Dysfunctions of the Welfare State

This timely analysis of today's economic realities relates the headlines to the long term causes from which they spring. Why did we have a worldwide financial crisis in 2008? Is stimulus the answer, and what are its risks and potential returns? Why are our investments so unprofitable? Why are our citizens struggling to find work? Why do we repeatedly confuse effort with results? The author finds the answers to these questions in the dysfunctions of the welfare state. Economics is the science of the creation and exchange of value, but Gross Domestic Product (GDP) confuses value with the creation and exchange of "goods and services." Along the way, GDP has become a measure not of value created, but of effort expended and of costs incurred. This confusion has become the cornerstone of policy manipulation of "the economy," because it is very easy to incur costs, though not so easy to create value. Policymakers are not eager to correct this discrepancy because it is easier to manufacture costs through brute force than to produce results that have real value. This book pins down the major contributors to these distortions in a number of specific areas, including education, science and engineering, hospitals and other medical facilities, the public utility transmission grids, and in the trade deficit. It also pursues the distortions caused by short-sighted public policy in the capital markets. The book concludes with a discussion of market efficiency and inefficiency leading to the conclusion that policy intervention into the capital markets reduces their capacity to allocate capital productively. The author addresses this broad topic from the unique perspective of someone who has contributed both to the theoretical analysis and to the actual practice of markets.

Table of Contents:
Preface to the Transaction Edition Preface to the Second Edition Preface Part 1. The Misallocation of Effort 1 On Work 2 Cheap Labor 3 Education Today 4 An Application: Begging for Poverty 5 Cheap Capital 6 Subsidies as Far as the Eye Can See 7 Where Are the Economic Assets for Tomorrow? Part 2. Credit, Inflation, and the Crash of 2008 8 Trust, Risk, and Regulation 9 Thoughts on Money Supply and Inflation: Money Ssupply, the Extra "S" Is for Extra Supply 10 More on Money Supply: The Last Two Years 11 Crash and Aftermath: The Crash of 2008 12 The Cost of Living and Inflation Reconsidered 13 Fallacies in the Measurement of Inflation 14 Money, Gold, and Inflation Part 3. Proposals and Reforms 15 A Proposal on Tax Policy 16 Redefining Shares: A Plan to Return Corporate Control to the Owners 17 Unemployment and Blame 18 Do Not Confuse Effort Expended with Results Obtained Part 4. Implications for Securities and Capital Markets 19 Risk Management in the Wholesale Power Market: The California Energy Crisis 20 Two Essays on Financial and Commodity Markets Index

About the Author :
Joel Clarke Gibbons is president of Logistic Research and Trading Company. He has also been a lecturer at the Stuart School of Economics, the University of Chicago, and visiting professor at the School of Public and Environmental Affairs, Indiana University. His experience includes work in energy economics and hospital finance, investment strategist and bond trader, financial engineer and professor of mathematical finance. Gibbons is the author of numerous books including Rethinking the Headlines and Man and God in the World.

Review :
-Gibbons brings together a keen intellect and practical financial experience to bring unique insights into how the economy and business works. Free of jargon, readers will find this book thought-provoking and cause them to look beyond the soundbites to the reality of the contemporary American economy, its problems, and formidable strengths.- --Sam Gregg, Acton Institute -A book of great wisdom and practical challenge..(it) talks about the wealth of nations not just in terms of material accumulations but also in terms of the moral values of a nation.... From a dozen books I have read the last year on economics, this is clearly my favorite.- --A. G. Malliaris, Loyola University, Chicago "Gibbons brings together a keen intellect and practical financial experience to bring unique insights into how the economy and business works. Free of jargon, readers will find this book thought-provoking and cause them to look beyond the soundbites to the reality of the contemporary American economy, its problems, and formidable strengths." --Sam Gregg, Acton Institute "A book of great wisdom and practical challenge..(it) talks about the wealth of nations not just in terms of material accumulations but also in terms of the moral values of a nation.... From a dozen books I have read the last year on economics, this is clearly my favorite." --A. G. Malliaris, Loyola University, Chicago "Gibbons brings together a keen intellect and practical financial experience to bring unique insights into how the economy and business works. Free of jargon, readers will find this book thought-provoking and cause them to look beyond the soundbites to the reality of the contemporary American economy, its problems, and formidable strengths." --Sam Gregg, Acton Institute "A book of great wisdom and practical challenge..(it) talks about the wealth of nations not just in terms of material accumulations but also in terms of the moral values of a nation.... From a dozen books I have read the last year on economics, this is clearly my favorite." --A. G. Malliaris, Loyola University, Chicago "Gibbons brings together a keen intellect and practical financial experience to bring unique insights into how the economy and business works. Free of jargon, readers will find this book thought-provoking and cause them to look beyond the soundbites to the reality of the contemporary American economy, its problems, and formidable strengths." --Sam Gregg, Acton Institute "A book of great wisdom and practical challenge..(it) talks about the wealth of nations not just in terms of material accumulations but also in terms of the moral values of a nation.... From a dozen books I have read the last year on economics, this is clearly my favorite." --A. G. Malliaris, Loyola University, Chicago