Reviews for Trends, prospects, and strategies for black economic progress

The average rating for Trends, prospects, and strategies for black economic progress based on 2 reviews is 3 stars.

Review # 1 was written on 2018-05-31 00:00:00 Marianne De Keyser Written by a liberal political economist this book explicitly sets out to outline "what Democrats have to do to regain their competitiveness politically." His underlying philosophy is that "Market principles and forces have to be used, but "leaving it to the market" is a recipe for failure. A modern economist would argue that economic policy which relies on neo-classical perfect markets - as is espoused by American Republicans and Australian Liberals - and ignores known causes of market failure and externalities is a recipe for failure. Thurow’s central thesis is that America faces a set of structural problems, including the low long-run trend rate of growth of productivity, whose solutions required that significant economic losses be distributed to politically powerful interest groups. A central tenet is that "nothing is more important than restoring American productivity growth, yet nothing is being done to do so." While this book was written 30 years ago about the 1980s, it is an indictment on how short a distance we’ve come that these same themes, amplified, dominate political debate in America and Australia in the mid 2010s. On the US budget problem his conclusion is as relevant now as it was then: "There are no solutions that lie within the bounds of current political feasibility" which remains the case while "most social welfare spending" is for the middle-class and not the disadvantaged. The baby-boom generation was undertaxed, and borrowed to pay themselves too many benefits. Thurow warned at the time that "the American economy is in a very literal sense running on borrowed money". Americans, then and now, were borrowing from abroad to enjoy a standard of living that cannot be sustained. In the 1980s the US had liquidated seventy years of asset accumulation in just two years when debt reached $94 billion. It has since grown to $18 trillion - 5000 years of asset accumulation at the rate of the 60s and 70s. Thurow also notes the challenges of US foreign debt in 1986 of $100 billion: in 2015 US foreign debt has grown to $6000 billion as part of a total debt of $18,000 billion. Thurow’s view on taxes v expenditure cuts also remains relevant (in both the US and Australia): "economically the United States will have to raise taxes significantly, since it is not possible to eliminate the deficit with budget cuts", but rues, correctly with the benefit of hindsight, that "nothing will be done without the impetus of a crisis". His comments on the consequences of income inequality have become even more relevant as, thirty years later, the top 20% earn 7% points more income while the bottom 60% earn 7% points less . His caution that "there are few examples of democratic societies that have managed to survive while tolerating extreme disparities in income and wealth" should be heeded by more politicians, and voters. He also reiterates what others have argued but what the US is yet to understand: tax deductibility for mortgage payments results in overinvestment in housing at the cost of more productive investment and was at the core of the financial crisis and the low savings rates. Thurow’s conclusion that America needs to twist from a tight monetary and loose fiscal policy to an easy money and tight fiscal policy is accurate: "However right a vigorous Keynesian recovery is in the short run it is not the right long-run solution." This ‘twist’ is the de facto policy being followed now in the US and Australia, but the politicians often ignore Thurow’s axiom that "a perception of equity is central if sacrifices are to be imposed in a democracy". This is something more politicians, in the US and Australia, should heed. The weakest areas of Thurow’s arguments are also the most important: his prescriptions on what needs to change. A number of Thurow’s arguments were weak at the time, which has been proven with hindsight. Thurow commends the Democrats introduction of Social Security as part of Roosevelt’s New Deal for lifting people out of poverty, but ignores that the US system, unlike Australia’s, effectively remains unfunded. In advocating stronger more interventionist government industry policy Thurow concludes that "the people who build the hardware are going to dominate the software" - failing to see the commodisation of IT hardware, and the value that first Microsoft and Apple, then Google and Facebook, have built from software and social networks. Thurow also is trapped in a nationalist view of trade policy, railing against globalisation and seeming to not understand, or at least accept, the benefits of international trade. In his discussion on reigniting productivity growth, Thurow understates the effect of: (a) migration of activity from manufacturing to services (with its adverse impact on average productivity growth); (b) of changes in quality and safety in the goods produced now v previously; or (c) of the adverse impact on productivity of capital investment (with adverse impact on short-term productivity growth). On employment Thurow sounds naïve when arguing that "it is possible to create a full-employment society without business cycles where the distribution of earning is significantly narrower than it is now", and when arguing for corporations to become partnerships with partial employee ownership and bonus systems based on average incomes. This is simply not supported, by Thurow or others, by any empirical evidence, let alone practicable to implement. Government stockpiling of commodities is a flawed strategy. Thurow’s prescriptions on increasing savings rates seem to ignore the role of shadow banking and those on retirement accounts are simply bizarre. These eccentric solutions undermine and distract from the important public and economic policy points that Thurow makes. If you agree with Thurow’s reasoning, then, with the US dollar reaching fresh highs in 2015, investors should recall Thurow’s warning that the dollar will fall and it will be rapid once it begins. Thurow concludes that Americans would "rally around the effort" to build a new economy. Thurow’s optimism was misplaced 30 years ago and contrasts with Krugman’s pessimism today that the US has the capacity to change. There are no signs that in 2015, America is any closer to recognising it has a debt problem, let alone identifying a pathway to a balanced budget or debt repayment. If Thurow’s warning was sobering in the 1980s it should be a clarion call now for Americans: "Eventually lenders quit lending, and when this happens painful changes in lifestyle are forced upon the borrower." "At some point the rest of the world will decide that it has lent America enough…and the lending will stop". For its articulation of the challenges, but not for its prescription of solutions, this book remains as relevant now as it was in the 1980s and is crying out for a publisher to release an updated version for the 2010s.

