Sunday, 21 August 2016

Review of Bob Murphy's 'Choice' - Amazing Yet Surprisingly Dull

Before this year's Mises University, I had promised myself not to buy any books in the Mises Bookstore. My reading list was too long already and my bags were completely full after weeks of travelling and a year in Australia - and most books are available online anyway. Being at the Mises Institute however, in the presence of brilliant people, and encouraging scholars, surrounded by so much amazing reads, I evidently couldn't resist. Among the books I acquired, were Murphy's latest book Choice as well as his study-guide to Human Action.

A story I have told some close friends (but still not published on Life of an Econ Student), is my introduction to Austrian Economics, and my spectacularly failed attempt of reading Mises' great treatise on my own. Since then, I have been mortally afraid of the 900-page book, and learned what little I know through other sources. My experiences this year finally convinced me that it's time to try again, three years after my first attempt. The warm-up was reading Murphy's Choice.

And honestly, I found it was pretty dull.

Murphy is quite up-front with the purpose of the book, as is most of the many comments on its cover: it is an overview, an introduction, a primer to those students curious about Mises but not yet ready to read Human Action. In the introduction, Murphy lists the major obstacles to Mises for most newcomers to Austrian Economics: the size, the vocabulary, and the assumed knowledge of economic controversies. Therefore, he writes:
Human Action intimidates many potential readers, who would otherwise be quite receptive to its essential elements. The present book is necessary, then, to relay the main insights from Human Action in a style that will resonate with the modern reader. (p. 13)
In other words, Choice is exactly the kind of book I would have needed three years ago. Having spent
these last few years learning a lot of econ and familiarized myself with many schools of thought via  university lectures (but more often student associations or reading groups or Mises University), I know much more econ than I did back then. Consequently, Murphy's excellent and easy-flowing prose, his solid arguments and illustrating examples are somewhat lost on me. Like in Chapter 11 ('Indirect Exchange And Money'); from simply reading the title, I knew he would begin with Menger's tracing of the origin of money, describe the chartalist critiques (predominantly Knapp), commenting on the more modern attack by anthropologists such as Graeber, continue with the equation of exchange, the regression theorem (maybe bitcoin) and probably the disputes surrounding the Gold Standard.

As expected, the next forty pages were a solid description of all those topics. And revisiting them was certainly fine, but hardly exciting or adding anything I didn't know already. The next chapter on money & banking was slightly better mostly because I found references to Selgin's great research into 18th century private minting (a review I still haven't published, despite finishing the book back in February), and had Mises confusing treatments of different kinds of money (Commodity, Credit, Fiat, Token, Ceritficates, Substitutes etc) thoroughly explained.

Likewise, the chapters on the Socialist Calculation Debate and the ABCT were kind of boring and superficial, especially for someone who has done some research into them.

But the really good stuff comes towards the end, where Murphy dug up a quote from 1949 (p. 282), showing how Mises favoured sweatshops way before they were a thing politically:
If the parents are too poor to feed their children adequately, prohibiting of child labor condemns the children to starvation. - Human Action, p. 740
Moreover, Murphy (and Mises) seems to have pre-empted my ranting about Comparative Advantage the other day, by providing the answer for why people & politicians keep on hampering the economy with their interventions:
The main function of tariffs and other protectionist devices today is to disguise the real effects of interventionist policies designed to raise the standard of living of the masses. Economic nationalism is the necessary complement of these popular policies which pretend to improve the wage earners' material well-being while they are in fact impairing it. - Human Action, pp. 248-49
In an excellent and typically Murphy-like way, he deciphers Mises' meaning and explains its purpose. A mechanism by which interventionist policies hamper the economy (such as the regulatory burden) is by adding useless costs to production. Such measures are punished by the inflow of cheaper products from abroad, since foreign competitors normally aren't limited by such regulation. By introducing protectionist measures, the inflow of cheaper products is prevented, and the relative impoverishment (compared to what would have been) following from the government interventions are hidden away in higher costs - or spread out and transferred to other sectors of the economy. Therefore, Mises claims the "main function of tariffs" isn't always the Donald Trump-like "Keep American Jobs at Home", but to cover up and distribute the cost of other interventions throughout the economy. Absolutely brilliant analysis.

Furthermore, Murphy’s end note and flowing prose, is probably the best and most encouraging ending I have ever read – in academic writing as well as in fiction. I am tempted to quote it at large, but will briefly summarize it appropriately. Murphy points out that Economics as a science has a peculiar nature: for most other sciences, it is enough for only a small minority of people to have any knowledge at all, in order for the rest of us to benefit from it. I know nothing about medicine, but as long as the doctors have access to specialized information and the necessary devices, they can operate on me and cure my diseases regardless of my ignorance. Same thing applies for cars and quantum physics and agriculture. In Economics, however, things are different. In Murphy’s words:
Even though economic science decisively made the case for free trade more than two centuries ago, destructive trade barriers still permeate the globe because people still support age-old superstitions. (p. 298)
In political systems based on popular vote, it becomes every citizen’s responsibility to oppose policies that impoverish us, harm us, and make us all worse off. As I noted the other day, the task falls upon us with a passion for econ to explain and make comprehensive the important conclusions of correct economics for the general masses. The last of many quotes by Mises powerfully finishes Murphy’s great book:
As conditions are today, nothing can be more important to every intelligent man than economics. […] All reasonable men are called upon to familiarize themselves with the teaching of economics. This is, in our age, our primary civic duty. - Human Action, pp. 874-75
Even though I yawned through much of Murphy's book, I must admit that it's a perfect introduction to Austrian Economics. Exactly the kind of introduction I would have wanted, and exactly the kind of introduction I would recommend anybody starting out today.

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