By Bob Davis and David Wessel
Two top-notch, national journalists, Bob Davis and David Wessel,
have co-authored the book Prosperity, which argues
that in the U.S. economy, over the next generation at least, living
standards for the great middle class will improve markedly, and,
at the same time, income inequality will narrow. This will happen,
they say, because of the productivity gains that are slowly but
clearly manifesting themselves, extensions of the information technology
revolution, global competition and revolutionary changes in educationmost
notably at the community college level.
It's a positive story they tell, making it unique. Typically, book
length efforts of this sort tend toward rather dark projections
of pending doom; Davis and Wessel see instead a boom that will flow
from today's economic circumstance. They urge the reader to understand
that economic effects of this sort take time and generally have
a considerable lag to the corresponding cause. Electricity is an
earlier example and parallel in American history. Eventually, it
had an unfathomable effect on productivity.
Mercifully, both authors are journalists for the Wall Street
Journal and that has put them in the habit of writing in
the vernacular. Prosperity is at all times comprehensible,
intelligent and certainly not dumbed-down for the mass market. It's
full of the authors' observations gathered as national correspondents;
it feels informed at the highest level, giving the book yet another
In the final chapter the authors argue that the federal government
could help ensure the coming middle class prosperity. This should
bring everyone with libertarian sympathies to the edge of their
seats. Take a breath, their recommendations to the government urge:
Never take your eye off the productivity ball. That is, government
involvement in the marketplace should concentrate sharply on encouraging
ever greater productivity. It's a prescription free-marketers can
live with, more or less.
To the Federal Reserve, Prosperity is an especially
interesting book. Certainly that's so because of its thesis regarding
productivity-based economic growth, but also because one of its
authors, David Wessel, is a chief economic correspondent for the Wall Street Journal, where, among other things, his
beat is the Fed.
The Federal Reserve has many interpreters. Some have talk shows,
others are working journalists, and the rest range from those conducting
mock Federal Open Market Committee meetings to the guys at the local
Chat n' Chew cafe. Among these interpreters, few are more respected
at the highest levels within the Fed than David Wessel. So when
Wessel writes a book, we pay attention. Especially when that book
contains a chapter on the Federal Reserve. (In Minneapolis, it was
recommended reading for senior officers and directors.)
Wessel's Federal Reserve chapter is aptly titled: "Alan Greenspan,
Optimist at the Top: Why the Fed won't be an obstacle to faster
growth." (The terms Greenspan and Federal Reserve are used almost
synonymously by Wessel, as he points out, "What matters more than
anything else at the Fed is what the chairman thinks, even though
other top Fed officials legally could outvote him.") The Fed/Greenspan
represents America's greatest concentration of economic power and
should it/he make the wrong policy choices, then the coming prosperity
could be endangered, says Wessel. That won't happen, (although the
naysayers imagine it will) because Greenspan is essentially optimistic
about the economy and he sees gains in productivity not unlike the
projections of the book's authors. The economy, like a massive ocean
liner that can't sink, is moving in the proper direction, and Greenspan
will not change its course, even though he has the power to do so.
And don't worry, if President Clinton selects another chairman before
his term expires, it's also well within the institution's ethos
to stay the course. Greenspan's legacy will live on.
Sprinkled throughout the Greenspan chapter are a few otherwise
unknown anecdotes about the chairman. On the surface these personal
notes have no connection to the book's argument or the chairman's
economic compass, but they do suggest that Wessel takes a holistic
approach to his Fed beat and is interested in the man as well as
his policies. For instance, speaking of Greenspan's new bride, Wessel
says, "When a Steinway piano, a wedding gift from Andrea Mitchell's
parents, was delivered, she was on the other side of the world,
covering the travels of the Secretary of State. He telephoned her,
placed the receiver near the piano, and played a tune so she could
hear it." Also, we learn of the chairman's method (perhaps meditative)
to soak up "numbers-laden Fed-staff reports." It happens in the
bathtub before going to work.
Those who have followed Wessel's byline might know that he shared
a Pulitzer Prize in 1984 for a series of Boston Globe stories on the persistence of racism in Boston. Last year, the Washingtonian magazine put Wessel among the top 50 journalists in Washington,
which had the effect of "pleasing his parents to no end." Wessel
landed his current beat, including the Fed, on the day the stock
market crashed in October 1987, and to that he formally "denies
any connection between the two events and is prepared to testify
to that before any grand jury." If there is any information to the
contrary, it hasn't leaked.
One last note. So much can be gleaned from a perusal of a book's notes.
Regarding the Greenspan chapter, we spotted a Region citation.
We now know where Greenspan does some of his reading; we wonder where
Wessel reads The Region.