Presidential Economics: The Making of Economic Policy from Roosevelt to Reagan and Beyond

...often misrepresented scientific evidence...

...Though he has often been highly critical of Ronald Reagan, he has not gone over to the enemy camp...

...economics with considerably more clarity than most economists, which makes his book accessible to any interested layman...

...That is one of the reasons Presidential Economics comes as a surprise...

...Fortunately, the public developed some cynicism and revolted against the idea that everything one liked caused cancer...

...Unlike his other books, Civil Rights has a personal, at times angry edge...

...No doubt there will continue to be those who say such remarkable things as Joseph Rauh, the veteran civil rights lawyer, did last year: "Cuts in food stamps [are] a civil rights issue...

...Reagan, by contrast, gets 71 pages...

...The decision last May by the chemical companies involved to settle the massive Agent Orange case rather than fight it out in court reflects a probably realistic estimate of how little chance scientific truth has in a lay forum these days...

...Miss Efron does two things superbly well...

...As Paul Craig Roberts makes clear in his recent book, The Supply-Side Revolution, ' the forecasts of a balanced budget by 1984 were 36 THE AMERICAN SPECTATOR JULY 1984 based not on Lafferite fantasies but on spending cuts that, it turned out, couldn't be won from Congress...

...Carried to its logical extreme, this alleged "prudence" against cancer risks sought to ban from the environment everything that might possibly cause cancer...

...But it is a resolute layman who will slog through it all...

...Meanwhile, there is a growing awareness among minority intellectuals that not every issue facing minorities can be explained by discrimination and thus reduced to a matter of civil rights, or resolved by government action...

...Of the latter, Stein says that Nixon had little interest in economics and "did not come into office with great zeal to reduce either the expenditure or the revenue side of the budget_9 He did not think that the country was suffering from excesses on either side...

...Someone earning $120,000 a year who gets a 30 percent cut in his marginal rate, Stein figures, would have to work 28.6 percent more hours to prevent revenues from dropping, which is plainly beyond possibility...

...The astonished man remonstrated, "That has nothing to do with you...

...An order has been issued that all camels must leave town by noon or else face summary execution...

...Some of the author's recollections of his government service are illuminating...

...When he is merely thrashing Arthur Laffer and Jude Wanniski--fat though hardly worthy targets--he is on solid enough ground...

...When he turns his attention to more worthy targets, as in a recent attack on Walter Mondale in the New York Times, he makes a persuasive de facto case for re-electing Reagan...

...PRESIDENTIAL ECONOMICS: THE MAKING OF ECONOMIC POLICY FROM ROOSEVELT TO REAGAN AND BEYOND Herbert Stein/Simon and Schuster/S16.95 Stephen Chapman D e s p i t e a long career as one of the nation's most prominent conservative economists, Herbert Stein is best known today as an opponent of the economic policies of the most conservative President since Calvin Coolidge...

...Any reader who wants a compact overview of the important economic events of the last halfcentury, according to the consensus interpretation of mainstream economics, will find it here...

...Only true aficionados will remain alert through long sections on such matters as the arcana of budget projections...

...If fully successful, this campaign--which brought large numbers of chemicals under suspicion-could easily have crippled American industry and caused numerous essential substances to be declared illegal...

...Perhaps more important, he was "impatient with the dull, pedestrian and painful economics of conventional conservatism_9 He called that the economics of three yards and a cloud of dust, whereas he yearned for the long bomb...

...From Stein's analysis, the reader would never get a clue how Reagan's tax cuts would, as it turned out, actually raise receipts in the upper brackets, rather than reducing them as expected...

...Should civil rights mean no distinctions on the basis of race, as Sowell reminds us the idea originally meant, or should it mean the use of race " t o get beyond racism...

...Intentionally or not, Stein's account of the imposition of controls casts the author in an unflattering light_9 The meeting at Camp David from August 13 to 15 of 1971, he says, was "one of the most exciting and dramatic events in the history of economic policy...

