Politically Incorrect Guide to Capitalism:

Politically Incorrect Guide to Capitalism: A Review

Murphy's book The Politically Incorrect Guide to Capitalism explores the very nature of America's capitalist society and works to debunk some of the economic myths and falsehoods that many in this country and abroad hold dear. The book is written from a conservative standpoint, and pushes the idea that free-market capitalism is the best economic option for America. Some very divisive subjects are discussed and broken down, bit by bit, through the lens of a conservative free market capitalist. Some of these topics include outsourcing, central planning, minimum wage, the IMF and Welfare. All of these topics are divisive, especially in American culture, and Murphy's take on these subjects is consistently from the right side of the isle. Readers usually open a book because they expect the book to hold up a certain perspective as truth, and Murphy's book is no exception. He uses labels such as "liberal" and "conservative" to help illustrate his points and, while there was a little finger pointing here and there, and a little blame being pushed around for some of what Murphy sees as the social ills of today's American culture, the book was mostly fully of arguments that would hold up in any court of law. They are fact-based and the references and experts used in the writing of the book all check out as legitimate.

Murphy breaks his book down as a twelve step plan for understanding free market capitalism. That is to say, he makes it easy for people who are unfamiliar with the idea of true capitalism, and makes his arguments clear and concise. Throughout the book, He dispels the wrongs of communism and socialism, and tells the reader why great care needs to be taken to steer clear of these two economic structures. This is where there is a little bit of politically-charged edge to the book. Sure he is an economist, lecturer, and financial adviser, but Murphy seems to have a distinct political agenda, which is not always right out in the reader's face, but is a constant undercurrent on every page. This may or may not be a bad thing, given that many people pick up a book because they wish to have their side of the argument validated. I would say that anyone looking to learn more about free market economics from a conservative platform should read this book. But those expecting a completely fair, bi-partisan look at America's economy should steer clear of this book, unless they are using it to gain insight into the argument structures that those on the right side of the isle like to use when justifying free market capitalism.

If the reader accepts Murphy's premise that America was set up as a completely free market capitalist society, and that socialism and communism, along with government are inherently bad, then there is little to squabble over throughout the book. Murphy assumes, as his reader would have to, that labor unions, rent control, and raising taxes are all socially irresponsible, sometimes bordering on socialist things to do. If the reader accepts these basic arguments as truth, then they will benefit greatly from having some economic and intellectual ammunition with which to defend their position.

Workers and Outsourcing

The book delves into the issue of outsourcing and free market economies with great passion. I found the first couple of sections on these topics went by fairly quickly, as Murphy established that he was a knowledgeable expert right away. His argument that outsourcing is good for the U.S. economy is from a conservative perspective. He argues that outsourcing, while labeled as a major threat to the U.S. economy by most "liberals," is actually a good thing. In a free market economy, prices are set based on pure supply and demand, not based on government regulation, restrictions, and tariffs. Therefore, in a purely free market economy, prices are free to fluctuate, assuming no company or corporation would dare to try to defraud people of their hard earned cash. This is where I first began to look at Murphy's view point and understand that he is a relatively idealistic free market economist. He assumes that corporations are working in the best interest of the customers by arguing that corporations that do not, wouldn't be in existence if customers were not happy with their product. This, to me, is like living in a vacuum where all corporations exist in a benevolent bubble, unwilling to rig prices or take an "unfair" share of a customer's money. I suppose his argument holds water, theoretically, but I wonder exactly how realistic it is.

Further into his book, Murphy begins to outline why outsourcing is not as bad as people sometimes say it is. If jobs are outsourced, and move overseas, the initial argument is people are now out of work. But Murphy goers a step beyond this widely-accepted "falsehood" and illustrates that those who were working jobs that were outsourced now have better opportunities to better their education or job situation, and in this way, everyone benefits. In Murphy's world, low-skilled, low-pay jobs are outsourced and the jobs that require education, innovation, and true American grit are the ones that survive and thrive. While there are some jobs that are necessary to the country's safety and security, which will likely never be outsourced, many of the low wage jobs, according to Murphy, should be outsourced to poorer nations that possess larger, cheaper labor pools.

Another advantage to outsourcing is the fact that it helps the companies doing the outsourcing by keeping costs as low as possible. Murphy argues that by keeping costs low, products would have lower prices and not have to conform to so many government restrictions are rules. As they do now. Even the tariffs on certain products, when made in America, can cost companies more than the cost of the entire product itself. Murphy argues that this is a very bad thing, and has been hurting businesses. To Murphy, the need to outsource is clearly spelled out in a free market capitalist society. The ability for a company to seek out and find the cheapest labor in order to produce a cheaper product is required of the capitalist model.

The movement toward a free market form of labor and labor restrictions (or lack of restrictions) are another argument that Murphy feels necessary to discuss. His feelings regarding minimum wage fall on the same side as most of the rest of the book, and are articulated well, from the right side of the isle. To Murphy, raising minimum wage hurts a free market capitalist economy because it raises the cost of everything else in that society. If a worker gets paid an additional $1 for the work he does, just because the government mandates that he make a minimum wage, then a company's logical choice would be to outsource that labor to another country. If the company can't outsource due to government restrictions or regulations, then their only choice is to charge more for their product. They are not just going to absorb that extra cost as may "liberals" would expect the company to do, according to Murphy. So a chain reaction of price hikes occurs, and those people now making an extra $1 an hour have less purchasing power. The system, according to Murphy, is flawed. What good is a raise in the minimum wage if prices rise accordingly?

