Everything for Sale: The Virtues and Limits of Markets
By Robert Kuttner
Knopf; 410 pages; $27.50
When he attempts to lampoon what he sees as a silly orthodoxy, he often just gets it wrong. Satirizing the efficiency of financial markets, he writes: "The market, again by definition, had to be right. If loans to ski resorts, fast-food chains, and the Bolivian government paid a slightly higher return than loans to a local small business or housing complex, then they had to be the more deserving use of capital." As any semiconscious economics student could tell you, a higher rate would not signal that the loan in question is more deserving than another, but rather, the opposite: that investors are being compensated for extra risk, leaving the marginal lender indifferent among the alternatives.
No doubt, to Kuttner, that account is just as stupid as the one he mocks. But if he expects to have any credibility, he should understand the difference between the two versions. Kuttner plainly sees himself as a heretic. But a heretic comprehends the ideas he is attacking. Someone who writes book after book to refute what he doesn't understand is just a crank.