Within Our Means. - book reviews

This dry, straightforward short book should scare the dickens out of every American more than any Steven King novel. Alfred Malabre writes about economics for the Wall Street Journal, which is not known as a bastion of financial caution. This book follows his well-received Beyond Our Means, which chronicled how deficit spending on the national, corporate, and personal levels had made the US ripe for takeover and almost guaranteed a permanent underclass.

Within Our Means is a guide for natural action to reverse our financial decline. The solutions Malabre offers are not easy, but he persuasively argues that they will hurt the rich more than the middle-class or the poor. He is a pessimist for the short term because Congress and the President have proven completely unwilling to face reality; he is somewhat optimistic for the long

term because the public has started acting without them.

This is a great overview of how the US economy affects individuals and how our national financial screwups of the last decade will ravage us and our children. It also gives good advice on how to turn our economy around in a sound moral fashion, and how individuals can help the national healing. Paul Hoffman

Other government data show that hourly pay levels also rose briskly during the Reagan years, but only if inflation isn't considered. The hourly rate in November 1988 was one-third greater than in 1981. But when an adjustment is made for inflation, this gain evaporates. Like the weekly pay figure, inflation-adjusted hourly pay had been edging down since early in the previous decade.

In the 1980s, U.S. savings, as a percentage of after-tax income, fell to the lowest levels since the 1930s. At 7.5 percent when Reagan assumed the presidency, the savings rate progressively diminished -- to 6.8 percent in 1982 and on down to rates of less than 4 percent in 1987 and 1988. . . . For perspective, the savings rate in Japan in Reagan's last years exceeded 20 percent of income, more than five times the comparable U.S. rate, and the rate was rising.

Hope springs eternal, but it is difficult in such circumstances to believe that very deep trouble can in fact be avoided. The economy has grown increasingly fragile after nearly a decade of expansion prolonged by the buildup of debt, mainly in the Reagan years. The business cycle remains intact, with a new recession bearing down the road. The Cold War peace dividend has gone east of Suez. To try to cut the budget deficit at such a recessionary time is hazardous, since reduced government spending and higher taxes act to restrain economic activity. That's hardly the formula for keeping a recession in check.

Within Our Means

Alfred L. Malabre, 1991; 167 pp.

$21 ($23 postpaid) from Random House Inc./Order Dept., 400 Hahn Road, Westminster, MD21157; 800/733-3000 (or Whole Earth Access)

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