49 of 50 people found the following review helpful:
4.0 out of 5 stars
What's really going on economically speaking, August 15, 2004
This review is from: Neoconomy: George Bush's Revolutionary Gamble with America's Future (Hardcover)
In this modest volume, economic journalist and Harvard-trained economist Daniel Altman attempts to explain what the so-called neoconservatives, who are directing President Bush's economic policies, are up to. Altman calls it a revolution that will greatly increase the chasm between the rich and the poor and create a new kind of society based not on merit but on inherited wealth and advantage.
The neocon's main idea is to abolish taxes on capital and earnings from capital. Their rationale is that untaxed capital will be more readily invested leading to a rising tide of economic prosperity that will lift all segments of society. Yes, the rich will get richer, but through "trickle down" and a booming economy, the poor and the middle class will also gain.
Such is the theory. Because such theories cannot be adequately tested on models, we can only find out if they work by testing them in the actual economy (which may be the real reason economics is called "the dismal science"). The problem--as Altman advises--is that if they fail the consequences may be horrific. If the rich get too rich and the poor too poor and the middle class disappears--well, such is the stuff of revolutions, witness Europe in the 19th and 20th centuries.
Here are the taxes the neocons want abolished: the estate tax; taxes on interest, dividends and capital gains; and the corporate income tax. Here's what famed investor Warren Buffet thinks about the abolition of the estate tax:
"Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit." (p. 250) Clearly he's agin it. I might add that the ironic example of the very mediocre George W. Bush as president of the United States is perhaps an early example of what Buffet is afraid of.
Feeling much the same way is Thomas Piketty, director of the School for Advanced Studies in the Social Sciences, whom Altman quotes as saying: "These new high-income tax cuts, together with all the previous tax cuts (including the repeal of the estate tax), will eventually contribute to rebuild a class of rentiers in the US, whereby a small group of wealthy but untalented children controls vast segments of the US economy and penniless, talented children simply can't compete... If such a tax policy is maintained, there is a decent probability that the US will look like Old Europe prior to 1914 in a couple of generations." (p. 241)
I don't have any doubt that people like George W. Bush are partially motivated by a desire to create sharp class distinctions and to increase the privilege of their friends and relatives. But there is more to the lopsided tax cuts than that. As Altman explains on pages 166-167, one of the effects of the huge tax cuts by the Bush administration is to tie the hands of his successors. "Forced to deal with deficits...they would [read: will] be hard-pressed to spend money on...social programs... They might even have to raise taxes just to avoid cutting spending." To put it bluntly: Bush 43 is spending not only our children's and our grandchildren's money, but the money of future administrations.
As Altman notes, this strategy was employed before by Ronald Reagan. Only trouble was, "his successor was not a Democrat, but his own vice president, George H. W. Bush." (p. 167) And, as you'll recall, Bush 41 turned out to be a one-term president, giving way to Bill Clinton.
Okay, is Altman's critique correct? Or are the neocons really working to take the nation to an economic heaven on earth?
I'm not sure, and the economists I have read are in disagreement. This book does not prove anything one way or the other of course. What Altman does, and he does it admirably with a calm voice and verbal restraint (too much restraint for my taste, by the way) is chronicle what has happened and point to what we can expect in the future if the neocons get their way. Obviously, he doesn't like the potential consequences, and neither do I.
Bottom line: a nice primer on Bush's economy policies, a bit too leisurely developed, but all told a kind of eye-popping indictment.
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20 of 22 people found the following review helpful:
5.0 out of 5 stars
Fair & devastating critique of Bush's economic revolution, September 17, 2004
This review is from: Neoconomy: George Bush's Revolutionary Gamble with America's Future (Hardcover)
Daniel Altman has the gift that I've been searching for: he lifts the curtain of economic jargon and exposes the major ideas of macroeconomic policy in all their simplicity. Why is there a controversy over the effect of income tax cuts on federal government revenues? It's really very simple. Some people think that if you can bring home more dough for an hour of work, you'll work more hours and bring home more. Others think that you'll work fewer hours, bring home the same amount, and use the extra hours on friends, family, and leisure. Voila, I give you the basis of Republican and Democratic economic policy, respectively.
This book introduces the neoconomists: the economic advisers to Republican presidents since Reagan -- I'm talking about Martin Feldstein, Glenn Hubbard, and Larry Lindsey -- and introduces the core ideas behind their economic policies in simple, understandable terms. The author actually studied under Feldstein at Harvard, and is pain-stakingly fair-minded about giving the neoconomists' ideas a sympathetic look. This makes the subsequent critique of Bush Junior's economic policies all the more devastating. The Bush administration has taken advantage of economic recession, 9/11, and Enron to dogmatically institute a host of dramatic tax cuts -- a classic bait and switch, selling a long-term economic policy as a short-term cure. What's worse, it has done so in the face of short-term economic data that seriously calls into question the validity of neoeconomic theory in this day and age. Even Martin Feldstein isn't thrilled.
Read all about it in "Neoconomy".
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7 of 8 people found the following review helpful:
5.0 out of 5 stars
Economic policy explained, October 18, 2004
This review is from: Neoconomy: George Bush's Revolutionary Gamble with America's Future (Hardcover)
If you ever wonder what economists are talking about, or are curious about how economic policy can affect your life, this is definitely a book you should read. The Neoconomy is how Altman describes Bush's fiscal policy goal, a world with no taxes on saving, which could bring great prosperity, or lead to unprecedented crisis. Altman manages to convey the subtleties of cutting edge economic research and its links to the current policy debate in a crisp, engaging style. Furthermore, unlike other economic scribblers, he manages to stay balanced and non-partisan. He weighs arguments for their intellectual soundness and policies for their impact, not their rhetoric. A must read for those aspiring to be informed citizens of the world.
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