The misunderstood economy
Robert Eisner
Everybody talks about the economy; everybody has complaints or recommendations. Few know what they're talking about. So asserts Robert Eisner - one of our nation's most distinguished economists - in this authoritative analysis of the real and imagined ills of the U.S. economy. In clear, accessible language, The Misunderstood Economy confronts an array of myths surrounding economic issues. Eisner begins by challenging many of the standards traditionally used to measure economic well-being. He argues that economic prosperity should not be evaluated by miscounted federal deficits and debt, nor by the level of prices. What counts is the production of goods and services to enjoy now and add to our enjoyment in the future - and the jobs necessary for that production. Eisner posits that the federal government's accounting systems are fundamentally flawed because - violating accepted practice in the private sector and in governments around the world - U.S. federal accounts make no distinction between current outlays and investment. We also fail to relate the growing federal debt either to government or national assets, or to our growing national income. The result is a failure to understand the real impact of deficits on our current and future economic welfare. Deficits can be too small, Eisner argues, as well as too large, and one can't tell which until they are measured right. Deficits can be too small in a sluggish economy with high unemployment, when the nation lacks essential purchasing power for the products of American business. Deficit reduction then destroys jobs and discourages investment; it offers current pain for no future gain. From this perspective, Eisner addresses common misconceptions on the role of taxes (he wouldn't raise them to reduce the deficit), social security, inflation, trade, and foreign investment. He sharply challenges the ideas of many economists, bankers, and politicians that a significant level of unemployment is "natural" and necessary. He rejects the ideas of those who poor-mouth the U.S. economy - by far the strongest in the world - but notes the failings that threaten our prospects for continued leadership in our rapidly changing, technologically advancing world. Throughout his lucid analysis, Eisner takes time to provide straightforward definitions of the terms so often used and misused in the course of national discussions . He concludes that we can enjoy greater prosperity today and build a foundation for greater long-term growth by focusing on the real issues and escaping the flawed thinking that has too often in the past been allowed to distort analysis of the economy.
