Focusing on ways that markets work with, rather than against, governments to enhance public welfare.
The optimal mix of market forces and government intervention to allocate resources is one of the longest-standing problems facing human civilization. At the theoretical extremes, resources in centrally planned economies are allocated by the government, while resources in capitalist economies are allocated by private markets. In practice, market forces and government interventions co-exist to allocate goods and services in a political environment with shifting pressures to give one approach more responsibility than the other.
Current public attitudes toward markets are at a low point in the wake of the Great Recession and the growth in income inequality that began in the 1970s. However, in this book, noted Brookings economist Clifford Winston argues that it is a serious mistake to overlook that markets will be a critical part of the solution to any public objective—whether it be to reduce inequality, stimulate long-term growth, slow climate change, or eliminate COVID 19. In Winston’s view, policymakers should be much more aware of the many ways that markets help government to achieve economic and social goals and the potential that markets have to provide greater assistance in achieving those goals.
Winston synthesizes the empirical evidence on the efficacy of markets in helping to protect consumers against anti-competitive behavior and when technology appears to prevent price competition; to enable individuals to make more informed decisions; and to reduce negative externalities, improve public production, and encourage innovations. Importantly, Winston presents evidence indicating how markets can also help to reduce poverty, promote fairness in labor markets, and provide merit goods. Winston subjects his assessment to a robustness test by explaining how market forces have helped to address the COVID-19 pandemic by, for example, finding new ways for people to work safely and providing incentives for pharmaceutical companies to develop safe and effective vaccines.
Winston takes a proactive approach in his conclusion by suggesting the formation of a major “Commission” composed of academics, policymakers, and businesspeople. Such a panel could explore how market forces could provide greater help to government to address economic and social problems and could provide specific recommendations to facilitate market solutions where appropriate.
Praise for Gaining Ground
“This book is a breath of fresh air in the current atmosphere in which reformers on both the left and right ignore the forces of markets. Winston convincingly explains that these reformers are mistaken. Instead, government and markets are complementary methods to be used together to achieve society’s goals. This is a must-read for current policymakers.”
—Dennis W. Carlton, The University of Chicago Booth School of Business
“We are in a moment in which the public has lost faith in both capitalism and economists—for many reasons. But whatever you think our public objectives should be—reducing inequity, engendering long-term growth, fighting climate change, fighting COVID-19—markets will be a critical part of the solution. Clifford Winston’s Gaining Ground is a panoramic book on the interplay between market forces and government that is essential to achieving these and other social goals.”
—Edward Glaeser, Fred and Eleanor Glimp Professor of Economics, Harvard University
“Clifford Winston makes a spirited yet nuanced case for enlisting market forces to achieve social goals. Winston buttresses his case with hundreds of examples, some anecdotal and some from scholarly research. Both policymakers and concerned citizens will find much of value in this volume.”
—Harvey Rosen, John L. Weinberg Professor of Economics and Business Policy Emeritus, Princeton University