FIVE ECONOMIC CHALLENGES by Robert L. & Lester C. Thurow Heilbroner
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If you've been looking for a manual that explains American economic woes and the various cures proposed, and does it in plain language without sacrificing substance, this is it. In its greater breadth, it complements John Case's Understanding Inflation. Co-authors Heilbroner (New School for Social Research) and Thurow (MIT) present separate chapters on inflation, unemployment and recession, government spending and taxation, the status of the dollar in the world economy, and the energy crisis. In each, their procedure is to present the problem in question, explain how it arose, and then set forth the costs of the different solutions potentially available. This last is the key to their approach, because, following up on Thurow's 1980 The Zero-Sum Society, they argue that behind every economic question there's a political question; namely, who gains and who loses? Apropos of inflation, for example, they note that specific segments of the population are penalized by the usual fiscal and budgetary responses--namely, women and minorities, who are thrown out of work by sudden contractions. Would it help, then, to eliminate government deficits? Heilbroner and Thurow point out that while the Federal government may run a deficit, once state and local governments are added in, the deficit disappears; so much for that solution. The only equitable cure, they believe, is for all of us to accept a reduction in our standard of living; they don't think much of the chances, but (like Case) they emphasize that, on the average, there has been no real drop in living standards from inflation. This leads them to see unemployment as the current biggest problem (it's the unemployed that pay for inflation, remember). And, since they don't see much hope of reducing unemployment through the private sector alone (investment incentives there would likely go into labor-saving technology), they advocate a federal program creating permanent jobs in the public sector. But these jobs (in public parks, in inner-city repair and maintenance) don't add to ""wealth"" as measured by GNP, so they require an unlikely reorientation of our political priorities. The other chapters follow the form: sometimes the problems look even more intractable than before, but at least we come away knowing the stakes. Valuable, thoroughly accessible reading.

Pub Date: April 16th, 1981
Publisher: Prentice-Hall