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Market Delusions

If I could make the president read just one book right now, it would be the one I just finished: Predator State: How Conservatives Abandoned the Free Market, and Why Liberals Should Too, by James K. Galbraith. I would consider sacrificing a finger to get him to read it and take it seriously.

Now, before you get your panties in a bunch about the delightfully inflammatory subtitle, Galbraith is no revolutionary. He’s an economist, and a fairly traditional one really; he has no interest in getting rid of markets. He’s well aware of what they’re good for and the situations in which they work. He can explain the failures of Soviet Communism with the best of them. In fact, he’s not even particularly interested in getting rid of (or even harshing on) large corporations per se, or even NAFTA. He’s probably to the political right of many folks who opine in these pages.

But what he does do, in conscientious real-world economic detail, is explain what the Reagan revolution did, why it didn’t work, and how its principles are inconsistent internally, even if you accept its stated goals. This in and of itself is heady stuff.

Then he talks about the rise of a predatory CEO class whose interests, thanks to various changes in our financial structure, became divorced from the interests of their businesses and became more identified with each other. These predators decided it was easier to take over government for their own benefit than to continue to improve the competitiveness and advance the technology of their industries (which is what happens when lazy responses like outsourcing and deregulation aren’t open). The following is as good a summary of the Bush II years as I’ve heard: “In the corporate republic that presides over the Predator State, nothing is done for the common good. Indeed, the men in charge do not recognize that public purposes exist. For this reason, the concept of competence has no relevance: to be incompetent, you must at least be trying.”

Galbraith then bravely explains how to get our country on track again: planning and standards (i.e. regulation)—otherwise known as the Scandinavian model. Which has the benefit of, well, working.

Galbraith challenged a number of things about how I thought the world worked, from trade agreements to China, which tends to be a good sign for me in a book.

But he’s still left me with one fundamental dilemma that he describes exquisitely, and doesn’t answer: Every politician in this country, bar none, feels the need to kneel publicly at the altar of completely free markets and free trade (even though neither exist and can’t exist)—conservatives and liberals only differ in terms of whether they say that markets sometimes need “help” around the edges or not. How do we change the conversation?

If the cold hard facts are that the market doesn’t function for health care (leaving aside the occasional second opinion, you don’t choose your treatments or drugs or appointment schedules the way you choose a car or a DVD player, nor should you), why are we even entertaining the idea of health care reform solutions that “make the market function better” or leave the predatory health insurance companies in place, who do absolutely nothing but drive costs up (again, this from the basic models of economics)?

If the fact is that regulation of wages, health and safety, etc. are what create the climate for competitive business improvement, not destroy it, how can we make it not a dirty word?

If it’s become super abundantly clear that financial markets cannot police themselves, let alone other businesses, how do we stop pussy-footing around the need to police them?

Because sadly, I can’t summarize Galbraith’s painstaking economic explanations in one column. In fact, I’m going to have to read the book a few more times in order to be able to summarize them in conversation. And if I could, it’s hard to imagine it being enough to get through the simplistic markets-good, government-at-best-necessary-evil that perversely has practically become part of the American national identity.

But it needs to be done somehow.

I believe the current administration does believe in public purpose, and is not merely a set of flunkies for a lazy CEO class. And yet, if they can’t challenge this all-pervasive assumption that here in America we don’t do these things—don’t plan, don’t regulate, don’t insult the good name of unrestrained monopolistic capitalism—or if someone else can’t make them challenge it, I fear the failure to recover from our current economic woes is going to be, in a word, spectacular.

—Miriam Axel-Lute

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