...His infatuation with John Connally, who became Treasury Secretary in 1970 and who was for any policy as long as it was bold and dramatic, made controls almost inevitable_9 Other insidious influences were at work, and not only on Nixon...

...Miss Efron approvingly cites a leading regulatory scientist in EPA who wrote in early 1983 that the public debate about the Reagan Administration's environmental policy missed the point...

...Puckrein writes frankly that many of the problems facing blacks today the growing number of female-headed households, teenage pregnancy, high black youth crime rates, drug abuse-cannot be "addressed by federal regulation or resolved by the tactics employed during the civil-rights era...

...The reply came immediately, "Yes, but I can't prove I'm not, and neither can you...

...In the end, though, Stein concedes much of the case made by intelligent supply-side economists--the importance of stable monetary policy, the obsolescence of the Phillips curve, the futility of "industrial policy," and-yes--the serious harm done by high marginal tax rates in the upper brackets...

...The brainwashing of the public and Congress, she shows, was accomplished with very shoddy and Harry Schwartz was a member o f the New York Times Editorial Board for almost 30 years and is Writer-inResidence at the College of Physicians and Surgeons, Columbia University...

...Stein does spend a lot of space quarreling, implicitly or explicitly, with supply-side theories...

...The spring issue of the Wilson Quarterly, for example, contains essays by William Julius Wilson, the Chicago sociologist, and Gary Puckrein, a young historian at Rutgers, that tend to focus attention on factors other than discrimination in understanding the socioeconomic situation of blacks...

...He doesn't mention, for example, the work of MIT's Jerry Hausman, who estimated in 1980 that a 30 percent tax cut would increase the work effort of primary workers (which usually means husbands) by some five percent and of secondary workers (usually wives) by nine percent...

...Food stamps are a form of recompense for past discrimination against minorities _9 . . whose parents didn't get enough to e a t . " And no doubt there will continue to be pressures brought and things done in the name of civil rights in matters that have no busihess being called civil rights issues_9 But we may well be moving toward a recovery of the proper meaning of civil rights and their vigilant, colorblind protection, and toward a more realistic understanding of the complicated landscape of racial and ethnic progress, and the limits of government action to effect it...

...Stein also downplays the importance of the drastic decline in inflation as a source of the swollen deficit...

...Ford and Carter get a scant 26 pages, with no mention of such ventures as Carter's asinine proposal for a $50 income tax rebate, his fruitless jawboning of inflation, or his admirable deregulatory measures...

...But these flaws shouldn't overshadow the book's many virtues--lucidity, adequate thoroughness, and somewhat more humility than one is used to from economists...

...This "evidence" was often exaggerated beyond its true significance by demagogic politicians and by journalists who proved patsies for scientists motivated often by the conviction that industrial capitalism was going to produce a needless epidemic of cancer deaths...

...The controls were more complicated_9 Nixon was "allergic to unemployment" and thus reluctant to fight inflation with tight money...

...But his book has defects as a historical survey too, chiefly its idiosyncratic emphases...

...A variety of legislation and bureaucratic regulations administered by agencies such as the FDA, EPA, OSHA, and others has in effect assumed that every chemical is born guilty of being harmful, probably carcinogenic, unless proved otherwise...

...It was exciting because of the important decisions made, the small number of people involved, and the secrecy of it all...

...Moreover, there has been enough scientific debate and enough expensive industrial opposition in the courts and enough confusion in the laws actually passed by Congress so that the practical results of the legislation were far less than the proponents had hoped or the opponents had feared...

...The six years of the Nixon presidency get twice as much space as the 16 years of Hoover and Roosevelt, which can be justified only by Stein's service under Nixon, as chairman of the Council of Economic Advisers...

...Sowell is pessimistic about the present course of civil rights, even despairing...

...His debunking of the likely effects of reductions in high marginal tax rates also misses the mark...

