In an Uncertain World: Tough Choices from Wall Street to Washington

In an Uncertain World: Tough Choices from Wall Street to Washington Robert E. Rubin Date: 18 November, 2003   —   $24.50   —   Book product page Rating:

I have Republican friends who are convinced the economy boomed in the 90's in spite of President Clinton. They believe the President doesn't do anything to influence the economy. If the Presidency of George W. Bush doesn't make them see the error in that view, I don't know what will.

I had a vague idea from reading newspaper and magazine articles that the Clinton team busted their asses to grow the economy, I just didn't know specifically what they had done. In fact, I was discussing it with a buddy of mine the week before Robert E. Rubin and Jacob Weisberg's book, "In An Uncertain World: Tough Choices from Wall Street to Washington" came out. The best I could do was assert that, if Clinton didn't do anything big to grow the economy, at least he didn't do anything to screw it up. Needless to say, as soon as the book hit the shelves, I grabbed a copy.

The first chapter of the book deals with Rubin's deft handling of the Mexican economic crises in 1995. It's a great way to start, because it grabs your interest and pulls you through the next couple chapters which deal with Rubin's life story, his early career, and his "nothing is certain" philosophy. At that point, the book really takes off. From the all-night economic strategy sessions with Clinton, to the breakfast meetings with Greenspan; from the West Wing to South America, Asia, and Russia this book covers it all and makes it exciting. The book gives the reader an intriguing glimpse inside the Clinton White House by a man who spent a lot of time working with Bill Clinton.

As for my Republican friends, I let Rubin sum it up for me:

"In important ways, the deficit had become a symbol of the government's inability to manage it's own affairs - and of our society's ability to cope with economic challenges more generally, such as our global competitiveness, then much in question. The view that fiscal discipline was being restored contributed to lower interest rates and increased confidence, and that led to more spending and investment, which in turn led to job creation, lower unemployment rates, and increased productivity. Some have argued that the productivity surge of the 1990s was merely a delayed reaction to the new digital technologies that arrived in the 1980s. But that view overlooks what happened in Europe and Japan, where the same access to new technology failed to result in a similar sustained productivity surge, probably because businesses didn't invest in technology to the same degree. That paucity of investment may well have been due to the structural rigidities in the labor and capitol markets of Europe and Japan, but even with the flexible economy of the United States, investment, and therefore productivity, probably would not have surged as they did without that increased confidence as well as lower interest rates."

"The restoration of business and consumer confidence, combined with lower interest rates, created a virtuous circle, a positive feedback loop. Deficit reduction contributed to economic growth, which, through increased government revenues, contributed to further deficit reduction, which in turn led to more growth, and so on. The fiscal effect of our plan was thus a function of both our policy measures and of the growth those policies fed. We didn't design the plan around the potential effect on the stock market, as we had with the bond market, but in fact a similar phenomenon occurred as improved fiscal and economic conditions contributed to a rising stock market, which in turn fed back into deficit reduction and the economy."

"The decision the President made in this process marked a dramatic change in fiscal policy. The opponents of that change - especially supply-side advocates who vehemently objected to including tax increases in our deficit reduction program - predicted that our program would lead to increased unemployment, higher deficits, and economic stagnation, recession, or worse. Republican Representative Dick Armey of Texas, chairman of the House Republican Conference, said the plan would be "a disaster for the performance of the economy" and warned that "no deficit reduction, no good can come of it." His colleague from Texas, Republican Senator Phil Gramm, called it "a one way ticket to a recession." Instead, the country had the longest period of growth in it's history, massive new private-sector job creation, low inflation, higher incomes across all income groups, increased investment and productivity growth, and lower deficits, eventually followed by surpluses. That has been a great and enduring frustration to supply-side advocates, who first predicted that our policies would cause great economic injury and then, when the opposite happened, argued that sound fiscal policy had nothing to do with economic conditions they had predicted would not occur."

I found the book very readable, especially after the requisite credential estalishing. Rubin keeps the book at slightly above an economic layman's level, and actually teaches some macro-economics as the book progresses. So, in addition finding out how hard Rubin and Clinton worked to push their economic agenda against a hostile Congress, Democrats as well as Republicans, I also ended up learning quite a bit about economics.

Too bad all of that hard work went down the drain during their successor's tenure. But perhaps another administration could use this book as a blueprint, or at least a starting point, for recreating what turned out to be the greatest economic expansion in American History.