Document LKvJRwjdKgj4wkKY4oq1Jo3nd

Whom the Gods Would Destroy, They First Make Insolvent: The Economic Face of Political Freedom One year ago. we referreo to a conversation we haO had with someone we identified as "an estimable academic, a dean of no smalt reoutation for foresignt. " The resultant essay spoke about the decapitalization of American industry, under what we hoped was an in triguing headline: Words Are Cheap, and Memories Short. Nothing in the past twelvemonth has given us cause to doubt the validity of that six-word title. Being ourselves notoriously wordy and forgetful, we were pieased to find in the year-end mail a communication from the same Venerable Dean, which we herewith convey. Be not alarmed 6y (he lengm of this missive. My life is too uneventful for tne traditional Christmas tiaings of kith and kin. marital unions ana geriatric reunions, costly vaca tions. ditto operations, and similar phenom ena that must interest the sender more than they can the recipient. Within these ivied walls. I am valued, if l am valued at all. not so much for what I have attempted and done as for what l have thought and said. Here is what I am thinking and saying these days. We talked last year about matters eco nomic. Let's look this time at the political side of the society we share. Bad cess to 1978! It brought us up heavals great and small, some immediate in their impact, some portentous for the future. We learned that the average annual rise in productivity for American private enter prise in the decade and a. half ending in 1977 had been only 2.7 per cent. This com pared with 5.5 per cent for Germany and 8.4 per cent for Japan. Or. Richard W. Rahn. executive director of the American Council for Capital Formation, told us the key to "economic vivacity" is not a cheap currency, but a high rate of productivity growth. He saw us "caught in a curious impotence, standing ialy by while Icarus tails into the sea." And why? One answer, if I may send a dirty word througn the U.S. mails, is profits, or rather the lack thereof. In a number of industries, profits are simply too low to justify investment in either ex panded capacity or improved production ef ficiency. Don't blame labor. The best and most willing workers in the world can't do the |Ob unless they have the tools. My eye falleth also upon Washington. The time has long passed when we could wrap a clacenial wail around our economy; the infant has emerged into the world, and a hostile world it is. You know the figures on our baiance of trace. They reflect a losing battle between our team, which is constantly undercut by its own government, and the other teams, which are constantly propped up and encouraged by their governments. I call to mind the story about the frontier wife wno saw her husoand locked in mortal com bat with a grizzly. Having been brougnt'up in a tradition of fair play, she stuck her head out of the cabin window and shouted; "Go it. husband! Go it. bear!" A short auiz--i can't shake the habits of the classroom. Name two American indus tries that stand out from the pack at a time when we are losing primacy in a number of international markets. One would certainly have to be the computer industry, which is years ahead of its overseas competitors. And anyone who has tried td place a tele phone call in a foreign land knows that we in the United States, to use an only slightly outoatea phrase, get more than our nickel's worth. Now for part two: Name two industries that were prime targets of antitrust litigation in the 1970s. Unprofessorially, I supply the answer: our foremost manufacturer of com puters and our foremost provider of tele phone service. These are called monopolies by seme. Some say that monopolies lead to inferior products and services, and to nigner costs for consumers. I want "some" to ex plain to me how it is that these two so-calleo monopolies have maoe their products and services the envy of the civilized world ana have at the same time lowered the cost, m terms both absolute ana relative, of what they furnish forth. What we seem to be saying to the be leaguered corporation is this: You must be strong enough to compete against giant foreign combines in state-owned or statesubsidized industries, but not so strong as to threaten the least efficient domestic pro ducers in your own industry. Among the otner |oys of the year now gone and little lamented was the announce ment of an oil price increase I think of as be ing in "the middle range"--i.e., more than we paid yesterday, but less than we wouid pay tomorrow. Being afflicted with economic myopia, we see that development only m terms of those flying digits at the gasoline pump. In truth, it should serve to remino us that we have been, to use the mildest possi ble term, frivolous in our planning. In 1952. when ypu and I were younger, the Paley Commission assessed the coming problem and laid out a national minerals ana resources policy. That strategy is still largely untapped, like those beautiful coffee-table books we buy and. after a while, persuade ourselves we have read, even thougn we the frontier wife who saw ner hiusca~c scree m mortal comcat wno a grzzy