Expert's view of US economy; The American Economy in Transition, edited by Martin Feldstein. Chicago: University of Chicago Press, $20.
This is a book based on a conference, a literary format which often fails because there is too much dependence on a collection of speeches of varying quality. However, this National Bureau of Economic Research (NBER) book succeeds because of the fine scholarship in the background papers for this affair held in January 1980 -- and the excellence of remarks by other participants.
The bureau, perhaps the nation's most prestigious economic research organization, was able to round up such top economists as Milton Friedman, Simon Kuznets, and Paul A. Samuelson (all Nobel Prize winners), Arthur F. Burns, Herbert Stein, and the late Arthur M. Okun (all former chairmen of the Council of Economic Advisers), plus other well-known economists. Also participating were industrialists and former government officials.
The basic question: "Where has the United States economy gone wrong?" The economy enjoyed tremendous growth in the 1950s and '60s, with relatively modest inflation, in stark contrast to the rampant inflation, low growth, and meager productivity gains of the '70s.
NBER President Feldstein writes: "There is a strong temptation to regard the poor performance of the past decade as the beginning of a new long-term adverse trend . . . . It is, however, too early to know whether such an extrapolation is really warranted."
revisions of the statistics last fall by the Department of Commerce indicate that the economic performance of '70s wasn't quite so bad as the figures in this book indicate. Nonetheless, it was worrisome.
Dr. Feldstein maintains that perhaps the most important reason for this deterioration was the expanded role of government. He speaks of "mismanagement of monetary and fiscal policy" worsening the business cycle and inflation, of regulation lowering productivity growth, and of government income- transfer programs destabilizing family life.
Whether or not his analysis is correct -- and it will be hotly debated -- this book also provides outstanding essays on post-World War II trends in such areas as financial markets, the business cycle, economic policy, international trade and investment, population, the labor market, and productivity.
Most of the papers are well written (in English, not in econometric formulas). But the book is not light reading. It is for the academic or others who want an in-depth understanding of the America n economy.