In search of new steam for America
Cambridge, Mass. — The New York correspondent of West Germany's leading newsmagazine, Der Spiegel, has been writing a cover article entitled "The decline of the United States."
To gather information for the story, the correspondent, Werner Funk, came to Harvard University here last week to a conference on US competitiveness. He found ammunition aplenty for his theme. Speaker after speaker lamented the decline in the growth of productivity, the inadequacy of research and development, and the lack of sufficient savings and capital formation in this nation.
The conference sponsors -- Harvard, the New York Stock Exchange, and the Senate subcommittee on international trade -- were consciously aiming at raising the nation's awareness of its economic difficulty.
"The intention is to get a consensus in this country . . . a recognition of the problems," said Sen. Abraham A. Ribicoff (D) of Connecticut, chairman of the trade subcommittee. "Productivity should be on the agenda of the 1980 campaign." He will be pushing to get a plank on this issue inserted in both the Republican and Democratic platforms.
He added: "We cannot allow ourselves to ignore the decline in our international economic strength, which is as threatening as military action to a safe United States and a healthy Western world."
The ultimate goal of the conference sponsors is to obtain government action.Mr. Ribicoff listed some measures he sees as necessary:
* Tax provisions to encourage both capital formation and innovation.
* Continued efforts to re-examine government regulation, aiming at minimum cost and lessened administrative burden.
* More support for research and development.
* Particular attention to certain technologically advanced industries to be sure that the United States retains its leadership.
Though there was some disagreement on methods for advancing US competitiveness, there was agreement among the approximately 125 business leaders, congressmen and other government officials, and academics attending the conference on the need for such action.
A similar attitude apparently prevails among the public. A nationwide survey commissioned by the New York Stock Exchange found that a full 90 percent of Americans believe the US economy is heading in the wrong direction, and 87 percent believe that drastic steps are needed to strengthen the economy.
"The people know we are in a crisis," the exchange chairman, William M. Batten, said. "They know our economic problems will be difficult to solve and are likely to persist for a while.
"They know the causes of our problems are not simply OPEC actions or the cost of energy, but are more fundamental. And they know that our economic problems have contributed to our nation's other problems at home and abroad."
When it came to considering trade-offs between, say, less consumer protection to reduce manufacturing costs and vice versa, the public was less united in its viewpoint. Nonetheless, 83 percent of the 1,000 people surveyed in 50 states agreed that the US needs a national plan to mobilize its resources and make American business more competitive with the rest of the world.
"Americans," Mr. Batten said, "have a far greatr understandng of the underlying problems of our economy than elected officials and opinion leaders give them credit for."
Obviously Mr. Batten hopes his survey will help persuade Congress on the need for new tax breaks for business to stimulate productivity.
Harvard's dean of the faculty of arts and sciences, Henery Rosovsky, made some comparisons of the United States' economic position with that of Britain in the 1880s. Economic decline in Britain began at that time, he said, but did not become fully apparent until after World War II. He warned: "Remaining on top is not a static process."
At the moment, noted Lawrence Klein, a professor of economics and finance at the University of Pennsylvania, the US continues to have the highest standard of living among the major nations of the world.
"But to be at the top is not enough," he added. ". . . we find the position of the US being challenged to the point at which many thinking individuals are asking whether we can survive -- not as a nation, but as an economic leader."
Ezra F. Vogel, a Harvard sociology professor and author of "Japan as Number One," a best seller in that island nation, concluded: "The US is in the process of being surpassed by Japan as a modern industrial power, and this creates serious consequences America is not confronting."
He went on: "Unless we put our house in order, our problems aggregated together could not only lead to a lower standard of living, but to a divided America, as each group clings desperately to its share of the pie. The quality of our national life will become more backward-looking and more protectionist, bringing an end to qualities in which we take pride: our optimism, openness, and generosity."
Der Spiegel's Mr. Funk suspects that the US economic problems are a "phase," that the nation will rise to solve them to a considerable degree. Mr. Vogel says, "We must find our own American ways to respond to the challenge.