China’s Immunity Gap
The Zero-COVID Strategy Leaves the Country Vulnerable to an Omicron Tsunami
Global Productivity's Long Decline
SLOW GROWTH of the world economy and rising unemployment in the industrialized world-along with the end of the Cold War, which once bound together the capitalist countries of North America, Europe and Asia-have given new life to nationalism, regionalism and protectionism in various quarters of the globe. Combating the persistence of slow growth must be a priority for the new American president and other leaders of the developed nations.
As he ponders remedies, President Clinton starts from a shaky base. The U.S. economy he inherits experienced the slowest growth of the postwar period-an average of 1.2 percent per year over the last four years. The economy began to recover from recession in mid-1991, but so slowly that most voters felt the recession was still on and rejected President Bush's bid for a second term. Governor Clinton's campaign was built on his pledge to "get the economy moving again," a theme borrowed from the 1960 campaign of John F. Kennedy. But the 1990s are not the 1960s; despite somewhat faster growth in the latter part of 1992, the U.S. economy is still hampered by deep structural problems and a global recession.
America's role in the new world economy has changed. Though still the largest national economy in the world, the United States is not the single dominant power it was at the end of World War II. The economic strength of Japan and other Pacific rim nations and of the European Community makes it unlikely that this nation will hold that position again.
The current global economic slowdown has been the most painful and protracted of the postwar era. The growth rate of the industrial countries has come down from 4.4 percent in 1988 to 3.3 percent in 1989, 2.6 percent in 1990, 0.9 percent in 1991, and 1.7 percent in 1992-too slow to keep pace with the growth of the labor force. Unemployment has risen above ten percent in most of Europe and in Canada, and above seven percent in the United States.1
The combined growth rate of the "economies in transition"-the former Soviet Union and eastern Europe-fell from 4.5 percent in 1988 to 2.3 percent in 1989. It then went negative, plummeting by five percent in 1990, 15.9 percent in 1991, and 12 percent in 1992-a decline of one-third of total output in three years, a steeper decline than any country or combination of countries suffered in the Great Depression of the 1930s. Systemic collapse in the East has aggravated problems in the West-especially the huge influx of immigrants to western Europe, a flood that may not yet have reached full tide.
The economic slowdown of the West did not begin with the collapse of the Soviet empire, the end of the financial boom of the 1980s or the 1987 stock market crash. Rather it started two decades earlier with the beginning of a persistent decline in productivity, whether measured either by output per worker hour or total factor productivity.
The trend stands out in the data for the "big seven" members of the Organization for Economic Cooperation and Development: the United States, Japan, Germany, the United Kingdom, Italy, France, and Canada. The annual growth of U.S. gross domestic product per capita dropped from an average of two percent in 1955-73 to 1.3 percent in 1973-86. In the same two periods, Japan's per capita gdp growth fell from 8.8 percent to 3.3 percent, Germany's from 4.2 percent to two percent, and the combined rate of the other four members of the big seven from 3.8 percent to 1.7 percent. One may argue about the precise measures but not about the overall downslide of productivity growth that has been going on for two decades.
Lingering Impact of Oil Shocks
WHAT CAUSED the productivity slowdown? Economists are still unsure. Their principal explanation, especially because of the timing, is the oil shocks of 1973 and
1979. Other leading suspects are an asserted greater rigidity of national economic systems, a falloff in the growth of new knowledge and technology, and tax systems (especially that of the United States) that favor consumption, discriminate against saving and retard investment.2
Low savings and investment rates, it seems evident, have weakened America's productivity growth and overall economic performance. In the 1980s America's net national savings rate fell from about eight percent of national income in the preceding three decades to less than three percent, because of large federal deficits and lower private savings. Proportionally the United States saves far less as a nation than any other major industrial country. In the past decade America's net savings rate averaged about one-fifth that of Japan and about one-third that of Germany and the Group of Seven (G-7) as a whole. This shortage of savings has not only constrained American growth but has also severely limited the capital the United States can supply to developing countries or the ex-communist states struggling to build market economies and effective democracies.
The economic slowdown has deep political roots. The oil-price inflation of the 1970s and early 1980s was triggered by Arab states using oil as a weapon against Western importers following the 1973 Arab-Israeli war, and then by the Ayatollah Khomeini's Iranian revolution in 1979. These were what economists call exogenous shocks to the economic system.
