IT'S THE SUDDEN swoops and crises in the world's economy that get the attention. But it's the slow and steady trends that are transforming the patterns of the world's wealth. One of these trends is the rapid rise in the production of the other industrial countries, relative to the United States. Another is the lack of improvement in the poorest countries, where the long-term increase in wealth per capita is now zero.
These two trends will be the major themes of the economic history of our times, as it is written a century from now. Consider, first, the rich countries. The conventional view used to be that they were expanding very rapidly only because they were catching up with the United States, which, as the leader, carried a disproportionate share of the cost of innovation. According to this view, the other industrial economies would slow down long before they drew even with the American levels of productivity. But it hasn't worked out that way.
There are a lot of ways to measure relative wealth, and one of them is to compare the earnings of industrial workers. Last month, just before President Ford left office, his Council on International Economic Policy published a striking set of numbers showing the enormous change in position since 1960. The following figures are hourly compensation rates for industrial production workers:(TABLE) (COLUMN)1960(COLUMN)1970(COLUMN)1976(est.) Sweden(COLUMN)$1.20(COLUMN)$2.96(COLUMN)$8.50 Canada(COLUMN) 2.13(COLUMN) 3.46(COLUMN) 7.39 United States(COLUMN) 2.66(COLUMN) 4.20(COLUMN) 6.90 West Germany(COLUMN) .83(COLUMN) 2.32(COLUMN) 6.70 France(COLUMN) .83(COLUMN) 1.74(COLUMN) 4.59 Japan(COLUMN) .26(COLUMN) .99(COLUMN) 3.26 Great Britain(COLUMN) .82(COLUMN) 1.46(COLUMN) 3.05(END TABLE)
The drastic changes since 1970 reflect not only rising output abroad, but the drop in the dollar's exchange rate. These changes are hardly mere technical adjustments. American productivity has not, in fact, risen very rapidly in recent years. Over the past decade, productivity - which is simply output per man-hour (person-hour?( - rose 24 per cent in the United States. In Canada, it went up 43 per cent. In Germany it wen up 73 per cent, and in Japan it more than doubled. Even Great Britain's productivity has risen slightly more than this country's since 1967.
Is it a bad thing that other countries should be getting richer faster than we? Not at all. But their great wealth and our rapidly rising trade with them make our economy work in ways in which we are not accustomed. The competitive pressure on us is rising.
Unfortunately, these rapid increases in productivity are not shared equally throughout the world. Some weeks ago the World Bank published its economic atlas for 1976, an annual accounting of global growth and prosperity. It showed that, from 1970 through 1975, real production per capita rose not at all in the 30 poorest countries. These countries comprise just about one billion peopl; they include India, Indonesia, and a broad band across central Africa. If anything, they lost a little ground in those five years. Their total output rose significantly in those five years - about 11.5 per cent as the World Bank calculates it. But their populations rose a bit faster.
By 1975, the average per capita output in the industrial countries, with a population of about 700 million, was somewhere around $5,080 a year. In those 30 poorest countries it was still about $130. That gap has existed for a long time. But there have been moments when both the rich and the poor saw hope that it could be diminished. Instead, since the beginning of this decade, it has grown steadily wider.