19 of 26 people found the following review helpful
Well-referenced but extremely illogical,
This review is from: Juggernaut: Why the System Crushes the Only People Who Can Save It (Paperback)
The author of Juggernaut has obviously read a great deal and so presents a broad view of the economy from many points of view. It is very interesting and useful from that perspective. But this book also has the highest number of completely nonsensical conclusions developed from shreds of truth than any book I have ever read. I gave it two stars because of its great list of references in the chapter "Fixing the System," and because it makes a very good list of ways in which government fails. The book also has a section on ways in which the free market fails, but that entire section is illogical and nonsensical. The free market is not perfect, but this book does not seem to have found those areas (see "How Markets Fail;" I gave it four stars). By the way, I never did figure out what the "Juggernaut" is (maybe complex society?).
I'll first list the correct ways in which government fails from the book (he overstated his case for some government failures, so I left those out):
1) If government ran the entire economy, it would be similar to a giant corporation. Bureaucracy would destroy the effectiveness of such a corporation, and so it would the government. Also the bureaucrats would have no competition to hold them in check.
2) Even in a democracy, minorities have no power. In the private market, minorities will be served too.
3) Individuals have no power in a democracy, only groups have any power. Politicians pay no attention to individuals, and it is too much work for individuals to follow everything in government.
4) Governments are made for group control (special interests).
5) For gov't to decide what products would be made would have to be somewhat arbitrary, if not determined by free market price.
6) People are naturally better governors of their own spending than of other people.
7) Regulating agencies inevitably end up benefitting the industry, not the consumer.
8) Gov't (in a mixed economy) is about transferring wealth, not creating it. This transfer costs money too, so there is a net loss.
9) Such transfers also create costs from private sector for lobbying.
10) Price controls (including minimum wages) create shortages and surpluses, and usually hurt the ones the controls are supposed to help.
11) While all government spending is included in GDP, it often does not increase wealth, such as for war production and make-work.
12) Regulations create their own constituency for expanding them; the regulatees.
13) If regulations don't achieve their purpose, the usual response is to increase their funding and powers.
14) If gov't agency spends less than budgeted, the budget will be cut for subsequent year. So no agency will spend less.
15) Gov't regulations cause much of the problems they claim to regulate.
16) Gov't regulations and laws are so large, no one knows what all is in them, including the lawmakers.
17) Taking responsibility from individuals and giving it to the state encourages irresponsibility by individuals and makes the state even more necessary.
18) State actions rarely correct problems. They usually create situations in which future state action will be required.
19) Supporting companies too big to fail creates irresponsibility and excessive risk taking (the moral hazard problem).
20) Many individuals and businesses do better by being parasites on the state than by creating goods and services for consumers.
The major nonsensical discussions about the free market were:
1) He makes a really big point about the effects of the frontier. His point is that the free market expanded and became so beneficial because of the open land in the Americas (not counting the people that were already here, which he does discuss). It is true the frontier did expand the potential economy, but he way overstates the effect. If the frontier is so important, then how did the European powers develop so much without frontiers? And the economy has only really expanded in the last 200 years, half of which occurred after the frontier was essentially gone. Morse says that since the frontier has been gone for the last 100 years, that our economy has been closed and so the free enterprise system has not been beneficial to most people. He says that in the open economy that people had more options because they could just go out on their own if they didn't want to work in the regular economy. But it was a lot harder to live in the frontier than he says. Few could hunt and gather on the frontier, so any frontier person had to farm or ranch, both of which required a lot of capital to start. It also required the knowledge of HOW to farm or ranch, which was not available to the average city person. Also, most people simply didn't want to go live on the frontier and spend the rest of their lives building capital for later generations. So the frontier may have been a romantic notion, but it had very little practical importance for the average person. On the other hand, the average middle class person of today has options for a multiple of professions, many of which were not possible 100 years ago. The economy of today actually has much more opportunity and many more options than that of the 19th Century. It would be more accurate to describe today's economy as open, and that of earlier centuries as closed.
2) Morse bemoans the interdependency of society today. He compares it to the imagined solitary life one could have had 100 years ago on the frontier, or the self sufficient farming life of previous centuries. He doesn't seem to understand that people have always been interdependent on others, since the beginning of our species. People are a social species, because we can't live without others. Even in hunter gathering groups, each person lived in interdependence on his clan and tribe. This is especially true for protection, as one person cannot protect himself. Also how does a solitary person survive when sick? On the frontier, people had these same needs. And despite the romantic notion of those on the frontier living alone in the wilderness with only one's family, almost all pioneers lived close enough to neighbors to call upon them in need. In today's world, the interdependence is more extensive and more impersonal, but the essential need for interdependence hasn't changed. It is also true that in today's economy, worker's social skills are more valuable than ever, because of more interaction than in the past. But what is wrong with a change in the skill set required from years gone by?
