Newspaper article THE JOURNAL RECORD

Americans Look for Change in State of U.S. Economy

Newspaper article THE JOURNAL RECORD

Americans Look for Change in State of U.S. Economy

Article excerpt

Economic recovery has begun, but, as this week's primary elections in Connecticut showed, voters are still anxious over the state of the economy and are looking for a president who can change it.

Knowing this, all the candidates are promising to deliver "change,"

in one form or other. President Bush, after more than 11 years of Republican control of the White House, blames the Democrats in Congress for the economic plight and for blocking his own proposals to cure the economy.

In effect, he is saying, like President Reagan before him, "We are the change."

Pat Buchanan, his Republican challenger, would move his party toward the "America First" right. Jerry Brown, the Democratic victor in Connecticut by a nose, is anti-establishment and would change policy toward the left, but occasionally toward the right, as in his flat tax.

And Bill Clinton, still the Democratic front-runner, proposes change toward the middle _ with tax cuts for the middle class, to be made up by tax increases on the rich.

But does anyone, politician or economist, really know how to change what's dragging the economy?

Not long ago, most economists would have said, "Of course we do,"

sure that John Maynard Keynes had provided the answer in his 1936 book, "The General Theory of Interest and Money." It prescribed higher government spending, tax cuts and lower interest rates for economies with idle capacity and unemployment.

But today, says Robert Heilbroner of the New School for Social Research, "Keynesian economics is dead and American capitalism is suffering from the consequences." He doubts that we will "regain our economic momentum or achieve international competitiveness until we find a successor to it."

If Keynesianism is dead, what killed it? Heilbroner attributes its demise to change in the structure of the economy, especially the labor force. Back in the 1930s, he says, most workers were "unskilled or semiskilled heads of households, largely unorganized and without a public support system of any kind."

So labor played a passive role in capitalism, gratefully taking whatever wages they could get. Governments could apply fiscal stimulus without worrying that it would kick off inflation while there were still workers looking for jobs.

That state of affairs changed when union membership in the United States rose from 6 percent in the 1930s to almost one-third of the labor force in the 1960s, with even greater unionization in other countries.

But the share of organized workers has actually been declining throughout the industrial world in recent decades, most of all in the United States. …

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