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Lost Lunch

Just about finished with David Cay Johnston’s “Free Lunch.” It is a book that claims to be a tell all about how the wealthiest Americans enrich themselves at government expense and how the little guy gets stuck holding the check at the end of the day. Indeed, there are several chapters that tell eye-popping stories of graft, greed, unscrupulousness, etc. such as how the owner of the elite Bandon Dunes golf resort is raking in money at government expense, but the book turns out to be nothing more than a protectionist and anti-market thome cloaked in language that free-traders and economists might actually relate to. 

He quotes Adam Smith throughout the book, and picks those passages that most economists feel are essential to understanding market economies. But Johnston then proceeds to skewer modern outcomes as being antithetical to the markets that Smith envisioned and blames markets themselves for the outcome. Two examples he cites that economic religionists (i.e. those of us that understand markets to lead to better outcomes than planned outcomes) have led to the demise of the modern world are electricty markets and the health care sector. Electricity markets, to him, represent why market solutions do not work because, “Enron paid politicians” to help design electricty markets to their maximum benefit – and these designs were especially valuable because consumers HAVE to buy electricty. Pardon me, but since when does any real economist promote a system where corporations can buy political influence to gain competitive advantages, and one where consumers do not have choice, and call that an efficient market solution? Or in health care, the allowance by government of the sale of non-profit medical companies to for-profit entities, is a failure of the market to work in the health care sector. What?

Sadly, his readers probably believe that is what economics is all about.

If anything, Johnston applies a public choice view to markets themselves (meaning that the design of market systems cannot be separated from the perverse incentives of those doing the designing), but the irony of what he is saying is completely lost on him. First, neither Smith nor any modern economist that earned his degree, advocates anything about “designing markets.” That a market is being designed makes it anything but the spontaneously ordered process that Smith and many of us think about. Second, in pointing the light on the incentives facing market designers, and scornfully repeating the phrase “people who believe government is the problem” he completely ignores the real and very pervasive public choice issues that permeate government. Does he really believe that only people that are CEOs of corporations are without scruples, and that by simply running for political office suddenly are saintly? He can’t possibly, especially after skewering former Oregon Governor Neil Goldscmidt. But that is not really the message of his book. The message really is that government outcomes are superior than market outcomes – and you need not look further than his chapters on health care for the evidence that this is his position. I thought I was going to get an unbiased inquiry into the corporatist disasters that are hurting millions of American citizens, and instead what I got was another anti-capitalistic diatribe that does a poor job of indicting markets and instead shows only the author’s preconceived beliefs about how the world does and should work. That is not journalism. That is OpEd writing.

One Response to “Lost Lunch”

  1. […] my original concerns with the book are here. Share and Enjoy: These icons link to social bookmarking sites where readers can share and […]

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