cial aircraft; how perverse export controls and the “joint development” of the FSX fighter plane subsidized out foreign competitors in computers and commercial aircraft. He makes a strong case for an openly acknowledged national industrial policy that will frankly admit to clear mercantilist motives instead of trying to sneak them through Congress in military drag. . Kuttner also advances the notion that substantial public sector investment is needed as a counterbalance to the market economy’s inherent instability which, if unchecked, undermines the social cohesiveness upon which capitalism depends. This view is set in opposition to that of laissez-faire utopians, who see society itself as merely the broadest marketplace, in which citizens, like Homo Economicus, should always act to advance their individual self-interest. Every economic transaction is supposed to be a one-night stand, because tomorrow someone might make you a better offer. This operating philosophy is supposed to add up to a socially optimal allocation of resources and a maximum choice for all players. In this view, loyalty is a purely nonrational and sentimental value. However, contingent short-term relationships come at the expense of many other qualities and factors the real economy needs: corporations that can plan for the long term; workers who consider that they have a stake in their company; communities that can count on employers staying put; suppliers who want long-term relations with customers so they can invest in productivity enhancing equipment. Thus, Kuttner sees in laissez-faire ideology not only factors contributing to the astonishing deterioration of America’s financial standing during the past decade, but also rationalizations for the concomitant deadening of our social conscious. Kuttner provides insight into the process by which longstanding domestic political alliances were supplanted by Ronald Reagan’s “politics of collective denial.” If, however, the real income of 80 percent of Americans has fallen since 1973, there should be a broad constituency for the kind of mixed economy Kuttner prescribes, and he talks of the convergence of an anti-laissez faire coalition. Trade unionists and liberals concerned about equity issues have been joined in the debate by bankers and industrialists in calling for government involvement in addressing the structural weaknesses in our economy: a poorly educated workforce, the lack of investment in public goods and technology, our ineffective and confused environmental policies, etc. Traditional economists aren’t likely to treat such issues, Kuttner suggests, because it is their habit, “to focus on statistical aggregates rather than observing what business firms actually do.” So it was that, following the dismal failure of then-Treasury Secretary James Baker to reduce our trade deficit by devaluing the U.S. dollar, economists busied themselves with examining what went wrong with their equations rather than looking into, “the dynamics of how, precisely, foreign firms manage to hold down their export prices despite the fact that the dollars they get are now worth up to 70 percent less then they were in 1985.” Classical economists, believing capital to be global and stateless, were embarrassed to find Japanese capital somehow acting nationalistic. Still, many of them insist that the decline of American economic strength is the result of natural forces rather than the failure to recognize and respond to the actions of foreign industries. It’s good to remember that most talking heads brought into our living rooms by Nightline and MacNeil-Lehrer wear hornrimmed spectacles with laissez-faire lenses that distort and obscure things clearly visible on the shop floors and in the offices where the battle for competitiveness is being fought. It will be hard to sell Americans the idea that bureaucrats, like those in Japan’s Ministry of International Trade and Industry, might do more to enhance our performance in the global economy than the flamboyant wheeler-dealers our capitalist mythology cherishes. Perhaps, in the wake if the S & L debacle, as well as the crises brewing in banking, insurance, transportation and other sectors, more people will come continued on pag:23 Help bring our technology out of the Stone Age! If you can help the Observer find an used Mac-compat ible laser printer free or cheap \(perhaps through a please call 512-477-0746. SupportThe Texas Observer! 18 AUGUST 23, 1991
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