The Big Picture

The disappointing deficit in the February trade balance for the United States will doubtless fuel new demands for extreme measures. The forces of protection inevitably seize on statistics that seem helpful to their cause. But it would be better for all if there were no precipitous response.

Monthly trade figures, daily stock and bond market fluctuations, occasional shifts in interest rates are being treated with an importance that they do not deserve. And, just as the preoccupation with short-term profits is having a negative effect on long-term business strategies, so the fascination with short-term statistics can beguile the nation into errors.

This is not to argue for complacency. President Reagan’s economic policies, commencing with the 1981 tax cuts that have had such a devastating effect on the budget deficit, have created problems of potentially grave consequences. The debt grows apace, not out of economic necessity but because of the fiscal stubbornness of a President who refuses to impose the taxes required to help remedy the situation. The Reagan-Nakasone friendship has resulted in a flabbiness of American trade policy, with the Administration failing to use as it should the tools at its command to redress unfair practices. Tariffs that the President imposed on a range of Japanese goods last week to demonstrate America’s displeasure over the Japanese custom of selling products below cost on the world market was an exception to the flabbiness. But in general there has been a preoccupation with policies that look no farther than the national borders--a myopia not unique to this Administration.

A better context for making policy is advocated by Leonard Silk of the New York Times in a brilliant analysis of “The U.S. and the World Economy” in the 1986 review edition of Foreign Affairs. “The greatest change needed to preserve stability and growth is for the world economy, rather than the national economy, to become the unit for policy thinking,” Silk concludes. “Despite the resistance of traditional national politics and interest-group pressures, the development of internationally integrated monetary and fiscal policies has become vital to the economic well-being of every country.”

There is always the risk that such a broad prescription for joint action will excuse inaction by any one nation. But the inaction is least defensible for the United States, with something more than a quarter of the world’s wealth. There have been occasions when Washington has behaved as a global leader. There is a particular need now.

That leadership involves domestic action--first of all action to provide adequate revenues for public services to reduce the dependence of government on foreign creditors. Beyond domestic matters, it requires elaboration of the global commitment evident almost two years ago when Treasury Secretary James A. Baker III sought an international remedy for Third World debt because he, at least, knew that it is everybody’s business.

Vision needs steadiness, not instantaneous reactions to each new indicator, however contradictory the indicators may be.