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Second Thoughts: Myths and Morals of U.S. Economic History.

In Second Thoughts: Myths and Morals of U.S. Economic History, many of our leading economic historians demonstrate that commonly accepted wisdom about America's economic past is often wrong, and therefore misleading. Reading this insightful little book will persuade the professional economist, the student, the general reader, and hopefully, the policy maker, that we will master our economic future only when we understand the lessons of the past. As editor Donald McCloskey boldly puts it, "the quickest route to economic wisdom in our time, it turns out, is a detour through the nineteenth and early twentieth centuries. Second Thoughts gives two dozen cases in point."

The six groups of lessons focus on International Relations and Foreign Affairs; Workers and Employment; Women and Minorities; Government and the Economy; Regulation, Deregulation, and Reregulation; and Technology and Competitiveness. Among the highlights are these:

* Jeffrey Williamson corrects the standard misperception of the Third World's economic failings, explaining that "income per head grew at about 1 percent per year among the nineteenth-century industrializers while it has grown at more than 3 percent per year in the Third World as a whole," in the past three decades.

* Supporting one of the book's major themes, Price Fishback carefully reasons that regulation can lead to unintended consequences, as when workers' compensation laws induced higher accident rates among early twentieth-century coal miners.

* Robert Margo convincingly demonstrates that "middle class blacks owe their successes in large part to themselves, and to the sacrifices of past generations of black parents who . . . sent their children to school, and . . . moved great distances so that their children might have a better life."

* Barry Eichengreen gives a superb, concise account of the gold standard, persuasively arguing that because the preconditions are no longer present, "a smoothly functioning gold standard would be impossible to reestablish today."

* Mark Thomas attacks the idea that trade surpluses are inherently "good" and deficits inherently "bad" by tracing our trade history. Over the entire nineteenth century, as our nation rose in economic might, there were only twenty years when the United States did not run a deficit.

* Terry Anderson and Peter Hill provide a compelling case that there is no such thing as a free lunch. Not even free land under the Homestead Act was really free.

* Richard Sylla adds a masterful history of bank regulation and deregulation, showing that regulation and half-way deregulation both fail when they ignore economic principles.

* Finally, there is McCloskey's own contribution, a true gem. With his usual rhetorical flourish, McCloskey wields the knife of economic analysis to eviscerate the body of arguments that international economic interaction is analogous to war or athletic competition. He cites the cold fact that Britain and the U.S. have not declined economically, and argues that we benefit from the progress of our "rivals." The ideas of Lester Thurow, Robert Reich, Paul Kennedy, and David Landes are sliced to ribbons.

The strengths of the book are the topics it covers, the morals it preaches, and the All-Star cast selected by McCloskey. Unfortunately, the publishers handicapped the authors by forcing them to state their case very briefly and to avoid references. Many readers will come away unsatisfied because some of the arguments have been compressed, becoming assertions without enough elaboration or supporting evidence. I found this to be the case for Julian and Rita Simon's chapter on immigration, for example, and would have learned much more if John Wallis had enough space to ruminate on whether or not the Great Depression could ever happen again. Fortunately, many of the authors rise above the constraints and deliver tightly reasoned, yet heart-felt arguments that will engage readers more than the staid journal articles and monographs on which they are based. I have assigned this book to the undergraduates in my Principles of Economics course, and it would complement many other courses, especially Current Economic Issues or American Economic History. A college education is incomplete if these lessons have not been learned. Unfortunately, the volume does not have enough room to attack other powerful myths, such as the one about the indispensable role of unions in delivering American workers higher wages and shorter hours. I look forward to follow up volumes aimed at dispelling additional myths and popularizing the important findings of economic historians. ROBERT WHAPLES Wake Forest University
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Author:Whaples, Robert
Publication:American Economist
Article Type:Book Review
Date:Sep 22, 1993
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