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

"Neoconomy', along with `What's the Matter with Kansas' are probably the two most influential books I've read in the last five years. Forget all you know about Supply-Side Economics and Trickle Down Theory, Daniel Altman has written an easy to understand book on what the heck the Bush Administration is attempting with all those tax cuts and why they target the wealthy. In a nutshell the Neoconomy is about reducing taxes on unearned income and savings in order to increase the accumulation of capital. This capital could be used to modernize, increase productivity and raise the holy grail of economics, the GDP. The country would theoretically attain more wealth, higher standards of living and a happy future for all. It's not an insane plan and it has the support of many well respected economists. The first problem with the plan is that it seems rather self serving. George W. Bush assembled a cabinet with an almost unprecedented cache of wealth. The author estimates their combined assets at between 3 and 30 times the value of the second Clinton administration. These are exactly the people who will benefit most from tax cuts on unearned income. They are also people who can afford to take considerable risks with our economy and still come out fine if things go sour. The other larger problem is in the very nature of the leadership of George W. Bush. He surrounds himself with like minded people and gathered an economics team consisting almost entirely of supply-side adherents creating an echo chamber of ideas. These are people who have taken economics beyond mere theory into the realm of religious dogma. Unfortunately when tax cuts and growth are the only path to salvation everything else tends to get shortchanged. It has occurred to business owners that some of the things holding back growth include employee benefits, high American wages, regulations and assistance for the poor. The obsession with growth sometimes seems to reach the level of pathological and government finds itself ripping away at society's foundation in order to raise the tower higher. The author also points out that capital accumulation on its own is useless. You also need an educated society in order to both develop and use new technologies. Meanwhile the administration has consistently under funded education programs, worked to cut college grants and shown disdain for the scientific process (Read `The Republican War on Science' by Chris Mooney to see how bad it has gotten). The last problem is that the Neoconomy may just flat out fail. Like the weather, economics can be affected dramatically by small unexpected perturbations. It's difficult to predict what will happen in six months or next month much less decades in the future. The Bush administration is treating economics like a hard science when in reality it's based on difficult to predictable human psychology. Changing the tax codes may have exactly the opposite intended effect. By reducing taxes on dividends people may actua

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.

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.

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.

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".