Eat the Rich: A Treatise on Economics Read online

  EAT THE RICH

  ALSO BY P. J. O’ROURKE

  Modern Manners

  The Bachelor Home Companion

  Republican Party Reptile

  Holidays in Hell

  Parliament of Whores

  Give War a Chance

  All the Trouble in the World

  Age and Guile Beat Youth, Innocence and a Bad Haircut

  P. J. O’ROURKE

  EAT THE RICH

  ATLANTIC MONTHLY PRESS

  NEW YORK

  Copyright © 1998 by P. J. O’Rourke

  All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the publisher, except by a reviewer, who may quote brief passages in a review. Any members of educational institutions wishing to photocopy part or all of the work for classroom use, or publishers who would like to obtain permission to include the work in an anthology, should send their inquiries to Grove/Atlantic, Inc., 841 Broadway, New York, NY 10003.

  Library of Congress Cataloging-in-Publication Data

  O’Rourke, P. J.

  Eat the rich /P. J. O’Rourke.

  p. cm.

  ISBN: 978-1-55584-710-4

  1. Economics—Humor. 2. Money—Humor. I. Title.

  PN6231.E295076 1998

  330'.02'07—dc21

  98–27100

  CIP

  Atlantic Monthly Press

  841 Broadway

  New York, NY 10003

  FOR TINA AND ELIZABETH

  CONTENTS

  1 LOVE, DEATH, AND MONEY

  2 GOOD CAPITALISM: Wall Street

  3 BAD CAPITALISM: Albania

  4 GOOD SOCIALISM: Sweden

  5 BAD SOCIALISM: Cuba

  6 FROM BEATNIK TO BUSINESS MAJOR: Taking Econ 101 for Kicks

  7 HOW (OR HOW NOT) TO REFORM (MAYBE) AN ECONOMY (IF THERE IS ONE): Russia

  8 HOW TO MAKE NOTHING FROM EVERYTHING: Tanzania

  9 HOW TO MAKE EVERYTHING FROM NOTHING: Hong Kong

  10 HOW TO HAVE THE WORST OF BOTH WORLDS: Shanghai

  11 EAT THE RICH

  ACKNOWLEDGMENTS

  I stole the title. But I don’t know from whom I stole it. I may have lifted it from the 1993 Aerosmith CD Get a Grip, which has a song by the same name. But Colorado journalist Dan Dunn informs me that Aerosmith might have nicked it, too. Dunn says there’s a tune with that moniker on Motorhead’s 1988 album, Rock’n’Roll. And Motorhead may have filched the thing themselves, because I first saw the phrase on T-shirts worn by the Shi’ite Amal militia in Lebanon in 1984 or 1985. I don’t know where the Amal got the phrase, but I assure you that they stole the T-shirts. Perhaps “Eat the Rich” is a part of the world’s folk-music heritage, the original version to be unearthed, by some archivist, from a forgotten Folkways recording, Songs of the Economic Advisers:

  Kill the poor,

  Eat the rich,

  Screw every other son-of-a-bitch.

  The rest of the book is my own work, for good or for ill, although I had a tremendous amount of help putting it together. As has been the case for the past thirteen years, Rolling Stone paid for the travel. All the foreign adventures and my trip to Wall Street first appeared, in modified form, in that magazine, and part of Chapter II appeared in Rolling Stone’s brother publication Men’s Journal. I owe a huge debt of gratitude (and unfinished assignments) to Rolling Stone’s founder and editor in chief, Jann S. Wenner. Besides being a good friend, he has been a remarkably tolerant boss. Rolling Stone already had someone writing about political-economy issues, my ideological pal-in-opposition, National Affairs editor William Greider. When I went to Jann in 1995 and told him I wanted to write about economics, he was momentarily taken aback. But he didn’t fire me. He just sighed and said, “You mean I now have two lunatic economists on the staff of a rock and roll magazine?”

  Part of Chapter X also appeared in the London Sunday Telegraph. Editor Dominic Lawson thereby allowed me to get my anti-British feelings about the Hong Kong handover off my chest in a way that would offend the largest number of British people. Sorry. I’m over it. I now realize that if I’d owned Hong Kong, I would have given it back to the Chinese, too. Although not until they bought me some drinks. But I’m Irish.

