The Rules of the Global Game: A New Look at U.S. International Economic Policymaking.

• Author: Feldman, David H.
• Position: Book Reviews

By Kenneth Dam.

Chicago: University of Chicago Press, 2001. Pp. xvi, 341. $32.50.

A book on U.S. international economic policymaking written by a current deputy secretary of the Treasury warrants attention. When that deputy secretary is Kenneth Dam, you can count on clear-eyed analysis and a wealth of personal experience, as he puts it, "in the front lines of international economic policy warfare in government and industry" (p. xii).

His purpose here is twofold. The first is to build a common conceptual framework for understanding how policy toward international issues as diverse as trade, exchange rates, or the environment emerge from the U.S. political process. That framework is based on public choice analysis augmented by a refined understanding of the rules and institutional structures that influence legislative and executive branch decision making.

His second motive is part normative: to use his framework to identify why the political process has produced better outcomes, defined as higher average living standards, in some institutional settings or over certain issues but not in others. Dam borrows the term "statecraft" from his colleague and mentor George Schultz to describe how the institutional setting can be structured to shape political outcomes toward these preferred high-income results. Much of the book is dedicated to exploring the bidirectional causality between interest group activities and statecraft options in a wide variety of policy areas.

Although this book is suffused with economic reasoning and with concepts from political economy, the intended audience is the nonspecialist reader. For practicing economists, the insights are mostly about political processes under institutional constraints, or what Darn calls "the micro-politics of Washington." For our undergraduates, the interplay between economic theory and political behavior would add real spice to many courses in the economics curriculum, and I would expect selected chapters to appear in many syllabi in coming years.

The book is divided into four parts. The four chapters that make up part 1 lay out the analytic framework Dam uses later on to explore a wide variety of substantive issues. Chapters 1 and 2 introduce his view of interest group politics, rent seeking by private groups, the role of parties, and how statecraft strategies can make political outcomes more economically efficient. Economics students will have to get used to Dam's interesting terminology...