Francis Meyrick

Book Review: “The End of Prosperity ” (Laffer, Moore, Tanous)
ISBN-13:978-1-4165-9238-9

This is a bi-partisan book, and a ‘must read’ for all who truly care about the future of America.

Not often that I suffer that particular effect, but this book leaves me with an uncomfortable feeling.
Very well written, with a wry sort of ‘quietly despairing’ humor that entertained me frequently.
I will give you a short review first, and then a long review. Take your pick. That tells you perhaps I took the issues this book raises seriously. (Disclaimer: I don’t want to upset anybody. Don’t get mad. I’m just offering a working class grunt’s opinion. I apologize for any perceived mockery of the Great Ones, the Federal Elite, who -of course- know what is best for me, and how best to spend my money for me.)

Short review:
Well written. Bang up to date. Touches intimately on political decisions and ATTITUDES, past and ongoing, that affect us all. Quite funny-sad-infuriating at times. Highly qualified writers/economists. You can argue if you want to that they are bone-headed wrong, dumb schmucks from the Rabid Right , but you can’t deny they are shakers and movers. These three boys have been in the thick of it all for a long time. If you care about America, about people and their jobs and families, then -please- just for this one book, lay any and all prejudices and political bias to one side. Stop. Take a deep breath, and plow right on in. With an open mind.
Again, I’m not suggesting you should agree, but PLEASE, at least quietly consider the issues. They are of monumental importance to us real, live, breathing little human beings.

Long review:
At issue, front and center, in this seminal work is the economy, and government intervention. Capitalism, free markets, laissez faire versus the Federal Government regulators, federal deficits, public works, taxation, monetary policies, etc. It asks searching questions.
When did it work? When did it not work? When was the economy sound? When not? Who damn well screwed it up? The greedy Rich? Left wing idealogues? Utopian reformers from Cloud Cuckoo land? Well meaning, sincere, but sadly misinformed politicians? Corrupt and lazy politicians, who couldn’t (can’t) be even BOTHERED to study economics, and who didn’t (don’t) give a damn, as long as they themselves were (are) all right, got (get) the votes, and got (get) re-elected? A gaggle of pompous Harvard trained politico career lawyers with a fee-feeble understanding of buh-basic economic principles? (okay, okay, I embellished that one a bit) Which President was the sharpest? Who was the absolute dumbest? How does the economy work? What keys on the economic piano should you hit, and when should you hit them? Can you achieve success just by hitting the right individual notes, or must you learn to play the right combination of notes, and hit the right economic recovery “chord “? How much harm can Mister Stoopid actually do? (A lot). Is uncontrolled Welfare undermining the American work ethic? Are we faced with “unintended consequences ” from well meaning but naive policies? Or are we too thick skulled to read History, and therefore doomed to repeat the same boondoggling fiasco? Are massive public works, bail outs and federal spending the answer? Has Mr Obama seriously studied History? Economics? Has he considered the arguments in this book? Has he maybe even read this book? (I hope so) Has he chosen advisers who have a track record in the past of having been correct in their economic forecasts? Who are his economic advisers? Where do they stand on supply side economic theory? All of these issues and more, are carefully examined in this book.
To my delight, I discovered that this book was avowedly bi-partisan in many ways. Let me say that again: “this is a bi-partisan book. ” You can’t just ‘cop out’, take the easy route, and avoid the undoubted serious cerebral effort of digesting this book, by conveniently plastering some ‘right wing’ label on it. It’s not. Some of the other “reviewers ” -obviously- did not take the trouble and make the effort to read it. One at least is vaguely honest, and right at the end of a rather long discourse, he tells us he only read the first chapter (!!), a few random pages, and relied on “Wikipedia ” to fill in any gaps in his understanding. That seems to me a rejection of this books merits “in advance “. Such a pity. This is a centrist book, that examines the issues, ( “It’s the economy, stupid! “) and cuts right across party political lines. This isn’t dogma. It’s not faith. It’s about the examination of historical events, past and ongoing. Some of it is factual, no debate. Some of it is interpretative, big debate. Great. Everybody involved. Both parties.
And that is another reason it should appeal to readers on ALL sides of the debate. You don’t believe me?
Some examples: the authors cheerfully rain down fire on the “four stooges “. Namely Presidents LBJ, Richard Nixon, Gerry Ford and Jimmy Carter. Two Democrats, two Republicans. Chapter 4 ( “Honey, we shrunk the economy “) (pages 61-83) goes into depth on their economic policies, and the results. This chapter pulls no punches, and soundly thrashes both Republican and Democrat economic policies. Chapter 4 alone contains lots and lots of thought challenging quotes, and you can agree or vehemently disagree, but I guarantee… it will get you thinking. I’ll give you a sample below:
(page 65) “Two Democrats, two Republicans. Four presidents emitting one dimwitted economic policy after another in what was the largest assemblage of bipartisan ignorance ever. We’d say that from an economic policy perspective, it just doesn’t get a lot worse than these four… “
(page 65) (on LBJ) “But the real economic poison pill was that for the first time in American history, at the same time we were spending more money for guns to win in Vietnam, LBJ unleashed a huge new spending barrage on butter, i.e. domestic programs. In 1965 LBJ launched the Great Society social welfare state “to end poverty in America “. The grand failure of the welfare state would plague America for the next thirty years- not just in the $5.4 trillion in budget costs that were poured down this rat hole, according to the Heritage Foundation’s cost estimate, but also in ill-designed programs that depreciated the value of work and family cohesion and created several generations of a permanent American underclass who were sucked into a cycle of welfare dependency. Poor families on welfare were pushed into 100 per cent plus effective tax rates, because they could lose more money in government benefits from working than they could earn on the job… “
(page 70) (on Richard Nixon) “To impose wage and price controls so that prices of goods and services could not rise exposed a fundamental lack of understanding of how the pricing system in a free market operates to allocate and place value on output… “
(page 71) (on Richard Nixon) “Next came Nixon’s big spending proclivities – the budget ran wild during his tenure, much of this facilitated and urged by a spendthrift Congress. In 1970 the federal budget stood at $196 billion. By 1974 the budget had increased to $269 billion, an increase of almost 30 per cent. Nixon saw federal spending as stimulatory for the economy, and that is when he declared himself a Keynesian…. “
(page 71) (on Richard Nixon) “This was a formal surrender in the fight to control government expenditures “.
(page 73) (on Gerry Ford) “Ford’s biggest failing was in misunderstanding how to combat inflation, which was still raging. Ford asked the nation in October 1975 to be “energy savers ” and to wear the Whip Inflation Now (WIN) buttons to try and slay the inflation beast, as if inflation were a state of mind, rather than the result of monetary policy run amok “.
(page 73) (on Carter) “….Jimmy Carter, who had run on an appealing anti-Washington, anti-big government,pro-balanced budget message. He was to be a new-era Democrat. It was a brilliantly crafted slogan for the times, yet once Carter was in the White House it became clear he had no idea how to lead the nation out of its deepening economic troubles.
(page 74) (on Carter) “Carter had promised to restrain the federal budget, but it stampeded on his watch…. “
(page 74) (on Carter) “Lacking a core pillar of ideology, Carter proved to be a micromanager and a constant vacillator on policy. In his one term he launched seven major economic programs, none of which worked and some of which contradicted each other… “
(page 79) “It wasn’t just high energy prices that flummoxed Jimmy Carter- but the rise in all prices seemed an irresistible force of nature during his presidency. He was a convert to the Phillips-Curve religion that high inflation had to be tolerated to put people to work, so even with the money supply rising by 11 per cent a year in 1977, he and his cadre of economists urged the Federal Reserve bank to lower interest rates and quicken the pace of the printing presses to push more dollars into the economy. “

