Major improvement in the job market in the United States contrasts with still-expanding unemployment in leading Western European countries. A recent article in The Economist (London) noted that, while the economies of Western Europe have turned upward, so far the increase in labor productivity has delayed the need to call back the unemployed.
There are several explanations for the adjustment both the industrial and the third-world nations are going through - excessive expansion of credit during the past decade or so; too-high expectations about future growth; the delayed effect of the wealth transfer that occurred from the two oil shocks of the 1970s.
When one compares the nations of Western Europe with the United States, however, one thing cries out to be mentioned. In the US, despite the degree of government involvement in economic decisions (if only through regulations), free-market forces are still relatively more important.
A Swiss journalist calling in our offices a few months ago was traveling around America to see how the unemployed in the so-called ''rust belt'' were readjusting. He was amazed to learn that the general attitude in the US is that such adjustments come along and must be allowed to work themselves out. This isn't entirely true, of course, and the Democratic candidate for president has indicated he would do more to keep jobs in the mature industries.
When the differing domestic political viewpoints are stripped away, however, there is still a tolerance for the adjustment process taking its natural course in the US. This is encouraging to those who are convinced that both the social and economic results of free markets are better, overall, than the results of controlled ones.
In Western Europe, most countries went for almost a generation after World War II without a real recession. There were so-called growth recessions, in which the growth rate would slow to almost nothing for a brief period. Some of this growth was undoubtedly due to a catch-up from the war; but government planning along Keynesian lines was keyed to making sure there was adequate demand in each economy.
For a long time it looked as if some of the European economies were working better than the US. Yet, when the adjustment that began for all of us sometime in the mid-'70s came, Western Europe seems to have been less prepared than the US to meet the challenge.
Most people do not question government's duty to shield citizens from temporary distress. The questions arise when temporary help begins to merge with long-term governmental provision for certain levels of social and economic welfare.
The vigor that emerges in a society of well-educated, inquiring citizens who have access to funding for their new ideas results in the kind of technological edge that the US enjoys in several fields today. Some European countries now are looking at ways to foster the entrepreneurial spirit; but that spirit cannot simply be grafted onto a foreign tree. Changes in tax laws and in the mechanics of the financial markets can help, but that is only part of the picture. Societies that cherish tradition, position, and safety over present accomplishment send out a definite message about the values they hold most high.
The governments of Europe, regardless of political party, are to some degree the inheritors of a kingly tradition, in which the ruling class acknowledged a responsibility to the rest of society. Such was not the case with America. If America seems chaotic to the newcomer, that's partly why. And not everything about the American tradition, carried to extremes, is good, either. But if you're looking for one reason that this economy is turning around so well, at least part of the reason lies in that difference.