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Book Review: The Right Data by Edwin S. Rubenstein, et al.

DECEMBER 01, 1994 by ROBERT BATEMARCO

National Review Books • 1994 • 409 pages • $17.95 paper

Did you know that 82 percent of the jobs created between 1982 and 1989 required high levels of skill and paid accordingly? . . . or that in 1990, there was one tax consumer for every 1.3 taxpayers? . . . or that during the 1980s housing became more affordable for those of middle income? . . . or that charitable giving during that same period increased by more than can be accounted for by higher incomes? If you did, you did not learn it from the mainstream press, whose constant refrain was that the ‘80s were a period of greed and indifference in which government programs were slashed, the rich got richer, the poor got poorer, and the middle class got shafted. If you didn’t, reading Ed Rubenstein’s The Right Data, will expose you to these facts plus many more.

The first half of this book consists of Rubenstein’s “The Right Data” columns which appeared in National Review between 1988 and 1993, grouped by topic. This is followed by a series of articles published by various authors in a special 1992 issue of that same fortnightly, entitled “The Real Reagan Record.” Contributors include Paul Craig Roberts, Martin Anderson, William Niskanen, Alan Reynolds, and Rubenstein, among others. The remainder of the book presents raw data tables with a minimum of commentary.

Although a supply-sider, Rubenstein transcends the caricature of that position by placing more emphasis on how high tax rates depress private economic activity, and less on how they cost the government revenue. Indeed, I found his discussion of the impact of various policies on job formation most enlightening. He cites OMB data which put the cost of the jobs government public work projects “create” at anywhere from $136,000 to $400,000 (versus $40,000 for the private sector), making it clear why such projects are net job destroyers. He also cogently illus trates how freer trade with Mexico has created jobs—both directly through exports (to which he attributes almost 400,000 new jobs between 1986 and 1990) and through the cost-cutting it made possible.

In the same vein, Glenn Yago’s essay on that most maligned of financial innovations, high- yield bonds (pejoratively and more commonly dubbed junk bonds by their detractors), pinpoints how they led to employment gains, with job growth six times higher than industry averages among those firms whose debt is classified as “junk.” He also puts the lie to James Stewart’s contention that junk bond-financed takeovers were a major contributor to unemployment, noting that only 6.6 percent of jobs lost in the ‘80s were lost as a result of takeovers (p. 250).

While, as I said earlier, the theoretical framework binding together the facts and figures presented here is basically sound, there are a number of unfortunate lapses. One of the worst is that the author seems to have a soft spot for the nearly oxymoronic idea of government investment. This leads him to downplay the harm done by government deficits so long as they “finance roads, bridges, defense installations, schools, and other capital projects that will increase future GNP . . .” (p. 57). But what about those roads and urban raft systems costing thousands of dollars more per rider per year than their customers are willing to pay for them, the bridges which are investments not in future GNP but rather in votes and campaign contributions for the legislators who “bring home the bacon,” the military bases that even the Pentagon considers useless (Rubenstein himself cites the Defense Department’s claim that fewer than one tenth of our bases are essential), and the schools whose inefficacy is a national scandal? The nature of government guarantees that such waste will constitute a large portion of government spending. And it renders absurd Paul Craig Roberts’ suggestion that we should adopt the Japanese practice of counting government spending as investment (p. 230).

Most of the articles in this book are two pages long, with none longer than twelve pages. This, plus a thorough index, makes it easy for one to quickly find out what one wishes to know about a specific topic. It also means that the seeker after an in-depth treatment of these issues will have to look elsewhere. Nevertheless, anyone looking for the facts that can poke holes in the most common misrepresentations of our recent economic record would find this book a good place to start. []

In addition to editing the book review section of The Freeman, Robert Batemarco is a marketing manager for economic analysis at J. Crew in New York City and teaches economics at Mary- mount College in Tarrytown, New York.

ASSOCIATED ISSUE

December 1994

ABOUT

ROBERT BATEMARCO

Robert Batemarco is a former economics professor who is currently a vice president at a New York marketing research consultancy.

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