  This book could not have been finished—or, at least, published—if I hadn’t gotten fabulous and fabulously necessary editorial help from Andrew Ferguson, senior editor at The Weekly Standard, and gotten good advice and hand-holding from Denise Ferguson. Whatever shape and structure the book has is due to Andy. The flabby and pointless parts are (as in my person, so in my work) mine. The manuscript was then vetted by Nicholas Eberstadt, visiting scholar at the American Enterprise Institute and visiting fellow at Harvard’s Center for Population Studies, and by Mary Eberstadt, writer for The Weekly Standard and other fine journals. Nick did his best to make the logic of my economic arguments actually logical and tried to show me how to use statistics in an unstupid manner. Mary helped put flesh and (more’s the pity) blood into the descriptions of the damage that totalitarianism does to people, and she tactfully pointed out a number of not-unstupid solecisms.

  The magazine pieces that formed the raw material of this book were assigned and, in many cases, conceived by Rolling Stone managing editor Robert Love. His editorial craftsmanship was great, and his patience was extreme. Bob has a knowledge of journalistic storytelling, something that has always eluded me. Specifically he knows what part of a story is the beginning, what part is the middle, and what part is the end—no small matter to the reader. Also a blessing was the help I received on Chapter II from an old friend, Men’s Journal editor Terry McDonell, the person who hired me at Rolling Stone in the first place. Terry and Men’s Journal senior editor David Willey helped me to explain high finance without exposing myself as the person who, in 1997, bought precious metals, held on to Japanese yen, and sold Pfizer short.

  An enormous amount of unsung research-and-development grunt work was done by Tobias Perse. And more of the same was accomplished by Mike Guy and Rodd McLeod. Exhaustive—and exhausting—fact checking was done by Mary Christ, Sarah Pratt, Kim Ahearn, Erika Fortgang, and Gina Zucker. Any remaining errors of fact are the result of my own pigheaded persistence in error. Heroic copy-editing tasks (I cannot spell well enough to find the SPELL CHECK icon) were undertaken by Eric Page, Marian Berelowitz, Corey Sabourin, and Thomas Walsh. And Eric Page returned to do a copy edit on the book text and ruin his Memorial Day weekend with a case of Dictionary Eyes because the author didn’t get the manuscript to him until the last possible minute.

  The cover photo was taken by the brilliant David Burnett, who always makes me look more or less human. (His secret is that he uses someone else for the model.) Tommy Jacomo, magnificent manager of the Palm in Washington, D.C., threw all the semi-inebriated Capital big suits out of his establishment so that David could take the picture. The Washington Palm is the best restaurant in the world and the only place where you can see James Carville eat something other than Ken Starr’s lunch. The little rich guy running away from me was drawn with skill and flair by Daniel Adel. And the whole cover composition was pulled together by Grove/Atlantic art director Charles Rue Woods, assisted by Whitney Cookman. They are geniuses. (One of the best things about writing “Acknowledgments” is that it gives a journalist a break from saying bad things about people. Also, sometimes he gets a free lunch.)

  There are scores of other people about whom I have good things to say. When I started writing this, I was so ignorant of my subject that I thought “economics” were plural. A number of friends in the financial industry helped wa
lk me through the basics, particularly Hugh Eaton, Richard Morris, and John Ricciardi, partners in the Cursitor-Eaton Asset Management Company, which is now a part of Alliance Capital; and Briget Polichene, former general counsel for the House Banking Committee. I was also assisted by the faculty and students of the Owen School of Management at Vanderbilt University. Dewey Daane, the Frank K. Houston Professor of Finance, emeritus, and a former governor of the Federal Reserve Board, explained money to me—very slowly and using words even I could understand. Luke Froeb, associate professor of management, gave me a pep talk and a reading list, but, most importantly, donated an item of his own classroom material titled “A Traditional Economics Class in Only One Lecture.” It was while reading this that economics began to make sense to me, specifically with the first two sentences of Froeb’s text: “The chief virtue of a capitalist mode of production is its ability to create wealth. Wealth is created when assets are moved from lower- to higher-valued uses.”

