Examining Stein's Proposals.

The article comments on the paper "America's Second Fiscal Revolution," by Herbert Stein. Stein's concern with "governing" the economy sets him apart from much conservative theorizing, which starts from the assumption that the economy does not need to be governed and that attempts to do so will only come to nothing against the natural forces of economic life. Stein derives his much more positive view partly from his own active participation in government and partly from the same sense of realism that enables him to see working Americans behind the abstraction of GNP. Stein simply accepts the fact that a sea change has overtaken the economy. One aspect of this change is that the federal budget is today a fifth as large as total national expenditure, compared with three percent as large in the 1920s. A second aspect is that the purposes of government spending have changed as dramatically as its size. Stein's interest in the budget as an instrument for affecting the use of national income contrasts markedly with that of most economists, conservative or otherwise. Conventionally, the budget has been regarded as a crucial variable by which levels of national growth and employment could be altered.