In this month's issue of The American Prospect, I reviewed The Private Abuse of the Public Interest: Market Myths and Policy Muddles, by Lawrence D. Brown and Lawrence R. Jacobs, and The Case for Big Government, by Jeff Madrick. An excerpt:
The most telling line in Lawrence Brown and Lawrence Jacobs' The Private Abuse of the Public Interest comes on the first page and was not written by the authors. Rather, it is a quotation from former Republican House Majority Leader Dick Armey. "Markets are smart," says Armey. "Government is dumb." This is an enormously illuminating statement. Markets, after all, are not "smart," and smart people do not claim otherwise. Rather, markets are supposed to be efficient. There is a difference. A man who finds himself in a convenience store without sufficient funds for his purchase might decide that the most efficient method of obtaining cash is to rob the register. He might well be right. But he would not be smart. He would not be wisely considering his own future or soberly evaluating the possible consequences of his actions. A Hostess cupcake is not worth jail time.The market, however, carries no such capacity for self-reflection. It prizes efficiency above all -- at least, insofar as efficiency is reflected in profit. It will squeeze profit from coal and trap heat in the earth's atmosphere. It will sell cigarettes to children and mortgage-backed securities to adults. It will build bombs for dictators and deny medical care to the sick. It will support all manner of economic activity and do so rather mindlessly. And so we must intervene when efficiency contradicts wisdom, or profit does injury to ethics. We must impose intelligence on the market.
