79-08-B5
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Investment Lag[edit]
Transcript[edit]The recent victories of Margaret Thatcher in Great Britain and Joe Clark in Canada have encouraged those of us who feel that the governments of the West have gone too far in over-regulating their economies- Britons and Canadians spoke loud and clear in their recent elections. And they said -- we've had enough of a nameless, faceless bureaucracy ever expanding its authoritative role in our private lives. We've had enough of a government which dreams up schemes to redistribute our income instead of adopting policies which encourage the continued growth of that income. Many Americans expressed relief at the election results in Great Britain. There was a feeling that this election might have been Britain's last chance to turn away from the policies that produced a stagnate economy and put disproportionate shares of power in the hands of a few trade unions. For many, the final straw came when the Labor government actually permitted the Post Office to stop delivery to a company which was being struck by its workers. Mrs. Thatcher has promised to turn away from the failure's of Britain's brand of socialism and get the country moving again. But while we are wringing our hands over the economic plight of Britain, we should not neglect the warning signs in our own system which suggest that we may be headed down the same path. High inflation and burdensome government regulations are the obvious points of comparison. But certain long-range economic trends are cause for even greater concern. According to a study by the American Council for Capital Formation, since 1960, the productivity growth in American manufacturing has been lower than that of the major non-Communist countries -- including Great Britain. Americans save much less than the others too. We save only about five percent of our after-tax income. And as a nation- we invest a smaller portion of our Gross National Product in new business and industry than Japan, West Germany, Canada, France and once again, even the United Kingdom. These disturbing trends have prompted a very thoughtful essay on the future of the American economy in Time magazine in April. Marshall Loeb contemplates what the American economy will be like in the 1980's. Will it be a period of unmatched growth and prosperity for all Americans? Or another decade of inflation coupled with a stagnant, no-growth economy? The key is our lack of investment and savings for the new decade. Mr. Loeb sees some very concrete reasons why American business is discouraged from investment and families are discouraged from saving. He writes "The shortfall is rooted in policies which have led to too much statism and not enough private initiative. Liberal or conservative, Republican or Democrat, almost all the experts agree on the causes of America's capital lag. Government policies have discouraged personal savings and thus have retarded capital formation. Federal spending has diverted money away from investment to consumption. And regulation has shifted capital away from productive, job-creating investments." Well, you take those factors and add to them a double-digit rate of inflation, and the cause of our investment lag becomes clear. But it does not have to be that way in the 1980's. Not wanting to be just another of America's many prophets of doom Mr. Loeb recognizes the latent strength of the American economy. If we can adopt policies to unleash the great potential of our economy, as it has been released for most of our history, he writes, the new decade will bring a period of unmatched prosperity. Government can encourage new investment and capital formation by eliminating unnecessary regulations, reducing the growth of federal spending and by encouraging greater domestic production of energy. If we do this, then the 1980's will be a decade we can all look forward to. This is Ronald Reagan. Thanks for listening. |
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