Newspaper article The Christian Science Monitor

Fact, Not Fiction: The US Thrives in a Global Economy

Newspaper article The Christian Science Monitor

Fact, Not Fiction: The US Thrives in a Global Economy

Article excerpt

EXPERIENCE teaches us to be cautious in accepting as fact things that "everyone" knows. In this spirit, let us turn to some universally held propositions on the United States economy and its supposedly deteriorating position in the world.

For starters, everyone knows that the Japanese now dominate the global economy, having pushed US firms out of the top ranks. Frequent references to the tabulation of the world's largest banks reinforce this view. It is true that Japanese-based banks represent 13 of the world's top 20 (measured by asset size in 1990). The other seven are Western European institutions. This is not a happy day for American financial leaders.

Nevertheless, commercial banks are not the only manifestation of US financial acumen. Of the top 20 insurance companies, for example, the US leads the list with nine, followed by seven Japanese firms, and two Western European. In the case of investment banking, the US and Japan each can boast of nine firms out of the 20 largest, with only two from Europe.

The most comprehensive measure of overall corporate standings, however, is the ranking of all companies by the valuation placed on their stock. In that case, the US and Japan each can cite nine firms, with Western Europe reporting just two in the top 20 worldwide. Japanese industry can justifiably be proud of its movement to the front ranks of world business. Japan's rise is similar to the rise of American companies to world-class status a century ago. In any event, the most successful American companies are still very much world-class players.

Another economic "fact" that everybody knows is that US manufacturing has been sliding downhill and that we have become just a service economy. The purveyors of "big think" believe they discovered the ascendancy of the service sector in the last few years. But a look at historical statistics reveals that the crossover between manufacturing and service employment occurred over a century ago, prior to 1890.

A reason for the rise in service employment is that, in many cases, companies in this sector do not experience the substantial increases in productivity reported by manufacturing enterprises - which now need fewer people to do the same amount of work. …

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