U.S. Economy

State and local levels of government were more burdensome to people in the early stages of our country than federal levels. The national government mainly received revenue through tariffs and land sales.

The growth of government power in American history has been by creating emergencies that then necessitate a ratcheting up of centralized power and war. Crisis & Leviathan by Higgs is a prime resource for this topic.

The role of ideology in the growth of government is required as intellectual cover for what is done regardless of the government form (e.g. monarchy or socialism). For example, Arthur Schlesinger, Jr. played such an intellectual role.

State efforts to reduce inequality and poverty have been, at best, ineffective. Everywhere we turn, writes Art Carden, the prophets of doom are telling us that the market economy sows the seeds of its own destruction by generating unequal distributions of income.

It isn't altogether clear that increasing inequality has brought with it pronounced deleterious consequences. In spite of claims to the contrary, the United States (which still enjoys more freedom than almost every other country on Earth, in spite of its own massive regulatory/welfare state) outperforms mixed-economy welfare states on a number of margins.

The Fed is powerful but it can't create economic growth, writes Frank Shostak. Contrary to Monetarist claims, even the attempt to flood the markets with money can backfire if the conditions that allow for sustainable investment don't exist. More pumping destroys real funding and destroys more businesses, which in turn makes banks reluctant to expand lending. 

How much comfort can the U.S. take in the sufferings of Japan? In a side-by-side comparison of the productivity of the two economies, the U.S. comes off looking worse than one might expect, while Japan, long in the mire of recession, not as badly as one might assume. Example: in the past 12 months, government spending in Japan fell by its largest amount in at least 22 years. 

As we observe the current frenzy of lawyers preparing to sue McDonald's and Burger King—and even suing Kraft Foods, the maker of Oreos—for allegedly causing their clients to suffer from obesity, we cannot help but wonder what lunatics have taken over the U.S. legal system.

The measures of inequality on which analysts, policymakers, and armchair pundits typically lean may be misleading, argues Art Carden. Even when measures of real income tell us otherwise, the real differences in income and wealth generated by the free market may be much smaller today than they were 100, 50, and even 10 years ago. So maybe "inequality isn't growing fast enough" for some—it doesn't appear to be growing at all.

Allan Meltzer did not set out to encourage Americans to consider the unthinkable: the Fed is so dangerous to our economic and political health that it should go. But maybe, just maybe, his new but flawed book may reignite a debate that goes back to Jacksonian America. Gregory Bresiger is the reviewer.