U.S. Economy World's Envy
March 3, 1997
If imitation is the sincerest form of flattery, the United States' economy is being fawned over by the rest of the world, say observers. U.S. policies of deregulation, deficit-reduction, inflation-control and monetary responsibility are finally being given credit abroad.
In contrast, in the late 1980s, Japanese officials regularly lectured the U.S. about economic policy -- at the time holding out their own statist economy as a model.
- Now, the collapse of the Japanese economy has caused prolonged stagnation and plummeting stock prices.
- In Germany -- where public sector spending is now 50 percent of gross domestic product, the top marginal tax rate is 53 percent and unemployment is the highest since 1933 -- economists are openly envious of our faster-growth and low-unemployment rates.
- Now German leaders want to lower the top individual tax rate to 39 percent and eliminate many deductions -- similar to changes made here 11 years ago.
- A huge disparity shows why the U.S. economy is more flexible and productive than Germany's. Their labor costs average $29 an hour, while the U.S. figure is just $16 an hour.
Some European countries did embrace certain U.S.-style reforms and have benefited from them.
- Great Britain in the 1980s reformed its tax code and sold off a number of state-owned industries.
- The Netherlands cut its budget deficit from almost 10 percent of GDP in the early 1980s to below 3 percent.
- Today those the two countries are Europe's economic leaders.
Source: David J. Lynch, "USA Back on Top," USA Today, March 3, 1997.
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