But the oil shocks were also endogenous. The were linked to changing market conditions-that is, to growing Western dependence on Middle Eastern oil, to economic boom and worldwide commodity-price inflation kicked off by the escalation of the Vietnam War and the Johnson administration's dilatory fiscal policy. President Johnson's unwillingness either to curb domestic spending by gutting Great Society programs or to demand a tax increase to finance the war-as well as his desire to push for economic growth-all helped prompt global inflation.
Excess fiscal and monetary stimulus on the part of other developed countries also contributed to the worldwide commodity boom. Inflation worsened the terms of trade of Third World and Middle Eastern producers, setting the stage for the first round of oil-price explosions. Rising oil prices fueled general inflation and forced the developed countries to adopt the tight monetary and fiscal policies that would in turn intensify the investment, productivity and output slowdowns of the 1970s, 1980s and 1990s.
In the 1980s the effect of the oil price explosion on productivity growth gradually wore off; industrial nations, some faster than others, adjusted to higher oil prices, and the relative world oil price came down. Nevertheless the slow rate of productivity growth continued. Hence, the causes of continuing slow growth in the late 1980s and early 1990s must lie elsewhere.
Deflating "Bubbles" Slowed Growth
SPECULATIVE FEVER gripped stock markets and real estate markets in the 1980s and caused a global wave of mergers and acquisitions. Rapid growth of the global financial markets and a "less government" political climate that reduced financial and antitrust supervision and regulation combined to produce "bubbles" in economies around the world. Lest the bubbles burst, governments and central banks decided to let air out of them. But deflationary actions-not only by financial regulators but also private financial institutions themselves-aggravated the economic slowdown.
The fall of the Berlin Wall exacerbated the switch to counter-inflationary measures in Germany. The huge price paid by Chancellor Helmut Kohl to bring about quick unification-an exchange of West German marks for East German marks at an overpriced one-to-one rate and a transfer of capital to the East amounting to about $100 billion a year-caused the German budget to swing from a moderate surplus in 1989 to a deficit equal to five percent of gdp in 1992. That set off inflationary pressures and-still worse-inflationary fears.
To still the pressures and fears, the Bundesbank kept money tight and interest rates high while the rest of Europe was trying to fight recession. The result was to worsen the problem of slow growth in Europe and everywhere else. Bundesbank policy also intensified disequilibrium among currencies and political strains among European Community signatories of the Maastricht treaty, threatening European monetary and political integration and even the world trading system under the General Agreement on Tariffs and Trade.
Japan was also experiencing the worst economic and political tensions and anxieties since beginning its remarkable post-war recovery and long spell of high growth. Its financial bubble, built on inflated asset values, has been sharply deflated. Stock prices have fallen about 60 percent, and real estate prices, though they have already come down by about 20 percent, are regarded as very shaky. Scandals over political and business corruption have helped to undermine public confidence in the system. The Japanese establishment-including politicians, bureaucrats and business leaders-now acknowledges that the country is in a genuine recession. Present strains, it warns, may last another five to seven years, and possibly a decade or more.
The fear is that the steep fall of securities prices and land and other asset values will have a long-lasting effect on Japanese banks and industries. One senior Japanese economist explained: "In the past the threats were like a broken leg- sharp, painful but specific-and it was clear what was needed to mend them. This downturn is more like a virus affecting the blood system-much more complex and pervasive."3
In its efforts to cure the disease, says Akio Mikuni, a leading Japanese financial analyst, the Ministry of Finance got caught in a dilemma: "If it allows the prices of land and equity to be set genuinely by market forces, asset prices would plummet and the capital cushion of Japan's banks wiped out. The Finance Ministry would have given up its most important tools right at the moment they would be needed for coping with a resultant first-order banking crisis."4 For the time being, the Ministry of Finance has chosen to support the markets at deteriorated levels. Nevertheless, Mikuni believes that the ministry's actions are ultimately unsustainable. "The negative carrying costs of holding overpriced assets," he notes, "will continue to eat away not just at the stability of the financial sector but also at the profitability of manufacturing firms."
Other analysts, while conceding that Japan "has finally gone over the edge/' believe that it will come back in a few years, stronger than ever. Japan, says Kenneth S. Gourtis, strategist and senior economist for the Deutsche Bank Group in Asia, is "purging itself of the excesses of the 1980s, cleansing its economy, melting off the fat" it had accumulated over recent years. "By the mid-1990s," he contends, "once the economy is brought down again to its rock-hard, competitive core, Japan will be poised for another powerful leap ahead through to the end of the decade."5
Japan's future will depend not just on actions by the Ministry of Finance, the Ministry of International Trade and Industry or other agencies, banks and businesses, but also on the policies of foreign governments and developments in the world economy. Whichever crystal ball is right about Japan's economy, analysts, government officials and central bankers agree that this has not been a typical business-cycle recession, either in Japan, Europe or the United States.
