In the few weeks since his election, Bill Clinton has made it
clear that he plans to put the economy at the top of the new
administration's agenda. An Economic Security Council will share
equal billing with the National Security Council. And to get the
ball rolling, Clinton has called a "working" economic summit of
business, labor, academic and government leaders.
I applaud Clinton's running start. A lot needs to be done to
cope not only with the lingering recession, but also with the
more important, long-range task of preparing to compete in the
21st century. But I do fear that Clinton and his activist
advisers may reach for a panic button that need not be pushed.
The McKinsey Global Institute recently completed the most
thoroughgoing study to date of world productivity. Led by Nobel
laureate (and Democrat) Robert Solow of MIT, it gave us
surprisingly good grades. McKinsey Co. Managing Director Fred
Gluck discussed the institute's findings.
A big lead, and holding our own.
Compared with the rest of the developed world, the United
States has _ and is maintaining _ about a 20 percent lead in
industrial productivity (as measured by 1990 output per full-time
worker, adjusted for purchasing power). U.S. output per worker is
$49,600 vs. $44,200 for Germany, $38,200 for Japan and $37,100
for Britain. Moreover, as Germany and Japan have approached U.S.
productivity levels, the rate at which the gap between "us" and
"them" is closing has slowed. In the 1980s, only Japan edged up
on us (and not by much); we actually added to our lead over
Germany. (Besides, as Gluck points out, this isn't football: "The
successful growth of our trading partners is in our interest.
Competition between national economies has never been a zero-sum
A robust edge in manufacturing.
It's true Japan does a better job with consumer electronics
and autos; but the McKinsey report shows the United States
leading Japan in total manufacturing productivity, including
two-thirds of the major manufacturing categories (e.g.,
chemicals, petroleum, rubber and plastics products; textiles and
apparels; food products). Other studies suggest a significant
U.S. productivity advantage over Japan in high-tech industries
such as biotech, computers and software. (In each of these areas,
by the way, Japan has mounted highly publicized, organized _ and
mostly fruitless _ catch-up efforts.)
A stunning lead in services.
In the service sector (which employs 74 percent of Americans,
65 percent of Japanese and 55 percent of Germans) we excel
overall, with a 2-to-1 edge over Japan in retail productivity and
a 2-to-1 edge over Germany in telecommunications. (Our balance of
trade in services, which, incredibly, is not included in
conventional trade statistics, is running about $50 billion per
year in our favor. …