Review of The Armchair Economist


Steven Landsburg, The Armchair Economist

Steven Landsburg‘s The Armchair Economist is a book that anarcho-capitalists will appreciate for two reasons.

First, as an outreach tool it provides a solid introduction to economic ideas from a free market perspective. The concepts covered are simple enough for anyone to understand, but remarkable enough to spark interest in economics and the dangers of government. With fun examples and amusing anecdotes, it will help find those who are curious, open-minded, and almost ready for more earth-shattering works by anarcho-capitalists.

Second, the book comes from a mainstream free-market perspective that will not only force ancaps to hone their thinking, but also teach them a few tricks that are not found in the works of Austrian School economists. Most ancaps will pick up new arguments for freedom that will resonate with regular people, and learn interesting points about economic history that they may not have been exposed to.

Landsburg also makes a solid attack on democracy. He does not have the space to go into it as deeply as Hans Hoppe’s book, but he gets the main ideas across. He also takes down naive environmentalism, likening it to a fundamentalist religion. Landsburg devotes the final chapter to it, and does such a good job that the book is almost worth reading just for that part. If that is not enough, there is also a guest appearance by a famous anarcho-capitalist.

There are, of course, a few parts of the book to which ancaps will object. The first is that Landsburg occasionally comes up with justifications for state action. Often this involves presenting some government policy that could improve the economic efficiency of a specific situation. This is the way that many economists approach the analysis of social dynamics, but for libertarians it rings hollow. Without including ethics and property rights in the discussion of how to resolve conflict, economists show what will happen without determining what should happen. That is what a value-free science like economics is supposed to do. However, as a proponent of the free market, Landsburg should be more careful about misleading people into conflating economically efficient solutions and ethically correct ones.

This omission of justice comes across in his otherwise interesting analysis of a common noise pollution problem. A carpenter makes noise on his property. A doctor moves in next door and the noise prevents him from doing his job. Should a judge order the carpenter to stop? Landsburg makes an interesting point about the Coase theorem, and how the judge is powerless to affect the outcome because the market will keep the higher value business running no matter what the judge decides.

Unfortunately, this misses the human element. If the judge orders against the carpenter, then, in a free market, he may be able to use economic power to keep his business alive, but he will have been victimized by the court. Justice does not mean that the world carries on in the most economically efficient manner. It requires that the actions people take have appropriate consequences. This is one of a few missed opportunities to discuss economic ideas from the perspective of an individual.

Similar frustrations come from examples of the effect of taxes and  government debt. Landsburg points out that an individual can effectively pay off “their share” of a government’s debt by setting up an investment account that pays its proceeds directly to the government. It is an interesting idea from a financial engineering perspective, but glosses over exactly why a private person should be responsible for the government’s debt in the first place. Not to mention that even if you went through the trouble of paying off “your share”, the government would just borrow more money and you’d be back to where you started.

Despite these small setbacks, the book still shines. It has good humor, sarcasm about bad economics, jokes about mistaken predictions of macro-economists, and makes fun of government for being the only institution willing to fund research with no societal value. The core economic message of humility is one that everyone would do well to learn.

An excellent introduction to economics with a healthy skepticism of the state. Four Murrays.

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