The Dangers of a New Depression
AFTER A MEETING with Japanese Prime Minister Kiichi Miyazawa and officials from the Ministry of Finance and Bank of Japan, Federal Reserve Board Chairman Alan Greenspan noted that among the topics discussed was "the balance sheet problem" that in Japan is referred to as "asset deflation."6 Greenspan had earlier described the structural imbalances in the U.S. economy as more severe and more enduring than many had previously thought. The economy, he said, was "still recuperating from past excesses involving a generalized over-reliance on debt to finance asset accumulation. Many of these activities were based largely on inflated expectations of future asset prices and income growth."7
As reality broke through, businesses and individuals holding debt-burdened balance sheets had diverted cash flows to debt repayment at the expense of spending, while lenders turned cautious. The credit crunch was on. And as Greenspan further explained: "This phenomenon is not unique to the United States; similar adjustments have spread to Japan, Canada, Australia, the United Kingdom and a number of northern European countries. For the first time in a half century or more, several industrial countries have been confronted at roughly the same time with asset-price deflation and the inevitable consequences."
The last such asset deflation, credit crunch and wave of bankruptcies followed the Great Crash of 1929. Fiscal, monetary, and trade policy blunders helped to turn that earlier asset deflation into the Great Depression of the 1930s, which lasted a full decade-until the outbreak of World War II. I shall always remember the phrase of my old boss, Elliott V. Bell: "Out of the wreckage of depression slithered the serpents of Nazism and war."
Nowadays, reversing the celebrated maxim of George Santayana, we believe or hope that those who remember the past are not condemned to repeat it. Yet it is already evident that the long period of slow growth, which some have called a "controlled depression," has produced revolutionary consequences of its own. It helped to shatter the Soviet empire. As the British editor William Rees-Mogg has written: "A world economic crisis is a type of world revolution. It destroys old structures, economic and political. The Soviet Union, with its rigid inability to adapt, was the first to fall before the full force of the storm. Such a crisis destroys well-meaning politicians and promotes men of power.... It destroys respect for government, as people discover that their leaders cannot control events."8
The burst of optimism that greeted the downfall of Soviet communism has given way to anxiety that years will pass before the new states in the East can become effective market economies and democracies-and that some may not make it at all before dictatorship returns. The end of the Cold War was expected to bring great benefits to people in many countries as resources were shifted from military to social programs. Thus far, however, the peace dividend only shows up in lost jobs and falling incomes.
Theoretically there is no reason why this must be so; in a rational world, the improved prospects for peace should have led to greater spending on consumer goods and productivity-raising investment. But that can happen only if workers can be shifted to new jobs-and financial resources reallocated to create those jobs.
In the absence of human and capital resources to expanding civilian industries, there are strong economic pressures on arms-producing nations to maintain high levels of military production and to sell weapons, both conventional and dual-use nuclear technology, wherever buyers can be found. Without a revival of national economies and the global economy, the production and proliferation of weapons will continue, creating more Iraqs, Yugoslavias, Somalias and Cambodias-or worse.
Like the Great Depression, the current economic slump has fanned the fires of nationalist, ethnic and religious hatred around the world. Economic hardship is not the only cause of these social and political pathologies, but it aggravates all of them, and in turn they feed back on economic development. They also undermine efforts to deal with such global problems as environmental pollution, the production and trafficking of drugs, crime, sickness, famine, aids and other plagues.
Growth will not solve all those problems by itself. But economic growth-and growth alone-creates the additional resources that make it possible to achieve such fundamental goals as higher living standards, national and collective security, a healthier environment, and more liberal and open economies and societies.
Reducing the Deficit to Promote Growth
WHAT WILL it take to fuel the engines of world growth? The answer can be found in the lesson learned from the Great Depression: the developed countries need to pursue macroeconomic policies that will keep the world economy moving forward and keep world trade and investment flowing freely.
This means, first and foremost, that the United States and most other industrial countries must make efforts to increase savings and productive investment.9 A higher rate of capital formation will serve not only their own interests but also- through the global growth mechanism of expanded markets- promote the interests of the developing world, Asia's newly industrialized countries and the states of eastern Europe and the former Soviet Union that are striving to modernize and build closer links with the world economy. Higher rates of capital formation in the developing and newly market-oriented economies are critical to their economic success and, in many cases, to their political viability.
