David Stockman is pissed. Seven hundred forty two pages worth of pissed. And he wants you to know it.
If you're under 30, Stockman was once famous for daring to criticize then-President Reagan's economic policies. Stockman was the budget director, and for his truth telling he received a one-way ticket to Reagan's "woodshed," where he was undressed and spanked for daring to share his contrarian views.
Fast forward to the present moment. Stockman is angrier than ever -- at Reagan, at FDR, at Nixon, at both Bushes, at Alan Greenspan and Ben Bernanke, at Hank Paulson, and above all, at Barack Obama. He has written the most important book on the American and world economy in the last 50 years, and his outrage, unrepentant fury, name-calling, and overall orneriness -- not to mention his myth-busting and unassailable and often astonishing research -- make his book a must-read for everyone who pays taxes, owns a home, buys stock, or ever hopes to retire without becoming a ward of the state.
The Great Deformation: The Corruption Of Capitalism In America (Public Affairs, $35) clearly went unedited; no one dared. The book is indifferently organized, rampant with repetition, and prone to errors in basic math. Yet what would an editor venture to say to an author who calls FDR "a relentless dilettante with an affinity for quixotic schemes and downright quackery"?
Or Richard Nixon "feckless" and the creator of a financial "abomination."
Milton Friedman: "profoundly erroneous."
The Fed in general: "pusillanimous."
Fed Chair Ben Bernanke: "In the wrong high office at the worst possible time."
Secretary of the Treasury Hank Paulson: "emotionally unglued and hysteria-gripped."
And lately? The "uniquely unfit" Mitt Romney's "winnings from bubble finance during his years at Bain Capital were so preposterously impossible in an honest free market that it's no wonder that his 2012 campaign amounted to one giant platitude."
To be fair, Stockman's an equal opportunity destroyer. Stockman decries President Obama's "reckless, unspeakable folly" as "an unnecessary and inappropriate fleecing of American taxpayers" and "a naked exercise in borrowing from the future on Uncle Sam's credit card."
So Dave, name-calling to one side, where's the beef?
Stockman's outrage rightly focuses on almost a century of governmental mismanagement of the economy, from FDR's insouciant trashing of the gold standard, the underpinning of the world economy, which unleashed the forces that led to World War II; Nixon's 1971 wage-and-price controls, which brought in their wake the high inflation and double-digit "misery index"; through the outrageous Reagan-Weinberger imperialist military buildup; all leading up to the crony capitalism that nearly destroyed the world economy in the 2008 meltdown.
He decries as myth these ideas:
•FDR's New Deal ended the Depression (it prolonged it);
•The Depression signaled a failure of capitalism (no, the Depression resulted from trade protectionism and the late 1920s stock market bubble that temporarily took down the farm and industrial sectors of the economy);
•The Reagan military buildup took down the Soviet Union (it was DOA economically by the time Reagan was elected and the vast military bequeathed to Reagan's successors made possible the Iraq and Afghanistan wars without Congressional approval);
•GM was on the verge of collapse in 2008 (actually, GE CEO Jeff Immelt's bonus was on the verge of collapse and GM would have recovered without government intervention);
•And the biggest Big Lie of all, that the world economy was teetering on the edge in 2008 (Paulson and a few other "feckless bailsters" head-faked a compliant, moronic George W. Bush and a terrified Congress into rescuing Wall Street from nearly a trillion dollars of its drunken sailor-style gambling losses).
A little bit of history, folks. In the first half of the 20th century, two economic theories competed for world primacy. One was Keynesian thinking, which says that you contract the money supply when the economy is strong and print more dollars when it's weak, and thus control the business cycle. The other was the brainchild of von Hayek, an Austrian economist who believed that the free market could manage itself without the intervention or manipulation of central banks.
Keynes was charming and eloquent; everybody loved him. Frederick Von Hayek was a lousy public speaker with a scruffy beard and an impenetrable German accident. No one liked him. In short, Keynes won, influencing everyone from FDR, Carter and Obama (overtly) and Nixon, Reagan, both Bushes, and a bunch of Fed chairmen including Alan Greenspan and Ben Bernanke (covertly).
As a result, whenever the economy's a mess, like right now, the government prints gazillions of hundred dollar bills, hoping that people will spend their way into prosperity -- which is as ridiculous an idea as it sounds.
The problem is that pretty much everyone, with the exceptions of Dwight David Eisenhower and his Fed chair William McChesney Martin, Paul Volcker, and David Stockman himself, have been drinking Keynesian Kool-Aid for eight decades.
The result: "Sunset in America," in Stockman's cruel twist on his former boss Reagan's 1984 campaign slogan, "Morning in America."
At the end of his exhausting (for author and reader alike) tome, Stockman does provide a lengthy section on solutions, none of which are likely ever to be implemented, including a return to the gold standard and sound banking, the abolition of the electoral college, and a single, six-year presidential term, so that people like Obama can only do so much damage.
"Required reading" is an overused term. In fact, proof of reading The Great Deformation should become a requirement for voting. Bring your dog-eared copy to the polls or stay home. The self-confessed smartest guy in the room has written a compelling, intensely readable book that exhumes aspects of economic history that both Democrats and Republicans likely wish would have stayed hidden. The Great Deformation is the book that everyone in Washington, at the White House on both sides of the aisle in Congress, at the Treasury, and in the lobbyists' offices on K Street, fervently prays that you never read.