Getting it Right: Markets and Choices in a Free Society.

• Author: Hemphill, Thomas A.

In this book of thought provoking essays, Robert J. Barro, Robert C. Waggoner Professor of Economics at Harvard University and an internationally renowned macroeconomist, has compiled, updated, and expanded many of his writings previously published since 1991 for the Wall Street Journal and other business media. Professor Barro, although Harvard educated, describes himself as a libertarian of the Chicago School. His classical liberal philosophy emphasizing free markets, limited government, and property rights is evident throughout the essays and acknowledges the influences of Milton Friedman, the late George Stigler, Gary Becker, and Robert Lucas on his writings. The author, who exhibits a clever wit in his writing, divides up his essays under the headings of economic growth, monetary and financial policy, fiscal and other macroeconomic policies, and the power of economic reasoning, covering applied microeconomic public policy issues.

Democracy and economic growth are of professional concern to the author, and his essay on this topic is illuminating. Professor Barro evaluates the influence that economic development has on a nation's propensity to experience democracy. Using an index that combines a statistical analysis of a country's standard of living (real per capita GDP, infant mortality, and education) and the level of political (voting) rights in a country, Professor Barro forecasts the growth and decline of democracy in nations from the year 1994 to the year 2000. His analysis shows that improvements in the standard of living substantially raise the probability that political institutions will become more democratic over time. This contrasts with his findings that an increase in political freedom has an overall negative (but small) impact on growth with the effect positive at low levels of democracy but negative at higher levels (wealthier countries can absorb the reduced rate of economic progress). For Western countries interested in exporting democracy to developing countries, says Barro, the first lesson is that more democracy is not the key to economic growth, although it may have a small beneficial effect for countries with few political rights. The second message is that political freedoms tend to erode over time if they get out of line with a country's standard of living.

In "Monetary Policy: A Matter of Commitment," Professor Barro's thesis is that a central bank's primary objective is to adopt (and commit to) a policy of...