The United States, still the largest and most important economy in the world, needs to play a constructive role in raising global capital formation. It can only do so if it eliminates its huge and still growing federal budget deficits. The Bush administration's final estimate of the U.S. budget deficit, which was $290 billion in fiscal year 1992, was revised upward to $305 billion by 1997, if present policies continue. That deficit is "structural"-meaning the bulk of it would still be there, even if the economy were operating at full capacity and full employment.
Repeated deficits have forced the United States to import capital from abroad in order to finance government activities and to help cover America's own investment needs. Instead of exporting capital to the developing world, with reciprocal benefits to its own exporting industries, the United States has been absorbing global capital, putting upward pressure on long-term interest rates and slowing its own and worldwide investment and growth.
America's deficits, both internal and external, could not have grown so large nor endured so long had it not been for the willingness of foreigners to invest in dollar assets. That willingness reflected the international role of the dollar and relative confidence in America's political stability and long-run growth potential. The United States must now move decisively to justify that confidence-or risk seeing it shattered.
Strengthening America's economic growth must be a top priority for the rest of the decade. Stronger growth will require eliminating the budget deficits that have undermined the nation's savings rate and long-term investment. Unless remedied, America's chronic and rising budget deficits and low national savings rate will act as a drag on its productivity growth and its ability to build any international cohesion on critical economic and political issues. Washington's budget deficits will also continue to limit its ability to deal with social problems at home.
U.S. economic policy should aim to raise the rate of national savings to at least its pre-1980 level of about eight percent of national income, about five percentage points above its current level. When invested in plant and equipment, research and development or infrastructure, the additional savings would raise the annual growth rates of productivity back to its historical level of more than two percent per year, making possible a steady increase in living standards, a steady reduction in unemployment and the accumulation of extra capital for meeting domestic and foreign needs.
Proposals by certain economists to get rid of the budget deficit problem by excluding outlays for capital goods from total government expenditures have little merit and might even aggravate problems with the nation's fiscal mismanagement. The idea of a government capital budget is not new. Proposals for a capital budget surfaced in response to public concern over the contribution of rising public expenditures during the Vietnam War, and they were rejected as likely further to confuse and distort the federal government's fiscal policy.10 That conclusion still applies: use of a capital budget would seriously understate the government's current draft on the resources of the economy. Indeed it was the overdraft on the nation's resources during Vietnam that broke the long spell of stable postwar economic growth and initiated the inflationary pressures and slow productivity growth that have dogged America and the world since.
In periods of inflationary pressure the appearance of a balanced budget, with capital expenditures excluded, would pose a political and psychological barrier to adequate taxation, even beyond the usual resistance present in Congress and the public. Those interest groups pressing for new spending would inevitably seek to stretch capital budget rules to get their proposals included as forms of investment, whether in physical, intellectual or human capital, skirting the immediate impact that would normally be to increase the current deficit.
If the capital budget were limited to physical capital, it would be likely to distort decisions about allocation of resources, promoting the priority of investments for "brick and mortar" over programs for which future benefits could not readily be capitalized, such as health, public education and child care, even when there was no accurate evidence that such a shift would be more beneficial to the nation.
Several foreign governments that previously used capital budgets subsequently abandoned them. In other countries maintaining a semblance of capital budgets-the division of transactions "above the line" in the regular budget and "below the line" in the capital budget-became so arbitrary as to make the distinction meaningless. Even if a capital budget were desirable, it raises a formidable array of accounting problems and issues, such as how to count military hardware (which produces no incremental income year to year) and how to measure depreciation of government property.
Concerns about the distorting effects of a federal capital budget should not imply rejection of special tabulations and analyses of government spending of an investment nature. On the contrary, efforts to promote long-term productivity and overall economic growth could be served by careful analysis of the costs and benefits of proposed capital expenditures in future budget documents, without harm to the budget as a tool for furthering economic stability and growth. The Clinton administration should be encouraged to move in that direction. But it should bear in mind that the private sector requires at least as much attention as the public sector in its potential contributions to increasing investment in productivity-generating capital goods, research and development and job training. A reduction of the structural budget deficit would augment private investment by increasing national savings. The long-term aim of fiscal policy should be not just to reduce the budget deficit but to achieve a structural budget surplus, including Social Security and other retirement accounts, of one to two percent of GDP over the coming decade.
