The Great Deformation

April 1, 2013
Stockman, Ronald Reagan's director of the Office of Budget and Management, diagnoses America's political system as a "tyranny of incumbency and money politics" in this extensive treatise. The Troubled Asset Relief Program incited him to begin this historyâgovernment interventions being antithetical to the Reaganismâbut he argues that short of "sweeping constitutional change," any solution "is so radical it can't happen." Stockman's narrative holds that the government caused the "Great Recession" by saving private entities like AIG, that the roots of the 2007-2008 housing crisis stretch back to the Bretton Woods conference, and that all this behavior is a revival of New Deal Keynesianism. He includes comprehensive lists of heroes and villains; with Ben Bernanke, Hank Paulson, and Alan Greenspan all named among the latter. After several hundred pages of deep analysis, he offers 13 suggestions for a way forward, but the book, otherwise focused and provocative, can't decide whether it is a history or a policy brief; his obsession with history overtakes the need to design a future, and instead of each option receiving due consideration, they're squeezed onto the end. Since Stockman convinced us the problems are nearly insoluble, a more balanced presentation would make this a more functional document.

March 15, 2013
Former Michigan congressman and budget director for the Reagan administration Stockman (The Triumph of Politics: The Inside Story of the Reagan Revolution, 1986) tells "the real story [of]...how the nation's conservative party fostered the great fiscal breakdown now upon the land, and got away with it." The author laments the failure of officials to permit the financial collapse of 2008 to run its course. "Had this attack been allowed," he writes, "hundreds of billions in long-term debt and equity capital that underpinned the Wall Street-based speculation machines would have been wiped out." It also would have "implanted an abiding 1930s style generational lesson about the deadly dangers of leveraged speculation." The author insists that such an outcome would have been "a good thing" as well as "profoundly therapeutic," but Stockman fails to offer convincing refutation of the argument that things would have gotten out of control. He chastises Bernanke, Geithner, Paulson and others as agents for Wall Street's financial power, but the author's narrow focus on finance does not adequately address the real threat of a plunge into a depression worse than that of the 1930s. However, Stockman performs a real service when he debunks the myths that have been associated with Reagan's conservatism and promotes Eisenhower's fiscal and military conservatism. Two such myths, which provide the framework for this massive work, are specifically highlighted. First is his analysis of "where the Reagan Revolution's fiscal math hit the shoals," leaving a legacy of permanent "massive deficit finance" and the legend that "deficits didn't matter." Second, he traces the roots of perennial deficits back to Roosevelt's decision to take the country off the gold standard in 1933 and Nixon's ending of the dollar-to-gold convertibility in 1971. Stockman forcefully conveys enormous amounts of knowledge, but some assertions will be found to be contentious.

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April 1, 2013
Stockman, veteran of the Reagan White House and Wall Street, offers his self-described polemic, a wide-ranging indictment of the American government-economic complex; free markets and democracy have been under long-term attack, and the author explains why we have myriad problems, perhaps intractable. He indicates the book contains much original interpretation of financial and public policy events and trends of the last century, even a revisionist framework. Stockman concludes his lengthy controversial argument with: the cure . . . is to return to sound money and fiscal rectitude and to correct the great error initiated during the New Deal . . . . In pursuing humanitarian purposes the state cannot and need not attempt to manage the business cycle or goose the free market with stimulants for more growth and jobs; nor can it afford the universal entitlements of social insurance. Its job is to be a trustee for citizens left behind, maintaining a sturdy, fair and efficient safety net. This thought-provoking book will contribute to important debates on these issues.(Reprinted with permission of Booklist, copyright 2013, American Library Association.)