Is America Falling Behind?

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Then I would like to see this country mount a new diplomatic effort to persuade its allies to share the burden of European and Pacific defenses more equitably. That does not mean that America should pull out its troops from West Germany or South Korea with a shrug of its shoulders. It does mean that the United States is today well placed because of its economic problems to persuade the rising nations of the West and of the Pacific that it is in their long-term interest to share more proportionately the expenses of an adequate military defense.

I am also worried about the massive American domestic deficit and the unprecedented foreign deficit. The loss of this country’s accustomed competitive edge in manufacturing and the loss of its traditional place at the apex of world finance is a dangerous combination. The answer here is not to resort to defensive measures, such as old-fashioned protectionism, but once again to encourage the innovation, flexibility, and adaptation that seem to me the keys to success. This will certainly involve such changes as new management structures and attitudes in business; one already sees these appearing. Sooner or later I believe it will have to lead to new ways of coordinating public and private activities. These are matters about which economists and political scientists will argue. Speaking as a historian, however, I am certain that adaptability will necessitate a shift away from national consumption—the credit-card way of life as well as unproductive government spending—into formation of human and physical capital. That last may be a painful process.

Perhaps not so very painful if we consider that a great deal of that shift should result in an improvement of the quality of our lives—that is, in our inventories of skills and knowledge.

Painful even then. I recently heard of a state legislature that was considering lengthening the school year to match that of the Japanese—about 240 days instead of 185. What a furor that started! The tourist industry protested. The kids protested. Some of their parents protested. The teachers wanted more compensation. So the trade-offs for redistributing resources into the capacity for future growth and flexibility are not painless. Politicians running for office may use slogans like “Hard choices,” but they don’t spell out those choices. None of them are willing to talk about raising taxes in order to increase the growth potential of the nation. None of them are even willing to mention raising taxes to the levels that were around before Mr. Reagan gave people a lot of pocket money. What I call the “thinking classes” are already wrestling with these notions. But the American electorate in general is not, and neither party wants to be the first to mention it. What is fascinating to me is that Gorbachev faces something of the same kind of problem—indeed, a much more difficult one.

 

 

 

 

People don’t want to hear bad news. They don’t want their institutions criticized.

Does he? Gorbachev knows what has to be done: An impossibly inefficient economic apparatus must be dismantled and a new one installed. Our problem is that we do not know exactly what has to be done.

Perhaps. On the other hand, The New York Times a little while ago carried a story about Gorbachev in some village telling the townspeople about how bad Soviet medicine was, how bad their production system was, how backward their science was. An old woman spoke up, saying, “Why are you bad-mouthing the Soviet Union all the time?” I remember I thought, It’s the same problem there as here. People don’t want to hear bad news. They don’t want their cherished institutions criticized or even held up for examination. One can understand that and even sympathize with it. But however understandable, these attitudes of defensive pride get in the way of making the changes that may have to be made.

You present a very sobering picture. But isn’t it likely that the very growing awareness of our problems will lead us to overcome them? Isn’t it the challenge that generates the response?

Of course, there is such a possibility. But I wouldn’t want to count on it. To turn around the vast inertial system of a country like the United States quickly is no easy matter. I remember a newspaperman asking a British minister in the midst of some crisis in the 1970s, “Are we at the edge of a precipice?” and the minister answering, “No, but I wish we were.”

I get the point.