  My best and most-extensive source of economic understanding, however, was the Cato Institute, the libertarian think tank run by President Ed Crane and Executive Vice President David Boaz where I hold the unpaid (and I earn it) position of Mencken Research Fellow. The Cato Institute loves freedom, embraces responsibility, and displays a grumpy nonpartisanship in politics. Plus, donations are tax deductible, so give it a bunch of money. Cato has provided me with research and analysis for all my books for the last ten years. (Except Give War a Chance—folks at Cato believe that killings should be made in the marketplace.) I’d like to thank Ed and David, and Cato scholars Doug Bandow, Ted Carpenter, James Dorn, Stephen Moore, Tom Palmer, Roger Pilon, José Piñera, Jerry Taylor, and the late Julian Simon, and I’d like to thank Nicole Gray for years of getting Cato events together and getting me to those together events.

  Another organization that has been a great help and to which I hope I’ve been a little help in return is the National Forum Foundation, founded in 1984 to promote democracy and human rights in places that didn’t have those things. Forum Foundation provided me with contacts in Russia and Cuba. President Jim Denton got me into the various political headquarters during the 1996 Moscow elections, and chief financial officer Therese Lyons showed me around St. Petersburg. The National Forum Foundation has since merged with Freedom House, which has been fighting the same excellent battles since it was started in 1941 by political odd couple Eleanor Roosevelt and Wendell Wilkie. Jim and Therese now serve, respectively, as the executive director and the vice president for finance and administration in the new organization. You should give it a bunch of money, too.

  The chapter on Good Capitalism would not have been possible if some of the best capitalists in America hadn’t been willing to waste hours answering Kiddie Investment Klub–type questions from me. That time could have been turned into money, but instead it’s become prose. Therefore it is both heart- and wallet-felt thanks that I give to Michael Meehan, Sean McCarthy, Merrill Lichtenfeld, Tom Leander, Al Ehrbar, Alan Braunshweiger, Jeffrey Leeds, Jay Duryea, Kevin O’Brien, Myron Scholes, and Robert Merton. And thanks to Kim Kirkpatrick for the Scotch-and-Water Park joke.

  In Albania, Eton Tocaj and Dave Brauchli were a tremendous amount of help with important things, such as keeping me from getting killed.

  In Sweden, Peter Stein played a splendid Virgil to my poor imitation of Dante as we toured the environs of socialistic Heck. The people I met there were forthcoming, welcoming, and kind even though they knew I was going to make fun of their country. (Thanks, by the way, to Peter Berlin, author of The Xenophobe’s Guide to the Swedes, for the phrase orgy-borgy.) In Stockholm I was treated to innumerable dinners, lunches, and intelligent conversations, and maybe there’s something to that Social-Democrat nonsense after all—as long as I keep my legal residence in New Hampshire for tax purposes. My thanks to Odd and Ingrid Eiken, Thomas Gür, Anders Isaksson, Jean Louis Gave, Nils-Eric and Kerstin Sandberg, Carl and Jeanne Rudbeck, Johann Kugelberg, Rolf Albert, Eva Norlin, Äke Ortmark, Thomas Atmer, Elizabeth Langby, the Swedish free-market think tank Timbro, and to American ambassador Thomas Siebert and his wife, Deborah.

  Sweden, however, does have an evil twin—Cuba. The darker side of socialism was made less dark by David Beard, Chris Isham, Jennifer Maguire, Pascal Fletcher, Douglas W. Payne from Freedom House, and Frank Calzòn, executive director of the Center for a Free Cuba.

  Jonas Bernstein did everything possible in the way of finding all the pieces with a straight edge in that gigantic jigsaw puzzle that is Russia. I’d like to thank him and Richard Conn, David Nunley, Michael Caputo, Dmitry Volkov, Claudia Rosett, the Honorable Chris Cox, Garry Kasparov (who introduced me to the Boris Yeltsin campaign staff—let’s see Big Blue do that), Intourist guides Ana and Paul, the International Republican Institute, and the Jamestown Foundation.

  My travel through Tanzania would have been pointless without the intelligence, information, and friendship of J. J., who did all the hard work. The trip was arranged by the commendable firm of Abercrombie & Kent. I thank Edward Hudgins of the Cato Institute, and Rahim Azad and Kephas Mavipya for the insights they provided, and Zanzibar’s Mbweni Ruins Hotel and Mnemba Club for welcome respites from journalism.

