MARKETCRAFTERS

An economic exploration of bringing public policy to bear on the market.

It’s received wisdom among libertarians that the market is best left alone to regulate itself. Writes Facebook cofounder Hughes, this is mere dogma: It’s not sheer entrepreneurial genius that shapes American capitalism, but a careful leveraging of the private marketplace with fiscal policy that serves the public interest by both doing well and doing good. Hughes dubs this employment of the tools of the state to economic ends “marketcraft.” As he notes, it’s nothing new: Nearly 40% of our economic output today is in sectors such as health, banking and finance, and transportation, all heavily administered and managed by state regulation. Among his subject case studies are Texas businessman Jesse Jones, who urged Franklin Roosevelt to create a financial institution “able to extend emergency credit to businesses teetering on the brink of bankruptcy,” which eventually resulted in the Reconstruction Finance Corporation, in time the prime funder of the World War II defense industry through investments that “showed that it could build markets, setting the stage for their dramatic postwar expansion.” The RFC also helped farmers negotiate the Depression by setting both floor and ceiling prices for agricultural commodities, and it begat Fannie Mae, helping fund housing. Different actors, largely labor unions, helped establish a marketplace for health care in the 1950s, activism that eventually resulted in Medicare—though, owing to congressional inertia, it was a failure on a larger scale, resulting in the fragmented system we have today. Writing in clear and nontechnical language, Hughes proceeds through other case studies—the Federal Trade Commission as a check on corporate power, for instance—to conclude that there are now countless opportunities for similar public and private sector interventions, especially to “lower the cost of living for American households.”

A lucid refutation of libertarian economics in the service of the public interest.