kfl%mx.lcs.mit.edu@MC.LCS.MIT.EDU (09/29/86)
From: Steve Walton <ametek!walton@csvax.caltech.edu>
... much of this is a quote from Lester Thurow's review of a book
called "The Positive Sum Strategy," a book which advocates
restoring American productivity growth primarily by "getting the
government out of the way of business."
If excessive government spending is the problem, how do the
authors explain the fact that the OECD has just announced that the
Japanese government now spends a larger fraction of Japan's G.N.P.
than American governments (local, state, and Federal) does of the
U.S. G.N.P.?
What's to explain? The reviewer is clearly confusing productivity
GROWTH with productivity itself. The US is still far more productive
than Japan.
... If overall government spending is the problem, why is
productivity worst in the country--the U.S.--that now has the
smallest government sector among all major industrialized
countries?
Productivity is HIGHEST here. It is, however, growing only slowly,
primarily because of the enormous national debt.
Jorgenson shows that the effective American corporate tax rates
were far higher in the 1950's and 1960's, when productivity was
growing at a rate in excess of 3 percent, than they are now, when
productivity is growing at less than 1 percent per year.
1) The growth rates make it clear that productivity is much higher now
than in the 1950s and 1960s.
2) INDIVIDUAL tax rates have gone way UP since then.
3) Many individuals and corporations choose to invest in government
bonds rather than in stocks and corporate bonds, thanks to the
guaranteed high rate of return and tax exemption. Government
borrowing is driving out private borrowing, to the great detriment
of capital accumulation. Capital is necessary for productivity.
To take another example, Thurow shows that during the 6 years from
1979 to 1985, blue-collar worker productivity ... had an average
productivity INCREASE of 3 percent per year.
Not because they were working harder or longer hours, but because of
increased capitalization.
Overall business productivity fell largely because of the addition
of white collar middle managers, who are totally non-productive.
They are? Then why do businesses hire them?
However, I think he makes his central point eloquently: government
intervention in the market is not, in and of itself, bad, and it
is certainly not evil.
Even if he were to prove that government interference was a net
benefit, which he certainly has not, it would still be BAD simply
because it is immoral to steal.
It should be judged on the practical criterion of whether it
works.
If a burglar were to feed his children with money he stole from your
house, money which you otherwise would have spent on something "less
constructive" such as going to the movies, does that make the burglary
ok? Is it too to be judged on the practical criterion of whether it
"works"? If so, is ANY accumulation of wealth or ANY spending of it
on non-essentials morally justifiable as long as there are hungry
people in the world?
Not that I am unwilling to debate the point on purely practical
grounds. The facts are all on my side there too.
Anyone who wants to flame on this should go get the September
'86 issue of Scientific American and read Thurow's article for
yourself.
I have done so. I have been reading Scientific American for over
15 years. Their science and math articles are excellent, but their
political bias is well known.
I have read not only the review, but the book itself. If it makes
you happy, I strongly disagree with the book, but for very different
reasons than Thurow.
...Keith
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