Much of the pessimism about the performance of the American economy in the 1970s is misplaced, according to the sophisticated statistical analysis that is at the core of this challenging study by a Brookings economist. Production, investment and R&D in manufacturing compared well with past decades and current European performance. America is not deindustrializing; employment has shifted significantly to high-growth and high-technology industries; the main troubles have come from domestic factors rather than foreign trade competition. Naturally there are some problems about this analysis, but it is well argued and cannot be ignored. Lawrence is less original in his case against sectoral policies and his preference for macroeconomic policies and letting market forces play. He calls for clearer analysis of what we are doing to ourselves and has some ingenious suggestions about trade policies and adjustment incentives.
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