Unwarranted Intrusions: The Case Against Government Intervention in the Marketplace [Hardcover]

Martin S. Fridson CFA (Author)

Book Description

Publication Date: May 19, 2006

What happens when politicians substitute their wisdom for the market’s? The result is usually a government subsidy that provides advantage to a special interest group only–but costs everyone and drains the economy. In Unwarranted Intrusions, well-known financial commentator Martin Fridson turns his sharp eye for uncovering opaque financial reporting practices to the U.S. government and examines the economic reality of some of the most popular yet financially draining subsidies. Fridson debunks programs that claim to provide jobs, encourage savings, provide affordable housing, and preserve family farms–among many others. Unwarranted Intrusions is a provocative and exhaustively researched challenge to prevailing political claims of programs that purport to protect the public good.

Editorial Reviews

Review

"UNWARRANTED INTRUSIONS MERITS INCLUSION IN THE SHORT LIST OF THE BEST BUSINESS BOOKS OF THE YEAR. MAKE THAT THE DECADE."-from the Boston Globe article, Politicians often play Robin Hood in reverse --By Cecil Johnson (07/14/2006)

From the Inside Flap

Politicians invariably cite lofty purposes to justify government intervention in the marketplace. On closer examination, the intercessions usually turn out to be clever schemes for buying support from special interests with taxpayers' money. The already advantaged turn out to be the biggest beneficiaries, while the resulting misallocation of resources afflicts society at large.

In Unwarranted Intrusions, well-known financial commentator Martin Fridson turns his sharp eye for investment deceptions and accounting ruses to subterfuges practiced by the U.S. government. His exhaustive research reveals politicians from both sides of the aisle basing legislation on elementary economic fallacies. George W. Bush and Hillary Clinton play their parts in the story, along with less likely figures such as Al Jolson and Bozo the Clown.

The opening part, A Nation of Subsidies, focuses on government meddling that ranges from trade protection and publicly financed athletic stadiums to subsidies for the arts. You'll chuckle as Fridson gleefully debunks the supposed market failures that officeholders use to justify their machinations.

Part two, Restraint of Trade, assails government intrusions into ordinary commercial activities, such as apartment rentals, the operation of automatic teller machines, and even television audience ratings. You'll be forced to reexamine your assumptions about protecting the public against volatile stock markets and music industry payola.

In the final part, Telling It Like It Isn't, Fridson details how politicians rely on misrepresentations to foist badly conceived policies on the electorate. From exaggerating their impact on the nation's economic performance to periodically pretending to clean up campaign finance, Fridson shows that politicians repeatedly prove themselves to be masters of false advertising. Costly government intervention operates on such a vast scale that there is no chance of immediately dismantling it all. The good news is that one small victory can represent a huge gain in public well-being. Filled with in-depth insight and practical advice, Unwarranted Intrusions will open your mind to the possibility of putting our dysfunctional system back on track.

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Product Details

• Hardcover: 309 pages
• Publisher: Wiley; 1 edition (May 19, 2006)
• Language: English
• ISBN-10: 0471687138
• ISBN-13: 978-0471687139
• Product Dimensions: 9.2 x 6.7 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (5 customer reviews)
• Amazon Best Sellers Rank: #1,296,399 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

8 of 8 people found the following review helpful:

5.0 out of 5 stars Outstanding presentation of governmental economic nonsense, October 7, 2006

By 

Charles Ashbacher (Marion, Iowa United States) - See all my reviews
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This review is from: Unwarranted Intrusions: The Case Against Government Intervention in the Marketplace (Hardcover)

I agree with nearly everything that the author says. His arguments against the economic effectiveness of government subsidies and intervention in the markets appeal to my libertarian streak and it is well known that many (most?) of the government programs are economically counterproductive. Some are downright silly. One of the most ridiculous, primarily because it went all the way to the United States Supreme Court, is the case of Karen Finley. She was an "artist" whose primary area of expertise was smearing her naked body with food. In special instances, she raised money by having people pay to lick the food, primarily chocolate, off her body. When her NEA grant application was rejected, Finley sued. So silly, yet so significant. For the real issue was twofold.

*) Should the federal government use tax money to fund art?
*) If the answer to the first question is yes, what are the bounds on the art?

