The Transformation of the World Economy: 1980-93.

• Author: Graves, Ronald L.

This book contains a broad-brush overview of changes in the world's economies from 1980-93. It is not all encompassing of every economic policy or measure in each country studied nor, understandably, is Solomon able to discuss every country. In general, Solomon's keen insight and breadth of experience provides this book an expert's historical validation. Yet its economic simplicity should be viewed in the top level dialogue it is written.

In Chapters 2 and 3, Solomon does well to set the stage of the world economy in 1980. Chapter 2 covers political leadership changes, inflation effects, the OPEC oil shock, international banking, interest rates and so forth of the major countries and/or geographic regions discussed later. Chapter 3 sets the stage for changing economic philosophies predominantly in Great Britain, Germany, Japan, and the United States, the focus on Thatcher and Reagan being to move their countries toward "more market-oriented economies." What Solomon does here is show us what was of importance at the start of the 1980s to world leaders, and how their focuses or policies changed by the end of the study period. He does well to point out fallacies of supply side economics, particularly in concentrating on personal marginal tax rate reductions rather than corporate tax rates, whence comes the majority of investment. However, Solomon implies the growth in defense spending during the 1980s, as a major contributor to the growth in the value of the dollar, is inexcusable. I believe he should keep the state of the U.S. military in 1980 in mind and then ask himself if it was as effective as an instrument of U.S. policy then as it is now.

In Chapter 4, details of the inflationary pressures of the early 1980s and the action by the Federal Reserve can be found. Coupled with this, Solomon takes the reader through the macroeconomic dynamics of the decade both with simplistic economic values and his description of private and public resource transactions. His discussion on the balance of payment points out if the Federal Reserve had pursued a less restrictive monetary policy, the current account would have still been in a deficit. He does well to point out the slowdown in the rising personal incomes in America is more a function of changes in productivity than of Reagan's policies. The discussion on the United Kingdom and Thatcher's policies emphasizes the change in "culture of the nation" to reflect a more positive, independent public...