We're No. 1, and It Hurts

• Share

To professional athletes -- when they are not on strike or locked out -- and their adoring fans, there is nothing so exultant, as the chant of "We're No. 1!" American business executives are getting somewhat the same feeling. Finally, finally, they are beating their Japanese, German, South Korean, Taiwanese, name-the-country rivals -- and in products like autos, machine tools and computer chips, where a few years ago they were being trounced. The U.S. firms are not only turning back an import invasion of American markets but also triumphing in so-called third-country export markets and even swiping some sales in Japan and other tormentor countries. The closest thing to an official world championship of business is top rank among the nations studied by the Swiss-based World Economic Forum, and last month the forum made the announcement: after eight years of Japanese domination, the U.S. in 1993 had the world's most competitive economy.

But many ordinary Americans, and even some corporate middle managers, might greet that news with a shrug and a "So what?" -- or a skeptical obscenity. The price of beating overseas competition has been bitterly high: wave after wave of downsizing layoffs, wage increases limited or forgone, replacement of full-time workers by part-time or temporary hired hands. Even those who have hung on to regular jobs are often too exhausted by long hours of overtime and weekend work to enjoy the extra money they are earning.

The upshot, according to TIME's Board of Economists, is this: the increases in productivity, or output per worker hour, that have helped make the U.S. No. 1 again have also laid the groundwork for an unprecedented period of steady growth in output and employment with little inflation. Says Stephen Roach, senior international economist at the investment firm of Morgan Stanley: "Ultimately, that could be translated into the long-awaited improvement in the standard of living of the American worker." But, as he and other board members note, it hasn't happened yet. Making it do so, says Roach, "is the real challenge" facing the economy.

Meanwhile, the public mood seems confused and contradictory. Among 800 people questioned last week in a TIME/CNN poll by Yankelovich Partners, 38% described the economy in general as either growing moderately or booming, versus only 9% who thought it was in recession. But in response to the question "Do you think the recession has ended in the area where you live?," 54% said it had not; only 40% thought it had. An even stranger contradiction: 81% thought their own family's finances were doing either fairly well (69%) or very well (12%). Yet when asked "Do you personally feel better off as a result of the recent improvement of the economy?," 58% answered no, 37% yes.

Even to experts, the economy displays two faces, both of which are on view in Flint, Michigan. It is the site of General Motors' Buick City works, which is central to all GM auto production because it makes parts for assembly plants throughout the country. Buick City, in turn, was the scene in late September of a strike that, says Roach, "was symbolic of an issue that is really at the core of the debate right now: do workers get to reap the benefits of the improved efficiencies that they are delivering to employers?"