Joe Stiglitz's Cognitive Dissonance

From Division of Labor.

A complimentary copy of Joe Stiglitz's "The Price of Inequality" recently appeared in my mailbox. I'm no big fan of Stiglitz's work, but in skimming the table of contents I noticed a chapter on rent-seeking and decided to read it.
On p. 45, Stiglitz writes:

Three factors contributed to the increased monopolization of markets. First, there was a battle over ideas about the role that government should take in ensuring competition. Chicago school economists (like Milton Friedman and George Stigler) who believe in free and unfettered markets argued that markets are naturally competitive ...

Just a few pages later (p.62) he writes:

In the Clinton administration, we tried to make the mining companies pay more for the resources they take out of public lands .... [The companies] argued that the policy would impeded growth. But the fact of the matter is that, with an auction, companies will bid to get the mining rights .... Modern auction theory has shown how changing the design of the auction can generate much more revenue for the government. These theories were tested out in the auction of spectrum used for telecommunications beginning in the 1990s ....

Wonder where Uncle Sam got the idea of auctioning off spectrum rights ... oh yeah, from one of those free market fundamentalist Chicago schoolers named Ronald Coase.
Like a blind squirrel finding a few acorns, Stiglitz's rent seeking chapter does hit a few worthy targets (import restrictions, ethanol, Wall St). However, in addition to the cognitive dissonance over the Chicago school and spectrum auctions, the chapter suffers from a macro case of cognitive dissonance in that Stiglitz advocates more government involvement while failing to realize that it is a large and active government that provides the rents he bemoans.