A call for US to 'rearm'
New York — Is the United States economically and politically "over the hill"? Walter E. Hoadley, chief economist of the Bank of America, the nation's largest bank, has been traveling all over the world trying to find the answer to this question.So far, Mr. Hoadley said during a quick stop in New York, the perception in the countries he has visited is that the US is indeed past its prime.
The implications of this are that events like those that have occurred in Iran and Afghanistan "are just openers," he said. He cited a recent meeting he had in Ecuador with a high government official who lectured him on how the resource-rich countries were now going to dictate terms to the industrialized nations, such as the US. "The North-South dialogue," the economist pointed out, "is not academic anymore."
If the perception spreads that the US is weakening, he predicts, then the dollar will weaken, social tension will rise, and the US will have difficulty persuading its allies to support it on important issues.
In fact, this is exactly what has happened, he pointed out. America's allies have been reluctant to follow Washington in an economic blockade of Iran and in the boycott of the summer Olympics. Without strong leadership, he asserted, this trend will continue.
To counter this decline, he calls for the US to "rearm itself" economically and politically. Mr. Hoadley, for example, who has sometimes been described as an "economic cheerleader," maintains that it is time to propose the tax cuts that would enable the US to compete economically with the rest of the world. This has been termed "supply-side economics" and has been endorsed by Ronald Reagan in his presidential campaign.
"Politically," Mr. Hoadley said, "the time is ripe for a budget deficit, if the purpose is to rearm ourselves economically."
On his trips, which now take about 50 percent of his time, he has also been talking to world political and business leaders about the effects of continued oil price increases. He says the consensus is that if oil prices rise another $ 10 to $20 a barrel, the global economy will sink into a morass that will do it permanent damage.
"Once the world price of oil reaches over $30 per barrel we will have reached the point of no return," he said.In the 18 countries he visited in the past year , no government or private official disagreed with him, he said, and even OPEC knows it.
With the US entering the 1980s with such a laundry list of problems, the Bank of America economist is calling the coming period "the decade of destiny" for the United States. Either it solves its structural problems, he concludes, or it will continue to face the world's perception that it's "over the hill."