I just finished reading Paul Stiles' book entitled Is the American Dream Killing You? Some friends recommended it, and it sounded like a good read. Rarely do I take the time to actually write an extensive review of books that I've read, but this is one I felt that I must comment on.
The premise of the book is that "the Market," (yes, he capitalizes it throughout the book, and actually anthropomorphizes the Market throughout the book) is actually destroying the quality of our lives.
Stiles uses examples of longer work hours, longer commutes, McMansion's, obesity, environmental degradation, working mothers, media, and so on to explain how the Market is undermining our ability to lead happy lives. It is a compelling argument.
Stiles aims at capitalism, arguing that the free market is running amok, dictating how we ought to live our lives and constraining us all to fit into its agenda for higher productivity and consumption.
Yet Stiles only gives lip service to the reality that the market cannot operate without the cooperation of society--without people. Market forces work because they satisfy human desires. The market would change, were the people in the market to decide to change. Stiles addresses the cultural decline, but all in light of the market's forces upon them, not the culture's power over the market.
The distinction is a significant one, because a capitalist system cannot exist for long when over-run by greed. Jay Richards points out in his book, Money, Greed, and God that greed and capitalism are mutually exclusive. In a capitalist system, mutual exchange for the benefit of both parties ensures a sustainable system. The buyer buys only what he can afford and desires. The seller sells based on a surplus of goods or services. He does not erode his capital supply of goods and labor, meaning, for example that he does not over harvest his land, or kill all his livestock, knowing that his land is his source of income, or his livestock must procreate to be able to sell in the future.
Were this same system to be infected with greed, as Stiles is arguing, the buyer's desires would be unencumbered due to credit. The seller would abuse and use up his capital and labor to exhaust all possible avenues for income, effectively becoming a looter. This is an inherently unsustainable and unstable system—such a system can only persist through external intervention, such as by government.
Stiles calls our market a 'hyper-market,' accurately in my opinion. But his failure to recognize that greed and capitalism are incompatible leads him to mistake our market system as 'free market' capitalism, when in fact ours is a artificially constrained market.
Here are some ways our government enables and condones a market full of greed:
- Congress and The Federal Reserve have worked in tandem to allow America to live beyond its means for decades through inflation and growth based on debt--much of it now foreign debt. This is the curse of being the world's reserve currency.
- The Federal Reserve has an easy money policy, making loans cheap for banks, who in turn use 10:1 leverage, sometimes higher, to create even more cheap money. Together, America is allowed access to easy credit--allowing Americans to live further beyond their means than ever.
- Government regulations are frequently boosted by large corporations that erect major financial obstacles for small competitors to survive. This is called 'corporatism,' and is most certainly not part of a truly free market. The recent Sarbanes-Oxley legislation is a prime example of this--it takes a corporation millions of dollars to meet regulatory requirements, a drop in the bucket for major corporations, but perhaps a make or break requirement for smaller publicly traded corporations.
- Farm subsidies and food regulations grossly distort the market, making some foods and products appear cheaper than they truly are, and making other competitive products much more expensive than they need be.
- Tax subsidies for government favored products, such as oil, drive down prices.
- Tariffs, such as the recent tariff on tires manufactured in China again, distort the market, allowing more expensive American tires competitive in America, though making Americans pay more for new tires.
- This list could go on and on. Again, these are not signs of the free market, but corporatism and government favoritism. These issues have unintended consequences, and, combined with greed, and in a system where greedy individuals are given access to a government willing to listen and accommodate them, make for a system like Stiles is arguing against.
It is not the free market that is to blame, or even that greedy people have taken over the free market. The problem is that human greed has created a market that favors the greedy, and breeds greed in others. This looter mindset induces others, seeing others become rich through looting without legal restraint to begin looting themselves. These are significant distinctions that Stiles does not address.