First, the good news: The U.S. economy, after making difficult adjustments, has roared back to become the most competitive in the world.
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The bad news? One of the “difficult adjustments” has been the elimination of millions of highly paid jobs. This has forced millions to seek employment in the expanding low-wage sector of the economy.
The social and political implications of this are anybody’s guess.
There is, however, little disagreement about the basic premise: The U.S. economy is strong and positioned to get stronger. Yet a growing percentage of the American work force is not in position, because of inadequate education or outmoded skills, to take advantage.
No fewer than three recent studies have confirmed what’s going on, though none of them received much play in the press.
On Sept. 6 a Switzerland-based organization called the World Economic Forum declared that the U.S. had replaced Japan as “the world’s most competitive economy.”
The periodic ranking of 41 industrialized nations cited the U.S. for creating 30 million jobs over the last 20 years, for its recent economic recovery and for the positive impact of individual entrepreneurship and corporate restructuring.
The forum’s listing of the new world order for competitiveness: The U.S., Singapore, Japan, Hong Kong and Germany.
Last week the Council on Competitiveness, a coalition of U.S. corporate leaders, issued a report declaring that, over the last five years, the nation has regained its lead in several key technologies that had been fading.
“America has maintained its position in technologies where it was already strong and has come back in areas where we were losing-a very good combination,” said Daniel Burton, president of the council.
Three years ago, when Japan seemed to be eating our lunch in the automotive and electronics sectors, the same group warned that America was on the road to competitive ruin. Now we’re told Uncle Sam has lapped the field in biotechnology, quality assurance and the design of manufacturing processes; and we’re catching up in historically weak areas such as robotics and printed circuit-board technology.
Also last week, the Commerce Department issued its annual report on global competitiveness, finding that “we are in better shape to compete than we have been in many years.”
The Clinton administration obviously gilded this lily, but the report’s basics speak for themselves: Gross domestic product is rising, as is manufacturing productivity; 4 million jobs have been added to payrolls since the beginning of 1993; inflation is in check; and corporate profits are up.
With so much good news in these reports, you may wonder where I came across the bad stuff.
Easy. I kept turning the pages.
“Part of the sizable gains in productivity that have been achieved in recent years,” the Commerce Department report went on to say, “have occurred because businesses have been cutting staff.”
The report also notes that wages are stagnating. From 1950 to ’73, real, inflation-adjusted pay had been rising an average of 3 percent a year. Since then it has been going up only 0.4 percent per annum.
But those are just averages. A closer look reveals that wages have been going up smartly for the highest-paid and best-educated 25 percent of the U.S. work force. Meanwhile, the middle half has stagnated, and the bottom quarter has lost ground.
The World Economic Forum issued similar warnings along with its gold medal for competitiveness.
Our goods and services are getting more competitive on world markets, its study said, but America’s middle class will continue to get squeezed unless we do something about poor secondary schools, bad attitudes in the workplace and low savings rates.
The group also warned the three mature industrial powers-the U.S., Japan and Europe-that their $18-an-hour average cost for semi-skilled labor won’t hold up long against $2-an-hour competition from emerging countries:
“The temptation to concentrate new industrial activities or relocate existing ones in these (low-wage) regions, to the detriment of the `old world,’ will be difficult to resist.”
So much for the good and bad news. How about those social and political implications that are anybody’s guess?
Here’s mine: The income gap will continue to widen between the techno-skilled and the techno-unskilled, causing more desperation at the bottom, anxiety in the middle and paranoia at the top.
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Rush Limbaugh and Louis Farrakhan notwithstanding, American political discourse will become even more shrill, more vindictive and more unlikely to beget effective change.
Extremist movements will emerge on the right and then on the left. But eventually our pragmatic center will tire of the din and do what needs to be done in education, training, welfare reform and the rest.
Imagine competitiveness reports with nothing but good news, no matter how many pages are turned.