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Producing Economic Growth
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19990 |
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Section : |
EDITORIAL
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| Issue
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8 / 1992 |
555 Words |
| Author
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Morton A. Kaplan
Editor and Publisher |
Except for the Club of Rome and other doomsday theorists, most people want economic growth in order to improve life. The question is whether we are going to be sufficiently disciplined to produce it. When the government first placed quotas on Japanese cars, the big three automakers merely used the opportunity to increase prices rather than to improve quality and market share. The unions pursued pay raises and outlandish benefit packages rather than healthy companies. And the workers, buffeted by authoritarian management practices, made little effort to create quality products. Although there are institutional reasons for some of these irrational activities, TV news exacerbates them.
The public at large, inspired by twenty-second sound bites, uttered by talking heads in handsome bodies, believed that more regulation protected their interests and that protectionism saved jobs rather than destroying them while raising prices. Congress passed thousands of laws buying off special-interest groups at the expense of our prosperity. The savings and loan crisis was understood in Washington at least by 1980, but neither Democrats nor Republicans, Congress nor the president, were willing to drink the medicine, when it would have cost $100 billion rather than $500 billion. Then they closed the loophole on real estate in the interest of tax fairness and destroyed hundreds of billions of dollars of capital, thus turning good loans into bad ones and deepening the bank crisis.
Economic downturns are unavoidable. The recent one in particular had to occur because businesses had not adjusted their level of employment to reflect the efficiencies that contemporary computers were permitting. That is why the postrecovery employment rise this time cannot be nearly as fast or great as in previous recoveries. But the truth is that our national economy has been shot in the foot by politicians, organized interest groups, and a public that is economically illiterate.
In the symposium this month in the Currents in Modern Thoughts section, the reader will learn of the great cost of regulation, the movement toward lean production, and the problems of taxation. The reader also will become acquainted with the cultural basis for productivity and the great importance of human capital. In the January issue, we surveyed the revolutionary developments in technology that will intensify human capital requirements. Not mere improvement but a revolution in educational methods is needed if we are to adjust well to the world of the midtwenty-first century. It should surprise no one that the national debate on education deals only with palliatives that are
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