Maechling, Charles, Jr.
"The next century - can the free market panacea survive?".
Virginia Quarterly Review v71, n1 (Wntr, 1995):1 (18 pages).

Abstract:
       A comparison of the free market economy model of the US
       and the mixed economy models of Japan and Western Europe
       shows that there are striking differences between the
       two which are not only economic but historical and cultural.

       Free market economy model dogmatically adheres to the
       orthodoxy of free market while the mixed economy model
       gives more prominence to society than to the individual
       and at the same time provide opportunities for the free
       market economy.  The free market economy model threatens
       national welfare by neglecting the role of the state and
       this policy will have political repercussions as well.


Tomoyuki Tanaka wrote:
 
> from Page 2 the paper:
> 
>         The result is that instead of growing closer to its
>         principal trading partners, the United States is now in
>         the state of continental drift away from them.  If it
>         persists in this course, it will eventually be the only
>         major economic power dogmatically committed to free
>         market economics with the rest of the world [...].
> 
>         The United States will then find itself in recurring
>         confrontations with these trading partners, including a
>         unified Europe of even greater economic power.
> 

Hi,

Lets see: Japan and Europe followed one course and the USA another. I do 
remember reading about a decade or so ago that Reagan and Bush were setting 
the US on the path to ruin because they did not have an "Industrial Policy" 
like Japan and Europe did. 

And "Industrial Policy" was GOOD because it would have government 
bureaucrats directing investments into the areas of future growth 
(like big main frame computers and supersonic transport planes) while 
the backwards and non-directed Americans would be wasting their investment 
money on things with no future (like personal computers and wide body jets).

Now I know that some of you shortsighted critics of "Industrial Policy"
will say that for the past decade Japan and Europe have been in a economic 
slump while the US economy has been expanding.  But this is just another 
example of "False Prosperity", a topic I will soon issue a post about on 
sci.econ and a.p.e.
-- 
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                       (_)


False Prosperity

I see posts from two different kind of critics of the US and/or of
capitalism. Some  are convinced that living standards in the US
are falling from some past 'peak'. Depending on the source, this
glorious high point was during the 1950's, or the early 1960's, or
1973, or 1989.  The 'evidence' given depends on which peak year is
being promoted.  Various kinds of "real wages" (including the federal
minimum wage) are used to support the earlier years, the median 
family income is used to support 1989. (of course that was the last
year of "Reaganomics", before the Bush "read my lips tax hikes".
But for some reason the critics do not like to say that the
US economy peaked during the time of the 28% top income tax and
its been downhill since).

I have responded to this "Pauperization of America" theory in other
posts and on this file from my web page:

http://www.geocities.com/capitolhill/4834/93.txt


The evidence from longer life, lower infant mortality, lower birth
rates, more travel and vacation trips, better medical treatments, 
bigger houses and more people owning their own, etc. is so obvious 
that at least some of the critics now concede that the US APPEARS 
to be getting more prosperous.  What I call the False Prosperity.  

Sure Americans THINK that the economy is doing well, and that they
are prosperous, just because they are buying their homes, paying
off the mortgage, sending their kids to college, traveling
all over the world in record numbers, eating well, and living
longer than ever.

But they are wrong. This is all just the illusion of wealth and
prosperity. Because it is all based on debt and a negative trade
balance, and advertising that convinces people that they are
wealthy when they are REALLY poor, so that they will borrow to
buy even more things that they REALLY cannot afford.

But the truly informed will know that while capitalism created 
economic growth until its maturity, as Marx had pointed out, 
the "end point" of capitalism comes when markets are saturated
and the system can no longer expand. Depression caused by a glut
of overproduction.  Poverty everywhere because people are buried
in wealth.   This happened in 1930, and the decade of the Great 
Depression is the "natural and normal condition" of the 
capitalist system.

Since then a series of unusual conditions have kept the true
equilibrium from returning. World War II temporarily ended the
Depression, and the Cold War and the "Irrational Exuberance"
of the US stock market, have all combined to create 60 years of 
'unusual' False Prosperity.

But soon the "normal" economic conditions of the 1930's will
return. The process has already started in Japan and spread to
the rest of Asia. And as Lester Thurow has pointed out in 
book "The End of Capitalism" there were no net new jobs
created in Western Europe from 1973 to 1994.  The process of
natural stagnation is well along there.

It is only in the US, where stupid and destructive tax cuts
by JFK and then Reagan have delayed the inevitable return to
equilibrium, that the False Prosperity is still spreading. 


I will close with one of my favorite quotes:

Are US Consumers Sinking in a Sea of Debt?

"Consumers short-term debt, perhaps the most controversial
force in the booming U.S. economy, is approaching a historic
turning point. Having risen at an abnormally fast rate for
ten years, it must soon adjust itself to the nation's capacity
for going into hock,....which is not limitless.  Whether the
rate of growth in consumer debt will slow down is no longer
in question....it must slow down.

                             ---FORTUNE magazine, March, 1956

                     ,,,,,,,
_______________ooo___(_O O_)___ooo_______________
                       (_)
jim blair (jeblair@facstaff.wisc.edu) For a good time call
     http://www.geocities.com/capitolhill/4834

"Tweek" <Tweek_1@hotmail.com>:


Consumer debt service payments were about 10% of disposable personal 
income in 1960.

It was 11.7% in 1970
It was 10.6% in 1980.
It was 10.5% in 1990.
It was 11.2% in 1997.

Not much of a change.


>