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Friday, December 7, 2007

David Cay Johnston's New Book, Free Lunch

Free_lunchDavid Cay Johnston's next book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill), will be released on December 27, 2007.  Here is the publisher's description:

How does a strong and growing economy lend itself to job uncertainty, debt, bankruptcy, and economic fear for a vast number of Americans? Free Lunch provides answers to this great economic mystery of our time, revealing how today’s government policies and spending reach deep into the wallets of the many for the benefit of the wealthy few.

Johnston cuts through the official version of events and shows how, under the guise of deregulation, a whole new set of regulations quietly went into effect—regulations that thwart competition, depress wages, and reward misconduct. From how George W. Bush got rich off a tax increase to a $100 million taxpayer gift to Warren Buffett, Johnston puts a face on all of the dirty little tricks that business and government pull. A lot of people appear to be getting free lunches—but of course there’s no such thing as a free lunch, and someone (you, the taxpayer) is picking up the bill.

Johnston’s many revelations include:

  • How we ended up with the most expensive yet inefficient health-care system in the world
  • How homeowners’ title insurance became a costly, deceitful, yet almost invisible oligopoly
  • How our government gives hidden subsidies for posh golf courses
  • How Paris Hilton’s grandfather schemed to retake the family fortune from a charity for poor children
  • How the Yankees and Mets owners will collect more than $1.3 billion in public funds

In these instances and many more, Free Lunch shows how the lobbyists and lawyers representing the most powerful 0.1% of Americans manipulated our government at the expense of the other 99.9%. With his extraordinary reporting, vivid stories, and sharp analysis, Johnston reveals the forces that shape our everyday economic lives—and shows us how we can finally make things better.

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Comments

Thank you! Thank you! Thank you! I just heard a fascinating interview on NPR and now I understand! A small town in our county recently turned down a Cabella's location much to the dismay of many of the residents. Now I see why! This has made me realize that each of us is responsible for making sure where our money goes, even if it is in the form of sales tax. I am making swift changes in the stores I do business with. And, I am going to tell everyone I know. I can't wait to read the entire book!

Posted by: Cheryl Gray | Jan 3, 2008 9:25:12 AM

Can Mr. Johnson run for President??? Please???

Posted by: gary wilson | Jan 3, 2008 4:04:15 PM

I heard him on public radio today and it reaffirmed what I already knew. The whole US should know about this and stamp it out with lawsuits against he govt. officials that allow it and those that take this money. The money is taxable to the IRS. Do they report it?

Posted by: mj | Jan 3, 2008 7:04:25 PM

Yes I also listened to Mr Johnston on the radio. I am ordering the book , and passing this book to everyone I know. Hats off to your book.

Posted by: darleen | Jan 8, 2008 8:42:54 AM

If we had this book in 2000, we could have known in detail what a sleazy crook we were electing; but better late than never...

Posted by: DRAGONSLAYER | Jan 19, 2008 2:09:18 AM

I just heard of your book on " The View" Free Lunch and I am going out to buy it as I want to be more informed about how the government is always for the rich.The poor just gets poorer as we all well know. We as taxpayers are the heartbeat of American, yet never get a break on anything.

Posted by: katherine | Jun 2, 2008 9:11:28 AM

I'm reading "Free Lunch" now, and it is a good book. It's easy to read, and more importantly, it does expose great waste in our system. I have some concerns about his rhetorical approach, though, and the real aims of his work.

Mr. Johnston makes clear that it's the replacement of pro-middle class rules with pro-elite rules that is the heart of the problem. The entire point of the book is to show how the rules make uneven the playing field. I think Mr. Johnston fails to draw a strong enough line between replacing some rules with others, and deregulation, though. His critiques often target deregulation as failed policy and uses the largesse of the last 30 years to bolster his argument. However, less regulation is not to blame, shifting regulation to less efficient ends is. In other words, there has been no deregulation.

I think Mr. Johnston would earnestly agree with that statement, but his writing on the lack of deregulation is unclear. I think Johnston would have been better served, rhetorically, if he had focused clearly on the fact that our system is still excessively regulated.

Along the same lines, Mr. Johnston failed to talk about how we got here. He starts with deregulation and goes from there, without any context. Why did we, as a nation, believe that deregulation was needed? Were we over regulated in the 1960s and 1970s? If not, why were the likes of Reagan able to convince us that we were?

Mr. Johnston does go in to some basis-level economics to set the stage for some explanations of wage and stock arbitrage. However, he ignores what I would call the larger issue of the expansion of the money supply brought on by Nixon's 1973 decision to "close the gold window". Without the hugely inflated M3 money supply, all of these giveaways would be impossible, as would the level of debt and trade imbalances that our nations currently nurtures.

Johnston's lack of context, and rather simplistic analysis, leads me to believe that he's more interested in setting the stage for a Robin Hood like movement of robbing the rich to give to the poor (Johnston would say, of course, taking back from the rich to give the poor what was theirs in the first place) than he is in really explaining the finer points of wealth centralization.

And it’s too bad. If Johnston had accurately expanded his explanations to include are failed policies on money, then he would have created for himself better opportunities to describe real fixes. Instead, he’s been left with suggestions that the people pay for the travel and leisure of Senators who make $150,000 per year.

Posted by: Don Carroll | Jun 9, 2008 8:45:25 AM

If I could I'd also add, in response to Dragonslayer, that while we may find George Bush's enrichment through the Ranger's deal distasteful, it certainly doesn't make him a crook. In our system, it pays healthily to know the rules. Bush, long critiqued as a bumbling fool, knew the rules and used them to his (and his fellow investors') benefit.

I don't think it's too helpful to call people crooks when they've not even approached breaking the law. Do we also call people crooks when they accept foodstamps, or get the government to guarantee their student loans, or mortgages? What about SBA loans, which have made many people rich while shifting the real risk of business for both the business owner and his lender, onto the taxpayers?

What's wrong with this country that everyone we don't like must be evil, idiotic, or criminal? If you don't like the rules, vote for someone to change them -- the Democrats have had since 2006 to make systemic changes, what have they done? What have they even attempted?

Posted by: Don | Jun 10, 2008 7:36:50 AM

Dear Sir,
My wife and I just finished reading "Free
Lunch." It should be compulsory reading
for all elected officials. It covers
everything from hedge funds to derivatives
and the role of lobbyists starting from
federal to state to local governments.
The most revealing part though, I thought,
was the role of lawyers. They now have
Limited Liability Partnerships. Like you
said, in the old days, they used to police
thenselves and they should return to those
ways. With Limited Liability Partnership,
in my way of thinking, they more or less
develop the role of a holding company and
if that goes bad rather than correcting
the problem, one individual takes the fall
and it is business as usual. Unless this
problem is corrected, I think our whole
democracy, in this country, is doomed.
We used to be a creditor nation where now
we are a creditor nation and our dollar is
going down to the point where no one
respects us as a government any more. We
are just a country of a bunch of hedge fund
dealers selling from offshore to evade the
federal income tax and selling derivatives
that even the IRS hasn't decided on
because of the vast amount of lobbying to
not have any regulations on them. You
can easily understand why Senator Obama
wants to tax them and then the people in
Congress will have to decide if derivatives
are an income or an expense. The Blue Dog
Democrats in the House are behind Senator
Obama and he has to get the Senate to go
along with him which will be a real
challenge on his part considering all the
money the hedge fund dealers have spent in
Washington.
Yours truly, LaVern Isely

Posted by: LaVern Isely | Jun 11, 2008 12:02:18 PM