| 9.5°C Dublin

reagan aide's take on How AMERICA faltered

David Stockman

David Stockman

If there's one lesson to be learned from David Stockman's massive new book, 'The Great Deformation', it's this: Beware the zeal of a convert.

Stockman was Ronald Reagan's budget director in the early 1980s, a time of huge federal deficits, only to criticise the administration after leaving it. During a subsequent career in private equity, at Blackstone and Heartland he piled debt on to companies.

And once again Stockman has seen the light. All this debt is terrible, he's discovered, just terrible! And he wants everyone to know how bad.

In 'The Great Deformation' Stockman warns that we're on the road to perdition thanks largely to Franklin D Roosevelt, who gave Americans the New Deal; Richard Nixon, who took them permanently off the gold standard; and spineless central bankers like Alan Greenspan and Ben Bernanke, who've recklessly flooded the world with greenbacks.

It's easy to mock this repetitive and intemperate screed, whose author helped set in motion the catastrophic train of events he bitterly decries.

Embedded in the subtitle, for example ('The Corruption of Capitalism in America'), is the naive notion that capitalism once lived in a tender prelapsarian state of free-market innocence – unsullied by slavery, collusion or generous government handouts.

Stockman has other provocative ideas. In keeping with his notion that cheap money is the root of all evil, he blames the Great Depression on excessively easy monetary policy.

And he's convinced the Federal Reserve and the Treasury should have refrained from intervening during the financial crisis of 2007- 2008, saying the trouble wouldn't have spread beyond Wall Street.

Yet he has some cogent arguments.

The US tax code really is crazy for encouraging debt instead of equity. Excessive defence spending really has enabled a series of misbegotten military adventures.

And he argues Wall Street probably does hold far too much sway in government.

Available with free P&P on www.kennys.ie or by calling 091-709350.

Irish Independent