...The anecdote comes to mind reading Edith Efron's The Apocalyptics because it neatly summarizes the plight of every new chemical synthesized in this country since about 1970...

...And as a practical matter it is impossible to prove that any chemical will never cause cancer in some human being under some circumstances...

...The best is his examination of how Richard Nixon, an avowed opponent of expanding government involvement in the economy, could succumb to the most draconian wage and price controls in American peacetime history, besides presiding over a rapid increase in federal spending...

...The worst is tedium...

...Those figures don't validate the Laffer curve, but they are nonetheless impressive...

...Then, the most influential school of thought held, there was no threshold effect, no minimum amount below which the substance could not cause cancer...

...He has also been on the receiving end of personal attacks from members of this elite (the epilogue--"The Degeneration of a Controversy"--is Sowell's response to his critics...

...But Stein doesn't try to justify the various military commitments that make the Reagan defense budget necessary, or to answer 'To be reviewed next month by Thomas Hazlett...

...I n short, the dominant school of what Miss Efron calls "regulatory science" --to distinguish it from real science-came dangerously close to assuming there could be no proven noncarcinogens, just as the Muscovite of our anecdote argued there could be no proven non-camels...

...Stein also pays little heed to the growing number of economists who believe that deficits have much less impact on the economy than total spending, however financed...

...S t e i n deserves credit for his nutritious approach...

...The meaning of civil rights is more and more debated, not just in magazines and books but also in corridors of federal power (e.g., the Civil Rights Commission) where, previously, race-preferential policies were seldom questioned...

...This book calls to mind one of Jane Austen's characters who hated reading history: " I t tells me nothing that does not vex or weary m e . . . the men all so good for nothing, apd hardly any women at all...

...When asked what he was doing, the friend replied, "Don't you know...

...That perception is Stein's fault, but it isn't entirely fair...

...In fact, this taxpayer only needs to work a little more, while spending considerably less time and money in search of ways to avoid taxes, which his tax cut makes less valuable...

...He exaggerates the hope in the Reagan Administration that tax cuts would raise revenues...

...She demonstrates that nature is not benign and that daily we are bathed in natural, potentially carcinogenic radiation and imbibe with our normal food and drink potential carcinogens which were there in the first place, not added by some greedy industrialist...

...The "civil rights vision" will continue to have a hold on many...

...This is more than a little disingenuous...

...To have the fundamental meaning of civil rights finally addressed in Washington is a necessary step toward a satisfactory answer...

...and was astonished to find a friend, all his few belongings in a pack on his back, walking rapidly toward the city's boundary...

...In fact, he is smarter, and more attuned to the ingredients of sound economic policy...

...A polemic, however wrongheaded, would hold the reader's attention better than a history...

...But his book is at once less polemical and more ambitious than that...

...If Stein is acquainted with recent scholarship on the effects of taxes on work, he doesn't betray it...

...This legislation and much of the accompanying public hysteria about the dangers of modern industrial society, its chemicals, and its pollutants, Miss Efron shows convincingly, were largely overkill...

...his professional colleagues who argue that spending, not debt, is the obstacle to economic vitality...

...Obviously the lure of power can corrupt even those who distrust it...

...But even he wouldn't argue that the economy would be better off with a budget balanced by a continuation of high inflation...

...Ideologically you should fall on your sword," his son told him, "but existentially it's great...

...For more than a decade now he has had the courage to ask many of the right questions, and to follow the evidence wherever it has led...

...The nation is still a long way from where it should be on civil rights...

...At times like this he sounds like Felix Rohatyn...

...The findings of this pseudo-science were sold to the American people with results that are still powerful as evidenced not only by existing law but also by the widespread hysteria about Love Canal, dioxin, and whatever chemical dump from 50 years ago is found in any normal American community these days...

...Then, even if the feeding and general care of these animals had been slovenly and even criminally careless, if some fraction of these animals seemed to develop a higher than expected number of tumors, the substance immediately became suspect as a potential human carcinogen, with the word potential too often omitted...

