All Commentary
Wednesday, November 1, 1989

Book Review: Lexicon of Economic Thought by Walter E. Block and Michael A. Walker

The Fraser Institute, 626 Bute Street, Vancouver, B.C., Canada V6E 3M1 • 1989 • 390 pages • $29.95 (U.S.) cloth, $1.9.95 (U.S.) paper

As the title states, this book is a lexicon of economic thought. Each of the several hundred economic definitions is one to three pages in length. But unlike other lexicons and dictionaries, this one presents a point of view—the free market view—rather than just a series of dry definitions. The definitions and examples take a Canadian slant (the book is published in Canada) but have value to a worldwide audience.

Many of the references contain humor. For example, the entry for “scalpers” starts off: “Next to husbands, scalpers are the most misunderstood group in our society.” The “politics” entry cites H. L. Mencken’s famous quote that elections are a kind of futures market in stolen property. The “social justice” definition sounds like it could have been written by F. A. Hayek. Social justice does not exist. Only individuals can be just or unjust, and only individuals can be treated justly or unjustly. The concept of social justice is used by government as an excuse to justify all kinds of intervention ranging from affirmative action to the progressive income tax.

“Economic justice” is explained as follows:

While entitlements are always expressed positively, such as, “she has a right to support from the state,” the truth of the relationship is quite different. In fact, the only way somebody can be delivered the right to support is if some other person is denied access to the resources they have earned. In the most prosaic terms, for every person who receives a dollar they didn’t earn, somebody else earns a dollar they don’t receive.

Affirmative action means that employers must look not only at an applicant’s intelligence, character, and experience, but also at whether the person is a woman, a native Canadian, or handicapped. The American view of affirmative action would include other groups as well. The authors state that this policy is unjust and give economic and ethical reasons for their view.

In the “airline deregulation” entry, the authors mention George Stigler’s position that government regulation really doesn’t protect consumers, but serves to create a kind of producers’ cartel. Airline regulation limits competition, thereby putting up barriers to market entry. This stifles competition, so there is less pressure to reduce prices or improve quality, and the consumer suffers. Since Canadian and U.S. airlines have been deregulated, prices have fallen and more people travel by air. The increase in air traffic has caused some congestion because the same number of airports now must handle more traffic.

The authors also debunk the fallacy that deregulation has caused travel-related deaths to increase. One study they cite found that lower air fares caused some travelers to take airplanes rather than cars, which reduced auto fatalities. Since air travel is safer than auto travel on a passenger mile basis, overall safety has increased since deregulation.

The entry on “broadcast regulation” debunks some of the more popular myths about this widely misunderstood subject. The authors relate the story of the hearings that the Canadian Radio-Television and Telecommunications Commission has been holding on whether religious organizations should be allowed to have broadcasting licenses. They point out that having to ask permission to broadcast is the same, in substance, as having to ask government permission to publish newspapers, magazines, and journals. Broadcasting is a form of free speech, and just like other forms of free speech, there should be no need to ask government permission.

However, the argument goes, broadcasting is different from other forms of free speech. The electromagnetic spectrum isn’t the kind of thing that can be privately owned. It is a public good, and as such, must be controlled by government. But this is not so. All that is needed is to insure that proper boundaries are set on the spectrum so that one station doesn’t encroach on another’s wave length. It is a property rights solution.

Another common argument is that there aren’t enough frequencies to go around, so government must allocate them. But this argument just points out that economic scarcity exists, which is nothing new. Scarcity is nearly a universal phenomenon. Government isn’t needed to allocate other scarce goods and services, so why is it needed to allocate airwaves?

Each topic in this book is short and can be read in a minute or so, which makes it attractive to someone who doesn’t have large blocks of time to devote to reading. The book is also a handy reference for those who want to take a quick look at the free market position on a particular subject.

Professor McGee teaches accounting at Seton Hall University.

  • Robert W. McGee is an associate professor of accounting at Fayetteville State University. He has had more than 40 years of experience working in a variety of capacities, including public accounting, corporate accounting, tax law, banking, consulting, and education. Clients include the United States Agency for International Development, the World Bank, the African Development Bank, and the Central Intelligence Agency. He has participated in several USAID Accounting Reform programs. He was in charge of assisting the Finance Ministry in Armenia convert the country to International Financial Reporting Standards; in charge of reforming the accounting curriculum at all the major universities in Armenia and Bosnia; drafted the accounting law for Armenia and Bosnia, and reviewed the accounting law for Mozambique; reviewed securities legislation for Turkey; trained government ministry officials in Bulgaria, Rwanda and Tanzania, accountants in Russia, and economists in Ukraine. He has lectured or consulted in more than 30 countries and has earned 13 doctorates from universities in the United States and 4 European countries.