Reaganomics vs. Rhodes scholars

When Chrysler got into trouble there was no agency in the United States government with responsibility for sophisticated analytic or predictive work on an industry level; Congress got the proposal to guarantee Chrysler loans and turned to a private firm for an eleventh-hour study of the industry. The government bailed out Chrysler, and previously Lockheed, at a time when conventional wisdom said the country was suffering from ''too much government.'' It sounded oddly like the attack by the doomed Herbert Hoover, years and years ago, on federal intervention after the 1929 crash.

Two former Rhodes scholars have come up with a different concept, as drastic in its way as the ''supply side economics'' to which President Reagan is wedded. Something has to be done, they say, for the American economy, but what? Mr. Reagan believes he can restore it by cutting taxes, stimulating production (supply), and reducing government intervention. He thinks free enterprise alone will fix things up. This new book argues that free enterprise is fine, so far as it goes, but that it's not what European and Japanese competitors of US industry are using in sweeping past America in all sorts of new technical fields.

The book has the horrendous price of $25 and the lay reader had better wait for the paperback edition. Reviewing it, MIT economist Lester C. Thurow calls it a guide to the future. Everybody agrees something is wrong: there's inflation, unemployment, and stupefying deficits; Mr. Reagan says with satisfying simplicity that it's mostly due to oversize government; the new study says that, no, something else has happened. The evangelists of this new doctrine argue that other countries (Germany, Japan, France) have more government intervention than we do, what America needs is ''a coherent industrial policy'' supported by government.

The book's name is ''Minding America's Business.'' Its authors are Ira C. Magaziner, president of an international business consulting firm and trustee of Brown University, and Robert R. Reich of the Kennedy School of Government at Harvard. They aren't light-weights, nor is Professor Thurow. We're at a crisis, they say: ''Rampant inflation and high unemployment are symptoms of economic stagnation. Our standard of living is no longer rising. In 1980, our median family income declined 5.5 percent in real terms. . . . The past decade has witnessed a decline in our productive growth.''

What to do about it? - that's the debate of the '80s. Mr. Reagan has his answer, which seems simple and direct and may be right: cut back government and let free enterprise take over. Messrs. Magaziner and Reich aren't quarrelsome; they simply say that other industrial countries have coherent government-corporate policies whereas Washington has dozens of commissions and agencies all setting policy. ''No one is accountable for the aggregate effects of the disparate programs that have been implemented in relative obscurity,'' they say. ''The US economy is in crisis.''

There's new low-wage competition from Korea, Brazil, Singapore, the Philippines, Malaysia, and Sri Lanka. America used to lead in computers, semiconductors, aircraft, industrial machinery, pharmaceuticals, scientific instruments, and off-shore technology, the authors say. Now foreign companies, assisted by their governments, are actively seeking to close the gap with the US and move ahead. They are doing that, too, in lasers, biotechnology, robotics, microelectronic applications, and things like that. Reducing government's role? The authors argue that ''reductions in government regulations, spending, and taxes for the wealthy have only the remotest connection with productivity improvements and enhanced competitiveness.''

What America needs, the authors argue, is ''a coherent US industrial policy.'' To get this isn't easy, they agree, in a country where consensus-forming institutions like political parties have been declining for two decades; it isn't easy under America's unique ''non-parliamentary system in which power is divided between Congress and the president. . . . Issues rise and fall with a rapidity and specificity that render comprehensive policymaking all but impossible.''

The reader ponders. Are these analysts right? Is Mr. Reagan right? It is an anxious time. Perhaps we can't be sure, but we can see that something's the matter. The more informed debate we have about it the better.

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