3) Morse states than in a money economy every transaction is zero sum. Yet in the same chapter, he states that competition has improved productivity. That is contradictory, because increasing productivity is not zero sum. In a previous chapter, he talks about how values are subjective, and that trades could not occur otherwise, because no one would make a trade if both sides valued the traded objects the same. He was perceptive in his earlier chapter, and he should read what he himself wrote. Trades cannot be zero sum or they wouldn't be made. His argument simply makes no sense.
4) He also talks about how the money society changes everything. But money is simply a medium of exchange, and a way of valuing different products against each other. It has no value except for those two functions. Money has added to our wealth by facilitating transactions. It changes nothing else. Oh yeah, he also says that money is a monopoly. I think he must not understand what a monopoly is, since every person in America has money,and no one could possibly hoard it, since the government can simply make more.
5) Morse says that all business moves in the direction of monopoly, but he never gives any evidence. It is common sense that every business TRIES to get a monopoly, but that doesn't imply that they succeed. And he never explains why a business concentration is bad. The concentration can only occur if the consumer is being satisfied in a free market economy. This is only bad if the monopolist then prevents other businesses from entering the market, and then does not satisfy the consumer. I have seen no evidence that this has ever happened, other than as gov't fiat.
6) In his summary chapter called "Exploitation," he continues with nonsense. He says that the open system is so much different from the closed one, but I sure don't see it. He says the rich exploit the poor by raising prices, yet the poor live a whole lot better than they did 100 years, during his so called open economy. It is true that wages have stagnated for the last 10 or 20 years, but that is long after he states the economy closed, and there are much better explanations for it than he gives.
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Initial post: Sep 24, 2011 2:54:36 PM PDT
Last edited by the author on Sep 24, 2011 2:56:18 PM PDT
I think you misunderstood the second part (and thus mischaracterized the book). It is not as you say aimed at showing "how the free market fails" but rather aimed at showing why the market is no longer free. You criticize the author for making "nonsensical conclusions developed from shreds of truth" and then go on to make nonsensical conclusions about the book from shreds of truth. Where does he say "money is a monopoly?" "All business moves in the direction of monopoly?" You shouldn't criticize an argument that you obviously don't understand.
Posted on Sep 25, 2011 8:14:59 AM PDT
N. Helton says:
A thoughtful, logical, well-written review. If the author of Juggernaut had been more careful to verify his opinions before stating them as facts, he would have written a different book. Sensationalism sells, unfortunately.
I recommend David Mamet's The Secret Knowledge: On the Dismantling of American Culture. It's a superior book which addresses similar issues. Mamet is the better thinker as well as the better writer.
In reply to an earlier post on Sep 25, 2011 9:48:12 AM PDT
He is difficult to understand. He goes on and on. But I suspect I understand him better than you do.
Both your questions are answered in the chapter called "Monopoly." On page 258, he says "... a quasi-monopoly of money is possible, where a relative few control the majority of the currency. This is exactly what we have seen over the course of the twentieth century and still see today in America and throughout the West. We have also seen that such a quasi-monopoly can and will act as a true monopoly in the power it wields under the right circumstances." So I guess he only says there is a quasi-monopoly, whatever that is, but he says it is equivalent to a monopoly. In my mind I interpreted that as monopoly, and I apologize for not stating it exactly correctly. But my review was long enough as it was, and I couldn't say everything.
On page 263 he says "The kind of monopoly and consolidation of wealth we see these days has been the norm since the turn of the twentieth century." Doesn't that mean that all businesses move in the direction of monopoly? And the rest of the chapter he emphasizes how much power businesses have in comparison to the consumer (all of which is exactly backwards, as competition has increased dramatically in the 20th Century and especially for the last few decades).
Isn't showing how the market is no longer free the same thing as saying the market fails? I don't remember him saying the market is no longer free, but I'll trust that I missed that. What does it mean that the market isn't free, other than it doesn't work well anymore (that is, fails).
In reply to an earlier post on Sep 25, 2011 2:38:56 PM PDT
Last edited by the author on Sep 25, 2011 2:44:55 PM PDT
If the author wasn't able to convey his ideas clearly to you, that's bad writing. I didn't have trouble understanding, so I didn't think that was a problem. At any rate, you exaggerate and distort his meaning to make your point--it might be a fair point, but it doesn't mean that the book is nonsense.
