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America Inc. versus Japan and Germany
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11443 |
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CURRENT ISSUES
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| Issue
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4 / 1994 |
2,604 Words |
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Rich Lowry
Rich Lowry is editorial associate for National Review. |
Last year, Procter and Gamble maintained its solid position in a profitable business--consumer products like Tide, Pampers, and Crest--reporting a double-digit earnings growth for the year and exceeding the $2 billion mark in earnings for the first time. It also announced it would slash about 12 percent of its work force, 13,000 workers, and shut 30 plants within the next four years.
This is economic recovery, 1990s' style. A record 600,000 American workers were laid off last year--not in a recession, but in the third year of a growing economy. In the last two and a half years, job growth has been just one-third of what it was in past economic upswings, a gap of about four million jobs.
Figures like this have prompted hand-wringing from editorial writers and politicians about a "jobless recovery," an economy so anemic that even when it grows cannot create jobs. But what is widely interpreted as the sputtering of the American engine may really be its revving.
"We wanted to take our company apart brick by brick," Proctor and Gamble chairman and chief executive Edwin Artzt explained, "and put it back together again--into a leaner, faster-moving, more financially fit organization."
Hundreds of companies--entire industries--have done the same. The result is an economy that in many ways is leaner, and stronger, than those of the anointed heirs of post-Cold War global economic leadership, Germany and Japan. "They are way behind us," says Stephen Roach, a Morgan Stanley economist and productivity expert.
Studies disagree about the relative positions of Germany and Japan but not about who leads the pack. A study last year by the McKinsey Global Institute in Washington, D.C., had Japan at 83 percent and Germany at 79 percent of U.S. productivity in nine areas of manufacturing. In service industries--the biggest share of the U.S. economy--McKinsey showed similar, and sometimes wider, American leads.
Increased productivity means increased output--putting more income in the hands of workers and more competitive goods on the world market. America's productivity edge is supported by data from the Organization of Economic Cooperation and Development (OECD) showing the per capita gross domestic product (GDP) in the United States as 14 percent higher than Germany's and 18 percent higher than Japan's--and the growth of U.S. exports at a rate of 10 percent a
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