Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill)

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America was built on the premise that hard work would be financially rewarded, but unfortunately, more than 37 million people are part of the growing ranks of the "working poor": people who work two or three jobs yet are unable to pay their living expenses. What's wrong with all these people that makes them unable to achieve even a modest level of comfort in this Land of Opportunity where the streets are paved with gold? In my experience, it doesn't take a genius to realize that the working poor are a by-product of America's increasingly stratified socioeconomic structure that punishes the middle class and the working poor by unfairly elevating the wealth of the rich to rarified heights. But I'm not the only one who has noticed this as you'll discover when you read David Cay Johnston's new book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You With the Bill) (London: Portfolio; 2008).

Johnston opens his book by discussing how the pursuit of one's own self-interests can benefit all of a nation's citizens so long as these activities are limited by an invisible hand, as espoused by philosopher and father of capitalism, Adam Smith. The author points out that even though Smith was a capitalist, he frequently cautioned people about "the damage done when the government interferes in the market by guaranteeing profits or handing out gifts." The author then goes on to reveal how the American government is selling out its birthright by providing financial gifts to corporations and individuals who are rich enough to qualify for them. Unfortunately, everyone is forced to finance these gifts through their taxes. In this book, Johnston explores some of the more egregious examples of who and how these injustices have been perpetrated on the American public and how they are rending the social fabric of this nation.

All social relationships and interactions rely on a set of rules, and one of the functions of government is to write and enforce rules that regulate the economy so the "have-nots" are not unfairly victimized by the "haves and have-mores". This is done primarily through taxation, which -- ideally -- functions as a transfer of wealth from those who have more to those who have little. But unfortunately, during the past thirty years, American tax laws have been subtly rewritten by lawyers and lobbyists so that it is legal to either give away or sell public assets at bargain basement prices. Further, because the government itself is increasingly beholden to corporate interests and to the whims of the super-rich, it is abusing its constitutional power of eminent domain to seize private property so it can give it to someone else.

Predictably, those "someone elses" are either rich individuals, such as George W. Bush (chapter 7), Barron Hilton (Paris Hilton's grandfather; chapter 16) and the owners of professional sports teams (chapter 6), or rich corporations, such as Enron (chapter 18), Wal-Mart (chapter 9) and that predatory health insurance company, Maxicare (chapter 22). The author explores the details of how those with limited financial means who seek to improve their situation with a college education are victimized by loans that mysteriously charge inflated interest rates even though they are guaranteed by the government (chapter 14), how homeowner's title insurance has been corrupted into a costly and useless waste of money (chapter 13), and how home burglar alarm companies openly steal from the public to provide their services to the detriment of public safety (chapter 12). But this is not all; the author explains how, even though total government spending has not changed during the past 25 years or so, public tax monies have been increasingly funneled away from services that benefit all of us and into unfair subsidies destroys a free market economy and contributes to lower wages, unemployment, higher taxes, bankruptcy, crime.

Since I have been sued repeatedly (and unsuccessfully) these past two years for unpaid medical bills, I was particularly interested to read the author's explanations of how American medical care was transformed from a basic human right into an expensive profit-driven business that is just not available to everyone -- like me -- and how this limited access harms the public health by increasing disease and even leads to needless, preventable deaths (chapters 21 & 22).

In this eye-opening book, Johnston inspires outrage by explaining how GW Bush's "have more" pals manipulate and intimidate the government into providing them with a free lunch of millions and millions of dollars at tax-payer expense while denying help to the poorest and most vulnerable among us. Mercifully, after getting everyone's panties into a twist, the author concludes with a chapter that suggests several interesting remedies for this situation. In 28 sections (introduction, conclusion and 26 chapters), Johnston explains the ephemeral American tax code in an accessible way without causing your eyes to glaze over. In doing so, he also provides a worrying glimpse into the inner machinations of our government. I recommend that every American citizen reads this informative book and that every library in this country make at least one copy available to the public.

David Cay Johnston began his career at the San Jose Mercury in 1968. After working an investigative reporter at the Detroit Free Press between 1973 and 1976, he went to the Los Angeles Times where he worked as a reporter until he was hired by The Philadelphia Inquirer in 1988. Johnston joined The New York Times in February 1995 where he was an investigative journalist focusing on the subject of taxation. Johnston was a finalist for the 2000 and 2003 Pulitzer Prize, which he won in 2001 for investigating our tax system. He now works as an independent journalist. He is married with eight children and five grandchildren, and lives with his wife in Brighton, NY.

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America was built on the premise that hard work would be financially rewarded

It was? I guess nobody thought to mention that to either the Pilgrim Fathers or all those slave-owners... Although admittedly you don't say who would be financially rewarded, or for whose work.

I think it can be fairly argued that America was buil on that premise, not that it was founded on that premise. I think it might also be fairly argued that the premise was more honored in the breach than in the observance. The US government has been giving away public resources for a long, long time in the name of economic growth. And it extends from the very top of federal government to the very bottom of your local city or county government. See, for example, the tendency of local governments to buy from or give contracts to local companies even if they have higher prices than non-locals. It's done in the name of keeping the money at home, but in reality it's because all the local officials go to the same club or church as the local business owner. Or they are related. Or they are one and the same.

This is done primarily through taxation, which -- ideally -- functions as a transfer of wealth from those who have more to those who have little.

It's a small thing, but this statement really bothers me. As I understand it, the main function of taxation at all levels is to pay for services essential to the entire community: police, fire, education, national defense, etc. Wealth redistribution arises indirectly as those with a greater capacity to pay rightly shoulder more of the burden, and services for all are proportionately more helpful to those with less ability to do without them. It's a side effect, not a goal or a benefit. Even in obviously redistributive programs such as welfare the purpose is to assist those in active danger because of their poverty, not to simply push everyone toward a median.

That's probably an over-reaction to a single line, but "wealth redistribution" is a common Republican scare tactic and I think it's worth making the distinction between that and good government. Government taxes to make everyone's lives better, everyone paying according to their ability, not to "punish the rich".

First, thank you for the thorough and thoughtful review of my latest book.

Second, I marvel at how Internet discussions tend to veer off on tangents, sort of watching the hole instead of the doughnut. (At least this one did not devolve into nasty exchanges, the social distance of the keyboard often breaking down even the most minimal notions of civility.) The followups here are noticeably on point.

Finally, the key point made in both Free Lunch (and in Perfectly Legal, my 2004 book), is that the official government records show that American governments are redistributing incomes and wealth UP. The record shows that government now takes from those with less to give to those at the very top. Unfortunately very few journalists study the record and, instead, report on what politicians say.

Thanks for an interesting book review. I will buy Johnston's books, read them, then donate them to my local library, in the hopes that some people will wake up to what is really happening in this country. Of course, you do realize that some economists and economic historians argue that the concentration of wealth in a few hands may be necessary for the great leaps which occur in the advancement of science and technology. Whether or not that is true is another debate entirely from this question that Johnston poses about what the current facts of American life actually are and what they have been for over 200 years. Have not the wealthy men always run our governments for their own interests?

By Elizabeth (not verified) on 15 May 2008 #permalink