Business: No Progress Without Pain

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Thurow also places blame on the shortsighted views of many American businessmen. With shareholders peering over their shoulders, company chiefs too often focus on this quarter's profits, while neglecting long-term investment and planning. By contrast, Japanese managers look ten to 15 years ahead and are willing to sacrifice current earnings for long-run payoffs. As an example, Thurow notes that Nissan Motor Co., the maker of Datsun, lost money in the U.S. for years while it was cultivating the American market. But the company stayed the course, and has become phenomenally successful: its car and truck sales in this country have soared from 1,640 in 1960 to a projected 600,000 this year.

The M.I.T. economist has a controversial plan for rebuilding American business: setting up a national investment committee to pick and support the economy's winners. The group might authorize Government loan guarantees to farm-equipment and chemical companies for research into ways of growing more export crops. Small telecommunications firms could receive the funds needed to compete in the vast world market for information transmission devices from picture phones to satellites. Thurow argues that without such Government aid as price guarantees, some vital industries—synthetic fuel production, for example—would never emerge.

Members of Thurow's proposed investment committee would be recently retired leaders of industry, labor and politics. Those still active, he says, are more concerned with preserving the economic status quo than with opening new fields. Thurow last week dismissed President Carter's proposed Economic Revitalization Board, which will be headed by Du Pont Chairman Irving Shapiro and AFL-CIO Chief Lane Kirkland, as "a prop-up-the-losers approach."

Thurow would encourage research and investment in new technologies by ending the corporate income tax. To offset the Treasury's revenue loss, stockholders would pay a tax on their share of the company's retained earnings as well as on their dividends. Thurow urges that most antitrust laws be wiped off the books. He cites the eleven-year-old Government battle to dismantle IBM as a monumental waste of legal talent and money. Contends Thurow: "The breakup of IBM would benefit no one except the Japanese computer makers." He also favors the growth of giant conglomerates, which he says would readily shift workers and capital from low-to high-productivity jobs within the same company.

Many economists admire Thurow's analysis of the dilemma, but challenge his solutions. Their chief complaint: he would concentrate even more power in Washington. Says Economist George Gilder of the International Center for Economic Policy Studies: "It is difficult to see how Big Government can break the impasse if Big Government is the impasse." Thurow, however, says that his purpose is not so much to provide answers as to show that tough decisions are inevitable. Says he: "The theme for the 1980s will be: all stress, much strain." Only forceful political leadership can ensure that this stress and strain will result in a renewal of American economic vigor.

—By Charles Alexander