Our Made-in-America Economic Woes

The real question that The Times Board of Economists should ask is not what President Bush did or didn’t get from the Japanese, “Getting Japan on the U.S. Bandwagon” (Jan. 5), but why he had to go there in the first place. If Bush needed the Japanese to bail out the American economy then the problem is greater than he, or most economists, admit.

The nation’s economic mess is not manufactured in Japan or Western Europe, but in America. The crisis of the American economy is a structural crisis with roots that reach back to the immediate post-World War II era.

During that era, Americans enjoyed unprecedented prosperity and stability largely because the economies of Japan and Western Europe were shattered by the war. They simply did not have the economic or industrial capability to compete with American goods in the world market.

Then came Vietnam. The guns and butter policy of Lyndon Johnson produced enormous deficits. The OPEC price run-ups in the 1970s brought an end to cheap energy.

Bloated military spending, irresponsible fiscal and tax policies, cuts in job and social programs, and the shrinkage of the iron, steel and auto industries during the Carter-Reagan years furthered the economic decline. The result: Real net productive investment dropped more than a quarter between 1979 and 1989, and real hourly wage and salary earnings fell nearly 10%.

Meanwhile, Japanese and German firms rebounded. They developed efficient marketing, management, technical innovation and an educated and trained work force to consistently produce higher quality goods than U.S. companies.

Their major products dominate world markets not because of their protectionist policies or the economic greed of their leaders but because they are better--and consumers know it. U.S. political and business leaders can rescue the economy from stagnation and decline only when they stop searching for foreign enemies and begin social and economic renewal at home.

EARL OFARI HUTCHINSON

Inglewood