Tuesday, May 19, 2009

FREE LUNCH: Book Review

FREE LUNCH: New Book By David Cay Johnson

Reviewed By Edwin C. Pauzer (New York City)
(from reviews at amazon.com)

Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) (Hardcover)
One thing you can expect when you open a book by David Cay Johnston is narrative that reads like a drama unfolding except that the plot is present-day America and the story is how the wealthy are getting richer at the expense of the middle class. Hence the title "Free Lunch," where the wealthy steal it with government approval, are paid to take it, or get it free, courtesy of the same who hands the bill over to us.

At the very beginning, Johnston explains what the invisible hand of Adam Smith means, for the benefit of those who know it and for those who only think they do--of which there are more than enough of the latter. Smith postulated that a free market economy creates competition that serves the common good but, (and here's the kicker), does not work if government provides them bounty (subsidies), or allows them to collude to keep prices high. He also stated that there would be enterprises that would operate to seek bounties only, the equivalent of modern corporate welfare.

Johnston provides chapter after fascinating chapter of how government at all levels offers break after break which is consistently picked up by Average Joe Taxpayer. Such "bounties" include:

· Misuse of eminent domain, which is supposed to mean appropriating land for the common good such as a new highway or airport. Now it is used to support developers who wish to profit at the expense of the homeowner.

· Tax breaks. Not only do companies such as Wal-Mart, Cabela, or Bass Pro insist on property tax breaks that decimate the local economy rather than improve it, but they might even insist on keeping the sales tax. Communities may not see a return on their investment for decades.

· Government intervention in the form of legislation that may even benefit large companies at the expense of the citizen such as "free-market" energy as espoused by Ken Lay that eventually cost Californians exorbitant charges for no additional electricity generated.

· Kids who take student loans are finding out that what they thought was a loan at six percent suddenly became eighteen percent guaranteeing that they will pay far more than they borrowed for years to come, and the lender is guaranteed no risk.

· Our government is also lavishing subsidies onto for-profit health care companies that consistently look for ways to deny claims. No subsidies go to nonprofit health systems even though studies show they offer superior care. (Adam Smith also said: "What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole").

· The grand prize, which is our current administration in the form of George W. Bush [now hisory-- thank the gods--tr] who sponsored a drug plan for seniors that was worked on (behind closed doors) by Billy Tauzin (R), Max Baucus (D [Obama's point man for "health care reform"--tr]), and John Breaux (D). These "representatives of the people" guaranteed that Adam Smith's dictum of seeking the lowest possible price would be ignored. Their bill guaranteed that our government would not be allowed to negotiate the price of drugs for its citizens even though it would make purchases in bulk.

In each of the above, there has not only been collusion by companies and industries, but also a feckless government that has given its blessing with collusion of its own, subsidies, and bluster of threats to investigate wrong-doing, with investigations that never quite materialize.

Having read his previous work "Perfectly Legal" I was eager to get my hands on this book, and I was not disappointed. In twenty-seven chapters that span the length of less than 300 pages, you will discover how industry and government have actually worked to first deceive, then gouge the average hard-working taxpayer. Any one of these chapters is a revelation that made me open this book at every opportunity.

This is the kind of book you can be sorry that it comes to an end, and also be glad that it does (because it is too painful).

If this book cannot stir the most politically apathetic into action, nothing will.

Maybe they'll just have to see the bill first.