Everything for Sale : The Virtues and Limits of Markets

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Summary: Crap by any other name...
Review: It's quite amazing to how much length monopolists of all kinds will go to defend their position, even after they've been proven utterly wrong!

The horrible, stupid and disasterous consequences of government interference in market processes should not require further demonstration, but here we go: yet another idiot who tries to prove that "markets are wrong".

Kuttner doesn't get it: markets are OUTCOMES of incredibly large number of choices millions of people make. To say that some outcomes (momentary snapshots of ongoing, complex processes) is not "perfect" or "desirable", he argues from HIS personal perspective. Maybe indeed HE would have liked to allocate ressources differently, but it is the outcome of billions of individual decisions.

The implicite assumption by Kuttner is that some "central agency" would know better. WRONG! As history teaches, any attempt at centralizing decision making FAIL, precisely because of limited knowlege and the complexity of any real problem.

Let's take the example discussed elsewhere on this forum: airline deregulation. Apparently, there are many "negative consequences" and somehow, Kuttner doesn't like the current system very much. Well, that's HIS take. I assume he always was rich enough to pay excessively high air fares, contrary to the majority of people, who can only afford flights since the industry has been deregulated.

Some companies fail. SO WHAT? That's part of the market process!!! Some companies provide bad seats, lousy service and have a slightly higher accident risk. SO WHAT? That's the point about a market: you are allowed to choose a really cheap, crappy solution. You're not FORCED to spend huge amounts of money, when all you want is to get cheaply from point A to point B! If you are WILLING to pay more - up to the ridiculous price levels from before deregulation, then you probably get a very high level of quality and service.

As usual, Kuttner simply forgets about the fact that lousy quality is often the only way of making certain goods and services available to the not-yet-wealthy. Our grand-parents had to put up with things of incredibly shabby quality, as compared to what we have now. No one served up high quality on a silver platter at low cost.

Worst of all is that a HUGE number of examples of "bad markets" actually are due to "bad regulations", but it takes brains to spot the unintended consequences of regulations, if all you ever read is the declaration of intent of any law.


Rating:
Summary: A good counterpoint to the religion of the free market
Review: Kuttner relies greatly on an appeal to intuition and predjudice in this book, and with good reason; he is utterly unskilled in economics and profoundly ignorant of economic theory. Reading this book was a waste of time and money.

There is more to be found in Thomas Hazlitt's brief "Economics in One Lesson" than in all of Kuttner's columns and books.

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Summary: Challenging the Rhetoric of Market Purity
Review: Robert Kuttner takes on free trader's myth, which perpetuates the need for pure markets and limited government. He points out how this ideology, which has brought about the deregulation of many industries and continually pressures for reduced government spending -- on infrastructure, research and development -- has seriously retarded wide economic growth. The result of the U.S. economic policy over the last thirty years has created widening income inequality, limited access to universalities such as health care and basic economic security, and a breakdown of democracy that was established to protect American citizens from private tyranny. He challenges the free-market ideologues that continually influence politics and law by preaching the rhetoric of whatever the outcome of the market must be optimal if it is the result of the operation of the market. Kuttner explains that the myth is allowed to perpetuate not do to economic problems, but because of a lack of political power on the part of most Americans.

Kuttner makes a fine argument through his comprehensive survey of most sectors of the American economy and the social effects of unregulated capital. Moreover, he points out that pure market efficiency is only possible in spot markets, and rarely occurs in reality. He further faults the free market ideologues on their notion that everything can be reduced to markets, citing that markets in certain items are contrary to public policy or unlikely to be produced due to the theory of free-riders, such as with public infrastructure. Kuttner explains that the corporate call for "pure markets," freed from regulatory constraints, is really a corporate call for liberation from its extra-market commitments to community and charity.

Kuttner's position for alleviating most of these problems that have arisen through the "pure market" myth is to increase the size and stance of government to a more socialist form similar to those of Western Europe, with a mixed economy. He calls for the government to intervene by taking over administration of extra-market commitments and universalities such as health care and pension benefits, and provide incentives to corporations that are socially responsible to their employees. Moreover, Kuttner seeks a redistribution of economic and political power through a return to a progressive tax system that weighs heavier on persons with greater wealth and income. He contends that Americans need to display the habits of a strong democracy in order to keep markets in their place.

After reading this book, it is obvious that Mr. Kuttner is very passionate about the subject for which he writes. My only critism of his work is that it is a bit cumbersome.

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Summary: A balanced form of capitalism
Review: Robert Kuttner's "Everything for Sale" does a fine job of criticizing unregulated markets. The author takes a look at how markets price themselves in various industries and discusses the relative strengths and weaknesses of the pricing model. Kuttner reveals that in most markets, the public good can be best served by both allowing the "virtues" of the market to work freely and by implementing regulations that correct whatever "limits" may be found in any particular market.

