The Way the World Works [Paperback]

Jude Wanniski (Author)

Book Description

Publication Date: July 1, 1998

To celebrate the 20th anniversary of the book which helped launch the current economic miracle, Gateway Books is proudly repackaging and re-releasing The Way the World Works. Jude Wanniski's masterpiece defined the economic policies of the 1980s responsible for a booming stock market, the creation of thirty million new jobs, untold wealth, and unparalleled prosperity.

Product Details

• Paperback: 366 pages
• Publisher: Gateway Editions; Fourth Edition,Fourth Edition edition (July 1, 1998)
• Language: English
• ISBN-10: 0895263440
• ISBN-13: 978-0895263445
• Product Dimensions: 5.9 x 1.1 x 8.9 inches
• Shipping Weight: 1.3 pounds (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (29 customer reviews)
• Amazon Best Sellers Rank: #136,072 in Books (See Top 100 in Books)

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Most Helpful Customer Reviews

98 of 107 people found the following review helpful

5.0 out of 5 stars Twenty Years Later, Wanniski Has Been Justified August 27, 2000

By Todd Winer

Format:Paperback

"The Way The World Works" is a brilliant andprovocative book that illuminates the reader on a full range of political, economic, and social issues. Mr. Wanniski alerts us to what he describes as "the global electorate." The author sees human civilization as an unfolding story where societies find the best political and economic systems through a trial and error process. This process, which continues through the present, is largely progressive. "The global electorate" has rewarded systems that work, like American democracy, and dissolved systems that don't work like Soviet communism. History moves forward to suit the needs of its people. When Mr. Wanniski wrote this book in the late 1970s, such ideas as "historical progress" seemed out-of-date. Assertions of Western superiority over other political systems seemed naive. After all, the Communist empire was expanding into remote corners of the globe like Afghanistan and Nicaragua while the United States and Europe sputtered economically and splintered socially. But from his home in New Jersey, Mr. Wanniski anticipated the revival of the West. Led by Ronald Reagan and Margaret Thatcher, the capitalist democracies rediscovered the secrets of their success - classical "supply-side" economics. Much of the book articulates current economic issues through the prism of supply-side economics. Mr. Wanniski offers keen insight into the origins of the Great Depression and the causes behind the oil price surge of the 1970s. You may be surprised. He is especially persuasive in articulating the need for tax cuts. Mr. Wanniski argues that tax cuts pay for themselves by encouraging more entrepreneurship, unleashing more economic growth, and thus funneling more tax revenue into the Treasury. For example, after World War I, the U.S. and Britain took different approaches in shifting from a wartime to a peacetime economy. The U.S. slashed its tax rates and prospered during the 1920s while Britain kept its rate high and remained stuck in Depression. Britain never really corrected its mistake and spent most of the century in retreat as a world power. Mr. Wanniski sees tax policy as the key intangible in explaining why some Third World nations have prospered since decolonization whereas others have regressed. The U.S., in particular, was ahead of the curve until the late 1960s when Washington abandoned classical economics for Keynesianism. "Tax-and-spend" policies, designed to spark consumer-driven demand, only undercut the private economy. When taxes were raised, counter- intuitively, tax revenues fell. By painfully experiencing the shortcomings of Keynesianism during the 1970s, the U.S. stumbled into the success of the 1980s. Federal revenues doubled in the 1980s even as tax rates held constant. The new Western dynamism could not be ignored by citizens in socialist countries. By decade's end, communist dictatorships in Europe and Asia were throwing in the towel. A new chapter in the story of "the global electorate" is just beginning. One of the most intriguing points in Mr. Wanniski's book is that politics has been absolutely crucial to economic development. A nation's prosperity rests in large part, he contends, on the wisdom on its political leaders. This may be a lot for some conservatives to swallow but the author documents his points thoroughly and convincingly. If Mr. Wanniski is correct, then the next presidential election becomes even more significant. Is the current prosperity the handiwork of a) President Clinton, b) the Republican Congress, c) both, or d) none of the above. The answer, even now, isn't clear. But if the next president ignores "the global electorate" and strays from the supply-side course, the citizens will eventually correct their error in time - just like they did by dissolving Keynesianism in the 1980s. According to this book, we will collectively get where we need to go. Whether we reach our ultimate destination peacefully and rapidly, or on the other hand - painfully and slowly, is the question before us.

