Hard Heads, Soft Hearts: Tough-Minded Economics for a Just Society.

• Author: London, Paul A.

How the Democrats can beat voodoo economics. The Case For Competition

The title of Alan Blinder's book, Hard Heads, Soft Hearts: Tough-Minded Economics for a Just Society, tells a lot about the author's dilemma as he tries to find a place for his views in the Democratic camp. A professor of economics at Princeton and a columnist for BusinessWeek, Blinder argues that a refurbished Keynesian economics--driving for low levels of unemployment, opposing protectionism, fighting subsidies and oligopolies--could give us a truly healthy economy, not the precarious prosperity we have now with enormous trade and budget deficits. In a book that bridges the academic and the popular, offering excellent footnotes and plenty of one-liners, he spares no one. Taking shots at monetarism (tight money) and supply-side (enormous tax cut) policies, he calls Reaganomics "the worst of both worlds--a soft head and a hard heart." He also criticizes the softhearted but mushy-headed policies of liberals who want to control markets through devices like protectionism or huge agricultural subsidies. Chiding many Democrats on rent control, Blinder recalls the maxim that "after bombing it's the second best way to destroy a city."

As an argument for Keynes and as a critique of recent American economic thought, this book succeeds. But Blinder does not overcome the political problem he sets up for himself--to show how a Keynesian policy that offends both the left and right could prevail. His nemesis is what he calls Murphy's Law of Economics, "a systematic tendency for good economics to make bad politics and vice-versa." For Blinder, bad policies (like supply-side tax cuts and rent control) are popular; good policies (like cutting subsidies or eliminating tariffs) are unpopular. The question of how to sell Keynesianism confounds not only Blinder but any Democrat who takes on George Bush and the Republican party's economic line.

"Competition, competition"

It's important to remember that Keynesians have always had political problems, even though they helped shape the economic policies of the Kennedy and Johnson administrations and Nixon said that he was a Keynesian. That's because Keynesianism is a fundamentally radical idea that makes a lot of people uncomfortable. Its emphasis on liberal trade and open markets, for instance, upsets the AFL-CIO. And conservatives become apoplectic about Keynes; after Marx and Freud, he ranks as one of the leading figures of their demonology. With his General Theory of Employment, Interest, and Money, John Maynard Keynes took a swipe at businessmen, declaring that consumers are the true engines of the economy. (In many European languages, the translation of businessmen is "job-givers." They were the suns of the economic universe.) Keynesianism is a jarring political rebalancing, and it has never gone down...