Kuttner also includes a moral dimension to his discussion, where appropriate. As we all know, markets respond only to money. But as a society, we have decided that it would be immoral, for example, to deny health care to seniors who can't afford to pay; consequently we have Medicare and Medicaid to fix this fundamental market flaw. Similarly, Kuttner shows us where pricing models in certain industries fail to take proper account of environmental, labor and social costs and suggests common-sense ways to correct them.

Opinions about the value of Kuttner's work vary widely. Laissez-faire idealogues have charged that the work amounts to "socialism" (see one of the reviews below). To judge for yourself, take a quick look at just one of the industries that Kuttner critiques in the book: airlines.

Kuttner calls the Reagan-era deregulation of the airline industry a "failed experiment". He points out the many problems that have occured since deregulation, including: declining levels of passenger service, airline consolidation and monopolistic pricing, loss of service to small cities, circuitous routing of flights, declining safety levels, etc. I think most people would agree with the accuracy of Kuttner's assessment and that indeed, air travel has become much less appealing today.

Kuttner's solution is to create a system of "regulated airline competition". Fares would be set at levels that would allow sufficient funds to be allocated to properly maintain planes, better serve passengers, restore service to under-served areas, increase competition, and so on. I found Kuttner's ideas to be reasonable -- not ideological -- in that they balance the needs of business and the public in a fair manner.

Of course, Kuttner wrote this in 1999. The terrorist attacks of 9/11 have only made a bad situation worse. Ironically, public funds were required to save the industry from insolvency. Therefore one could argue that Kuttner's recommendations for greater public accountability is far from unreasonable.

Again, the airline industry is just one example. Kuttner also has much to say that is useful about healthcare, energy, finance, labor, and more. As some of these industries currently seem to be imploding due to the excesses of laissez-faire (Enron, Arthur Andersen, WorldCom, etc.), Kuttner's thoughts on the dangers of unregulated behavior prevalent in these industries appears to be more valuable now than ever.

In the current climate of investor skepticism and high-profile corporate fraud, tighter controls over business behavior may be just the medicine our economy needs to heal itself, restore investor confidence and ensure that businesses become more responsive to people's needs. In that light, I don't view Kuttner's ideas as socialistic at all; rather, I think Kuttner helps us preserve capitalism by curbing its most destructive tendencies. To that end, "Everything for Sale" can provide guidance to citizens and policymakers who may be pondering how we can build an economy that works for everyone, and I highly recommend it.

Rating:
Summary: A valuable read
Review: The point that Kuttner makes in this book is that laissez-faire markets are not always ideal in certain segments of society, and that in these areas, a combination of government regulation and market economics produces the best practical outcome. In the field of healthcare, for example, there are extra-market values--namely, the principle that no one should want of medical care because they can't afford it--that the market doesn't (indeed, CAN'T) account for. Another example is telephone regulation. If it were up to the market, rural populations would never receive telephone service, because the marginal cost of servicing these rural areas is too high. It is a valuable public good to ensure all citizens have access to a telephone in their own home. Laissez-faire economists (often unconsciously) use circular reasoning to find that markets are better. Or, more often, they simply take it for granted.

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Summary: Marginal theory
Review: This insightful, hilarious actually, treatment of free market mania and economics is important reading since there are few books around that can stand up to the legitimation tactics (Foucault stuff, if you recall) of the current theories. There are two questions, markets, and the theories that justify them, and/or make them worse than they need be because of theoretical obsessions that are really ideologies. Looking at the complex arcana in most economic treatises would leave most silenced in awe by the triumphs of reason, little suspecting that most of it is paper airplane category pulp fiction.
At least economists manage to allow some critique of their subject (delusions can cost real money). The field of evolutionary theory needs a book like this, but unfortunately the domination of the paradigm there is so total as to allow no dissent at all in normal channels and it in fact costs no one anything since it all happened long ago and good for the dog eat dog economy anyway (real money) to be deluded in that case.

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Summary: An engaging discussion of some problems with free markets.
Review: Well written but often less well thought out, this book gives a great introduction to some of the problems which arise under free-market conditions. "Everything For Sale" gives some very compelling arguments against the mindless worship of the free market which seems so prevalent among professional economists, but also gives some very bad arguments. I took particular issue with his argument against people acting as utility-maximizers, where he uses cigarette smoking as an example of something that people trying to maximize utility would never do - he argues that they would weigh the health risks 30 years down the road and the expense as outweighing the immediate pleasure which smokers derive from cigarettes. In other areas, though, like his discussion of the health-care system, his reasoning and writing is excellent.