Short-Term Growth vs. Deficit Reduction
ACHIEVING the nation's goal of stronger long-term growth must be accomplished in a way that is consistent with raising the level of economic activity in the short run, especially to increase employment. President Clinton needs to reconcile the apparent conflict between two types of economic advisers-the short-term fiscal stimulators versus the longer-term deficit eliminators. He has said he intends to call the shots himself and avoid, on the one side, excess stimulus that would drive up interest rates and retard investment and, on the other, fiscal drag that would keep the economy in the doldrums.
If a solution to this dilemma is possible, it can be found in a unified program to encourage private and public investment over the next four years: short-term stimulus and long-term progress toward eliminating the budget deficit should be offered and legislated as part of one package. This is the task for which President Clinton's experienced legislators-Senator Lloyd Bentsen and Representative Leon Panetta-were presumably chosen as secretary of the treasury and director of the Office of Management and Budget: to persuade Congress to enact a program for gradually phasing in deficit-shrinking measures that would not interfere with the recovery or with the financing of public and private investments to spur national economic growth, and to make each year's fiscal policy consistent with the longer-term program.
A program for recovery and steady growth should provide for deferring measures to get rid of the budget deficit if economic stagnation persists and the economy slides back into recession. But such deferrals should be only temporary, until the economy recovers. Such a program is difficult to lay out firmly in advance and will require the closest cooperation between the administration and Congress to maintain flexibility without deserting its fundamental goals.
Stable growth will also require closer coordination between fiscal and monetary policy. In the past, some central bankers and economists have argued that the sole task of the Federal Reserve's monetary policy is to prevent inflation and to safeguard the value of the dollar. But in times when overcapacity and unemployment-and even deflation-are the main problems, the Federal Reserve has an obligation to aid economic recovery. The goals of reducing unemployment and preventing inflation are parallel, not irreconcilable, objectives.
Those objectives can best be achieved in existing circumstances by reducing the structural budget deficit, thereby making it possible for the Federal Reserve to maintain or increase the growth of the money supply and to bring interest rates down farther without fear of regenerating inflation. With industrial output at less than 80 percent of capacity and the unemployment rate above seven percent, there is no reason for premature alarm about inflation. It was that kind of alarm that so inhibited monetary policy in the 1930s, worsening the depression and hampering the recovery. That was a time when reducing unemployment, not heading off a feared inflation, should have been the primary target of monetary policy. Although the present slump, except in eastern Europe and the former Soviet Union, is not as severe as the Great Depression, monetary policy still needs to avoid focusing on the wrong problem at the wrong time.
Tighten G-7 Coordination
IN THIS more closely integrated and stagnating world economy, it is the inadequate growth of the world money supply, not just the money supply of any single nation, that provokes the greatest concern. Collaboration among the three most important central banks and sources of international monetary reserves-the Federal Reserve, the Bundesbank and the Bank of Japan-will be vital to curbing world inflation or deflation and achieving stronger and steadier world economic growth. Collaboration by nations and their central banks on monetary policy must be accompanied by efforts of national administrations and legislatures to coordinate fiscal policy, from which, as we have seen, monetary policy cannot be divorced.
There is no reason for not achieving greater fiscal and monetary cooperation, even among members of the "Group of Three," which represent different national interests, different national cultures and different regional constituencies. Such cooperation might most effectively be achieved within the framework of the Group of Seven, where the other four members of the group could help to resolve disagreements among the three. Participation in the ongoing efforts to develop consistent fiscal and monetary policies to achieve common goals could also, within this context, be sought from representatives of the emerging regional organizations in Europe, North America and Asia.
To become an effective policy coordinator, however, the Group of Seven needs to be more than a once-a-year "summit" of presidents and prime ministers, which has served as more of a photo opportunity than as a forum for analysis, debate and decision-making. The work of the G-7 must involve much more than drafting an annual communiqué phrased in its broad, if not altogether meaningless, generalities.
If the G-7 is to be transformed into a useful instrument for economic cooperation, it needs a secretariat, regular meetings of economic, financial and political representatives, and more frequent ministerial meetings to prepare the way for decision-making on the major issues. Its fundamental aim should be to strengthen the growth of the world economic system, on which all national economies increasingly depend.
In recognition of the likelihood of different conditions within national and regional economies at any given time, policies for systemic growth should not necessarily impose the same fiscal or monetary policies on all member countries at all times. Rather, the G-7 should aim at harmonizing national policies to achieve the common goal of systemic international growth.
