Bright economic news isn’t new
by Phil Burgess, Unabridged from the Rocky Mountain News, December 7, 1993
Economic news continues to improve. It began during the last three months of the Bush administration, when US economic growth led the industrialized world. Some observers are even beginning to talk about an “American resurgence.”
Economic indicators are clear . Unemployment, now at 6.4%, is down sharply — the largest one-month drop in 10 years. Consumer confidence is up.
As is media confidence. That may be most important. Last year, the media gave generally downbeat reports on holiday spending — even though reports after the fact showed Christmas spending was brisk. Example: When a store owner said, “We are hoping for a good year, but we’ll have to wait and see,” the TV reporter closed with “This is Terry Jones at the mall, where store owners are hunkered down as most customers seem to be looking but not spending.” This year, when a store owner says, “We are hoping for a good year, but we’ll have to wait and see,” the TV reporter closes with “This is Terry Jones at the mall, where store owners are bracing for the Christmas onslaught.” What a difference a year makes!
But America’s resurgence, a theme of this column since 1989, is more fundamental than the latest economic headlines. US productivity remains the highest in the world. For example, a recent report by McKinsey & Co. shows that US productivity in manufacturing is 17% higher than Japan’s and 21% higher than Germany’s.
The US regained its position as the world’s largest exporter in 1989, and America’s global market share of manufactured exports is increasing dramatically. In 1986, the US accounted for 14% of manufactured goods exported by the industrialized nations. Now US global share is up around 18%, and nearly one-fourth of our merchandise exports are high technology products.
Even more dramatic is the situation in Japan and Germany, America’s two major competitors. Both are facing severe economic challenges and social problems, including negative economic growth. Government policies in both countries have protected their workers and business organizations from the wrenching forces of technology and competition that forced US companies into major reforms — re-engineering, total quality management, producing more with less.
In Germany, particularly, silver-lined social safety nets and other government mandates financed by industry or by taxes on industry have killed job creation. Now the chickens are coming home to roost — for workers and corporations in Japan and especially in Europe.
By contrast, big US companies are emerging from the 1980s lean and ready to compete. The US has the hottest entrepreneurial economy among the industrial nations. Technology is driving unprecedented innovation.
President Clinton should think twice before “reversing economic policies that were in place for 12 years,” a promise he made to the annual meeting of the centrist Democratic Leadership Council in Washington last week. Many of those policies prepared American industry and the American worker to compete and prosper in the 21st century.
As the Germans and Japanese have discovered, misguided public policy can screw up a good thing.