You are currently viewing the printable version of this article, to return to the normal page, please click here.

BOOK REVIEW: Clarifying economic facts of life

- The Washington Times - Tuesday, January 5, 2010

VOODOO ANYONE? HOW TO UNDERSTAND ECONOMICS WITHOUT REALLY TRYING By Christopher T. Warden

Accuracy in Academia, $9.95, 101 pages

Reviewed by Wes Vernon

In an ideal world, "Voodoo Anyone?" would be required reading for every journalist who communicates with the public on politics and economics. That would emphatically include the overwhelming majority in the mainstream media. Even sportswriters or commentators should understand the market forces at play for the stratospheric salaries accorded football players, just as entertainment writers have some familiarity with celebrity performers whose pay dwarfs that of their nominal bosses.

This thin but - in its own focused way - comprehensive book would ideally provide a clear underpinning for economics as taught in academia. It should, but doesn't, in part because many courses in economics are often shrouded in mystery and sometimes flavored with a goodly amount of gobbledygook - the better to maintain tenured employment for a sector of the professoriate.

The late author Christopher Warden brings to the table impeccable credentials as an educator and journalist, having spent eight years in the latter calling as the editorial page editor of Investor's Business Daily.

"Voodoo Anyone? How to Understand Economics Without Really Trying" tears away much of the fog that seems to afflict media coverage of the economic facts of life. The author/scholar lays it all out in clear concise language that everyone can understand. As Accuracy in Academia's executive director, Malcolm A. Kline, adds in his own preface to the book (which his organization published), widespread knowledge of the how and why of economics would enable more "people [to] make better choices in their own lives."

Indeed, one could speculate that had "Voodoo Anyone?" been written and widely read in the early 1980s, much of the public perplexity that initially greeted (the ultimately successful) "Reaganomics" might have been avoided. It would have made an ideal supplement to the writings, of Jude Wanniski, Art Laffer, Milton Friedman, Robert Bartley, George Gilder, Jack Kemp and other supply-siders of that era.

The media-influenced conventional wisdoms about the Great Depression of the 1930s, the gas lines of the 1970s and the financial meltdowns of the early-21st century would have us believe that all of these crises came about because the free market failed. Christopher Warden shows that - au contraire - those crises came about when markets were circumvented.

Coming just as congressional Democrats are marching the nation on the plank to government control of nearly one-sixth of the economy, Warden's chapter on health care describes an already messed-up system that our lawmakers are determined to turn into a total disaster. Already, thanks to political monkeying that has no relation to the real world, patients want more care because the real price is hidden, and health care providers actually provide less care because they are not being fully reimbursed. That amounts to rationing.

The political class can't wean itself from a penchant for going from bad to worse. Warden's friend and fellow professor (Troy University), M. Stanton Evans, in a classic play on words during a radio interview, described such willful blindness as a "rendezvous with density." Mr. Evans penned an introduction to Warden's posthumously published book.

In fact, this little volume is chockablock with horror stories of lessons never learned, as in the chapter on energy: California consumers complained when their retail electricity bills soared, even as the state-run electricity market had imposed price controls on charges the consumer paid to the power companies while also ensuring that wholesale prices the power companies paid to the producers were high.

What followed that squeeze play on power companies was a series of rolling "brownouts." So the state dealt with a problem caused by price controls with more price controls to increase the supply, sticking the taxpayer with the bill for a $50 billion purchase from the municipal bond market to guarantee high prices in long-term contracts to producers so the supplies would go up while consumer prices in homes and offices would be kept down.

Had the market been allowed to work its will, with the state removed from the energy market, Warden argues, things would have been messy for a short while, but the ultimate result would have been increased supplies at lower prices. The problem with that, of course, is that politicians can't stand a complaining public for more than 30 seconds, so they stick the taxpayers for a "solution," and hope that the voters who are consumers will not stop to realize that they are also voting taxpayers.

In fact, there are politicians who tend to think we're all stupid, and that is one reason they pull such voodoo stunts on a regular basis. They get away with it in part because some journalists automatically assume that if prices are up, the seller is "greedy." But the author asks, "If greed were the answer, why isn't a loaf of bread $10 or $50? ... The simple answer is no one would pay [that] price. Buyers will eat cornmeal" before they cave in to a form of extortion.

Applying the basics of the free market - if left alone by politicians and if reported on more frequently by knowledgeable journalists - would leave consumers/taxpayers as the winners. The author offers explanations in areas beyond health care and energy, including education, agriculture, social issues, labor, monopolies, financial markets and government action.

It is in the latter category that Warden tackles the question: If all this is so simple, why do elected governments do so many things that defy common sense? They tinker with prices, stifle supply and competition and generally manipulate markets, usually to the detriment of everyday consumers. Why?

Actually, "Voodoo Anyone?" explains that from the politician's perspective (getting through the next election) the lawmakers make "very rational decisions, given their circumstances." Such as? (1) Special interests (organized farmers, cable companies, and other businesses) who don't want competition and seek government intervention to assure it and (2) a sometimes general "instant gratification" mindset fueled by a largely economically illiterate media.

One can imagine the different tone of political campaigns if this book were in the hands of millions of voters.

Wes Vernon is a Washington-based writer and veteran broadcast journalist.