New York Times Book Review August 15, 1999 Beware of Bears ---------------------------------------------------------------------------- ----
An economist and a business reporter maintain that things are going swimmingly. By FLOYD NORRIS
There was a time when the campaign biography was a staple of the American political process. It was a book published as a man began his quest for the Presidency that painted him and his career in glowing terms. Flaws that could not be ignored were explained away.
W. Michael Cox, an economist with the Federal Reserve Bank in Dallas, and Richard Alm, a business writer for The Dallas Morning News, have written such a book on behalf of the American economy. They have a story to tell, and an amazing mastery of arcane economic statistics. But the effect is blunted by their reluctance to concede any possible problems.
By their account, ''Myths of Rich & Poor'' is needed as ''an antidote to the prevailing pessimism'' about the American economy. But that pessimism is hard to find just now. Worries about American competitiveness and corporate downsizing have faded in recent years as the economy has boomed. As I was reading this book, the Conference Board reported that Americans were more enthusiastic about current economic conditions than at any time since the organization began conducting consumer confidence surveys in 1967. (Confidence has since slipped a bit.)
One of the constants of those who have bemoaned the American economy in recent years has been statistics indicating that average income, adjusted for inflation, fell in the 1970's and 80's (although it has recently begun to rise nicely). Cox and Alm criticize those figures on several grounds, arguing, for instance, that inflation is overstated and that wage figures do not reflect growing benefits.
And what of income distribution? Sure, the richest people get a bigger share of the pie than they used to, the authors say, but so what? The pie is growing, and the economy is dynamic.
Anyone hurling as many numbers as Cox and Alm do runs the risk of appearing to shade statistics to support his case. That is a charge they level at some critics of the American economy, but it is also one to which they may be open. For example, they rightly argue that in assessing income gaps between blacks and whites, one must adjust the numbers to reflect differing levels of education. But a few pages later, in celebrating evidence that discrimination against women is on the verge of vanishing, they point to a study showing that women between the ages of 27 and 33 who have never had children make 98 percent as much as similar men. Such women are also more likely than the men to be college graduates, but there appears to have been no effort to adjust the figures to reflect that.
The most distressing evidence of lack of reverence for accuracy comes in a chapter entitled ''The Upside of Downsizing,'' which argues correctly that corporate cutbacks are part of an economy that is creating new jobs all the time in growing industries. Ever eager to drive home the point that those who oppose such cutbacks also oppose progress, they reprint a letter they say was sent in 1829 by Martin Van Buren, then the Governor of New York, to President Andrew Jackson, decrying the threat posed by railroads to the jobs of canal workers, boat builders and farmers who grew hay for the horses pulling canalboats. It is a letter that seems too good to be true, but their discussion of it shows no doubts about its authenticity. (They even highlight it against a gray background.)
Curious as to where that letter came from, I turned to the notes and found, first, that the source was a book entitled ''How to Be the Life of the Podium'' and, second, that the authors knew historians consider the letter bogus. ''Regardless of the letter's authenticity, the lesson is the same,'' the note says. Had they really believed that, they might have at least hinted in the book's text that the letter was a phony. With their wealth of knowledge about economic statistics, Cox and Alm could have written a much better book if they had felt less need to be cheerleaders.
---------------------------------------------------------------------------- ---- Floyd Norris is an editorial writer at The Times, specializing in business and economics. PS - Lane Kirkland is dead. The stogies did him in. Great obit in the New York Times.