Ronald Reagan's tax cuts released a freshet of new investment capital just as the new high-technology industries were ready to use it, which explains much of Mr. Reagan's current political popularity and also the question that American voters should be asking themselves (but for the most part won't) when they go to the polls in November.
The surface issues - school prayers, abortion, attitudes toward homosexuals at home and Russians overseas - are irrelevant to the American economic machine, which operates almost unnoticed behind the rhetoric of the campaign.
The real question is whether the American economy is at a stage where it still needs more of what it has been getting ever since Paul Volcker's restraint on the money supply was melded with Mr. Reagan's tax cutting. Is this what present and prospective conditions call for? Or is some other formula going to be needed to keep the marvelous American economic machine performing effectively?
It is performing well just now, generating a bountiful crop of new activities and new jobs without the tightness that would almost certainly release another round of damaging inflation. Somehow or other, due as much to coincidence as to conscious planning, Americans are enjoying the result of a good balance between the ability to produce and the ability to consume.
It is well to remember the great depression of the 1930s and remind ourselves of why it happened. World War I had stimulated an enormous increase in American productive capacity.
Modern labor-saving machinery had unleashed new wonders of food production on the farms and industrial capacity in the factories - enough to send 3 million American soldiers to France without a labor shortage at home.
But when the war ceased to consume the products of farm and factory, the market dried up. Consuming power shrank. America stagnated and even went hungry in the midst of plenty. The balance between production and consumption had collapsed.
That balance was revived when rising wages and welfare put purchasing power back into the hands of the masses of people.
World War II released another round of increases in productive capacity. It was sustained well after the war partly by sustained domestic purchasing power, but also by the abnormal duration of overseas demand. The war had damaged or exhausted the other great industrial centers of the world. A strong overseas demand for American goods and grains carried the production-consumption balance of wartime deep into the postwar era.
That in its turn had another consequence for which Americans have since paid a price. Foreign demand remained high for so long after the war that there was little recognized need for factory renewal and modernization. When European and Japanese economies came onto line with the latest and best in modern technology the American industrial fabric was exposed as obsolete. Not enough old factories had been torn down and replaced.
Jimmy Carter was unfortunate to be President when American industry had to convert suddenly and painfully from obsolete to modern machinery.
Mr. Reagan was fortunate in taking over at a time when the new industries were beginning to take up the slack from the scrapping of the old. His tax cutting helped the process of industrial renewal. It was helped further by a national rebellion against the pace of wage and welfare expansion. Programs that had revived the economy after the depression by reviving consuming power had begun to stifle enterprise. Too much consuming power can be as damaging to the economy as too little.
Except for those who are unwillingly on welfare or on unemployment, America seems to have right now a sound balance between the ability to produce and the ability to consume. But there is no arbitrary formula for achieving and keeping such a balance. Government policy can influence the balance. It cannot by itself produce or maintain the balance.
What kind of new taxes, if any, would help, or harm, the balance next year - or ten years in the future? That is what the election is really all about.