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America bashing.

Banner headlines trumpet the decline of U.S. economic power. According to these commentators, America is no longer competitive, as evidenced most starkly by our mountainous trade deficits, particularly with the Japanese. "The Cold War is over and Japan won" is the conclusion drawn by both Democratic and Republican presidential candidates and many of their followers. Consumer confidence has plummeted to depression levels.

Critics from both the left and the right bemoan the failure of our most vital economic and social systems, including education, health care, and trade. They cite America's collapsing infrastructure, decaying manufacturing base, withering technological might, and eroding competitive position.

Who's to blame? Many Americans are pointing a collective finger at American corporations in general and their top executives in particular. The latter are depicted as overpaid, underachieving paper shufflers who have sat idly by while our international competitors have eaten our lunch. Is this depiction fair?

Not if the stock market is the gauge of performance. When shareholders holders ask the question, "Are we better off today than we were four years ago?" the answer is a resounding eyes. The aggregate market value of the New York Stock Exchange ballooned by $1.5 trillion from year-end 1987 to year-end 1991, an increase of 68%. This growth in our nation's tangible wealth contrast with the 40% plunge in the Japanese stock market during this period.

Yet many dismiss the stock market boom as an anomaly - neither indicative nor predictive of our nation's competitive strength; consequently, they do not credit American corporations for creating this abundant shareholder value. Nevertheless, by one important measure, perhaps the most important, American managers have gotten results for their shareholders.

American managers in certain industries have created, sometimes de novo, a great deal of wealth for their shareholders and for their country. While the media focus on plant closings and worker layoffs in aging industries, such as automotive and steel, technological breakthroughs and capital investments are being affected in developing industries, such as software and biotechnology. The stock market has realized and has underscored this dramatic shift in American economic prowess - exemplified by Micosoft's market valuation being greater than General Motor's, and Amgen's valuation exceeding USX's Steel unit, Bethlehem Steel, and Inland Steel combined.

In many young industries, and even in some old ones (e.g., entertainment), American competitiveness is being enhanced. Their successes may explain why total employment in the U.S. reached an all-time high in June 1991, and although the number of Americans out of work has crept up, our unemployment rate is still 30% less than the double-digit figures for Western Europe and Canada. Moreover, our international competitiveness has improved, as evidenced by American exports reaching an all-time high in 1991 and our trade deficit achieving an eight-year low. And in terms of output per capita, the U.S. is still 25% higher than Japan and 30% higher than Germany.

In light of these accomplishments, many of our corporation and their leaders are creating significant value for both their shareholders and their country - achievements that today's America bashers so readily overlook.
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Title Annotation:Letter from the Chairman
Author:Rock, Robert H.
Publication:Directors & Boards
Date:Mar 22, 1992
Previous Article:The ethnocentric approach is out.
Next Article:'Surprise' governance.

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