Fearsome Pirate writes:
Brian, I’d never read Cavanaugh, so I am reading this (PDF). What follows is a running commentary. First of all, it’s nice to see someone has at least perused the authors he’s dealing with, instead of dealing with some kind of caricatures or wild generalizations (Krugman does this all the time, which is why I don’t read him any more, see How Did Krugman Get It So Wrong for an example). So he actually has a pretty good understanding of how economists define a “free market” and the transfer of information via the price mechanism. But some problems appear early on, as he seems to think we all but have a free market in the USA and the globe. This is not true. Socialism is dead. Keynesianism, mercantilism, the welfare state, and progressivism are not.
I’m skimming past the section on Augustine, because it’s predicated on his first error. Words don’t have objective meaning, so it’s useless to argue about what “free market” should mean. It means what it means. And economics is a social science, not moral philosophy, so that’s why it uses a value-neutral definition of “free.” The reason economics doesn’t say what an individual’s desires should be is that if it did, it wouldn’t be economics any more. Saying “crack would be legal in a free market” is not the same as saying, “It doesn’t matter if you want to smoke crack or not.” Some economists think a free market would result in overall better outcomes for everyone. Many don’t.
Things start to fall apart in Section III. It’s the usual boring old tirade against advertising and using public airwaves as a marketplace. What he ignores is that advertising is an evolutionary arms race. As advertising evolves in its ability to reach consumers, so do consumers in their ability to ignore it. On the whole, it still end up with consumers getting products they want and rejecting products they don’t want. A million-dollar campaign with sexy ladies and explosions is no guarantee of profits. Consumers hold a lot of power over producers with their money.
Next is the old canard of “Barnes and Noble” vs the myriad “independent book sellers.” Of course, Barnes and Noble is being killed off by Amazon. What this trope ignores is that the choice consumers care about isn’t choosing which building they buy books in; it’s which books they buy. Barnes and Noble offered far more choice within one building than just about any independent seller does, and Amazon offers still more. Not only this, but he doesn’t really understand competition. Clayton Christensen is a better guide here. The four big beef companies don’t just compete with each other and some smaller companies, they compete with every single other choice consumers have of what to eat. The claim smaller farmers have no input into pricing is completely false. If the smaller farmers were able to undercut the big meat packers and make the same profit margin, in short order, they’d be the big guys and the current big guys would be broke.
Now he’s making the mistake of confusing “labor power” with “labor unions.” This is hugely problematic. Labor unions disenfranchise potential workers who don’t get hired at the union-negotiated rates. He brings up Right-to-Work laws and fails to observe that RtW states have growing manufacturing sectors while the Rust Belt is collapsing. To paraphrase Milton Friedman, it is little comfort to an unemployed man in Flint to know that if he could get a job, it would be at a very high wage.
I’m stopping here, because the xenophobia and racism of people that try to make a moral case against free markets enrages me. This belief that it’s evil and bad for a Mexican to leave his job making $0.25 cents an hour picking vegetables and take a job for $4.00 an hour in an auto factory because he competed with a guy in Ohio is just…how is that even moral? I guess everyone in the Third World should apologize to Americans for wanting to feed themselves, too.
Everything in the last paragraph of Section III is false. China is not a free market. And he’s criticizing Milton Friedman for advising Pinochet to be less of a totalitarian? Really?
Overall, this is just the usual mercantilist nonsense dressed up in theological language.
Nevermind, I kept reading. Now he’s comparing Spain to some quasi-prison El Salvador, and claims the latter is a sterling example of a free market phenomenon? Is he suffering from a head injury? Pro tip: If workers are locked in with barbed wire and armed guards, it’s not a “free market” business.
It started off interesting. Then it just progressively got worse and worse. There’s almost nothing of value in it.