Reagan came to Washington with plenty of vision. As these books make plain, however, he was unwilling to make the trade-offs necessary to realize many of his goals. Maybe the next President will be better suited for the job.
WHAT REAGAN WROUGHT
A reader's guide to Reaganomics
Among the new books on Reagan's legacy are these three from well-known economists:
Reaganomics: An Insider's Account of the Policies and the People, by William A. Niskanen (Oxford University Press, 1988). Niskanen served on Reagan's Council of Economic Advisers (CEA) from 1981 to 1985, and his book is the quintessential inside-the-Beltway view of recent economic history. Nothing about Rust Belts here: if it didn't happen in Washington it didn't happen. That said, Niskanen provides us with a not-too-partisan conservative view of Reagan's successes (e.g., cutting inflation) and failures (e.g., imposing "more new restraints on [international] trade than any administration since Hoover'). An occasional personal shot ("Ed Meese was the most conspicuously mediocre man in American public life') enlivens the book.
Day of Reckoning: The Consequences of American Policy Under Reagan and After, by Benjamin M. Friedman (Random House, 1988). Harvard professor Friedman has collected prepublication kudos from a host of Nobel-laureate economists. And, yes, his single-minded focus on the causes and effects of swelling deficits is both powerful and unsettling. Still, there are elements of the book that are hard to swallow. One is the relentlessly preachy tone, with scriptural headnotes to each chapter; from Friedman's moral fervor you'd think we had turned into a nation of child molesters rather than a nation of spendthrifts. Then too, these Harvard professors should get out more. At one point he tells us, "We are not borrowing against the future earning power of our new industries, for there are none'; later, he says, "There is little basis for thinking of the 1980s as an especially fertile period for business startups." Where has this man been?
Rendezvous with Reality: The American Economy After Reagan, by Murray Weidenbaum (Basic Books, 1988). Weidenbaum lasted on the CEA only until 1982, when he returned to Washington University in St. Louis. His distance from the corridors of power makes for a wryer view of public policy than you'll find among denizens of the capital. Example: Weidenbaum takes us on a quick tour through the defense budget, and comes up with several serious suggestions for cuts. But who else would see fit to quote from the Pentagon's 14 pages of specifications for fruitcake? ("The fruitcake batter shall consist of equal parts by weight of cake batter specified in Table I, and fruit and nut blend specified in Table II, blended in such manner as to meet requirements of 3.5.')
BOOK OF THE MONTH
Gloom and doom from the left
The Great U-Turn: Corporate Restructuring and the Polarizing of America, by Bennett Harrison and Barry Bluestone (Basic Books, 1988). Harrison (of MIT) and Bluestone (of the University of Massachusetts, Boston) care about Reagan's deficits for only one reason. By stimulating economic growth, the authors say, deficit spending has helped mask the American economy's longer-term structural problems. Those problems: a declining manufacturing sector, declining real wages, and growing inequality.
The two authors have been generating controversy over such matters ever since the 1982 publication of their book The Deindustrialization of America. This time around they elaborate their arguments, answer their critics, and assault new ground. The American economy creates jobs? Sure, say the authors -- part-time, low-wage jobs. "Corporate restructuring, aided and abetted by permissive government policy, is producing a startling deterioration in the quality of . . . jobs and consequently in the standard of living of a growing proportion of our citizens.'
Polemicists that they are, Harrison and Bluestone have their blind spots. In their view, America's lack of competitiveness is due entirely to corporate mismanagement, not at all to union wage levels or work rules. Downsizing and outsourcing are devious corporate maneuvers aimed at "zapping labor" rather than rational managerial responses to a changing world. (At one point they actually complain that Europeans are now "succumbing to the lure of the flexible workplace," as if flexibility were something intrinsically evil.) Nevertheless, their book is a provocative antidote, both to mindless business boosterism and to the Washington-oriented mentality of Reagan's other critics. What's been happening to the economy, Harrison and Bluestone show, has roots far deeper than economic policy -- and has costs as well as benefits for the entire country.
ON DEFICITS AND INTEREST RATES
Or, how many economists does it take to screw in a light bulb?
"There was (and is) surprisingly little evidence that government borrowing has a substantial effect on interest rates."
-- William A. Niskanen
"As a result of the sharp rise in borrowing by the federal government, the real rate of interest . . . rose sharply."
-- Murray Weidenbaum
"Our new fiscal policy, generating ever larger deficits even in a fully employed economy, [has] long since replaced tight monetary policy as the reason for high real interest rates.'
-- Benjamin M. Friedman
"The large and apparently intractable budget deficits do have real and deleterious effects on the economy. But the production of high interest rates is not one of them.'
-- Bennett Harrison and Barry Bluestone
"If all economists were laid end to end, they would not reach a conclusion." -- attributed to George Bernard Shaw
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