Not all forms of capitalism are created equal.

Author:Merry, Robert W.

A review of

The Great Equalizer: How Main Street Capitalism Can Create an Economy for Everyone by David M. Smick, Public Affairs, 2017

My longtime friend David M. Smick expressed misgivings when I offered to review his forthcoming book in his own magazine--the one in your hands at the moment. Dave Smick of course is the publisher, editor, and founder of The International Economy (in addition to his extensive consulting and investment activities), and he suggested that devoting magazine space to his latest musings on the financial state of the world might appear a bit immodest or perhaps too self-promotional. I countered that his readers deserved an exploration of the book's thesis and underlying arguments and shouldn't be deprived of such an exploration simply because he owns the magazine. He wavered, then relented.

I'm glad he did because I surely was correct in thinking this particular readership would want to know about this particular book, entitled The Great Equalizer: How Main Street Capitalism Can Create an Economy for Everyone. It is a fitting sequel to his 2008 bestseller, The World Is Curved: Hidden Dangers to the Global Economy, which warned that the world's financial situation was at a tipping point and could collapse at any moment. It promptly did collapse, and 40 percent of the world's wealth evaporated almost instantly. Not surprisingly, Smick won a highly deserved reputation as a particularly percipient economic analyst and seer. New York Times columnist David Brooks called The World Is Curved "astonishingly prescient."

But all that now is what Smick calls "old news." The question for today is what has happened since the so-called Great Recession, and why global growth rates-- including U.S. growth rates--have never managed to catch up to historical norms. That is the subject of The Great Equalizer.

It's not a treatise for the faint of heart. In surveying the economic scene in America and around the world, Smick sees powerful dangers lurking. The U.S. economy, he writes, is "a horror show that can take us all down." He adds, "America's future is at serious risk." And the country's economic disease is infecting its politics, as always happens when people feel helpless in the face of financial travail. "Today," writes Smick, "large parts of the American workforce are so angry that the long-term future of American politics is beyond prediction." Further, it isn't just the American economy that is raising alarms. "The global monetary system," he warns, "has become a high-risk casino."

But, true to his past association with that great supply-side optimist of the 1980s and 1990s, Jack Kemp, Smick perceives a solution to what ails the national economy. Kemp, the New York congressman and cabinet secretary in the George H. W. Bush administration, persistently hailed the underlying economic force and energy that is unleashed when ordinary folk can apply their entrepreneurial zeal and risk-taking bravura in a world unfettered by artificial barriers erected by government, often in league with Big Business, Big Labor, and Big Finance. Some thirty years after Smick's stint as Kemp's congressional chief of staff, he still finds inspiration in the Kemp vision. "The innovators," he writes, "are the secret to long-term prosperity."

But the innovators, dreamers, discoverers, and risk-takers--Smick's economic heroes--aren't driving the U.S. economy today. They are hunkered down, shackled by economic uncertainty, regulatory intrusion, inaccessible capital, and a scourge of Bigness. "The system," writes Smick, echoing Donald Trump, "has been 'rigged.'"

How did this happen? Smick's book answers that question by dissecting the works and actions of economic policymakers over the past decade and then laying bare the results--and the follies--of their complex ministrations. And the timing couldn't be more propitious, with the emergence of a new presidential administration that seems unshackled by conventional rubrics and prevailing habits of thought. In that sense, The Great Equalizer calls to mind George Gilder's 1981...

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