The political economy of inflation in the United States

Recent Books This book offers a comprehensive examination of tax reform designed to stimulate capital formation and economic growth. By focusing on competing tax initiatives in the political arena, this study outlines the sign&ant tax policy issues that must be resolved. Among the issues addressed are as follows: the growing interest among policy makers in major restructuring proposals, including the flat rate tax concept; an expenditure or consumption tax system; and a broadening of the existing federal income tax base. Off the Books: The Rise of the Underground Economy. Philip Mattera. New York: St. Martin’s Press, 1985. 160 pp. $25.00 ISBN O-312-58206-4. Mattera’s study examines a widely known but little investigated phenomenon of our post-laissez-faire economy: the rise of underground employment market. He analyzes in detail the structure and extent of this economy and outlines the economic transactions that occur within it. He demonstrates that the rise of this “black market” economy is playing a major role in the current crisis of the global economy, as manifested in the transformation of the labor market, the growth of new forms of criminal activity, and the crisis of the state. The study examines the challenge the underground economy poses to governments of all persuasions. The Painful Prescription: Rationing Hospital Care. Henry J. Aaron and William B. Schwartz, Washington, D.C.: The Brookings Institution, 1984. 161 pp. $22.95 ISBN O-8157-0034-2 ($8.95 ISBN O-8157-0033-4 paperbound). For three decades the cost of hospital care has been rising faster than inflation or the growth of population. In this book, the authors examine what choices the British have made in hospital care and how they made them, and then draw inferences about how Americans would respond should they undertake to reduce sharply the growth of medical spending, as have the British. The amount of care provided is compared; ten important medical procedures are examined and compared as well. The Political Economy of Znflation in the United States. Paul Peretz. Chicago: University of Chicago Press, 1983. 268 pp. (ISBN O-226-65672-1 paperbound). In this timely study of the politics and economics of inflation, Paul Peretz makes extensive use of empirical material, including opinion surveys, aggregate data, and historical evidence. He ana587

Recent Books lyzes real and perceived effects of inflation and their relation to political demands and economic policy making. The American pluralist-democratic system as we11 as elitist and Marxist theorists have offered quite contrary explanations for inflation. Peretz manages to refine these theories into a series of testable alternative hypotheses and to show which are best supported by the evidence. Presidential Economics: The Making of Economic Policy from Roosevelt to Reagan and Beyond. Herbert Stein. New York: Simon and Shuster, 1984. 414 pp. $16.95 ISBN O-671-44127-2. In 1980, American voters elected a president who promised to reverse the expansionist, interventionist trend in economic policy that had endured for almost 50 years. Ronald Reagan’s election seemed to signal both the end of the Keynesian era and the beginning of a new conservative order. What has become of the Reagan promise? In this examination of the event, policies, and personalities that have shaped our economy, Herbert Stein shows where we are, how we got there, and what we can expect in the future. He shows how supply-side economics promised more than it could deliver and calls for a new economic consensus based on fiscal and monetary reforms that reflect the long-term national interest. Reaganomics: A Midterm Report. Wm. Craig Stubblebine and Thomas D. Willett, eds. San Francisco: ICS Press, 1983. 232 pp. $14.95 ISBN O-917616-54-5. In this book, twenty-one economists, both inside and outside the Reagan administration, explain where the supply-siders went wrong-and where they were right. The book departs from most analyses by stressing not only the short-term problems but also the likely long-term impact of the administration’s initiatives. All the central issues are addressed: the decline in inflation, the effects of monetary policy on interest rates and unemployment, the looming deficit crisis, and regulatory reform. The editors conclude that the Reagan program is in fact a traditional mix of restrictive fiscal and monetary policies advocated by mainstream economists. Reconstructing the Federal Budget: A Trillion Dollar Quandary. Albert T. Sommers, ed. Praeger Special Studies. New York: Praeger, 1984. 260 pp. o-03-068902-3. The accumulating debt of the federal government is approaching $1.5 trillion, and by present projections, the deficits of the next several years will add another trillion dollars to the debt. In this 588