And Then There Were Three: How an Economy Grows and Why It Crashes

Stop all the clocks, cut off the telephone, and prevent the dog from barking with a juicy bone.

Because where there used to be just two standard economics primers that the aspiring Austrian student could get started with, there are now three.

We have already reviewed the first two primers, here at the Cobden Centre:

However, these may have just been superseded by a third: How an Economy Grows and Why It Crashes, by Peter D. Schiff and Andrew J. Schiff.

The Schiff brothers have created this new primer by basing it upon two cartoon-style books written in the 1980s by their father, Irwin A. Schiff, that have since gone on to become underground classics and which are also available on Scribd:

These two books have been blended together into a cohesive unitary whole and brought right up to date, with much more text added than in the original books, to nail home all of the major lessons of Austrian economics.  (Or as we Austrian adherents sometimes like to call it, True economics.)

Quite simply, this new Schiffian book is a joy to read as it follows the story of three Robinson-Crusoe-Style men — Able, Baker, and Charlie — and maps out how they and their descendants travel in time from a lost island of rude existence — catching and eating one fish per day with their bare hands — to a land filled with government-subsidised universities offering voters fun degree courses in surfboarding.

Just as Ludwig von Mises and Murray Rothbard begin with Robinson Crusoe scenarios in Human Action and Man, Economy, and State, Able, Baker, and Charlie start out with nothing but their bare hands and then work their way up through capital savings and capital goods production (building nets to catch fish), all the way through to every aspect of modern government-dominated economics (with oriental agents eventually using cartloads of Fish Reserve Notes to buy up everything of any worth on the original island).

One of the best parts of travelling through this telescoped journey is working out who represents who in the cartoons.  Ben Barnacle and his ‘Strong Fish’ policy are easy enough to work out, but can you guess who Franky Deep and Cliff Cod are, with their ‘Official Fish’ policy conundrums?

It actually goes well for the island until Franky Deep ousts Grouper Cleveland.  But from then on it’s a downward fish school spiral until the islanders hit a remarkably similar economic reef to our own.  The Schiff brothers then take this situation on a few years to show where the island will end up if it keeps following the fantasy fish policies of Barry Ocuda.

As well as being a great quick read, virtually every economic and financial policy you can think of is explored and examined within the pages of this book, without there being a single “There She Blows!” moment where everything suddenly reverses meaning, as happens between Classical micro-economics and Keynesian macro-economics, when saving and production flip from being moral and sensible to becoming immoral and nonsensical.

Instead, this book is simply based upon the sound rigorous principles of Austrian economics, which work from back to front in all climates, on every island, for all time, and which make sense all the way through from micro to macro.

In simple fish-related terms, reading this book will give you a whale of a time.

If I am forced to find a flaw, I suspect that the book will date fairly rapidly and will need to be updated in five to ten years, unlike either Economics in One Lesson or Economics for Real People; however, I am confident that this necessary update in a few years time will not be beyond the wit of the Schiff brothers to carry out, as and when it is required.

In the meanwhile, that still gives us plenty of fish-time Fridays to read and enjoy the current version, a flavour of which can be seen in the following YouTube video:

Before purchasing the book, you may also want to read these two splendid reviews:

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16 replies on “And Then There Were Three: How an Economy Grows and Why It Crashes”
  1. Well, that’s all very nice and user-friendly but, in the original (as I have just read it), there is no analysis of the increased consumption of fish ( & other resources) on the long term impact of the increased consumption on the fish population….no pricing of externalities, let alone any recognition of thermodynamics or finite resource management…

    The usual ‘invisible hand’ fantasy once again deluding another generation into accepting the theology that that makes each person their own deity….

  2. says: Stupidity is Permanent


    I doubt you’ll learn the basic lesson I’m about to cover as your type never does. But the reality is that when the fish are drawn from private waters, the owner of said waters has necessary the incentive and legal wherewithal to ensure that overfishing doesn’t taking place. This is because overfishing would diminish the land’s capital value. A self-interested owner tends to preserve his wealth by putting in place contracts that sustain said fish population. So the externality of which you speak only exists in your government utopia of public waters. Sustainability is actually more in line with private property than anything else. If you had even the cursory knowledge of economics that you pretend, you would know this as the classic ‘tragedy of the commons’ scenario.

    As usual, Arthur joins every non-thinking Statist clone molded by our government schools in blaming all problems and externalities caused by government on freedom and free markets. Perpetually ignoring all facts and basic reasoning, he joins in an infinitely self-righteous crusade to ignorantly crush the remaining 2 or 3 freedoms that the world enjoys.

    Arthur and his comrades would sooner jab out their collective eyes than see the ultimate truth; government creates the biggest and most disastrous externalities of all – commons pollution, war, poverty, and tyranny. All to save us from the hobgoblins of Arthur’s tiny, fearful mind.

    1. While this comment makes good points, this is not the tone we are looking for here. May I ask subsequent commentators to use their real names and to seek to provoke thought but not ire.

      If this thread becomes insulting, I will delete it.



