Beltway Books: Laying up treasure

For a time, trade became perhaps the hottest issue in the presidential race, with Patrick Buchanan hoisting the banner of economic nationalism and Robert Dole chasing after Buchanan with a rather tepid "me, too." But the issue has disappeared from the general election, with both major party candidates supporting significant government intervention while rhetorically embracing free trade.

In Against the Tide, Douglas Irwin of the University of Chicago surveys the arguments for and against allowing people to trade freely among themselves across national boundaries. Like most economists, Mr. Irwin leans toward free trade, but he catalogs the many opposing arguments as well. Indeed, he is willing to believe that in some cases protectionism might be better than laissez faire, but argues that alternative government policies are likely to be more cost-effective. While in my view he overstates the efficacy of government intervention, Against the Tide is a great resource for anyone interested in the issue.

What should become a hot issue is Social Security. While the Clinton administration has been shamelessly demagoguing against responsible Republican efforts to contain the growth of Medicare, both Medicare and Social Security have been heading toward financial Armageddon. Wall Street analysts Marshall Carter and William Shipman warn of an impending crisis as the Baby Boom generation retires. Preserving Social Security will require either massive benefit cuts or huge tax hikes, or both. As the authors put it, "this all adds up to a prescription for social, political, and economic unrest" and "generational conflict."

Their solution is to create Personal Social Security Accounts, funded by mandatory payroll deductions but invested at the discretion of the worker. This system would eventually replace Social Security, ensuring that today's workers would not end up losing money, as they will with Social Security. Promises to Keep is a sober book that should be read not only by the president and members of Congress, but by anyone hoping to rely on the government for his or her retirement.

Writing about a related subject is James Smalhout, a visiting fellow at the Hudson Institute.

In The Uncertain Retirement, he reviews the challenges facing the current system of private pensions and federal guarantees. He offers a package of thoughtful reforms and investigation of foreign practices. The book is a bit dry for the average reader, but that doesn't diminish its importance in helping readers understand the subject. Advances in the Economics of Aging similarly provides a broader look at the impact of the graying of America. The book's chapters-taken from a conference organized by the National Bureau of Economic Research-cover not only pensions, but also health care, housing, and labor markets.