AS THE DOLLAR continues to slide downward, it is reorganizing the world's economy. It is the world's most important price, and affects a great many other prices. Who are the winners?
In this country they are the manufacturers and, above all, the exporters. Companies that make computers, chemicals and airplanes now have an enormous opportunity. There are also benefits for the American producers who compete in this country with imports -- auto companies, for example, and steel companies. The importers are now under fierce pressure to raise their prices.
Next come the farmers, although not all of them. The dollar won't help the dairymen. Again, it's the exporters who will see a difference -- most notably, grain producers.
Through most of this decade, the economic climate has generally favored the service industries over the people who make tangible goods. That advantage is now reversing. One serious question for the American economy is whether the exporters can expand fast enough to take advantage of the markets opening to them.
Abroad, the most conspicuous beneficiaries are the people of the countries whose currencies are rising fastest -- Japan and Germany. Goods will be cheaper for them because of falling import prices. Conversely, their export manufacturers will be hurt -- although not quite so much as it looks at first glance. The prices of their imported raw materials and fuel are dropping rapidly. In dollars, the price of oil is currently about two-thirds as much at it was two years ago; in German marks it's two-fifths as much.
For the Latin debtors the falling dollar is, for the present, very helpful. Their debts are mostly denominated in dollars. For those such as Brazil and Argentina with large exports to Europe, export earnings turned into dollars will increase if the volume of goods only holds steady. That will make it easier for those countries to service their debts. The danger to the Latin Americans, and to the world, is that the industrial economies may fail to adapt fast enough to these new realities and go into a recession. If that should happen, the loss of their markets in the Northern Hemisphere would far outweigh any advantages that the cheaper dollar can bring Third World exporters.
And the losers? Most Americans -- those who don't work for computer companies and aren't wheat farmers -- will come out of the next couple of years a little poorer even if the country manages to avoid a recession. In Japan and Germany, falling import prices will reduce the risk of inflation and allow governments to expand their economies quite fast. This country is the reverse case. The steady push of import prices on the inflation rate will require the government to hold economic growth down. Over the past year inflation has risen faster than average wages and salaries. That's likely to continue. The lower dollar will bring down the American trade deficit, but a lower trade deficit will mean that the country is producing more in relation to consumption -- working harder but spending less.
The most important question of all is whether the transition to the world of the cheap dollar will be a smooth one. That will depend on the skill and courage of governments, not on the markets.