NOT all experts on American competitiveness are full of gloom.
The prime example is William Baumol, a Princeton University
economist, who says: "Most of the people who say we are doing very
badly have only looked at partial evidence. If you probe more
deeply, the significance is not what they make of it."
For example, Professor Baumol admits that the United States
productivity growth has fallen dramatically. The average annual
growth of productivity was 2.4 percent from 1950 to 1969, 2.1
percent from 1969 to 1973, and only 1 percent since then. But Baumol
sees this as a return toward historical rates and a trend shared by
other industrial nations. Japanese productivity growth rates have
fallen by about the same percentage as those of the US, he notes.
Further, he cites statistics to indicate that the US share of the
total industrial output of the 24 member countries of the
Organization for Economic Cooperation and Development has risen, not
fallen - from 36 percent in 1973 to 39 percent in 1986.
Richard Lester, executive director of the Massachusetts Institute
of Technology's Commission on Industrial Productivity, regards such
analysis by Baumol as politically "not particularly helpful." He
fears it will "dull people's incentives to do things which even he
may agree have to be done."
Kent Hughes, president of the Council on Competitiveness, regards
Baumol's observations as a "snapshot" of America's relative
strength. A movie of the last 20 years, he says, would identify one
troubling trend after another.
Baumol counters: "I am careful not to claim that there is any
guarantee that the Japanese will stay behind us. The Japanese are
doing relatively well and catching up. The Germans and the French
are falling behind. But we are No. 1 in manufacturing for the
moment. Yes, we should worry. But we should not get hysterical."
Baumol also points out that the US economy is not
"deindustrializing" more than other industrial nations. "We are
turning into a service economy," he says. This is the "same
phenomenon" that occurred earlier when those engaged in farming
declined from 90 percent of the US population in the 1800s, barely
feeding the US, to 2.5 percent now, producing huge surpluses.
Indeed, US labor is moving into services less rapidly than its
trading partners. While the US ratio of services to industry
employment grew 10 percent between 1965 and 1980, West Germany's
rose 19 percent, and Japan's climbed 31 percent, says Baumol. …