Philippon writes explicitly that by “free markets,” he means “markets are free when they are not subject to arbitrary political interference and when incumbents are not artificially protected from competitive new entrants” (p. Philippon is a self-described “free market liberal” who approaches his subject with a set of arguments and tools that are straight out of the neoclassical mainstream. He also looks at the data to see how “new” and “unprecedented” firms like Google, Apple, Facebook, Amazon, and Microsoft are, and he finds that while they definitely represent important new technologies, they aren’t really that different from other superstar firms of the past, relative to the rest of the economy. He goes industry-by-industry to explain where and how European markets have become freer than American markets. Philippon makes a convincing case that we would do well to revise our belief that the American economy is a free market while European economies are not. As he explains with respect to occupational licensing, the United States and Europe are moving in opposite directions, with the United States moving toward more tightly controlled labor markets and Europe moving toward freer labor markets (p. They tell the same story: European markets have gotten freer while American markets have gotten less free. He defends his thesis by exploring numerous data sources, including the Mercatus Center’s database 4 working to quantify the intensity of regulation in the United States (pp.
#Economix book review plus#
In fifteen clearly written, easy-to-read chapters plus an introduction, a conclusion, and a technical appendix, Philippon shows why some of my Danish audiences should have stifled their laughter when I described their country as a free-market paradise compared to the United States. “Philippon makes a convincing case that we would do well to revise our belief that the American economy is a free market while European economies are not.” I was surprised when I was doing some research for the talk and learned that according to OECD data, Danish retail shoulders a smaller regulatory burden than American retail even though Danish land use laws make it so that grocery stores there are inefficiently small and Danish consumers pay higher prices. One of my lectures applied some of the insights Deirdre McCloskey and I explored in our 2020 book 2 to the Danish retail sector. In August, I visited the Center for Political Studies in Copenhagen, Denmark for a week and gave a few lectures. It resonated with some of my recent experiences. Throughout the book, New York University economist Thomas Philippon explains why the United States is no longer the seat of dynamic, innovative capitalism that it once was. As a result, Europeans pay less and get more in a lot of industries, like telecommunications and air travel.
T he Great Reversal defends a provocative and surprising thesis: the United States has given up on free markets while Europe has embraced them.
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