Textbook Economics? A Review of The Politically Incorrect Guide to Economics

If people understood economics, then our problems with big government would be greatly reduced. Inflation, big government and even war are rare in ideologically smart societies. However, mandatory government education, socialist propaganda by the media cartel, and politicians serving up trillions in government giveaways has enticed the average American to the dark side.[1]

Political correctness, or the opposition to truth and justice, has fallen on America, seemingly, like a tsunami. It is a crucial weapon of the dark side. In economic matters, the latest Marxist/Progressive’s dark side assault has been economic inequality.[2]  This propaganda for higher taxes and more government handouts has been bolstered by decades of bogus government and academic statistical reports.[3] Everyone needs to know some economics to not be bamboozled by this misinformation campaign.

America’s high school and college students are often required to take a course on economics, but most of those classes are anti-economic propaganda against the market and entrepreneurship. The universities and their liberal arts curricula have been entirely infected with Marxism.  College graduates go forward knowing a few skills useful to the State, but more importantly are thoroughly brainwashed against the free market.

The modern Marxist agenda also includes environmentalism, gun control, population control, information control, etc., but at its core is economics. Thomas DiLorenzo’s latest book, the Politically Incorrect Guide to Economics is a most effective antidote to anti-economics that I have read.[4] He is the author of many great books, but I consider Politically Incorrect the most important and crucial today. Readers of Frederick Bastiat and Henry Hazlitt need to advance to this book.

Homeschoolers, high schoolers, and college students need to read DiLorenzo’s book as well as the new book by Per Bylund, How to Think About the Economy: A Primer.  Bylund’s primer is a one day read and clears the propaganda cobwebs from your mind and “primes” you for rational thinking about the economy.[5]

Without getting too effusive about Politically Incorrect or too detailed about its contents, I intend to review the book, unconventionally, as a textbook in economics as it has all the desirable elements of an introduction without all the drawbacks of a typical textbook.

To reiterate, this is not a textbook, but it does have all the crucial elements of economics presented in a very pleasant and effective manner.

Instead of starting with a “perfect” and unrealistic notion of the market, declaring imperfections left and right, and then subtly advocating technocratic government control over everything, DiLorenzo starts with the mutual benefits of cooperation and competition: reality, not fantasy.

The book unmasks the fallacies of history, demonstrates the crucial contributions of entrepreneurs and market competition, and exposes mainstream economists as apparatchiks of the state. He upends the mainstream economics profession, hoisting it on its own petards, in informative, engaging, and even startling ways.

As any good economics textbook should do, the book begins with a concise description of the nature of the market and price system, the enormous benefits to consumers, and the pivotal role played by entrepreneurs. This is then followed by several classic illustrations of the folly of price controls and their devastating impacts on people.

DiLorenzo then addresses the primary justifications for government meddling in the economy: externalities in general and the case of pollution, the so-called “Free Rider” problem, the Natural Monopoly case, the “asymmetric information problem” and the need to comprehensively regulate business.

Austrian economists have thoroughly critiqued the mainstream cases for government intervention and DiLorenzo explains these critiques. More importantly, he goes to the root of these justifications for government.  He shows that the economists who found these so-called intractable problems for the market had no working knowledge of the economic situations on which they based their “theories.”

So, for example, they “theorized” that farmers would free ride on the beekeepers whose bees pollenated their crops. Ship captains would refuse to pay the lighthouse keepers who helped keep their ships from wrecking. “Ah ha!” the mainstream economist shrieks, the free market is underproductive and dangerous! DiLorenzo shows that such cases are a figment of the mainstream economist’s imagination and ignorance, not historical reality.

The last section of the book includes concise attacks on unionism, the Federal Reserve, taxation, trade agreements, and socialism all of which is built on and inspired by Rothbard’s legacy.[6]

The book consistently shows that market competition and entrepreneurship are truly marvelous, but not perfect. In contrast, Mainstream economics took the dark turn a century ago in concocting the very unrealistic notions that markets should be made perfect with the help of government intervention, and that bureaucrats and politicians acted in the so-called “public interest,” not their own interest.

In addition to being an expert and significant contributor to the Austrian school of economics, the author is also an expert in “public choice” economics. He did his graduate studies at Virginia Polytechnic University, now Virginia Tech, where the Center for the Study of Public Choice was established under the leadership of James Buchanan (who was awarded the Nobel Prize in 1986), Gordon Tullock, Robert Tollison, and Richard Wagner. The realistic view of government that this school promulgates is woven seamlessly throughout the text.

The book introduces the reader to some of the best modern economists, many of whom were my professional heroes. They include Terry Anderson, Dominick Armentano, Frederic Bastiat, Gary Becker, James Bennett, Bruce Benson, Ronald Coase, F.A. Hayek, Henry Hazlitt, Robert Higgs, Randall Holcombe, Fred McChesney, Ludwig von Mises, Morgan Reynolds, Lew Rockwell, Murray Rothbard, Thomas Sowell, Richard Vedder, and Walter Williams.

Many of my contemporaries and their publications are also discussed in the book and the reader is encouraged to do further recommended reading on various subjects and topics. Readers are also alerted to books that the government does not want them to read.

Of course, there are plenty of bad guys discussed as well. This would include George Akerlof, Arthur Burns, Richard T. Ely, John Kenneth Galbraith, Bill Gates, Hermann Goering, Alan Greenspan, Alexander Hamilton, Robert Heilbroner, Adolf Hitler, Herbert Hoover, Lyndon Johnson, John Maynerd Keynes, Richard Nixon, Paul Samuelson, and Bernie Sanders.

There are sufficient references to the history of economic thought that students get a quick introduction to the topic. Mercantilism, Classical economics, Marxism, the Austrian school, and Keynesianism appear in the book more prominently than in most economics graduate programs.

I particularly appreciate that American history and the role of entrepreneurs in economic progress is presented in a non-Marxist fashion. To learn, understand, and remember economic theory these two subjects are very important and of course they integrate very well with other courses on history and business.

Of course, this is a short 200-page easy-to-read book.  Lesson plans for some topics will have to be augmented by the instructor’s favorite topics or by additional research and reading from sources, such as Mises.org.  The book is well referenced and footnoted, and I believe that this additional work is what brings the learning experience to life.

The book is short, inexpensive, and very well written compared to the typical textbook. It contains the most important materials and leaves out all the technical mumbo jumbo that has led most students to complain that “economics was the worst/most boring/most difficult course of my life.” I highly recommend this book as an excellent alternative that will inspire readers and students alike.

[1] https://mises.org/library/what-dark-side-and-why-do-some-people-choose-it

[2] https://mises.org/wire/thomas-piketty-wants-bring-back-communism-guise-democratic-socialism

[3] https://www.amazon.com/Myth-American-Inequality-Government-Biases/dp/1538167387/

[4] https://store.mises.org/Politically-Incorrect-Guide-to-Economics-P11233.aspx

[5] https://store.mises.org/How-to-Think-about-the-Economy-A-Primer-P11241.aspx

[6] https://mises.org/library/murray-n-rothbard-legacy-liberty

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