It might help counteract all the doom-saying and public confusion about the impact of the US government's new economic policies if the American people were aware of the deeper changes now taking place in society. Alexis de Tocqueville, perhaps the most perceptive of all 19th-century European travelers to the United States, noticed only too clearly the restlessness and distractibility of Americans that often keep them from identifying long-range matters of importance. Americans, he found, tend to "clutch everything but hold nothing fast, and so lose grip as they hurry after some new delight."Skip to next paragraph
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In a way, that situation seems to be occurring now. There is a compelling need for Americans to pause and look beyond the emotionalism and demagoguery of the moment from both sides of the political aisle and seek to identify those economic forces that are at work irrespective of President Reagan's policies and notwithstanding what Congress did or did not do in the way of specific legislation. Such an exercise invites risk, since what the future holds is always conjecture at best. Still, many experts believe enough is now known to strongly suggest that the United States in the early 1980s is moving through a significant economic transition.
The end result, they think, will be a stabler and more prosperous economy, subject to fewer of the sharp swings of boom, recession, and unemployment of recent years.
Here are just a few developments to consider: The US appears to be heading into a period of slower but more even growth. Inflation will continue but a lesser rate. Productivity could once again be on the rise, after a two year falloff. The increase in automation, icluding introduction of robots, is now intensifying in many industries, a process that could also somewhat improve productivity. Fewer young men and women will be entering the job market for the first time, meaning lower unemployment rates. With families having fewer children education funds can be shifted elsewhere in society. However, increasing rivalry between regions of the US suggests new and yet unknown political challenges. Now, to look at these issues in detail:
The reason for the slower growth, as economist Joseph Pechman of the Brookings Institution points out, is that with lessening but persistent inflation it will be almost impossible to let the US economy "rip" ahead at a fast clip. Moreover, there is a feeling among many economists that much of the high growth of the 1970s was an articial growth, with the government deliberately inflating the economy to hasten output and employment. The nation's monetary base in the 1970s, for example, increased at an annual average rate of 7.7 percent compared to 4.4 percent in the 1960s.
Slower growth should not preclude rising productivity. Looking at both labor and capital investment, productivity posted two consecutive quarters of increase this year, and will likely show a gain for 1981 as a whole. This trend may well continue into the decade. In part, rising productivity is expected to come from the very nature of the work force, with a large proportion of workers entering their most productive years. That, some economists believe, will mean a more experienced work force, with employers having to spend fewer resources on training programs and initiating output.