ARE THINGS REALLY THAT BAD?\Patrick Buchanan's dark view of the U.S. economy has become a\centerpiece of the Republican primary contest. It's also reignited\the debate about who has benefited from the recent years of economic\growth.\Sort of, but that's capitalism.

Byline: B.J. Phillips

THREE things happened last Tuesday:

Federal Reserve Chairman Alan Greenspan testified before a congressional committee. Amid increasing concern that a recession was on the horizon, he told lawmakers that the economy was, in fact, healthy and "on track for sustained growth. Any weakness is likely to be temporary."

Afraid that a strong economy would eventually trigger inflation, the stock and bond markets leaped off the cliff. The price of the 30-year bond declined more than two points, the worst one-day drop in two years. The Dow Jones index fell as much as 70 points before settling at minus 44.79 points for the day.

Greenspan's good economic news, televised on C-Span, was considered such a bad omen that one economist watching the slaughter on his computer screen noted that "the markets were falling about a point with every sentence he uttered."

Pat Buchanan won the New Hampshire primary.

These events are not unrelated.

Buchanan carried New Hampshire because he was the only candidate to express what many Americans feel, indeed fear: that a perverse equation now seems to rule our economic life, one which dictates that Wall Street prospers only when Main Street suffers.

There is a clear sense that society is dividing into haves and have-nots. Even worse for a country that has made a secular religion of upward mobility, a significant segment of society fears it is becoming won't-ever-haves.

The only surprise is that none of the other candidates got it. Bob Dole uttered a death-knell line on a par with George Bush's surprise over seeing supermarket scanners when he said he "didn't realize" the extent of the economic uncertainty.

Why not? The facts certainly support it.

Over the last quarter century, the national income has been redistributed. The bottom two-thirds of the population have been getting an ever-smaller slice of the economic pie since 1970, while the top 5 percent have been getting proportionately richer.

High school graduates make only 70 cents on the dollar compared with what college graduates make. Workers without a high school diploma face a lifetime at minimum wage.

All the other things they say are true, too. The spread between executive and employee salaries has exploded. Layoffs are ceaseless, despite record corporate profits.

Regardless of how well Wall Street has done, no matter how many new zillionaires are created per day in Silicon Valley, Americans believe that they have not done well. Polls show that two-thirds don't expect to do any better.

"There is a great deal of anxiety about the future out there," says Andrew Kohut, director of the Pew Research Center for the People and the Press. "There is also strong discontent with corporate policies that discard people like inventory that's no longer of any use."

Buchanan has given voice to these fears. But it is fundamentally dishonest of him to pretend that there are quick-fix nostrums for our economic woes.

The underlying truth is that capitalism is both creator and destroyer.

It generates new products, new companies, new jobs at prodigious rates. It also hounds into bankruptcy the obsolete and inefficient, and the handmaiden of that process is joblessness.

Since the last recession ended in March 1991, the economy has created 9 million additional jobs. That's a huge net gain, but between January 1991 and December 1993, 9 million people lost their jobs, however briefly.

Trade had virtually nothing to do with that, so protectionism won't fix it. Neither will supply-side economics, tax cuts, a growth rate of 2.5 percent instead of 2.25 percent, or anything else that a presidential candidate can actually do once he's in office.

It is the nature of our economic system to give and to take away. Unless we are willing to change that, the only thing government can really do is the one thing no candidate has talked about - soften the blows.