Eliot Janeway's recipe for national prosperity - read it cautiously Prescriptions for Prosperity, by Eliot Janeway, New York: Times Books, 348 pp. $ 19.95
ELIOT JANEWAY's new book smacks of an earlier era when many economists were even less precise than today. He doesn't seem to belong to any school of economics - monetarist, neo-Keynesian, structuralist, or whatever. As a result, it is difficult to find a logical economic pattern in this book.
''Prescriptions for Prosperity'' is often fuzzy in its analysis. There is none of the numbers-crunching of his younger economic colleagues, no careful economic theorizing. Perhaps that's why he calls himself a ''political economist.'' The words, suggestions, and opinions just flow and flow as Janeway rambles through a look back at economic affairs during the years from President Johnson to President Reagan.
Mr. Janeway doesn't lack self-confidence. He writes about national economic affairs with something bordering on bravado, stating firm judgments that could sweep you along, unless you stopped once in a while to ask, ''Now wait a minute - is that really so?''
Perhaps this stems from his background as an investment-letter writer (The Janeway Letter). Most such letter writers state firm opinions on where the market is going and what stocks or other investments to buy. Whether wrong or right, they exude an air of certainty because investors want firm, not wishy-washy, advice.
Mr. Janeway avoids the need for registering with the Securities and Exchange Commission as an investment adviser by not making recommendations on specific stocks or bonds or commodity investments. This makes it difficult to measure his track record as an investment adviser. But he is firm in the third and last section of this book about how one should divide a portfolio between general classes of investments, such as gas and oil debentures, low-grade, high-leverage gold stocks, high-technology defense stocks, etc., in either hard times or transitional times. (From what Mr. Janeway says, I suspect he figures the United States is on its way to hard times.) The reader will have to pick specific investments himself.
A second element in this book (and Mr. Janeway's other writings) is a fecundity of ideas - policy suggestions, novel ways of looking at the political economic scene, fresh interpretations of events, and so on. It makes for somewhat entertaining reading. There may be useful ideas, but some of the ideas are rather wild and others, shall we say, questionable.
For instance, to deal with ''the complaint'' of ''extortionate interest rates resulting from astronomic deficits,'' he suggests, ''Export the deficit by selling to dollar-rich OPEC governments long-term, nonmarketable Treasury paper subject to no interest charges until maturity.''
Well, first of all, how much high interest rates result from large deficits has been a matter of considerable debate in Washington lately. But, assuming that's right, the OPEC nations as a group no longer have a balance-of-payments surplus, but a deficit. Even Saudi Arabia ran in the red last year. Janeway suggests Arab central banks would buy these so-called ''zero-coupon bonds'' issued by the US Treasury in exchange for the guarantee of American protection. I doubt proud, sovereign Arab nations would accept such a deal, especially since the US is the prime ally of Israel.
Another of his recommendations would seem to have a greater chance of acceptance. Banks and other mortgage-issuing institutions, he says, should offer second mortgages on which only interest is paid - not the principal. Swiss financial institutions have offered perpetual mortgages for many years in that capital-rich nation. The US does not usually have such a capital surplus. But at the moment housing is doing well with other new types of lending, such as variable-rate mortgages.
Such suggestions are part of Janeway's ''quick fix'' to avoid ''the twin blight of depression and war.'' Mr. Janeway holds a gloomy view of world prospects, saying: ''The peace and prosperity America secured for herself after World War II are now suddenly in danger.''
His analysis is more sophisticated than that of the common doomsayer. He knows modern history, has had considerable contacts at various times with White House insiders (including presidents), and has a good memory for appropriate quotations, aphorisms, and anecdotes. But in a way, that sophistication makes his book more dangerous. Read it with caution - and take his advice with more than a single grain of salt.
