Food for an Election Year
SEGAL, HARVEY H.
Food for an Election Year The Seven Fat Years, and How to Do It Again By Robert L. Bartley Free Press. 347 pp. $22.95. Head to Head: The Coming Economic Battle Among Japan, Europe and...
...Should these unravel, his often pernicious gaming and battlefield analogies would be pointless...
...to blunt Volcker's efforts...
...In a tough chapter on the S&L scandals, he recalls that not long before ascending to the Fed chairmanship Alan Greenspan submitted to government regulators a commissioned report giving the now convicted Charles Keating a clean bill of health...
...and Japan???a veteran American insurance executive in Tokyo and a young Japanese real estate specialist in New York...
...economic power and influence...
...in factories, in the market, in real estate...
...Since the candidates are all aware of the shrinkage of family incomes in the U.S., regiments of speech writers and spin doctors will surely mine this motley trio of books...
...Likely to be more appealing to politicians is his intriguing scheme to pay annual rents to tropical countries for preserving their rain forests...
...Wallowing neurotically in arcane and ill-understood statistics," he writes, "a gaggle of declinists denies a reality evident to everyone else in the world...
...A more plausible explanation is that the "fat years" bracketed a business-cycle recovery and expansion that benefited from a marked decline in the price of oil and the overall rate of inflation plus increased defense outlays...
...Thus, the impact of a tax cut on investment spending cannot be confidently predicted unless interest rates at least stay put and fickle expectations don't falter...
...Within blocs, there would be free trade and fixed exchange rates, between blocs "managed" trade and presumably floating rates...
...Once he stops playing Jude, the patron saint of lost causes, Bartley's intelligence and integrity are manifest...
...By recounting the tribulations of resident foreigners in the U.S...
...This view is a roseate illusion created by Bartley's uncritical reading of the real gross national product (GNP), the nation's total income and output adjusted for inflation...
...14.95...
...Less taxes will, of course, lift rates of return on all undertakings...
...Michael Lewis, too, takes up the matter of cultural difference...
...He is not entirely successful, but he does come closer than heavier-handed academics and journalists...
...While working in Washington for President Ronald Reagan's Council of Economic Advisers late in 1981, I watched Beltway sup-ply-siders do everything in their power???not a great deal, fortunately...
...The Danes have already demonstrated their unwillingness to do so...
...Peering into the future, Bartley denounces those who speak of a continuing decline of U.S...
...Pacific Rift: Adventures in the Fault Zone Between the U.S...
...After forcefully reminding us that we cannot for long continue to consume more than we produce and run up a net trade deficit with the rest of the world, he offers a solution that befits the dean of MIT's Sloan School of Management: expand manufactured exports...
...Instead, he champions the "communitarian" practices of Germany and Japan...
...Tomikawa points to hatred and ferocious competition among Mitsui and its two main zaibatsu, or interest-group rivals, Mitsubishi and Sumitomo...
...25.00...
...The purpose of Pacific Rift, he tells us, is to "address the principal source of tension between America and Japan: the mistrust with which each views the other's motives and methods...
...The author's strong views on corporate governance, takeovers and junk bonds, moreover, clearly expose the fatuousness of the conventional wisdom...
...Thurow deplores the spirit of "Anglo-Saxon" economics, with its stress on competition, high personal consumption, profit maximization, and the interests of corporate shareholders...
...Reviewed by Harvey H. Segal Author, "Corporate Makeover" It is just possible that serious questions of economic policy are going to be debated during the Presidential campaign, even if largely in 20-second soundbite salvos...
...But monetary policy, by raising and lowering short-term interest rates, affects the cost of capital...
...To raise the level of saving and in vestment, Thurow would boost prices and reduce personal consumption through value-added taxes...
...An apostle of the supply-side creed, Bartley believes tax cuts revived GNP growth after 1982...
...There is, however, a gap between a good book and a cogent, 750-1,200-word take worthy of a Pulitzer Prize...
...One is ethnically homogeneous and closed to immigration...
...Once the deceptive GNP aggregates are broken down, though, a very different and disturbing picture emerges: The constant wages and salaries of about two-thirds of the work force actually fell during the '80s...
...The Wall Street Journal's editorial pages, over which Robert Bartley has presided for the past 20 years, are among the country's liveliest...
...336 pp...