  The handover of Hong Kong to China was a grim occasion and also a great party. It was homecoming week at the Foreign Correspondents Club. Thanks for all the tips (and tipples) I got there from past president and old (and, John, I do mean “old”) friend John Giannini, present president Keith Richburg (whose book Out of America was also a big help in writing about Tanzania), Dave and Celia Garcia, Hugh and Annie Van Es, Jimmy Lai, and Bill and Julie McGurn. (And special thanks to Bill for his articles and essays on Sir John Cowperthwaite.) The handover ceremonies were also turned into fun by the totally amusing company of Lauren Hutton, John Cleese, Alyce Faye Eichelberger, David Tang, Dominic Lawson, and Rosa Monckton. I look forward to seeing all of you again at the next triumph of bad governance—maybe in Belfast.

  And my visit to Shanghai would have been much less comprehensible without Yeung Wai Hong and Kate Xiao Zhou, and much less pleasurable without Jim Whitaker and my fellow members of the cobra-blood-drinking fraternity: Jerry Taylor, Gary Dempsey, and Aaron Lukas.

  I want to thank my publisher and friend Morgan Entrekin and everyone at Grove/Atlantic for printing this book (probably against their better judgment) and paying me for it (definitely against their better judgment). I want to thank Grove/Atlantic’s Associate Publisher Eric Price, Director of Publicity and Marketing Judy Hottensen, Managing Editor Michael Hornburg, Assistant Editor Amy Hundley, Subsidiary Rights Manager Lauren Wein, and all the other people whom authors do not customarily thank and without whom authors would have nothing but wiggles on a computer screen to show for their efforts.

  My gratitude to Scott Manning for arranging the book tour and putting up with my ingratitude while I’m out touring and am temporarily under the impression that fifty-year-old writers should act like twenty-year-old rock-band drummers.

  More gratitude to my longtime and long-suffering agent, Bob Dattila, who barely winced when I proposed a book on economics (“Oh, Hollywood is going to leap on that”). And more gratitude yet to Jacqui Graham, who keeps publishing me in Britain despite my continued outbursts of provincial Anglophobia, and to Don Epstein and everyone at Greater Talent Network, who keep finding people who will pay me for lecturing so that I don’t have to get a real job or write books that can be made into movies.

  With all these thanks said, I now come to one of the great conundrums of literature. How does one give full and sufficient credit to one’s wife without sounding like a mealymouthed pig or giving the readers mental images of the tambourine-playing spouse in This Is Spinal Tap? I’m going to go for mealymouthed pig. Tina O’Rourke has a business degree and understands the stuff in this book, which is more than its author does. She accompanied me on several of the foreign trips, or, I should say, I accompanied her. She helped with the travel arrangements and tour research. To her I o
we the slogan “America—it doesn’t suck.” And Tina, supplied with Rolling Stone journalist credentials for the Cuba trip, was forced at one point to actually ask a pop-music star, “What’s your favorite color?” Then, as this book was being written, Tina edited, fact-checked, proofread, entered the whole manuscript into the word processor that remains a Delphic mystery to her husband, managed the household, changed diapers, and gave our infant daughter her 1 A.M., 3 A.M., 3:30 A.M., 3:45 A.M., 4 A.M., and 5 A.M. feedings while I…stared out my office window and picked adverbs. Thank you for not killing me, dear.

  A NOTE ABOUT THE BIBLIOGRAPHY

  There isn’t one. I’m too lazy. And who ever heard of humor with footnotes? But there are certain books which I found crucial to a neophyte student of economics, especially if (and I mean no insult to the texts by this) that student is uninformed, innumerate, light-minded, and a big goof-off. In other words, these are the books to read if you want to know something about economics but have never gotten further into the subject than figuring out a trifecta at Belmont:

  There isn’t one. I’m too lazy. And who ever heard of humor with footnotes? But there are certain books which I found crucial to a neophyte student of economics, especially if (and I mean no insult to the texts by this) that student is uninformed, innumerate, light-minded, and a big goof-off. In other words, these are the books to read if you want to know something about economics but have never gotten further into the subject than figuring out a trifecta at Belmont: