The Way It Really Was
RAPPING, LEONARD A .
The Way It Really Was America's Hidden Success: A Reassessment of Twenty Years of Public Policy By John E. Schwarz Norton. 208 pp. $12.95. Reviewed by Leonard A. Rapping Professor of...
...In the late 1970s there was little support for such a proposal...
...That all this did not add up to a coherent economic program has been lost in the visions and images projected by the President and his supporting cast...
...There is undoubtedly merit in Schwarz' demographic interpretation of the stagnant '70s...
...According to Schwarz, its apparent acceptance by the public is mainly attributable to the lack of a coherent alternative explanation for macroeconomic events of the '70s...
...or tight money, a major shift of income to the rich and a depression...
...With a lot of data and much common sense, he contends that Washington got a bum rap...
...The rising inflation and unemployment of the 1970s, he maintains, were the crucial factors in laying the psychological groundwork for a successful attack on Washington...
...Without accommodating monetary expansion, these developments would have meant massive unemployment...
...Not even the burgeoning deficits since 1981 have silenced the claim...
...Schwarz properly argues that, given the presence of these extraordinary forces, government economic policy was remarkably successful in preventing an unemployment debacle...
...In a readable and tightly argued chapter, the author provides an explanation for stagflation...
...Medicare, Medicaid, food stamps and school lunches improved the health of people of all ages...
...That shifts the emphasis of the argument from the domestic to the international scene, where there were two forces contributing to stagflation: the opec inflation push, currently in temporary abeyance, and the export challenge to American industry, continuing today...
...The double blow of opec and imports demanded a restructuring of our economy...
...the labor market would have been unable to absorb the post-World War II baby boom, plus the big increase in women seeking work...
...Contrary to myth, the Great Society did not just "throw money at problems...
...Most important, the portion of the population certified as poor in the United States was reduced from 20 per cent in 1960 to 11 per cent throughout the bulk of the 1970s...
...Indeed, during that period corporate tax rates actually fell...
...director, Project on Economic Restructuring When Ronald Reagan took office in 1981, he cut the taxes of the rich to pay his political dues, he increased the Pentagon's budget in the hope of intimidating the Soviet Union, and he took from the poor to feign fiscal restraint...
...But I would place greater stress on the role of the oil price hikes than on the expansion of the labor force...
...Neither would the transfers of money to opec have permitted the normal channels for purchasing power to absorb commodities and services...
...John E. Schwarz, an associate professor of Political Science at the University of Arizona, restricts himself to examining the 1960s and 1970s...
...The irresponsible fiscal acts were coupled with antigovernment rhetoric in which truth was displaced by fabrication, and legitimate concern by false hopes...
...The notion that too much government growth somehow strangled America's economy was popular long before Reagan used it to confuse voters in 1980...
...Nor does anyone dispute that the many programs of the Environmental Protection Agency (EPA) have had a beneficial effect...
...Significantly, too, Federal deficits in the '70s were greatly exceeded by consumer, corporate and Third World deficits...
...Still, in the 1980s the proposal remains the logical extension of the policies of the previous two decades that Schwarz singles out for approval in America's Hidden Success...
...In this unreal environment, America's Hidden Success challenges the shibboleth that Washington has been the cause of the country's problems...
...What we got were the free-market " wait and pray" nostrums of the Right, and the fecklessness of Jimmy Carter, who faced down opec in 1979 by bemoaning an American "malaise" on TV when gas rationing would have equitably eased the pain...
...Schwarz also notes that personal, property and corporate taxes did not soar between the early '60s and late '70s...
...Although motivated by a desire to squelch a political scandal, even President Reagan seemed to dimly acknowledge the agency's value when he recently appointed William Ruck-elshaus to head the EPA...
...Important as he believes these factors were, however, he ultimately moves beyond them...
...To deal with stagflation in the 1970s, there were two options: an incomes program involving wage and price controls, along with some kind of industrial policy to regulate and coordinate market processes...
...Reviewed by Leonard A. Rapping Professor of Economics, University of Massachusetts...
...As evidence of its effectiveness he cites this impressive fact: An economy that had created 12 million jobs between 1950-65 became one that suddenly created 30 million jobs in the next 15 years...
...Save for notable exceptions like Senator Edward M. Kennedy of Massachusetts, the Democrats provided no leadership on the issue...
...The second option was pursued, of course, and it has been followed by the present unhealthy, probably temporary consumer binge...
...The Women, Infants and Children Nutrition Program helped cut infant and maternal mortality by sizable amounts...
...Together they formed a global pincers movement that had a profound impact on income distribution and industrial growth in the United States...
...Moreover, in this and other areas of regulation, the economic costs of control have been vastly overestimated...
...Schwarz mentions the Vietnam War, Watergate and the large sum of money spent on antigovernment propaganda...
...Finally, Schwarz points out that corporate bureaucracies are no less encrusted and inflexible than those that run the show in the nation's capital...
...An incomes program would not only have required restraint by organized labor, but also by executives, managers, professionals, small businesses, and corporations...
...Essentially, he blames it on the rapid growth of our labor force in the 1970s and, to a lesser extent, on the opec price shocks after 1973...
...Following a line laid down in the 1970s by William Simon and others, the Administration has argued that all our economic ills come from Big Government...
...In the light of all this, why was the Federal government so easily made the scapegoat for the economic and social problems of the '60s and '70s...
Vol. 67 • April 1984 • No. 8