...And anticipations of future returns, as John Maynard Keynes observed, are shaped by "animal spirits...
...the other is multiethnic and open...
...Despite help from White House phrase maven Peggy Noo-nan, Bartley has failed to bridge it...
...Told that Manhattan "is a den of f...
...and Japan By Michael Lewis Norton...
...Lewis neatly exposes the most salient disparity between the two nations...
...But both, I think, are undergoing changes that will eventually close the "rift...
...His thrust is that the last seven years of Ronald Reagan's reign, from 1983 through 1989, were prosperous because of the successful application of supply-side economics...
...The economy began its slump in 1980, a year after Jimmy Carter appointed Paul A. Volcker head of the Federal Reserve Board...
...There is little government can do to counter these circumstances, but that is no excuse for ignoring them...
...Readers of Head to Head who can tolerate Thurow's lecture-note didacticism will stumble upon proposals that are wise and, occasionally, somewhat original...
...Tax changes alone are not their prime motivation...
...He would deny voting rights to investors who have held their shares less than two years, and limit the ability of pension funds to affect corporate policies???surefire formulas for perpetuating the control of incompetent managers and punishing shareholders, the vast majority of whom are members of pension plans...
...To be sure, real GNP growth accelerated on the whole and per capita as the economy recovered from the 1980-82 recession...
...ing rattlesnakes" and a guaranteed loss for Japanese investors, Lewis asks Shuji Tomikawa, Mitsui Real Estate's New York representative, why they "want to leap into our snake pit...
...that] in the end only America can lead...
...Supply-side dogma, holding that tax relief will reliably and quickly boost investment spending, flies in the face of economic theory as well as common sense...
...He makes a persuasive case that state-of-the-art technology can more than offset the disadvantage of high American wages...
...In effect, the President gave him a free hand to damp inflation by monetary restraint, a sharp contrast with Richard M. Nixon, who before the 1972 election pressured Fed Chairman Arthur F. Burns to heap more monetary fuel on the fire of inflation...
...As one of that gaggle, Lester Thurow not only challenges Bartley's certitudes but outlines a remedial program for preserving our position as a major player...
...128 pp...
...The choice leads him down a troubling path...
...Thurow foresees a world of three economic blocs in the 21st century: a European Community (EC) colossus that embraces the entire subcontinent, a North American group consisting of Canada, Mexico and the U.S., and ultimately an Asian group led by Japan...
...Save for Michael Lewis' elegant little jewel, the prose ranges from clear if undistinguished to ambiguous and awful...
...the highly educated, the highly skilled and the highly placed...
...Evidently, morbid fear of losing face at home propels them into self-destructive bidding wars for Manhattan's skyscraping status symbols...
...in the 21st-century competition with a united Europe and a strong Japan...
...when they believe the rate of return, including a premium for bearing risk, will exceed the cost of capital (the return paid on a risk-free investment...
...never mind leader...
...In each weekday morning's transition from slumber to full consciousness, I find the paper's usually loathsome yet bracingly provocative opinions a fitting complement to a cold shower and cappuccino...
...What we learn from this volume hardly squares with Thurow's preconceptions...
...He would also drastically shorten auto installment loans and increase the Federal gasoline tax by $1.50...
...You, too, can benefit from them, but be forewarned: Most of their nuggets are not happily extracted...
...These, he maintains, foster cooperation, high personal saving and the preservation of large organizations and work forces, rather than a scramble for profits and dividends...
...Such arrangements were plausible when the insightful economist Emile Despres envisioned them in the mid-1960s...
...In reviving them today, Thurow assumes that electorates in the EC will submit docilely to the rule of the Brussels bureaucracy...
...The losers, who are now demonstrating their disenchantment with conventional politics, were victims of intensified global competition, bad corporate management and the wrenching disruptions that typically ensue when bubbles of inflation and speculation burst...
...Those disguised losses were more than offset by the real gains of the remaining third...
...So much for vaunted cooperation in a "communitarian" culture...
...In addition, devolutionary rumblings elsewhere in the Community make me wonder about the solidity of Thurow's component nation-states...
...Far more dubious are the bald assertions in Head to Head about cultural differences among the world's chief traders...
...People invest...
...Head to Head: The Coming Economic Battle Among Japan, Europe and America By Lester Thurow Morrow...
Vol. 75 • June 1992 • No. 7
