Why the U.S. Is Slipping

Gloomy view from Cambridge

They gathered not far from where Paul Revere sounded his timely warning against invaders, and in many ways, their message was similar and every bit as alarmist. Meeting two weeks ago in Cambridge, Mass., for a two-day Harvard University conference on U.S. competitiveness, some 150 businessmen, academics and Congressmen took a generally gloomy view of the U.S.'s business prowess. The nation, they argued, is losing the international trade war; foreign competitors are producing better goods at lower costs. America now stands on the verge of becoming a second-rate economic power.

"We are at a turning point," warned Ezra Vogel, chairman of Harvard's Council of East Asian Studies and author of Japan as Number One: Lessons for America. "If we are to avoid going the way of Britain, we have to act fast." Added Harvard Economics Professor Otto Eckstein: "The 1980s are a decisive decade. The forces of decline can be stemmed, but if we fail to come to grips with our problems, the U.S. will wind up taking a back seat to more disciplined countries such as West Germany, Japan and possibly even some totalitarian countries developing along socialist lines."

The conference participants generally agreed on the causes and cures of what they see as the coming economic holocaust. The reasons, they noted, ranged from oil-fueled inflation and the weak dollar to labor strife, excessive regulation, inadequate government-business cooperation and, most of all, slumping productivity brought on by too little investment in research and equipment. Among the most popular suggested solutions: more labor-business-government dialogues and more effort to halt the flood of regulation. The participants favored cuts in business and personal income taxes to spur individual savings and corporate investment, even if it meant that the federal budget would remain in deficit.

One urgent need, along with the search for solutions, the conference concluded, is to educate Americans about the problems and the necessity for solutions. On this point, the participants took comfort from a specially commissioned poll, which reported that an overwhelming 90% of Americans already believe the economy is headed in the wrong direction and 87% acknowledge that drastic, possibly painful steps must be taken to correct the situation. Nonetheless, there was at least one hint that the message of cooperation and joint solutions may not be getting across. Despite repeated invitations, only three middle-ranking labor representatives bothered to attend the conference.

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