Saturday, July 28, 2007

Review of "Everything for Sale" by Robert Kuttner

The marketplace has it advantages, yet it is unable to be perfect. It is foolhardy to believe that all economic solutions will eventually emerge from the marketplace and with just market corrections. Robert Kuttner explains where market imperfections exist and how to correct them.

Unions are presented as a positive economic force, as the organization of employees and prevention of employer abuses is shown to raise productivity. Often these productivity increases surpass their bargained wage increases. Employers resist unions, even with they are advantageous to them, because they don’t wish to share concede managerial powers. Plus, increased wages are sometimes paid by with reduced profits. Yet, the overall effect of unionization has created a better wage distribution that helps the overall economy.

The growing service economy is less unionized. In part, this is the fault of unions who expelled their more radical members, who were in fact their best organizers. The resulting lower wages of service employment in general is contributing to an increase in national wage disparity that is creating economic imperfections.

Robert Kuttner calls for greater civil vitality and government actions designed to work as allies with the market in strengthening the economy. Failing to do so, we will continue to experience such market imperfections as in wage and wealth disparities and a poor allocation of health care services. The health care system lacks free market competition, fails to provide perfect information to consumer, and consumers have little mobility to choose their health care providers even if they had better information.

The economy is one where people do not always act rationally or with stable economic optimization strategies, as a free market requires. There are forces in financial markets and businesses that often seek to take unfair advantage of market systems, which further diminishes the ability of the market to operate efficiently. There is a need for government regulation of the market, unions, fair trade with common international standards, and policies such as strong education systems and social support systems to keep the economic system operating as well as it can. The book is an excellent explanation of the true workings of our economic system.


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