...THE APOCALYPTICS: POLITICS, SCIENCE, AND THE BIG CANCER LIE Edith Efron/Simon and Schuster/S19.95 Harry Schwartz An anecdote popular in Moscow at the height of the Stalin terror told of a man who came out on the street at 6 a.m...

...Stein writes about Stephen Chapman is a syndicated columnist for the Chicago Tribune...

...Simultaneously, it became accepted dogma that the mere fact that an experiment had not shown a substance to be carcinogenic in some animal species could not be taken as conclusive evidence of its safety since some other test in a different experimental animal might give the reverse result...

...No doubt that is why, while trying to put great distance between himself and sensible supply-siders, he ends up not so far away...

...As paraphrased by Miss Efron, "he pointed out that the issue was not whether the administration was more or less conserTHE AMERICAN SPECTATOR JULY 1984 37...

...Unfortunately he is transfixed by the belief that the nation is undertaxed, particularly for its military needs, and by the worry that the deficit will impair growth...

...More startling still is Hausman's estimate that, at the margin, each dollar of income taxes collected costs the economy forty cents in "deadweight Ioss"--the total loss from exchanges that are not made because of taxes...

...In any case, he had little support from the public or in a Democratic-controlled Congress to do so...

...S t e i n ' s criticisms o f supply-side economics are less stimulating...

...In a fantastic feat of scholarship, she unveils what she considers-with more than a little reason--the biggest scandal American science has ever known...

...He traces, in a temperate and generally fair manner, through the economic policies of the last nine Presidents, explaining where they went right as well as wrong...

...You're not a camel...

...The shoddy scholarship that produced the evidence for the mass brainwashing usually took this form: Some substance was fed to a rat or a mouse or some other experimental animal in huge quantities far beyond any reasonable human consumption equivalents...

...This is a worthy project, but one fraught with hazards...

...Secondly, with scrupulous scholarship, she exposes the scaremongering that led high officials to frighten the American people with the idea that there were tens of thousands, even millions, of potentially carcinogenic chemicals being spewed out by our satanic factories and inflicted upon a helpless and unknowing populace...

...This cynicism was best illustrated by the successful pressure on Congress to preserve our right to use saccharin though that substance had been "proved" carcinogenic by all the canons of regulatory science...

...Still, it's hard to escape the conclusion that his greatest pleasure is deriding supply-siders...

...But he tends to concentrate on them while shrewdly ignoring more persuasive and accomplished economic thinkers who have also stressed the importance of restoring incentives to work and investment...

...Whatever its flaws, it is not a tract against Arthur Laffer...

...Stein regrets the controls--the "great sin"--but waxes nostalgic about the "exhilaration" felt by everyone who participated in the decision...

...Instead he wastes space boring the reader with exhortations to "decision-makers" to "carry on a responsible discussion" toward a "useful consensus...

...Should this happen, one man we will have to thank-whether some want to or not--will be Thomas Sowell...

...Sowell is not only upset by the ' 'politicization of race," the "lies and deceptions" associated with racepreferential policies, and "the lofty contempt of a remote and insulated elite [judges, bureaucrats, civil rights activists, and members of the media] from the mass of citizens...

...Herb Stein is no supplysider, but he may not be past redemption...

...To my dismay she shows that much of this trend began with one of my favorite writers, the late Rachel Carson, who, in Silent Spring, unjustly and inaccurately sold the idea that nature is benign and only man-made chemicals are the enemy...

...Yet there are, I believe, some reasons for optimism...

...With the battle for civil rights "won," Sowell believes it is counterproductive to make every issue affecting minorities into a civil rights matter, where inevitably one's good faith is called into question, and racism is charged, if one is unlucky enough to be on the "wrong" side of an issue_9 It is Sowell's conviction that realities such as the ones he has elaborated in this and his other books should cause civil rights activists to reconsider their rhetoric and the kind of policies they advocate...