1. Fred Block, The Origins of International Economic Disorder: A Study of United States International Monetary Policy from World War II to the Present (Berkeley and Los Angeles: University of California Press, 1977). In 1950, per capita Gross National Product (GNP) for the United States was $2,536, as compared to $1,000 for West Germany and $382 for Japan (Paul Kennedy, The Rise and Fall of the Great Powers [New York: Vintage Books, 1989], 369). break

2. Imports of Third World countries, including Taiwan and South Korea, loom largest in the category of nondurable manufactured goods such as clothing and shoes. See Fred Block, "Rethinking the Political Economy of the Welfare State," in Fred Block, Richard A. Cloward, Barbara Ehrenreich, and Frances Fox Piven, The Mean Season: The Attack on the Welfare State (New York: Pantheon, 1987), 109-60. The core of the U.S. trade problem remains its bilateral deficits with Japan and Western Europe.

3. Defense spending was 6.6 percent of the 1985 GNP in the United States, 3.2 percent in West Germany, and 1 percent in Japan. Michael L. Dertouzos, Richard K. Lester, and Robert M. Solow, Made in America: Regaining the Productive Edge (Cambridge, Mass.: MIT Press, 1989), 114.

4. This argument has been developed particularly by Seymour Melman, Profits without Production (Philadelphia: University of Pennsylvania Press, 1987).

5. Melman, Profits without Production , reports that in 1976 research and development spending devoted to military purposes was estimated to be 31 percent in the United States, 8 percent in West Germany, and 1 percent in Japan (p. 158). Moreover, by 1977, Japan had 50 scientists and engineers serving civilian industry for every 10,000 people in the labor force; West Germany had 40; and the United States had only 38 (p. 171).

6. These competitive practices are described in Dertouzos et al., Made in America , chapter 9.

7. Ibid., chapter 7; Robert E. Cole, Work, Mobility, and Participation: A Comparative Study of American and Japanese Industry (Berkeley and Los Angeles: University of California Press, 1979); Charles F. Sabel and Michael J. Piore, The Second Industrial Divide: Possibilities for Prosperity (New York: Basic Books, 1984); Joachim Bergmann and Tokunaga Shigeyoshi, eds., Economic and Social Aspects of Industrial Relations: A Comparison of the German and Japanese Systems (Frankfurt: Campus Verlag, 1987).

8. Jocelyn F. Gutchess, Employment Security in Action: Strategies that Work (New York: Pergamon Press, 1985).

9. Thomas Kochan, Harry C. Katz, and Robert B. McKersie, The Transformation of American Industrial Relations (New York: Basic Books, 1986).

10. John Zysman, Governments, Markets, and Growth: Financial Systems and the Politics of Industrial Change (Ithaca, N.Y.: Cornell University Press, 1983), especially 245-51, 260-65. See also Dertouzos et al., Made in America , 61-63.

11. It is difficult to compare poverty rates across countries because of conceptual problems and issues of available data, so these figures are simply approximations. The poverty rates for children for West Germany and the United States are taken from a comparative study using data from 1979-81 (Timothy Smeeding, Barbara Boyle Torrey, and Martin Rein, "Patterns of Income and Poverty: The Economic Status of Children and the Elderly in Eight Countries," in The Vulnerable , ed. John L. Palmer, Timothy Smeeding, and Barbara Boyle Torrey [Washington: Urban Institute, 1988], 89-119). In this study, poverty is defined as a disposable income of less than half the national median adjusted income. The data on Japan are from 1985; the cutoff is equivalent to two-thirds of the U.S. poverty line (Samuel H. Preston and Shigemi Kono, "Trends in Well-being continue

of Children and the Elderly in Japan," in The Vulnerable , ed. Palmer et al., 277-307).

12. Richard Lynn, Educational Achievement in Japan: Lessons for the West (Armonk, N.Y.: M. E. Sharpe, 1988), 4-17. One study reported that the average Japanese student performed better than 98 percent of American high school students. See also Dertouzos et al., Made in America , 84-86.

13. Cynthia Hearn Dorfman, ed., U.S. Study of Education in Japan (Washington, D.C.: Government Printing Office, 1987), 7.

14. Dertouzos et al., Made in America , 87. Japan also has an extensive apprenticeship system.

15. According to OECD data, household savings rates for 1985-87 averaged 15.8 percent in Japan, 12 percent in West Germany, and 6.1 percent in the United States. Organization for Economic Cooperation and Development, National Accounts , vol. II (Paris: OECD, 1989). As we will see, serious questions have been raised about the validity of these figures.

16. George N. Hatsopoulos, Paul R. Krugman, and Lawrence H. Summers, "U.S. Competitiveness: Beyond the Trade Deficit," Science (July 15, 1988): 299-307.

17. Recent work has stressed the rhetorical nature of economic arguments. See Donald McCloskey, The Rhetoric of Economics (Madison: University of Wisconsin Press, 1986).

18. For an excellent discussion of the Federal budget deficit that addresses this metaphor directly, see Robert Heilbroner and Peter Bernstein, The Debt and the Deficit (New York: Norton, 1989).

19. White House Conference on Productivity, Report on Productivity Growth (Washington, D.C.: Government Printing Office, 1984).

20. Fred Block, Postindustrial Possibilities: A Critique of Economic Discourse (Berkeley and Los Angeles: University of California Press, 1990), chapter 5.

21. This evidence is reviewed in Block, Postindustrial Possibilities , chapter 4.

22. Barbara Ehrenreich, Fear of Falling: The Inner Life of the Middle Class (New York: Pantheon, 1989).

23. These arguments are developed at greater length in Fred Block, "Bad Data Drive Out Good: The Decline of Personal Savings Reexamined," Journal of Post Keynesian Economics 13, no. 1 (Fall 1990): 3-19.

24. Thomas M. Holloway, "Present NIPA Savings Measures: Their Characteristics and Limitations," in The Measurement of Saving, Investment, and Wealth , ed. Robert E. Lipsey and Helen Stone Tice (Chicago: University of Chicago Press, 1989), 21-100.

25. Fumio Hayashi, "Why Is Japan's Saving Rate So Apparently High?" NBER Macroeconomic Annual 1 (1986): 147-210. In a more recent study, Hayashi finds that there are only small differences (3 percent of Net National Product or less) between the national savings rates of the United States and Japan over the period 1978-1984. Fumio Hayashi, "Is Japan's Saving Rate High?" Federal Reserve Bank of Minneapolis Quarterly Review 13, no. 2 (Spring 1989): 3-9.

26. Ibid., 6.

27. Data on saving for housing and land in Japan are provided in Charles continue

Yuji Horioka, "Saving for Housing Purchase in Japan," Journal of the Japanese and International Economies 2, no. 3 (September 1988): 351-84. While Horioka does not believe that high land prices can explain high rates of personal savings in Japan, his data suggest otherwise.

28. Robert A. Blecker, Are Americans on a Consumption Binge? The Evidence Reconsidered (Washington, D.C.: Economic Policy Institute, 1990).

29. Connie Bruck, The Predators' Ball: The Junk Bond Raiders and the Man Who Staked Them (New York: Simon & Schuster, 1988), 272.

30. Block, Postindustrial Possibilities , 175-77.

31. Some ideas along these lines are elaborated in Block, Postindustrial Possibilities , chapter 7.