The Roaring Nineties

First, some irritations with this book. The beginning chapters seem not to have been proofed. There are occasional typos (dare I say spelling errors?) and curious phrases. While the overall meaning was clear, I found the errors distracting. For unknown reasons, these problems seem to decline and disappear by Chapter 3.

This suggests the important message of the book is in its later chapters. There, however, Stiglitz gets a little repetitive. On the other hand, I could take the ending chapter and epilogue as a summary emphasizing his memoir of service in the Clinton Administration.

On account of those flaws in the book, I rated it 4*. For pure content and willingness to joust with sacred cows, however, Dr Stiglitz earns 5*.

The first part of the book is essentially a complaint about things not done, or the wrong things done, in which Treasury is the bete noir. It appears the celebrated Mr Rubin and his Finance World henchmen were in cahoots with Wall St and the IMF in preventing Prof Stiglitz' hopes and schemes from coming to fruition. When Treasury ideas actually worked, as in the 1993 tax increases, it was accidental. As 1993-97 Chairman of Clinton's Council of Economic Advisers, Stiglitz was in close proximity to Clinton and Rubin, so had to suffer the embarrassing consequences of his advice being on the wrong side of history. So, it could be that he diminishes Clinton's successes because they weren't invented in his office; or, maybe not.

While Stiglitz points out how various Treasury and IMF prescriptions were bad medicine for the world's poor and needy, and poison for many developing countries, it is not clear how the things that worked, worked. He says the 1993 tax increase was against all conventional economic theory; in that, I concur. He says that the economy subsequently improved as a result of increased confidence, the computer revolution, the peace dividend and a mix of other factors. I agree with those facts. However, he never makes clear, in a step by step way, how the mistaken 1993 fiscal policy succeeded in creating a "virtuous circle." I am still puzzled why the Clinton Administration succeeded, since all others failed who followed that prescription. It would be useful to know why this exception to theory worked. Since Stiglitz doesn't provide an explanation, even though he is capable of doing so, maybe there is no explanation; we may have to attribute the Clinton boom to luck.

If Stiglitz doesn't explain how a mistaken policy succeeded, it is clear the Clinton Administration was constantly pursued by corporate and other special interests. The same interests are at home in George W Bush's White House. I certainly got the impression that it matters not who gets elected President, because the United States government is being directed by competing interests. (Disclaimer: I am predisposed to receive that message.) The American style of government is the compromising of interests; hence, pork barrels, log-rolling, boon-doggling and horse trading. All this and boodle, too, is implicit in our Constitution, and has been going on from the beginning. Only an exceptional and dominating personality can overcome the death of a thousand cuts which awaits a President and other elected officials.

At one point, he complains that the pressure of making day to day decisions simply overwhelms the desire to accomplish great things (p 280). Thus are the men in office driven, not drivers. From this, I concluded it is much better to be out of office than in it, if one wants to have any control or understanding of what is going on. That is why lobbyists and parasites of all sorts are usually more successful in setting the agenda than the office holders and bureaucrats. [Thus I am more appreciative of just how strong Lincoln and FDR really were.]

Stiglitz' truly important economic themes are laid out in these headings:

The deficit reduction myth
The myth that wars are good for the economy
The hero myth
The myth of the invisible hand
The myth of finance
The big, bad government myth
The myth of global capitalism
The myth of triumphant capitalism, American style
 

... Chapter 11, "Debunking the Myths"

Now, I recommend this book because it saves me the trouble of writing some of it, especially the last chapters. (I have disputed the same myths in "Uh Oh ... Boring".) I welcome Stiglitz' book, because it is really hard to find people who think (feel?) as I do. It is especially difficult to find anyone with credentials who can and will dismiss the market fundamentalists, by producing the evidence of their failures. I am grateful for this work, as it makes me feel less alone; it shows I am not a madman.