expenditures

In many ways, the State has become little more than an engine for the forced redistribution of money. People vote for politicians who will give them things, hoping what they get from picking their neighbors' pockets will be greater than what someone else, in turn, takes out of their own. Politicians flog the system for all it's worth, and are rewarded according to their ability to hand out loot they have no right to in the first place.

Of all the ways this is done, the most egregious, at least in Bennett and DiLorenzo's minds, is the pouring of tax dollars into organizations that then use that money to lobby for specific policy agendas. Again and again, Bennett and DiLorenzo give us chapter and verse (and dollar amounts) of how labor unions, environmental radicals, anti-market and pro-socialist, 'anti-poverty,' 'civil rights,' and other pressure groups pocket free money at taxpayer expense. Conservative, industry, and pro-business groups aren't spared their time in the spotlight either. Nor are the politicians (many of whom are still in office today) who receive hefty campaign cash from the same groups to whom they funneled those tax dollars.

George Will has written that anyone who wants to understand how American government works shouldn't read the Constitution, but rather open the Washington, D.C., phone book and observe all the organizations, associations, and lobbies with the word 'National' in their name. Bennett and DiLorenzo provide an invaluable service by exposing this racket fully. Even seventeen or more years after its first publication, 'Destroying Democracy' is essential reading for anyone seeking to understand what politics and the State are really all about.

This absolute gem from 1989 should be updated and republished. I have resurrected it in relation to my reading on federal budgeting and the dangers of the deficit spending now in vogue in Washington (2002).

This is the best book I have read on the strategic aspects of the federal budget--needed reforms, key issues in allocation policy, using the budget to stabilize the economy.

Where the book excels is in its analysis of how the federal budget should be used to steer private sector outlays--as Osborne and Gaebler suggested, we must steer rather than row--guide the private sector rather than use taxpayer dollars for direct products and services.

In his discussion of priorities, the author focuses heavily on the lack of investment in education and the resurrection of education both public and private. As we enter the 21st Century largely ignorant as a Nation (of external realities, not at individuals), I cannot help but think that the time has come for the public to take charge of "political economy," and begin actively setting forth its priorities. Just this week, in The Washington Post of 27 February 2002, David Ignatius suggests that Washington has turned its back on the Nation. Seems to me that's pretty dangerous, but if the Nation allows itself to be ignored by Washington, then we have the government--and the federal spending priorities--we deserve.

The role of the Japanese government, in particular that of the Ministry of International Trade and Industry (MITI), in shaping industrial policy and export success in Japan since World War Two has been much debated. In recent years, however, with evident failings in the operation of financial institutions, financial regulation and financial probity, it is the activities of the Japanese Ministry of Finance (MoF) that have come under scrutiny both inside and outside Japan. J. Robert Brown, Jr.'s book is the first English-language monograph to analyse the recent travails of Japan's Finance Ministry in the context of longer term developments. Brown describes how during the early post-war years the priorities set by economic recovery and capital shortages generated a system in which the MoF acted as the agent of stability and recovery. It acquired enormous domestic power from its control over the budget process, and an international reputation for its influence over financial markets, particularly in regulating th e division between banking and securities business initiated under the Occupation. Its position was rooted in informal and personal links and information flow, as well as administrative guidance. Brown describes how the operation of the ministry itself, and its locus in broader decision-making structures, engendered risk aversion, and hindered initiative, innovation and leadership, but the advantages of the system ensured that it continued to operate with a degree of effectiveness as long as the economy grew rapidly. By the early 1970s, however, the original raison d'etre of the banking-securities division was gone. The MoF accepted the need for financial reform, but less so the concomitant and inevitable reduction in its own influence. While the pressure for reform from outside Japan was considerable, the MoF was weak in the face of political pressure and vested interests, and progress was slow until the scandals of the 1980s brought the big securities companies into public disrepute.

The MoF was likewise slow in coping promptly with the banking difficulties that followed the collapse of the Bubble economy in the late 1980s. Historical memories of 1920s banking crises led officials to conceal the real extent of the problems that existed, and resulted in constant attempts to play for time. Banks, like securities companies, were effective in manipulating political pressure, and not until 1995 was the first commercial bank permitted to fail. Incidents such as the Daiwa scandal in New York and the jusen (housing loan companies) losses further exposed the inadequacy of informal reporting, and the need for greater openness for effective regulation.

In describing this course of events, Brown demonstrates a process of painful adjustment in which lessons have been learnt only slowly. He argues that the MoF is far from having overwhelming power, even over the budget, and that politicians have not hesitated to overrule MoF officials when it has been in their constituency or party interest to do so. As such, the ongoing reform of both the financial sector and the MoF itself has a political dimension. Brown concludes, however, that the resolution of the bureaucracy's role must rest with the bureaucracy itself. Japan should, moreover, think carefully before going down the path of any explicitly US model, or breaking up or excessively weakening the MoF.

Brown has written a readable and accessible book, informative for both non-specialist and specialist, for both practitioner and academic. Based on extensive interviews with MoF officials, politicians and private sector financial institution employees, as well as on written sources, it has a refreshing 'down to earth' quality about it. Unlike many works on contemporary Japan, it locates the current problems in a longer term perspective, and as such will be a useful source of reference for business historians. Despite its high price it is likely to be better used than many more learned volumes, and should be welcomed as a valuable addition to the literature.

Copyright 2000 Information Access Company, a Thomson Corporation Company; ASAP Copyright 2000 Frank Cass & Company Ltd. Business History

"Probably the most intersting point made in the book is that although government's growth relative to the economy as a whole has been dramatic since the late Victorian era, the fraction of GDP absorbed by government has almost stopped growing since 1980 both in the United States and in other wealthy OECD countries."

Tanzi and Schuknecht "seem to be familiar with the entire range of the analytic literature, though none of the "techy" modelings underlying this literature are revealed in any detail. This sort of exposition is probably wise because such inclusions would cause the nontechnical reader's eyes to glaze over and are unnecessary for those already anointed. Tanzi and Schuknecht do develop the theoretical notions intuitively, however, which is more important, and their bibliography will be particularly helpful for the neophyte scholar. Their index is quite comprehensive, and both lay and professional readers might start their study there after a quick reading of the initial and final chapters."

Tanzi and Shuknecht wonderful explication of fiscal policy should make "Public Spending in the 20th Century" a "must read" book for anyone interested in the growth of government. "The wealth of descriptive data and the authors' fresh and lively style make this book very readable...A copy of Tanzi and Schuknecht's work should be on the desk of all policymakers who believe...that the institutions of fiscal choice really matter."