Kicking the economy - while it's up
IT would be shameful to shape today's Washington policy and next year's presidential election on a mirage of declining American economic potency. And yet this is happening. Washington has crunched the dollar and pressed ahead on hostile trade legislation to defend American ``competitiveness.'' How a weakened dollar could be said to denote a strengthened US economy has long escaped us; at other times a weak dollar, politically speaking, has been taken as a sign of failed economic leadership. And trade policies that tend toward higher prices should also be suspect.
The United States is not being beggared by its Asian and European economic competitors. As political scientist Everett Carll Ladd illustrated in an Opinion column yesterday, the real US gross domestic product (GDP) per capita has risen over the last decade relative to every other industrial country, except for a very marginal relative slippage against Japan. The Organization for Economic Cooperation and Development has devised the GDP measure to avoid the distortions caused by such factors as exchange rate variations. By the OECD's numbers, based on purchasing price parities, a few countries improved their positions relative to the US from 1975 to 1980 - Italy, for example, from 65 percent to 69 percent of the US GDP, West Germany from 84 percent to 89 percent, Japan from 69 percent to 75 percent. But that was the 1980 election cycle. From 1980 to 1985, all fell back to below where they were relative to the US in 1975 - except for Japan, which netted a two-point gain.
Japan and West Germany, the current ``villains,'' had per capita GDPs at best only three-fourths that of the US: For what policy reason is that too close?
Granted, fair trade practices should be promoted, as the world manufacturing, services, and financial markets coalesce. But so should the intellectual argument be fair.
The truth is, Americans are relatively well off, and they know it. The University of Michigan consumer confidence measure stood at almost 93 percent in April - in the top 10 percent of readings in the last 30 years. Economic conditions are a major component of presidential approval ratings. Ronald Reagan, even with the Iran-contra affair roiling, is still getting a 47 percent to 53 percent approval grade from the American public. This is still way ahead of Jimmy Carter's approval rating, which plunged into the 20s in 1979, after long gasoline lines and talk of an ``era of limits'' undermined his public support. Americans did not want to be told the best was behind them. The figures since then show the public, not the President, was right.
Caution too should govern the preliminary 1988 presidential poll soundings in states like Iowa, where Rep. Richard Gephardt, advocate of a stringent trade measure amendment, reportedly may have secured a lead. According to the Gallup surveys, Sen. Edward Kennedy was leading incumbent Carter by an average of two to one among Democratic voters in the fall of 1979 - and still lost the nomination decisively.
Some parts of the American economy are hurting - though even the farm belt and industrial belt are doing better than they were. But if character issues or extraordinary foreign events do not intrude, next year's election will more likely reflect public satisfaction than dissatisfaction. The policy and campaign debate should better reflect this.