arusha. I'll give it the moniker Safari Barn. It sold souvenirs to tourists. A Maasai warrior in full fig stood sentry by the door, looking as quietly mortified as a Coldstream Guard placed at attention in front of a Victoria's Secret outlet." "Official Development Assistance has funded disasters and fostered attitudes of gross dependence. Yoweri Museveni, the president of Uganda, says his country 'needs just two things. We need infrastructure and we need foreign investment. That is what we need. The rest we shall do by ourselves.' This is the, 'If we had ham, we could have ham and eggs, if we had eggs,' philosophy. Or, as Nzezele put it as I was leaving Dar after having given him a large and not very well-deserved tip, 'When you get back to America, if you find that you have any extra money, could you send me a wristwatch?'" HOW TO MAKE EVERYTHING FROM NOTHING: Hong Kong "How a peaceful, uncrowded place with ample wherewithal stays poor is hard to explain. How a conflict-ridden, grossly over-populated place with no resources whatsoever gets rich is simple. The British colonial government turned Hong Kong into an economic miracle by doing nothing." "Hong Kong is the best contemporary example of laissez faire. The economic theory of 'allow to do' holds that all sorts of doings ought, indeed, to be allowed, and that government should interfere only to keep the peace, ensure legal rights, and protect property." "Maybe Hong Kong just wasn't one of those vital, strategic places worth fighting for, like the Falklands. Maybe the Poms only intervene militarily where there's enough sheep to keep the troops entertained." "Why didn't the British give some other island to China. Great Britain, for instance. This would get the UK back on a capitalist course-Beijing being more interested in money-making than Tony Blair. Plus the Chinese have extensive experience settling royal family problems." HOW TO HAVE THE WORST OF BOTH WORLDS: Shanghai "There are some strange players in the Chinese communist economy. For instance, the People's Liberation Army is a major investor. Consider putting PLA officers into positions of corporate responsibility. 'Sir, the merger strategy is a minefield, sir. Literally, sir.' And now I've offended the People's Liberation Army. There go my 1.2 billion hardcover sales." "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 20th century historical 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 Co-Prosperity Sphere.' There's a technical name for this political ideology." "Of course, if you want to feel like you've really traveled, Shanghai offers some experiences of the patently exotic kind. I went with some friends to what looked like the worst pet store ever. Inside there was a wall of terrariums full of fat, angry poisonous snakes, hissing, pulling hood boners, and making wet bongo noises when they tried to strike through the glass. This was, in fact, a restaurant on Shanghai's Huaihai Road. Specialité de la maison: cobra blood." "One of the more expendable waiters opened the hinged front of the cobra case and pinned a 4-foot serpent with a forked stick. He pried the critter out of its home, grabbed it beneath the head, and scuttled off to the kitchen holding the thrashing reptile aloft as though it were a living string of furious bratwurst." "A few minutes later, the fellow emerged with a tray of brandy snifters, each filled with bright, gory liquid, plus an extra glass holding the contents of the snake's gallbladder. Bonus." "There's a ritual involved in drinking cobra blood. Of course. There's a ritual involved in most very silly things. You have to get four males together and pledge a toast or something, and something else which I don't remember. Do I need to mention we were drunk? Then you slam it." "Being that a snake is a 'cold-blooded' animal I vaguely expected a chilled beverage. But it turns out a snake is a room-temperature animal. Which allows the full flavor to come through. You know the drill on exotic food. Cobra blood tastes like chicken... blood." "Drinking cobra blood makes you... It's very good for... Gives you lots of... The explanation was in Chinese. And cobra gallbladder juices do whatever even more. We let the youngest guy drink this. He said it was okay, although he was awake all night chasing mice around his hotel room." "The Chinese communists are attempting to build capitalism from the top down, as if the ancient Egyptians had constructed the pyramid of Khufu by saying, 'Thutnefer, you hold up this two-ton pointy piece while the rest of the slaves go get 2,300,000 blocks of stone.'" ~~~ and a Real Audio Bit :0) __________________ I was expecting an Aerosmith song from the Real Audio clip, but alas, my hopes were shattered. __________________ Did he break the record again? __________________ Maybe renots is into Motörhead. http://www.geocities.com/SunsetStrip...5/rroll.html#2 COME ON BABY, EAT THE RICH, PUT THE BITE ON THE SON OF A B1TCH, DON'T MESS AROUND, DON'T GIVE ME NO SWITCH, C'MON BABY EAT THE RICH C'MON BABY EAT THE RICH __________________ "Eat the Rich" by Aerosmith (no, I am not a fan - I just remember this song) Eat the rich, there's only one thing that they are good for Eat the rich, take one bite now, come back for more Eat the rich, I gotta get this off my chest Eat the rich, take one bite now, spit out the rest