Neoconomy: George Bush's Revolutionary Gamble with America's Future

Rating:
Summary: Fair & devastating critique of Bush's economic revolution
Review: 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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Summary: Economic policy explained
Review: 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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Summary: What's really going on economically speaking
Review: 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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Summary: Not a bush bashing book
Review: Lets start out by saying this is book to bash president bush but rather it shows what the president and his economic advisors ideas and plans and what the effect and possible effects will be.
This should be another one of those books that should be red before the election because some of these ideas will be considered radical by some.

The main idea for the bush plan is to have the tax cuts and such to put more money out for companies to have pools to borrow from and this inturn will stimulate the ecomony. But this is an experiment could go wrong. This administration can afford to experiment because if it does go wrong bush and his cronies will probably lose some money but they will still have many millions to live on, it will really hurt the middle class on down.

It is no secret that most of the tax cuts have benefited the so called rich by cutting taxes on estates dividends and savings. All of these people get the most of their income from stocks and real estate. Yes these cuts are for everybody but how many people from the $40,000 level on down can save and invest to get these breaks. Would you not think that if the president really wanted to stimulate the economy he would gear cuts toward the majority. With the tax cuts bush signed into law in 2001 the book shows that for those making $50,000 or less the tax difference is less than a $1,000 compare that that make $500,000 or more they get breaks at least 10 times that amount don't you figure those on the lower end of the scale could use the money the most.

Another example is the estate tax cut while they figure if they cut the tax it will encourage more investment but in reality it has probably encouraged them to save more for there heirs because of course less tax.

Just like in the Reagen era alot of these cuts are based on future years where they figure the economy will be strong but what will the effect be if the economy is in a poor state as it is in now you do not have all the projected revenue and you have record debt that has to be paid sometime

This book is written so that it is pretty easy to understand on a subject that at times is dry and difficult.

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Summary: What "fair and balanced" really means
Review: This book has been described -- and is -- a thorough, tough critique of Bush administration policy. But its virtue is in the fact that there are no cackling corporate cronies lighting cigars with $100-bills while they sketch out their plan to snatch food from poor children. This book looks at the numbers, looks at the facts, and lets a fair-minded reader draw conclusions for him/herself.

This is true fair and balanced journalism. Fair doesn't mean "having no opinion" or midlessly weighing two points of view equally, whether or not they are equally true. "Fairness" is a dispassionate, thoughtful look at reality. In this case, the reality is that some very intelligent economists with a real dream of making America's economy stronger have a plan. The problem is that that plan might have some dangerous intended and unintended consequences. Altman's book lets the reader decide whether the gamble is worth it.

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Summary: An Essential Book
Review: We all know about the war on terrorism. And the war in Iraq. The debates about these things are fairly clear. Or at least ubiquitous.

And yet perhaps the Bush Administration's central and most groundbreaking effort has to do with none of these topics, but rather with the economy. The Administration is seeking to re-orient it from top to bottom. And there is little coverage of this in the news.

Daniel Altman explains it to me in crystal clear and easy prose. What I liked the most was the sort of intellectual history approach he takes, showing where the ideas for the "neoconomy" came from, as in what professors espoused them, who their students were, and how they came to positions of influence in Washington, and the responses over the years to their ideas. It's a fairly small group with a distinct lineage--think of the economists' equivalent to Wolfowitz and the Straussians.

One striking thing, if I read it right: the desired endpoint for the Neocons is a society in which only working people are taxed. A person who derived their income not from salaries, but entirely from stocks, bonds, and the like, would not be taxed at all.

The neoconomists' measures, supposedly undertaken for the bland and admirable goal of enhancing savings, inevitably end up being regressive.

Altman is quite rigorous and judicious, weighing the arguments on their own terms, following them to their logical conclusions, noting contradictions and inconsistencies in their own logic.

What's being touted is quite different from what's really going on, as the neoconomists themselves admit. It seems, apparently, that an attempted revolution is in the works, behind the scenes. This book peels back the veil and lets us know what is really going on.

I came away from this book with a better understanding of both basic economics and the real paradigm shift that is potentially underway in the largest economy on earth.

Rating:
Summary: Refreshingly un-biased
Review: With presidential elections on our doorstep, Altman's 'Neoconomy' comes to bat with light to shed on future repercussions of the Bush Administration's economic plan. Altman's 'Neoconomy' is refreshingly un-biased allowing the reader, whether PH.D or undergrad, to determine what America's economic futrure holds in store.
Altman is charismatic, intelligent and makes his points fairly and concisely. I was thouroughly convinced of this after listening to him speak in San Francisco.