Murphy also argues that minimum wages hurt companies because they handicap them financially. If a company is required to pay a minimum wage, they are at a distinct disadvantage to one who does not. Whether or not the company who is not required to pay a minimum wage is overseas or not is of no consequence in Murphy's argument, but the author presents the evidence in a very clear, compelling manner. Each time minimum wage goes up, so does the price of everything else. Inflation via minimum wage increases is also a major systemic flaw according to Murphy. He believes that in a true free market, both the price of the product and the cost of the product should never be regulated by the government.

Murphy's argument against labor unions follows a similar line of thinking. If labor unions are allowed to organize, they can become the bullies of the economic landscape by demanding outrageous pay and benefits, independent of the true cost or value of their product. By their very existence, labor unions handicap corporations' ability to compete on the global market. And, since many labor unions do not allow the company to outsource their livelihood, these unions grandfather themselves into the economic fabric of the country, bleeding America corporations dry and keeping more of the company's profits for themselves. To Murphy, labor unions are only a few steps away from socialism. He argues that controlling the production, as the Soviets did in communist Russia, is a distinctly anti-capitalist model, and that by their very definition, unions therefore cannot be part of a truly free market economy.

Tariffs, like labor unions, are set up to benefit a select few workers according to Murphy. Just as labor union unfairly penalize those who are not a part of them, tariffs build an imaginary economy world of high wages and great benefits for products that are no better than something any other untaxed, un-tariff corporation could provide. It is in this way that Murphy argues that tariffs unfairly burden the American economy and create both distrust and anger in the economic powers that trade with America. If unfair tariffs are allowed to exist, those countries that now import American goods at high prices will begin to import them from elsewhere, or could even decide to produce the goods more cheaply in their own land. This does nothing to benefit American workers and corporations, and is not a behavior associated with free market capitalism.

Racism and the Environment

Murphy's take on the issue of racism is from a free market perspective. He assumes that, in a free market, racism would be all but eliminated due to the fact that a society that holds racist ideals and values cannot function as an economically successful one. There is little doubt, at least in this section of the book; the Murphy is beginning to stretch his arguments from a purely financial economic realm into a more socio-economic realm. If racism is seen as a negative thing by individuals and corporations, then being racist would not benefit either in a free market economy.

Murphy's discussion of Affirmative Action goes along similar lines, as he argues that Affirmative Action is inherently racist as it dictates that a certain number of minority workers be hired, sometimes irregardless of their skills and experience. This most likely does harm to a free market capitalist economy, because it keeps the very best, most experienced, most skilled workers out of the companies and corporations that need them the most, and replaced them with less skilled workers of different races, for the sake of having some racial diversity. Murphy is treading on thin ice here, economically speaking, given that the education and experience gap between the races has been closing for the past half century. But Murphy's argument, from a theoretical perspective, makes economic sense. Why hire someone based on their race instead of their experience or job qualifications? Is this behavior not racist in and of itself? By abiding by the Affirmative Action law, and having to hire a mixture of races, Murphy argues that corporations are once again handicapped, and are unable to compete on the global scale. Unlike other countries, where no form of racial discrimination exists, America and its economy are at a great disadvantage if Affirmative Action is allowed to continue to weed out the best candidates for the job, solely based on race. Murphy's arguments relative to racism and the economy were clear and concise, and the facts behind them are quite compelling.

Welfare and Taxes According to Murphy

Murphy refers to the U.S. As being a "welfare state" and argues that even the staunchest advocate for the poor and downtrodden could not argue for the continuation of welfare as beneficial to those who receive it. For Murphy, welfare is a free pass to continue doing what those who have been financially unsuccessful have been doing since they've been on welfare. It is a self-perpetuating cycle of poverty, and the U.S. government is helping to continue it. Welfare also hurts the rest of a society or economy because it causes taxes to be higher for those who do work for their living. It's a penalty on those who are productive members of society, and it is an unfair burden on the rest of the society.

Taxes are another subject that is hotly debated between the left and right sides of the aisle. Taxes are cause for debate because Murphy argues that, yet again, the government has crippled the U.S. economy and U.S. corporations by taxing them so heavily as to not allow them to compete with international firms. The playing field is not a level one in this instance, and Murphy uses a couple of arguments quite effectively to illustrate his point. The trickle-down economic model, which Reagan believed in, states that if the richest part of the economy, the part that generates wealth or the corporations are allowed to function more freely and with less of a tax burden, then the rest of society benefits due to lower cost production and better corporate access to resources. This theory, while not completely provable, is quite compelling. It says that a welfare state, where taxes are high and productivity is discouraged through heavy taxation is the exact opposite of what need s to exist in a free market, capitalist society. Nowhere is the author more clear in his arguments, more articulate than in this section of the book.

Sure, lower taxes and the abolition of welfare have been subjects that "conservatives" have advocated for decades, but Murphy does an excellent job outlining not just the "how" but the "why" of the argument from the standpoint of economic theory. He believes that if an economy is to be truly free market, that the government should have the lowest amount of taxes possible. In order to free up corporations from the government stranglehold, corporate tax rates should be cut and set as close to zero as possible. In this way, the workers would benefit directly because of trickle down economic theory, stating that when a corporation is doing well financially, then the workers will be taken care of as well. This again, is an idealist assumption that Murphy makes, assuming that the corporation now having to pay less taxes will not just absorb the extra profits instead of turning around and giving it back to the workers in the form of higher wages, salaries, and better benefits.