Milken Institute Review Fourth Quarter 2001

December 2001

Peter Navarro, an economist at the Graduate School of Management at the University of California, Irvine, says Sept. 11 - the worst terrorist attack in history - will cost America hundreds of billions, and possibly trillions, of dollars. He includes not only the tangible costs of the attack, but intangible ones, too, including the value of the lives lost in the World Trade Center and the Pentagon, as well as the fears of those who worry they will be the next victims.

Ross DeVol, Director of Regional Studies at the Milken Institute, counters the fashionable pessimism infecting the long-term outlook on technology and growth. "Don't give up on The New Economy or the Internet because of the dot-com flameouts," writes DeVol. "Future productivity gains from the Internet and linking of computers will justify share prices above today's valuations."

Tim Taylor, managing editor of theJournal of Economic Perspectives, favors individual retirement accounts for Society Security recipients - but with a twist. Private accounts, he says, should be the liberal quid pro quo for raising Social Security taxes to preserve the system's long-term solvency.

Victoria Marklew, senior international economist at Northern Trust, analyzes Prime Minister Junichiro Koizumi's chances for pulling Japan out of its long economic slump.

Robert Walker of the University of Nottingham and Michael Wiseman of George Washington University compare Britain's ambitious efforts to reform welfare with America's tough-love approach.

David Evans of National Economic Research Associates examines at the success of "free" software such as the Linux operating system. He respects their accomplishments, but predicts that the heavy lifting in software will continue to be done by commercial producers.

Rick Carey,a writer who covers cars and the auto industry, offers a cool look at the economics of car collecting. The bottom line, he says, is fun - not profit.

This issue's book excerpt is from Nickel and Dimed, the best-seller by Barbara Ehrenreich, which offers a first-hand look at how America's unskilled workers try to survive on $7 an hour.

And, of course, we have our regular features: The Charticle (this time on the return of blacks to America's South), Puzzler, and Mark Alan Stamaty's cartoon.