To answer your question, the difference between "the free market failing" and "how the market is no longer free" has to do with potential. The author claims that the free market is the best (only?) way of creating widespread wealth. He does not argue in any way that a truly free market would fail at providing this wealth. Rather, he claims, the only way that such a system could fail is if it wasn't truly free any more.
For a market to be free, there need to be alternatives to the given system. Only that way can its participants act on their own volition. Morse gave a very logical and well-thought-out analysis of how the close of the frontier diminished those alternatives.
Do you believe that we have truly free markets in the U.S. today? If not, then why are they not free? Is it because government? Why is the government able to restrict the freedom of the market? If you trace backwards, you'll find that it always comes back to this very logical turning point in American history--around 1890. And why does that date mean so much? Because that is when the alternatives became more and more difficult to secure.
In reply to an earlier post on Sep 25, 2011 3:23:04 PM PDT
Well I certainly don't believe that he showed that there are no alternatives in the market. People have lots of options in the economic system -- they can buy a wide variety of different products, and can earn a living a wide variety of ways. We have more options than we have ever had in history. But I'm repeating myself; I said in my review that the economy is far more open now than it was in the 19th Century.
I do think we have mostly free markets in many commodities. I can buy food from many different outlets or grow my own; I can buy automobiles and clothing and housing in many any quantity and quality that I have money available for. I have choices of at least dozens of different professions. On the other hand, the government does highly regulate the labor market, medicine, banking, and housing, which does greatly limit my choices. Luckily, the prosperity of this country has resulted in the expansion of choices to a greater degree than the government has limited them, so choices do continue to expand.
I don't see where you get the 1890's turning point. There was a minor increase in government intervention at the beginning of the 1900's, with Teddy Roosevelt and Wilson. But the biggest increase in government intervention was with FDR in the '30's. Government intervention continued to increase at least into the '80's. Arguably, intervention at the federal level has not increased since then, with deregulation perhaps offsetting other areas of increased regulation. But local government regulation continues to increase, particularly with service occupation licenses and zoning laws. None of this has anything to do with the frontier.
In reply to an earlier post on Sep 25, 2011 3:44:37 PM PDT
You seem to be happy with the system as it is. More power to you.
I, on the other hand, find there to be some serious flaws in the system. This author did an excellent job of describing them and proposing solutions. Anyone else who sees the same kind of problems in the system will probably agree.
In reply to an earlier post on Sep 26, 2011 9:53:40 PM PDT
This reviewer lauds 'How Markets Fail' by John Cassidy. In that book, the author bases his pro-government argument on the idea that Alan Greenspan's tinkering at the Fed was the epitome of the free market. Since Greenspan caused the housing crisis, we need less freedom in the markets and more regulation.
The reviewer seems to have a strange notion of logical.
In reply to an earlier post on Oct 14, 2011 6:40:20 AM PDT
I laud that book because he makes a lot of good points. I did review that book and mentioned several ways in which Cassidy correctly showed that markets don't always work. I don't mention any discussion about Alan Greenspan in my review of that book, because it wasn't an important part of Cassidy's book, and Cassidy didn't make very salient points in that regard. Please read that review and comment on it there, and I'll also reply there.
Posted on Nov 10, 2011 6:25:22 AM PST
Last edited by the author on Nov 14, 2011 6:01:19 AM PST
Thomas Heller says:
I thought your comment, "By the way, I never did figure out what the "Juggernaut" is (maybe complex society?)", was rather telling. Indeed, it displayed a lack of imagination which tends to cast a shadow on your point-by-point dissection of Morse's theme. I think you missed his examination of how advancements in economic practice over the years have resulted in too many being painted into a corner.
Until I read 'Juggernaut', I had always pooh-poohed the notion that the rich were getting rich by exploiting the poor. That's hard to swallow when one knows that a free market is based on voluntary exchange.
Well, Morse has enabled me to grasp that the increasing efficiency ("ruthlessly" so, he avers) by which today's large economic actors can extract higher and higher profits is *precisely* the manner by which the well-to-do, in effect, *can* feed upon those not so well-off. My hat is off to Mr. Morse.
In reply to an earlier post on Nov 13, 2011 3:50:26 PM PST
I agree completely--the reviewer shows a disheartening lack of imagination. I also agree that the "rich get richer" concept is tough to stomach, but I would add that the reason it is so is based on two assumptions made by modern liberal pundits--that (1) it is due to the proper working of capitalism, and (2) the only way to solve the problem is more government intrusion. This book shows how those two assumptions are false and so makes the case easier to stomach.
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