BOOK REVIEW by Joanne Conrad: Spin-Free Economics by Nariman Behravesh

Spin-Free Economics
by
Nariman Behravesh
Published 1/21/10

Stealing from the public? Immigration doesn’t hurt American workers? Technology and globalization don’t hurt American workers? Foreign aid is not helpful? Public education and health care don’t work? Pollution is not so bad?
Economist Nariman Behravesh writes at length about these issues in Spin-Free Economics, a No-Nonsense, Non-Partisan Guide to Today’s Global Economic Debates, published 2009 by McGraw Hill.
His eleven chapters are Lessons from History, Markets Know Best, There is a Price for Everything, Competition is Consumers’ Best Friend, Growth is Good, Globalization More Like Love than War, Good Government/Bad Government, Poverty/Inequality/Job Security, The Search for Stability, Financial Markets and the Economy, and Nine Economic Lessons for a Polarized World.
He suggests stealing from the public is evident in many areas, such as corporate welfare, education, jobs, immigration, globalization, foreign aid, and even pollution. “Government interference in markets, for example, creates a fertile environment for special interests to gain at the expense of consumers” with “subsidies, tax breaks, and protectionism.”
In education, the lack of competition, union influences, and spending “40% higher than other rich countries” do not benefit students’ performances—that charter schools and other private schools and more competition “would produce better results at a lower cost.” He cites a Department of Education study that says charter schools have higher percentages of minority students and do not hurt the poor.
He says health care would also “benefit from more competition” and that health care is now a “market failure.” His solution would have both public and private sectors involved and not “confuse universal coverage with a comprehensive solution.” His bottom line states: “American health care spending will continue to rise, but has been growing at a slower pace than in many other rich countries, and the public burden is less.” His solutions include removing tax distortions, increasing portability, providing incentives to economize, creating risk pooling, providing more information for cost-effective choices, diminishing market power of insurers and providers, reducing scope of malpractice, and having incentives for healthier lifestyles.
About jobs, immigration, globalization, and income inequality, he stresses re-training for unemployed and that technology, not immigration nor globalization, is the number one culprit for job losses and income inequality. He acknowledges that the rich have become richer, but the poor have also become richer, albeit at a slower rate. He thinks globalization is a convenient scapegoat and not entirely blameless but that only 5 to 10% of American workers have been affected by globalization. He further writes that diminished unions are not causes as they were weak before income inequality increased, that Germany lost union share with no effect on income inequality, that higher wages have contributed to declining employment in airline, automobile, and steel industries, and in recent years union membership has been falling at a slower pace. He states wage controls, rent controls, etc., have unintended consequences, too, and do not really help the poor.
Foreign aid is also considered counterproductive and that countries that have embraced globalization and open trade have grown much faster and helped the world’s poor improve their standards of living. Countries with political instability constrain their productivity. He says the culture of kleptocracy is extremely constraining Africa’s growth.
Pollution and climate change are also discussed with statistics that in richer countries whose per capita incomes rise to between $5000 and $8000, the pollution levels off and begins to fall. He feels human ingenuity, adaptability, and flexibility will provide solutions and that “scare scenarios about global warming and associated draconian policy prescriptions run a very high risk of the cure being worse than the disease.”
His “Nine Economic Lessons for a Polarized World” stress “Free markets are a force for good and have had a superb track record in unleashing human ingenuity… for productive use.” They are: “Embrace and trust markets, Remove distortions to economic incentives, Reduce concentration of economic and market power and the potential for theft from the public, Adopt growth-friendly policies, Accelerate economic integration with the rest of the world, Focus government programs on areas where they can be most beneficial and assist free-market forces without interfering with them, Help the disadvantaged without hurting the rest, Develop macroeconomic policies that reduce economic uncertainty and volatility, and Encourage and develop innovative financial markets that help growth while reducing risks of boom-bust cycles.” In most all economic endeavors, he feels market-based solutions are much superior to “command and control” legislation and cites those who advocate, use, or have used command and control as failures.
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