In economics, as in politics, there is a tendency for history to repeat itself to some degree. There is, for example, the business cycle with its recurrent pattern of recessions and expansions. There are questions of budget deficits, tax changes, or tight money which turn up periodically. So it can be useful for moderns to try to learn from the successes and failures seen in economic history.
Herbert Stein is a veteran of the wars of economic ideas - and he deserves a medal for this book.
One noted battlefield for Mr. Stein was his role as chairman of former President Nixon's Council of Economic Advisers, 1972-74. But he had been studying or recommending ''macro-economic policy'' - broad budget and monetary issues - for decades before, and he has continued to do so ever since.
In this book he reviews and analyzes economic policymaking since the Great Depression. He does it so well that the volume should be compulsory reading for journalists, economists, and politicians. It could also give any citizen both a greater understanding of national economic affairs and a stronger sense of economic realism. He spells out, often with sardonic humor, the differences between political posturing and genuine economic issues.
Stein is a conservative economist, and this position is reflected to a moderate degree in his analysis. But he is mostly fair in presenting both sides of the various policy controversies.
On one of the big questions under debate in this election year, the budget deficit, Stein writes: ''Between 1981 and 1983 the country moved from a flush of enthusiasm for tax reduction to a sad recognition that taxes were too low - that we were ... an undertaxed society. ... Until Reagan became president it was always possible to believe that a determined budget-cutter in the White House could find vast amounts of money in expenditure programs that could be eliminated - and that Congress would be forced to eliminate them if some of the revenue was removed. But we have seen that 'even' President Reagan could not propose a budget that cut expenditures enough to hold deficits down without more taxes than were left after the 1981 tax cut. This may have been in part for political reasons. That is, there may have been bigger cuts that he would have liked to make if the Congress and the country would have accepted them. But undoubtedly he and his colleagues, once in office, discovered that the needed justifiable expenditures were larger than they thought.''
Stein argues that a tax increase is now needed, because it is necessary to devote a larger share of the national output to defense and to private investment, and undesirable to reduce the share devoted to consumption by the very poor.
''That means basically,'' he states bluntly, ''that it is necessary to reduce the share of the national output devoted to the consumption of middle-income people, the consumption of the rich absorbing only a tiny part of the national output.'' That's the sort of tough reasoning and blunt language that make the book valuable.