International cooperation must also be sought in other multilateral and bilateral negotiations for reducing military spending to levels appropriate to the post-Cold War environment. Military expenditures need to be adjusted to meet changing national security requirements, competing private and public investment aims, and the goals of reducing budget deficits and increasing the world supply of savings and capital, crucial to the reconstruction and growth of the ex-communist and Third World countries.
The defense budget should not be treated by any nation- including the United States-as an employment-security or growth-stimulus program, with spending levels rationalized by misapplied economic arguments. It would be a tragically lost opportunity if America and other nations failed to transfer resources desperately needed for investment and growth from military uses because of incompetence or self-interested opposition to economic adjustment. Such a failure would not only waste resources but also create pressures for otherwise unnecessary tax increases. The excess military capacity, moreover, would continue to spur the proliferation of weapons, both conventional and dual-use nuclear, thereby increasing threats to world peace and economic development.
Danger of Beggar-Thy-Neighbor Policies
THE LONG-TERM PROBLEM made acute by economic globalization-and global slow growth, stagnating real output and income, overcapacity and unemployment-is not just maintaining aggregate demand but also raising investment in activities that generate strong productivity growth and jobs. Increasing savings, per se, may not automatically raise the level of domestic investment sufficiently, although greater savings will help reduce interest rates and thereby encourage investment. In the integrated global economy, capital saved in one country can readily be invested either domestically or abroad; increasingly businesses and nations must create or acquire the capital, human skill and technology they will need to meet international competition. The alternative-protectionism and an aggressive nationalism-would, as the world has learned over and over, endanger both peace and prosperity.
Every developed country has accepted, formally or de facto, the responsibility of employing macroeconomic policies to combat inflation and unemployment. But under varying economic and political pressures, countries weigh those objectives differently. Throughout most of the postwar period, the need to contain and defeat Soviet communism went far to overcome political opportunism, the pressures of interest groups and the inherent unpredictability of capitalist economic systems. As a result the early postwar performance of the industrial nations was much better than in the years between the world wars.
But slow growth in the world economy now makes the danger of a reversion to beggar-thy-neighbor policies a real one.11 Some see the three major economic powers-the United States, Germany and Japan-riding in different directions and threatening to pull the world economy apart. But the interdependence resulting from economic integration has greatly reduced the effective autonomy of even large national economies. Nations have found that their policies are now less potent domestically, affect other countries more strongly and produce sharp and often unwelcome changes in the trade and payments balances and exchange rates that link them with others.
In this changed world, cooperation among the major economies in policymaking has become increasingly important. But there are no technical solutions to the economic problems the world is facing. What is most needed is the political will-the will of the United States, Germany, Japan and other major industrial countries to deal more effectively with their own problems and the will of all the major developed countries to work together for a common end.
The most important challenge for economic cooperation in the years ahead will be to keep the world economy growing at a vigorous and sustainable pace. With real economic growth the serious problems of world debt, unbalanced trade, currency disequilibrium and unemployment-as well as the social, ethnic, racial and nationalist tensions and the violence to which they give rise-can be contained, and progress made toward their solutions.
The greatest change needed to preserve stability and nurture growth is for the world economy to become the focus of policy formulation. Despite the resistance of traditional national politics and interest-group pressures, the development of farsighted fiscal, monetary, trade and investment policies in the major industrial countries has become vital to the economic well-being of all nations.
1 Figures here are taken from World Economic Survey, United Nations, New York, 1992, p. 1.
3 Financial Times, Nov. 17, 1992.
4 Akio Mikuni, "The Collapse in Japanese Financial Markets," working paper for the Group of 30, Tokyo, September 1992.
5 K. S. Gourtis, "Why Japan Will Come Back," The International Economy, September-October 1992, p. 1.
6 Press conference, American Embassy, Tokyo, Oct. 14, 1992.
7 Alan Greenspan, testimony before the Committee on Banking, Housing and Urban Affairs, U.S. Senate, July 21, 1992.
8 The London Observer, Sept. 7, 1992.
9 This section is based on "The United States in the New Global Economy: A Rallier of Nations," a statement by the Research and Policy Committee of the Committee for Economic Development, of which the author was Project Director.
11 See Jeffrey E. Garten, A Cold Peace: America, Japan,, Germany, and the Struggle for Supremacy, a Twentieth Century Fund Book, Times Books, 1992.