The Voters Cast an Economic Message

Trying to handicap primary results for Bush, Tsongas, Buchanan or Clinton won’t put money in your pocket. But keep an eye out for economic trends underlying the presidential campaign if you want to see what the American people really want.

For it’s on the economy that people register their serious concerns, choosing politicians to do their bidding as a director casts actors in a film.

That’s how it was in 1980, when the people’s real concern was to protect retirement savings by ending inflation and to restore respect for the United States by rebuilding the military. You might have predicted that voters would elect Ronald Reagan, but it would have been more useful for business and investments to have foreseen the decline of inflation and the rise of defense spending.

Similarly, at the end of the 1950s, people felt they had knit up a pretty powerful economy and national consensus, so they were primed for growth and new departures. They gave the job to young John Kennedy, but Richard Nixon would have had to cut taxes and spur growth if he had won.

This year the underlying trends are powerful but paradoxical. Americans are registering a strong desire to repair industry and institutions here at home, but also to learn more about doing business overseas.

They want government to both help and ride herd on industry, but they’re not eager to finance bureaucracy. So privatization of public services will be widespread in the ‘90s.

On all those trends the people have a longer perspective than the politicians. That’s why they’re skeptical of a $200 economic “recovery” tax cut--and why they gave former Sen. Paul Tsongas a victory in New Hampshire’s Democratic primary.

In any event, there may be no tax action of any kind this year. President Bush, wounded by New Hampshire, can’t control the process in Congress now, so tax legislation has become an occasion for grandstanding--making unrealistic proposals designed to provoke a veto.

The stock market, apparently concluding that the presidential circus has rendered government mercifully inert, has been strong since New Hampshire.

A major demand in the next few years, no matter who is elected, will be to bring military personnel home from Europe and Asia. But politicians would be wrong if they saw that as a turn toward isolation.

Isolationism isn’t in the cards with exports and imports now totaling $910 billion, or 17% of the total economy--and overseas business by U.S. firms pushing the total to far more than that.

Typical is the small manufacturer who says, “We’ve gone from having 15% of our business abroad to 50%, and I have a lot to learn.”

The most important underlying trend is the desire for economic renewal. It cannot be overstated how much Americans want a return to high standards in business and public life. They want to be competitive economically, but not to lord it over others--Americans are not by nature an imperial people. Rather it’s a self-improvement impulse.

And that is why, no matter who is elected, the next few years are going to see continued cost cutting and cost prevention in business, says management expert Peter F. Drucker in his new book “Managing for the Future.” The effort will go beyond layoffs. Whole departments will disappear if their functions are unnecessary. “The only way to bring costs down is to restructure the work,” Drucker says.

Such efficiency will free up capital, and the next few years will be times of low interest rates. But they won’t be like the ‘80s, with Wall Street manipulators walking away with the cash benefits from corporate restructuring.

Instead, the voters want somebody looking out for the public interest. “The people want government to orchestrate industry,” says a leading investment manager. “Far from condemning Japan’s industrial policies, they look to them for ideas.”

Still, voters are not willing to pay taxes for more government. So they’ll settle for a combination of public and private enterprise. “The answer to the governmental cash crunch, from the federal to state and municipal levels, will be privatization,” says Victor Riley, chairman of KeyCorp, a banking company with outlets in eight states.

Though reluctant to lay out tax dollars, the people will be more than willing to invest in new private companies. “Savings and investment are fashionable,” says William Brockman, who surveys customers for Fidelity Investments. Especially saving for retirement--more people in their 40s are opening up individual retirement accounts today than ever have before. “Trendy is out; authentic is in,” Brockman says.

What will the next four years be like? To be sure, there’s always a chance that in reaction to the Cold War’s emphasis on international affairs, voters could replay 1920 when they replaced Woodrow Wilson with Warren G. Harding, a handsome but weak President whose Administration was marked by corruption.

More likely though, the next four years will be a return to the 1950s. Dwight Eisenhower was elected in 1952 to preside over a period of low interest rates, when Americans got the national house in order and built up sinew for later departures to the moon and beyond. A point to remember is that when Eisenhower was elected, with war raging in Korea, few predicted prosperity. They weren’t looking at the underlying trends.