Fred Block and Robert Heilbroner, in "The Myth of a Savings Shortage" (TAP, Spring 1992), want to persuade us that, contrary to the conventional wisdom, there is no scarcity of savings in the U.S. economy today. They say that the present national savings rate is as high as ever; that it plays no depressing role in our prolonged recession and sluggish growth, not to mention our lagging productivity and our weakness in international competition; and therefore increased saving would be no remedy for these problems.If their argument were valid, it would entail a revolution in public policy. But alas it is a muddle of misconstrued flows, confusion of categories, and reckless double counting.
In the twentieth century, oil has fueled not only the world's economy, but also some of the most dangerous international crises. Shocks caused by sudden swings in the price of oil and struggles for control of its supply have been major sources of instability and war. Since the end of World War II, several crises -- Suez in 1956, the Iran-Iraq war in 1980s, Iraq's invasion of Kuwait last year -- have aroused the United States to reaction, in the most recent case to war. But without a program for the aftermath, this kind of activism, or rather re-activism, is not a constructive or adequate approach.