'America is better off than many people think'
What's the good news for Christmas day? There is good news, yes, even in the dreary field of economics, even at the dismal time of a global recession (worst in 40 years). For one thing (though we shouldn't boast in time of hardship) the United States is still the most prosperous country on earth. Some small nation may temporarily surpass us on an item or two. But by normal standards we're ahead. Russia isn't even in the running.Skip to next paragraph
Subscribe Today to the Monitor
I take my figures from the admirable Walter Heller of the University of Minnesota, chairman of the president's Council of Economic Advisers, 1961 through 1964. He counts our blessings in a summary for Public Broadcasting Service and counters the mistaken gloom about America that has found lodge-ment in much discussion of global distress. Has the standard of living slipped here behind other countries? Some people think so. Not at all: ''The US still leads the pack. With US per capita output as the benchmark, the closest competitors are West Germany, France, and Japan at 90, 80, and 70 percent of our living standard.''
Then again, a lot of people think that the United States has dropped to second place in terms of productivity. With all these computers and push buttons and things, factory production is going through a convulsion. But US workers on average, it turns out, ''still produce more goods and services per labor hour than any other workers in the world.''
Many readers may think there's a catch in this somewhere. We get so much bad news about slipping American standards that there is a feeling of alarm. Well, it is true to a point - US ascendancy has diminished. But America is still the leader. Says Dr. Heller, in the decade of the '70s, even after screening out the depreciation of the dollar, the unit labor costs rose only 6 percent a year in America as against 12 percent in West Germany, France, Britain, and Japan.
Here in Washington we have, of course been emphasizing the extraordinary deficits that face the Treasury. This reporter has, too, for the situation is unique save in wartime, and the red ink has been splashing not only here but in the capitals over the country.
But look abroad. Expenditures of central governments have grown almost everywhere in relation to total output. Latest figures indicate that in the US the ratio of expenditure by all governments (federal, state, and local) comes to around 32 percent of total national output. This is far behind West Germany, France, Britain, and Italy. Their governments spend, roughly, 45 percent of national output.
Maybe the US should spend a higher percentage - it's a matter of debate. But President Reagan, who feels we spend too much, will get comfort from the international comparisons. Only Japan of big countries has a smaller ratio: It is one-half percent below America.
How about deficits? Of the seven leading industrial countries the US has had the lowest ratio in the late 1970s of debt to output. President Reagan has faced huge deficits, but even so the overall US percentage is the lowest except for Canada.
That doesn't mean that the US is in fine shape. We have gone through four years of no-growth with the highest idle factory capacity and unemployment since the Great Depression. As years pass America isn't so far ahead of the rest of the world as it used to be. But it could be worse. Herbert Stein, for the American Enterprise Institute, who like Dr. Heller makes periodic comparisons of the US and other nations, finds that America is better off than many people think. It has a lot of economic strengths that some had forgotten.