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PARTISAN REVIEW
economy here is any bigger than it ever has been. The underground
economy includes all kinds of things that we do not usually think of
as illegal. High school babysitting is the larges t underground
activity in America. It's uncertain whether genuinely illegal under–
ground activities-such as drug traffic-are any greater than before.
What we don 't have, unlike Italy, are actual illegal manufacturing
plants.
DANIEL BELL: The Laffer argument is that if you lower the tax rates,
you'll bring that money back into the economy.
LESTER THUROW: There is no evidence of that.
If
you can get by with
paying zero taxes, and somebody lowers the tax from fifty to forty,
why should you rush off to pay forty?
DANIEL BELL: The money has to be laundered sometime.
LESTER THUROW: That's one of the reasons the Europeans have a big
VAT. A VAT is a way
to
tax the underground economy.
ROBERT NOZICK: What if criminals buy stolen cars?
LESTER THUROW: Somebody paid the VAT when the car was n ew.
Let's turn to American business practices. When Ronald Reagan
says the government is not going to solve our economic problems,
I'
he's absolutely right. And that includes government changes in the
tax laws. A critique that argues that something is wrong with
American business management is gaining momentum, but that has
nothing to do with government whatsoever. The japanese are the
most vociferous advocates of this line of reasoning.
About a year ago,
Fortune
magazine h eld a mee ting, at which a
group of American businessmen and a group of japanese business–
men who run American subsidiaries were each asked to explain what
they thought was wrong with the American economy. The American
businessmen spent the whole time complaining about the govern–
ment. The japanese businessmen said, "We don 't think that 's your
problem at all. We think you guys are lousy managers ." By that they
meant two things : that American managers fail to inculcate a sense
of teamwork in their workers , and that American middle and upper
management is inefficiently structured.
The japanese are able
to
inculcate in their workers a strong
sense of the virtues of teamwork, of corporate identity, of the need for
individual workers to help speed up productivity for the good of all.
And the japanese h ave a very strong case that they can do the same
thing in the United States. The Sony plant in San Diego set the
worldwide productivity record last year. Now why can the japanese
run a successful consumer electronics plant in the United States,