And this also raises a more general question concerning the use of public money to benefit small groups, the often-reviled "special interests." For if the federal government could not stop funding the fringe artists, there is no hope of stopping the real expensive cases of corporate welfare.
One of the greatest is the enormous subsidy paid to American farmers to raise surplus food. Not only is it an expensive and deceptive program, it helps to keep subsistence farmers in other countries in poverty. As Fridson points out, while politicians demand that the program be kept alive to preserve the family farm, the reality is that there really is no such thing anymore. Billions of dollars in payments go to large corporate farms, which are the only ones that can grow the cheap food demanded by society at a price that it will accept. The hidden costs paid by the generic taxpayer are rarely factored in, and when they are they are conveniently ignored by the policy makers.
Fridson also debunks the so-called "ethanol solution." Namely, take all of the surplus corn, convert it into ethanol, use it as fuel for automobiles and free the United States from having to import foreign oil. Tax credits and other gifts are used to promote the use of ethanol, with the thought being that farm prices will rise. The reality is that the farmer gets very little of the benefit, the bulk going to the distiller and the retailer. In fact, a Department of Energy estimate stated that every extra dollar of farm income from the use of ethanol costs the taxpayer four. Furthermore, since it takes more energy to produce a gallon of ethanol than can be retrieved from using it, ethanol may actually increase the dependence on foreign oil. Finally, in my home state of Iowa, the bumper stickers praise the use of ethanol, as it is touted as a fuel that burns cleaner. This "fact" has been refuted, although ethanol has some advantages, the different disadvantages mean that overall it pollutes as much as the burning of fossil fuels.
Where I disagree with Fridson is in his unwavering belief in the markets and the thought that people will always act honorably and honestly. As the recent corporate scandals demonstrate, there are crooks in low and high places and only the government can make and enforce the rules that will keep them as honest as possible. However, in general, I agreed with Fridson, all the while knowing how futile the task of trying to change these things for the better is.

7 of 8 people found the following review helpful:

5.0 out of 5 stars Stick It Where It Hurts, June 14, 2006

By 

Katharine M. Hikel "Dr. Trixie" (Hinesburg, Vermont USA) - See all my reviews
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This review is from: Unwarranted Intrusions: The Case Against Government Intervention in the Marketplace (Hardcover)

Citizens, rejoice! Marty Fridson, the D'Artagnan of finance, is back with his sharp and delicate sword, this time taking on the world of subsidy. Fridson is the eminently readable writer, historian, and Wall Street financial whiz whose books "It Was A Very Good Year" and "How To Be A Billionaire" offer wicked glimpses into the world of wealth accumulation, happily skewering the institutions from which all our rich fantasies spring. He now takes aim at the perennial use of government (read taxpayers') money to support troubled and misguided programs - Social Security! The FDIC! Fannie Mae! - which, he says, are better off left to the self-correcting forces of the marketplace.

Fridson gives lucid histories of government intervention - starting in 1867 with campaign-finance reform - showing that regulations and subsidized programs, dear to our hearts and psyches, that were created to reduce disparities in wealth and income, have generally achieved the opposite effect.

Politically-motivated bailouts -- aid to farmers, rent control, and property tax breaks for businesses -- create artificial shortages and gluts, making some people (usually the upper tax brackets: agribusiness, landlords, and CEOs) better off, at the cost of making everyone else worse - locally and globally. And the only people these subsidies invariably benefit are the politicians, who promote them to grease whichever wheel of the voters' cart is squeaking the loudest.

Market failure in any sector means disparity: goods and services are not allocated efficiently. Fridson says that government intervention in the economy is only appropriate when the market fails to produce an optimal outcome - in education, for example, where the need for skilled workers outweighs individuals' demands.

Direct income support is also necessary for workers who can't find employment, or who are unable to participate in the labor market. But other subsidies, protections, and regulations (like restrictions on short-selling and margin buying, or federal assistance to the big mortgage lenders, Fannie Mae and Freddie Mac) generally benefit the privileged (brokers; middle- and upper-income home buyers), exclude low-to-moderate-income groups, and contribute to the sequestration of capital in the top ten percent. Fridson provides plenty of credible, readable data to back his points.

"Unwarranted Intrusions" is so sharp that it's painless; this book makes reading the political news fun again. Buy two copies - one for yourself and one for your favorite Congressperson.

3 of 4 people found the following review helpful:

5.0 out of 5 stars Excellent primer on government's negative role in society, May 25, 2006

By 

John E. Tamny (Washington, DC) - See all my reviews
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This review is from: Unwarranted Intrusions: The Case Against Government Intervention in the Marketplace (Hardcover)

Fridson is amazing. The research here is exhaustive, but at the same time highly accessible and enlightening.

Fridson quotes everyone from classical economists such as Ricardo to contemporary politicians in showing how unwarranted intrusions by the government into our lives invariably makes us much worse off. For those who love to debate, this book is a must. Fridson uncovers the various myths about Ethanol, payola, and our "low" savings rate. An essential book.