David R. Henderson  


The Origin of the Word "Relati... Visualize Laissez-Faire: What ...

My review of Pete Leeson's book, The Invisible Hook, is on the web at Regulation magazine.


Despite the book's title, a takeoff on Adam Smith's "invisible hand," Leeson does not claim that pirates were led by their self-interest, as Smith's businessmen were, to make things better for the non-criminal class. Rather, he argues, we can understand pirate behavior by applying the economic tools that we use to understand the behavior of non-criminal businessmen. Leeson does so relentlessly, explaining why they showed the Jolly Roger, established a reputation for savagery, shared the loot relatively equally, didn't discriminate against black people, and had -- believe it or not -- tight restrictions preventing their leaders from having toomuch power.

A key division of power was between the captain and the quartermaster. The captain had absolute power in times of battle, but the quartermaster, who was democratically elected, had the power to allocate provisions, divide the loot, and administer discipline. And the crews disciplined the captains. Leeson tells of one episode in which the captains of a pirate fleet borrowed some fancy clothes that were part of the loot and wore them to attract local women. The crews became outraged at this transgression. Writes Leeson: "[I]f only all citizens guarded their polity's division of power as jealously as pirates." He has a point. Notice how accustomed we've become, for example, to the U.S. president using Air Force One for political purposes or for going on vacation (or dates). And yet we do nothing.

And finally:

One last note: Leeson is obviously a romantic. The sole line on the dedication page is, "Ania, I love you; will you marry me?" How many people do you know who are so romantic that they will use a page of their first single-authored book to propose? Apparently, the fair damsel said yes. Aargh.

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COMMENTS (5 to date)
david writes:

"Aargh"? Why, Mr. Henderson! Where is your sense of romance!

David R. Henderson writes:

Where is your sense of humor? :-) Seriously, I meant that paragraph as an appreciative compliment. I'm an incurable romantic.

david writes:

Okay, more seriously.

On Presidential pay - for a variety of reasons, people get truly annoyed when we pay national leaders a CEO's wage. Singapore does so - the Prime Minister of Singapore is the highest-paid chief executive of any country - and Singaporeans grumble a lot about it.

It's virtually the only country that does so, in fact - the second-highest is Hong Kong, which only pays roughly a fifth of Singapore's PM wage (counting wage per population makes the disparity more dramatic. The PM of Singapore gets roughly 50 cents USD per capita. HK pays 7 cents per capita. The President of the USA gets 0.1 cent per capita).

But the way Singapore does things - if you get a car grant (as part of your wage as a cabinet appointee, say), then you don't get a state car. If you get a state car, then you aren't given a car grant.

Do you think the average American would be so blasé about the President receiving benefits of this magnitude if this non-monetary compensation were changed to monetary compensation instead? If the President were paid millions instead, and asked to hire his own jet and pay for the USAF guard? I doubt so. On the whole, it's not that Americans are disregarding the shift of wealth to the political elite - apparently, Americans just really want to dictate what the President spends on.

Chris Lemens writes:

Pirates didn't say "aargh." They said "arrr," which means "yes," much like "aye" does.

which is the best possible source proving my assertion.


Josh Weil writes:

I just read a great paper by Leeson called "Two Cheers for Capitalism." He pretty conclusively shows the superiority of capitalism in creating good things.

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