Review # 2 was written on 2019-09-07 00:00:00 Arthur Wittwer 19 Jan. 2017 - My thoughts 30 years after reading this book: 1. It was a gripping and exemplary history of how this OMB Director in the first Reagan term actually tried to implement Reagan's proposed cuts in the Fed. budget and departments. 2. It showed how most of Reagan's cabinet appointees were far from part of the process to cut the budget, but were rather on the "receiving end" of the cuts, and not happy or supportive. 3. Weinberger (Defense) AND Haig (State) were particularly egregious offenders of Reagan's overall policy of cutting government, and purposely intimidated Stockman and his allies (Paul Craig Roberts and Martin Anderson) to stem any cuts in their departments. 4. Stockman made a very solid case for all the cuts. I have very warm memories of his vigor and comprehension of the need for and desirability of the cuts. From what I remember, he laid out the overwhelming benefits to society from the cuts, far outweighing the downsides to specific bureaucrats or other constituencies. 5. The main problem I had with the book was that it showed that Stockman never understood that any tax increases, which he advocated, would be totally counter-productive to the cuts in spending, and would slow down the economy and needed recovery. He thought tax increases were important, combined with the cuts in spending, to balance the budget. He totally ignored (probably more a fundamental misunderstanding than ignorance) that any increase in taxes would counter the forces for economic freedom and growth of the economy. Making the government smaller overall and especially a smaller part of the economy is key to continuing growth, productivity, innovation, justice and freedom. You know, the kinds of things that people immigrated to America for, fought a revolution to preserve and prospered under over a span of more than 200 years! 6. For these reasons above, I remember loving and hating the book, depending on the passage. I remember the first half or more being the good part - description of his life and the spending cuts process, though frustrating in many ways, because of the opposition from Reagan's own appointees. The second half was his realization that the cuts would not be deep enough, that "politics" was getting in the way, so deficits and increases to the national debt would be coming. At this point his personal turn from the Reagan Admin. was to announce this to Congress/press(?) and also to support tax increases. The famous "taking out to the wood shed" scene played out, where Reagan had to fire him, was described from personal experience. So - I highly recommend the book for historical insight, and for Stockman's excellent explanations of the benefits and need for government spending cuts, and for knowing just the kind of person Stockman is. Being aware of the massive flaw in Stockman is demonstrated by the later parts of the book and exhibited in his later career in investment banking and trying to own/run an auto parts manufacturer. It seemed to me an incredible betrayal, within Stockman's own philosophy or at least to general economics, to have misunderstood the importance of tax cuts so fundamentally. ------------- Stockman went on to work in investment banking with Peter Peterson, another even more dubious character, at Blackstone Group. His record there was mixed, but then he went on to found his own Investment group, which did fine for a while, but then invested in an auto industry supplier, and went bankrupt during one of the inevitable and fairly well documented difficult industry extended down-turns. After some significant time, he came back, with a splash, and started speaking and writing about the looming problem of government spending and the deficit. He had found out about and studied, to some extent, Free Market/Austrian Economics in the meantime, and so his arguments for cutting government spending are even more powerful and insightful now. HOWEVER, he still appears to be hung-up and totally confused on the issue of taxes and the "morality" of the deficit/debt. I remember reading and seeing interviews he granted just before and after his new book release on this subject (with Bill Moyers) and just being incredibly disgusted, especially in light of his increased knowledge and articulation of Austrian insights in how the business cycle works. He cannot plead ignorance of the better ideas at all now. So, anyone who reads Stockman should be totally aware of this horrible dichotomy between his good side and bad side. For me, the good does in no way outweigh the bad, especially since he has been exposed to and had plenty of time and opportunities to fathom and absorb the reality and true morality of the situation.