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The Right Rx
| Article
# : |
14229 |
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Section : |
CURRENT ISSUES
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| Issue
Date : |
7 / 1988 |
2,118 Words |
| Author
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Murray Weidenbaum
Murray Weidenbaum director of the Center for the Study of
American Business at Washington University in St. Louis and a
former chairman of the President's Council of Economic
Advisers. |
An effective agenda for making American business competitive in world markets must be truly comprehensive. A search for panaceas must be avoided. We need long-term solutions, such as investing in education and research and development, as well as short-term actions on the factory floor. We need public sector responses, such as getting the budget deficit down, and private sector initiatives, notably, management and labor facing the productivity challenge on their own. None of these necessary actions is easy, so they must be considered one step at a time.
First of all, the overall economic setting is vital. That means dealing with budget deficits that--via interest rates, the value of the dollar, and so forth--are so vitally connected with the historically high trade deficits that the United States has been experiencing. Focusing on economic fundamentals (i.e, getting the budget deficits down) is a continuous challenge, for domestic as well as international reasons. Realistically, however, serious effort will not start until the polls close on the second Tuesday in November.
It is not just a matter of slowing down total federal spending, which has been rising faster than the rest of the economy. The more basic concern is that almost all of the increase, and the massive deficit financing, has gone for "current consumption" via farm subsidies, entitlements, defense spending, and interest.
A pro-competitiveness budget should include a larger share for "investment" outlays that will yield an economic return in the form of a stronger economy and a rising tax base. Examples are not hard to find: Education and training, research and development, and airports and other infrastructure. This is hardly a plea for a larger federal budget; it is, rather, a call for a shift in emphasis within the existing level of outlays.
The recent trade figures show that a major reduction in the value of the dollar does not provide an instant solution to the nations' trade imbalance. Many foreign companies--especially in Japan and Western Europe--apparently are willing to absorb increased foreign exchange costs in order to maintain their recently won market shares. In striking contrast, many American firms prefer to concentrate on short-term profitability, forgoing the opportunity to regain their earlier market positions.
Emphasize Education
Twirling
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