Sunday, July 14, 2013

The Price of Everything

The Price of Everything
© 2009 Russell D. Roberts
224 pages

The Price of Everything is an economics novel about the virtues of prices and markets, explaining how they work to maximize efficiency and spread goods out among those who need them and are willing to pay. Like The Invisible Heart, it is a policy treatise in novel form. There, an economics professor fell in love with a liberal English professor and slowly worked his dark-side libertarian magic on her. Here, another economics professor, this one the provost of a university, takes a passionate youth leader with a social-justice agenda under her wing.  Roberts is harder on his ideological opponents here than in The Invisible Heart, possibly there because his doppelganger there was trying to seduce his opponent, while his professor is only trying to turn her target into the man who will bring the free market to Cuba.

The kickoff issue in The Price of Everything is a minor earthquake which causes a run on supply stores. Home Depot and like stores quickly sell out, but Big Box, a megacorporation which makes Wal-Mart look like a mom and pop operation, doubles its prices to take advantage of the uptick in demand. This causes outrage among customers, who are catalyzed by the presence of a pregnant woman who is unable to afford her groceries and led by young Ramon Fernandez, who condemns the store in a speech and then takes up an offering to allow the lady to meet her need.  Having discovered a knack for impassioned rabble-rousing, Fernandez decides to hold a rally on his university campus, protesting the fact that a new building is named after the Big Box corporation, who are donors. That attracts the attention of the professor, who chatting with Fernandez under the pretense of grooming him to be a more effective youth leader, engages him in questions and discussion.In reality,  she's ever-so-slightly steering him toward her point of view. Look at it this way, she says:  before the earthquake, both Home Depot and Big Box had the supplies on hand. After the earthquake, Home Depot maintained its price (fair to the consumer) and Big Box doubled its own.  But from whom did the lady find her supplies? Big Box, because it ensured that the only people taking the supplies were those for whom they were most important.  Had Big Box maintained its normal prices, all the supplies might have been bought up by whoever happened by first and decided to grab some extras. Home Depot's approach might be 'nicer', but  who served the lady's needs? (Well, the crowd did, but that's not the point she wanted to make.)

Roberts' arguments make a horrible kind of sense, though it goes against the grain to hear a defense for 'price gouging'.  More palatable is his attempt to convey the 'genius' of prices as regulating agents, ensuring that everyone looking for lead (his example of choice) gets enough, but not too much, the balancing being set by competition between firms trying to acquire supplies. This argument is especially convincing because the counter is so weak: if markets don't set prices, what will? Who can acquire and process all of the information needed to decide whose needs are greater than anyone else's?  (Maybe Google and the NSA, if they joined forces...) And by what standard are they using? Who plans for whom?

The Price of Everything is not quite as potent as The Invisible Heart, but it's still a fun little way to digest economic arguments from an author who is passionate, but not obnoxious; bold, but altogether pleasant.

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