The title of Tom Slee's book, No One Makes You Shop at Wal-Mart, is ironic; Slee's goal is to show why this response to the success of Wal-Mart is inadequate. More generally, Slee attacks MarketThink:
Hmmm...sound familiar? (The links, also ironic, are mine not Slee's.) Let the irony continue, I recommend No One Makes You Shop at Wal-Mart.
Slee's book is the best of the anti-market books: it is well written, serious, and knowledgeable about economics. In fact, I regard Slee's book as an excellent primer on asymmetric information, free riding, externalities, herding, coordination problems and identity - Economics 301 for all those budding young Ezra Klein's of the world who think that Economics 101 isn't quite right.
Here is one bit. Early on Slee makes a good point about preferences and outcomes:
The prisoner's dilemma shows how, as soon as one person's choice alters the outcome for another person...choices do not reveal preferences...instead of thinking about choices as revealing preferences, it pays to think of choices as 'replies' to the actions or likely actions of others. The best choice you can make is the best reply to the likely actions of others.
Later, he drives the point home with a nice example:
Faced with the observation that few children walk to school anymore, we commonly hear that this tendency represents our preferences: that "people won't walk" anymore. But this is oversimplified. What we are seeing is one equilibrium among many, and perhaps not the best one. There is an equilibrium in which no one wants their children to walk along empty streets, and so no children walk, but there is another equilibrium in which many children enjoy walking with groups of other children, and parents feel safe about their children because there is safety in numbers on the busy sidewalks.
...Too many cities have concluded that empty sidewalks are a result of our preferences...but once a city takes it as a given that most children will be driven to school, there is no need for the city to even build sidewalks in new subdivisions, and there is more temptation to build fewer, bigger schools rather than more, smaller, easily accessible schools. With these decisions, the empty-sidewalks equilibrium becomes even more entrenched: we are trapped in an outcome that was the result of individual choices, but that may not represent our true preferences.
Naturally, I have some criticisms which I will save for the extension.
In increasing order of seriousness.
As noted, the heart of the book is a well-written primer on let’s call it new economics. As such, this book would make a good supplement to an advanced undergraduate class. But the activism and attacks on MarketThink are occasionally distracting. Chapter 1, for example, opens with a
denunciation of inequality. Nothing wrong with that but Slee doesn’t even attempt to show that there is any
connection between rising inequality and the failure of MarketThink theories. He just lumps things he doesn’t like into one pile. If there were no asymmetric information, no
herding, no coordination problems and so forth I guarantee that there would
still be plenty of inequality.
For the most part, Slee illustrates the new economics with insightful, interesting and often new examples. But there are clunkers. I almost threw the book at the wall when he started talking about QWERTY. Surely, Slee knows that this worn-out example is a joke? The supposed superiority of the DVORAK keyboard was shown in studies conducted by … Dvorak. See here. It’s especially annoying that Slee did not reference, Winners, Losers & Microsoft.
As primer, it’s fine to illustrate with examples and move on but as an attack on markets one expects a balanced consideration of opposing theories. For example, Slee looks at beer micro-breweries vs. mass brewers arguing that we are currently stuck in the bad mass-equilibrium because micro-breweries rely on word-of-mouth but the institutions which sustain the word-of-mouth equilibrium only work when there are already lots of micro-breweries about which one can talk. Nice, but here is an alternative theory. Economies of scale made mass produced beer cheaper and when push came to shove consumers chose the cheaper good product over the more expensive but slightly better product (I don’t eat at 5 star restaurants every night). New technologies, however, have made micro-brewing more economic and as they have done so we are moving to the mass-customization world that Slee prefers. Consumers have gotten the best of all worlds – given scarcity – in both time frames. The beer activists in England that Slee likes moved the process along but in the direction that it was already going.
There is no comparative analysis in the book at all. No discussion, for example, of how free riding, asymmetric information, herding etc. distorts government choice. Also, no appreciation that what some of us MarketThink people really advocate is civil society which includes non-profits and voluntary collective action of all kinds. And, no we are not all corporate shills (p. 106).
It’s true that outcomes do not always illustrate preferences but often they do. Maybe people really do not want to walk to school. It’s subtle but Tom seems all too eager to call in the government to force us into the better equilibrium. I worry when people start talking about how government can help us to express our true preferences. Isn’t this what dictators always say? True freedom is oppression.
The chapter on power is terrible, I did throw the book against the wall. Perhaps in order to prepare us to welcome government as the deliverer of our true preferences, Slee wants to diminish the distinction between liberty and coercion. But a true liberal should never write things like this:
…the formal structure of democracy and free markets is not enough to rule out exploitation and plunder – characteristics usually associated with repressive regimes.
If Tom visits GMU (I happen to know he reads MR) he should watch out because I shall kick him in the shins stating, "I refute you thus."
More seriously, repressive governments around the world threaten, rob, torture and murder with impunity. Courageous individuals have died trying to escape such regimes while others have died fighting for their rights. No matter how great are differences in wealth, it is morally wrong to equate what goes on in repressive regimes with capitalist acts between consenting adults.