Quarterly Journal of Austrian Economics
Review of Concrete Economics: The Hamilton Approach to Economic Growth and Policy by Stephen S. Cohen and J. Bradford DeLong
Cohen and DeLong are well-known economists, but they indict their fellow economists for an overemphasis on theory. Away with models that have little relation to reality, our authors say. Instead, we need to grasp a simple lesson about the source of America's prosperous economy.
What is this simple lesson?
In successful economies, economic policy has been pragmatic, not ideological. And so it has been in the United States. From its very beginning, the United States again and again enacted policies to shift its economy onto a new growth direction. ... These redirections have been big. And they have been collective choices. ... Government signaled the direction, cleared the way, set up the path, and, where needed, provided the means. And then the entrepreneurs rushed in, innovated, took risks, profited, and expanded that new direction in ways that had not and could not have been foreseen.
The heroic leaders include, first and foremost, Alexander Hamilton; Hamilton’s nineteenth-century successors, who continued his high tariff policies; Teddy Roosevelt and FDR; and Dwight Eisenhower. Hamilton, a “major economic theorist,” favored “high tariffs, high spending on infrastructure, assumption of the states’ debts by the federal government [and] a central bank.” The rationale for this ambitious program was to reshape the economy “to promote industry ... the aim was not to shift the new and fragile economy to its comparative advantage, but rather to shift that comparative advantage.”
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Cite This Article
Gordon, David, Review of "Concrete Economics: The Hamilton Approach to Economic Growth and Policy" by Stephen S. Cohen and J. Bradford DeLong, Quarterly Journal of Austrian Economics 19, no. 4 (Winter 2016): 376–380