I hope these quotes show that the writers are not party biased, and that everybody gets a sock on the nose who they feel deserves it. (Oh, and by the way, Mr Laffer voted for Bill Clinton twice.) I hope also it suggests you cannot solve economic problems with good intentions, fine speeches, lofty ideals, massive spending, lots of free lunches. party political dogma, nailing the Rich, or by an extensive background in Law. It really is a must to have seriously read History, studied Economics, and to have listened (….) to alternative economic points of view. (Yes, how about… that Laffer curve thingie?)
Plenty of people have gone before, adamant that they knew best, unwilling to listen, dogmatic in their certainty, and been proven… dead wrong. And ordinary Americans have paid the price for this hubris, along with their families.
Here’s two interesting quotes for you to test your own mindset:
(page 75) “The Journal advised: “It stands to reason that the US economy would benefit enormously if the rich paid more taxes. We have been arguing this, at least implicitly, for years. What we have not been able to get the politicians to understand, though, is that you can’t get rich people to pay more in tax revenues by raising their tax rate “.
Read it carefully.
(page 116) “But Reaganomics did create a rising tide that lifted nearly all boats. “

Which of course, now, as of January 4th 2009, leads us to Mr Obama. He is a nice man. We all sincerely hope he will be a great President. And a sound, well read economist. Here’s some quotes for you to mull over:
(page 78) “Like busing, nuclear-free zones, and Whip Inflation Now buttons, price controls should be viewed as one of those discredited 1970’s experiments that deserves to be forever banished from public policy discussions. We despair that they are now being seriously debated in the current energy policy discussion in Washington. Barack Obama and many other leading Democrats favor a windfall profits tax on oil companies and anti-price-gouging laws. UGHH! The lessons of Carter’s failures still haven’t been learned. “
That concerns some of us. But it might just be idle talk. Give the man a chance. He’s good. Great orator. He’ll fix it.
Maybe.
Fast rewind to page 9 ( “The gathering economic storm “) “The short answer is that we aren’t just optimists, we are first and foremost realists. And we are now witnessing nearly all of the economic policy dials that were once turned toward growth being twisted back toward recession. The problem is not a crisis of the American Spirit or work ethic, or value system, or some inevitable decline due to complacency. It is that our politicians in both parties, but especially the liberal Democrats, are getting everything wrong – tax policy, regulatory policy, spending policy, trade policy. We call this the assault on growth. The political class seems to be almost intentionally steering the United States economy into the abyss – and, to borrow a phrase from P.J.O’Rourke, the American electorate, alas, seems ready and willing to hand them the keys and the bottle of whiskey to do it. Almost all of the catastrophic policy mistakes are being coated with good intentions….. “
The book also relates an interview (pages 9 and 10) between Mr Obama and Charlie Gibson of ABC News.
You might like to read the interview. I’m not sure what to make of Mr Obama’s odd comment “Well, that might happen, or it might not “. There might be an innocent explanation. But it sure didn’t fill me with confidence either.
The authors write: (page 10) “This amazing exchange left us scratching our heads and wondering whether this gifted orator who can fill stadiums with 70,000 or more adoring fans and followers and says that he is promoting ‘The Audacity of Hope’ has even the slightest clue about how economics works in the real world…. “

I can’t quote the whole book to you, and it would take many, many more quotes to run through the suggested economic remedies. But I hope… I have maybe set the stage and stirred your interest. Read this book. Please.

F.M.
(c)

Last edited by Francis Meyrick on October 5, 2009, 1:46 pm