33 of 34 people found the following review helpful

4.0 out of 5 stars Looking at the World thru Supply-Side Economics May 22, 2001

By D. Swager

Format:Paperback

This is an excellent look at the world through the view of supply-side economics. Jude Wanniski is very insightful in using supply-side theory to model real world situations and the conclusions have for the most part been borne out in the 20 years since the book was first published. Unfortunately, Mr. Wanniski can be somewhat obtuse (at least to me) in his writing style. While this book does not provide a complete nor concise text of supply-side theory, it does provide an excellent starting point and a reference for comparing various economic theories. As someone who subscribes to the Austrian school defined by Menger, Bohn-Balwerk and Von Mises, I found much in common and some interesting new perspectives within this book. Anyone who enjoys studying economics should read this important and impressive book. Mr. Wanniski provides continuing information through the Supply-Side University at his website (as of May 2001): www.polyconomics.com.

There are two common misconceptions about supply-side that still pervade common thought. The first is confusion between supply-side theory and what was packaged as supply-side economics during the 1980 U.S. Presidential campaign. The latter was merely a limited set of policy positions, mainly dealing with tax issues, designed to combat the prevailing condition of the day known as stagflation. The prevailing Keynesian theory did not even consider such a condition possible and hence provided no solution to the problem. Hence the harsh and caustic rhetoric that was used to finally displace the Keynesian "Tax and Spend" policies of the day. [Keynes never intended for deficit spending to go on forever and in his defense, F.A. Hayek (Austrian school) wrote later that had Keynes lived longer he would have been a determined figher against the inflationary policies pursued in his name.] While these politically packaged policies did follow supply side theory, they were not representative of a total economic model and therefore were criticized on that basis.

The second issue is the even more ridiculous notion that supply-side theory has been disproven or violates all other economic thought. This could not be further from the truth as Canadian economist, the father of supply-side economics, Robert Mundell won the 1999 Nobel Price for his theoretical work (Art Laffer compliled most of the emperical evidence). In fact, after 35 years of consumption based (demand side) Keynesian theory, supply-side was a reaffirmation of [Jean Babtiste] Say's Law: Commodities are ultimately paid for with other commodities. Say stated that "The encouragement of mere consumption is no benefit to commerce; for the difficulty lies in supplying the means, not in stimulating the desire of consumption...Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption" (1834). All economic schools embrace Say's law including Classical, Monetarist, Austrian and Supply-Side, except Keynesian. Even President Clinton's 1994 economic report stated "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth". Unfortunately 40 years worth of economists forced homage only to Lord John Maynard Keynes are having a hard time adjusting to the failure of demand side theory.

60 of 66 people found the following review helpful

5.0 out of 5 stars Supply-side economics explained November 22, 1999

By Corey

Format:Paperback

Mr. Wanniski spends most of this volume examining world events in light of supply-side theory. He covers a remarkable range, from the beginnings of history to the present century; I have never read as cogent an explanation of both the Great Depression and the stagflation of the Carter years.

This book scares the Keynesian establishment, and it should--they are gradually going the way of the Newtonians. The only criticism of Wanniski (and of supply-side in general) seems to be ad hominem--some of which may be read in other reviews here (the nonsense written by Donald about Hoover and the Depression demonstrates a complete misunderstanding of the book's major theme).

Even irretrievable leftists, though, can find much in this book over which to ruminate. Wanniski is notably non-partisan and seems willing to share his ideas with whomever will listen. I found his group's web site after reading his book, and he posts a daily letter which is usually just as absorbing. If you have doubts about ordering the book, go to the site and read a few of his memos.

Over time, I think that _The Way the World Works_ will join _The Wealth of Nations_, _Das Kaptial_, and _The General Theory of Employment, Interest, and Money_ as one of the great treatises on economics--and it is by far the most fun to read.