  3. says: Steven Farrall

    I’m with ‘stupidity is permanent’ and fully endorse his excoriating attack on ‘arthur’. Thing is Mr Baker, some of us have been dealing with the false arguments of the self deluding power seeking self interested lying lefty numpties for over 50 years, and it’s getting bit trying. And this leads to certain lack of politeness. There is only so long that you can go on being polite to those that just will not listen and will not pursue a rational argument. Those that always revert to the ad hominem attacks. Those that always end up shouting ‘Balls!’ (shades of one M Foot) to end the argument they are losing. Ultimately you start to think that maybe shooting them is the only answer. And then, because ‘we’ are civilised (unlike ‘them’) and believe in the rule of law – as opposed their belief in the rule of the apparatchik or bureaucrat – we sigh deeply and go back to the quiet rational argument.

    So please forgive ‘ S is P’ for his tirade. It’s entirely understandable. (Of course the poor man may have been forced to listen to the BBC economics spokesperson for an hour).

  4. says: Daniel Romeiro

    I’m with “Stupidity is Permanent” also. I know some people that uses similar argumentation to Arthur’s, and it’s exasperating. I’ve found the last paragraph particularly offensive: Arthur is clearly calling me a fool (even if in a indirect manner), and he does that with scorn: “The usual ‘invisible hand’ fantasy…”. Maybe “unintelligence is permanent” would be better? The question is, I don’t think that lack of intelligence and stupidity are quite the same thing. Stupid people are people that refuses to use their intelligence, as I see it.

  5. says: Doug

    Mr. Baker is right–we must strive for civility in the face of ignorance. What I’ve found is that for every legitimately ignorant person who insults us, there are ten on the fence who are turned off of our message when we become agitated in our response. It’s as important to be measured in communication as it is to be wise.

  6. says: Jody

    I’m also with ‘stuidity is permanent.’ Statism has never worked, it never will, it’s like the war on drugs, the war on terror, the war on prostitution and any other war on humanity, fruitless. Countries round the world are screwed, Greece will default, Greece will drop the Euro, then the real pain begins.

    The UK will never right itself, it’s to late, unless of course the government grows some balls(not gonna happen) and instead of cutting schools, health and roads (not that I agree with the government funding those things, I don’t), perhaps the government should cut bombs (the military and associated industries), banks (all those bailouts) and other corporate welfare. Governments around the world do nothing but give out welfare to the rich and in the UK the recent cuts amount to less than half a percentage point of the total budget, in other words, squat.

    Here’s an idea, get rid of the army, who’s going to invade us hmmm? Are the Germans going to come marching in, or perhaps the Russians? Let’s get real, the only reason we have an army is to maintain a pathetic excuse for an empire, get rid of it. Let individuals own an assault rifle, then if some evil force invades us (cue spooky music), we could fend them off instead of relying on idiots in government. Government pensions? Why? It’s up to me to fund my retirement, not the taxpayers. Bailouts to banks, how much this year? How much last year? How much next year?

    You see if government stopped stealing from people who actually work, and did not give it to corporations that are protected from competition, thanks to rules and regulations, what would all our current MP’s do? Go out and get a real job is the answer.

  7. The Schiff brothers did address the idea of over consumption in their book. They stressed that it was a result of cheap debt which enabled people to consume things they normally would not. They also stressed that under consumption, using that money for capital investment rather than spending was the way how economies grow. Actually these were likely the two major points behind the book. Especially when the source of credit stops coming in and all the high consumption industries which were dependent on customers having access to cheap credit completely failed and thus “the crash” occurred.

  8. says: Al Sledge

    I was appalled by Mr. Doohan’s comment and felt a degree of rage, thus postponing my response. All three of the Schiff family do not even pretend to cover all aspects in an economy in the pretend economies of Moltz or in the fishing model. These stories are just that, a model, because the real world is too complex for any individual to understand. Even the cheerleaders for the state should be able to recognize this fact. The difference between our groups are insurmountable. The statist deifies the state while free men understand that any “leader” is merely a mortal man. Not a god. If this makes each man his own deity, then so be it, because the alternative is to be a slave. In reality I know where I fit in the nature of things. I am not any better than a skid row bum, nor any worse than a king, pope, or a president. The only way I can be controlled by others is at gunpoint. And at this behavior, the state excels. An estimated 400 MILLION dead in the 20th Century alone, mostly civilian non-combatants!

    The common thread in the Schiff stories that I see is about the role of savings and productivity generating wealth and health. Money can be printed, savings cannot. They are not the same. I have come to believe in the “invisable hand” of the true free market and today we are witness to the “invisable FOOT” of government firsthand world wide. And the worse off humans conditions get, the harder the FOOT kicks!

    At what point should we be willing to admit central planning and government intervention in the economy are utter failures? When you lose your job? When your retirement and savings become worthless? When your children die from starvation?

    Unlike many, I force my views on no one. If you wish to believe Santa, the Tooth Fairy, and the Easter Bunny are real, then you are free to do so. I just see the world crumbling around us and take the steps that I can to try to get our family through it intact. Understanding the problem is but the first step. However if one cannot grasp the poblem then any solution MIGHT work. It kind of sounds like the Hope and Change platform.

    Sorry for this rather long and possibly boring scattered diatribe.
    Yours in Liberty,

  9. says: John

    I just have to say, I love this website and the commenters! Rarely does one find a news source that discusses common sense economics and have people commenting who understand the Austrian school of thought.

    Well anyway, I’ll be buying Peter Schiff’s book in due time. I love how he can explain complex ideas with simple examples – this is what he need to do to reach out to the masses who haven’t the time, nor patience, to read up on economic theory. Cartoon books on economics = Great idea :)

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