Government's Place in the Market

by Eliot Spitzer

In his first book, the former New York governor and current CNN cohost offers a manifesto on the economy and the public interest. As New York State Attorney General from 1998 to 2006, Eliot Spitzer successfully pursued corporate crime, including stock price inflation, securities fraud, and predatory lending practices. Drawing on those experiences, in this book Spitzer considers when and how the government should intervene in the workings of the market. The 2009 American bank bailout, he argues, was the wrong it understandably turned government intervention into a flashpoint for public disgust because it socialized risk, privatized benefit, and left standing institutions too big to fail, incompetent regulators, and deficient corporate governance. That's unfortunate, because good regulatory policy, he claims, can make markets and firms work efficiently, equitably, and in service of fundamental public values. Spitzer lays out the right reasons for government intervention in the to guarantee transparency, to overcome market failures, and to guard our core values against the market's unfair biases such as racism. With specific proposals to serve those ends--from improving corporate governance to making firms responsible for their own risky behavior--he offers a much-needed blueprint for the proper role of government in the market. Finally, taking account of regulatory changes since the crash of 2008, he suggests how to rebuild public trust in government so real change is possible. Responses to Spitzer by Sarah Binder, Andrew Gelman, and John Sides, Dean Baker, and Robert Johnson, raise issues of politics, ideology, and policy.

Genres: Economics

83 pages, Hardcover

First published April 18, 2011

Reviews

[Harald · Rating 3 out of 5]

A very brief book arguing for government intervention to enforce market integrity, correct externalities, and defend core values. The background is the financial breakdown of 2008 which Stigler partly blames on the lack of government regulation and partly on the lack of implementation of existing legislation. The author and two fellow contributors point to the classic theories of Mancur Olson and E.O. Hirschman to explain the political hurdles that face reformers in this field.