(^460) THE WEALTH AND POVERTY OF NATIONS
ductivity in 1950, after a few years of cleanup and a new start in Ger
many and Japan, was more than twice that of the world's most ad
vanced economies, and it was still twice as high in I960.^45
No country could expect to hold such an overwhelming lead indef
initely. Follower countries were gaining disproportionately by jumping
to state-of-the-art technologies. (That's what catch-up is all about.)
From 1950 on, mean labor productivity of these emulators gained
consistendy on that of the United States: 1.82 percent per year from
1950 to 1973; 1.31 percent from 1973 to 1987.^46
What do these figures add up to? International comparisons are ar
bitrary and often contradictory, so that it was not clear whether, around
1990, the United States was in first or third place in income per head,
whether its lower rate of productivity increase would persist, whether
these other, faster-growing economies, plus several newcomers, were
converging with it or on the way to passing it.* These issues were fur
ther embroiled by the conjuncture of the early 1990s: the Japanese
found themselves in the throes of a slowdown, while the American
economy continued to grow. Perhaps the Japanese had come to the
end of their "miracle."^1
Not to worry. The American data recall the earlier retreats of the
Netherlands and Great Britain: loss of market share in manufactures;
wastage of entire branches; new hires in service jobs, usually poorer-
paid; polarization of incomes.^47 On the other hand, U.S. unemploy
ment remains low (lower than European, but not Japanese), and
continued American dominance in new lines, among them the high
tech, computer-linked manufactures (software and hard), gives reason
for confidence (hope?). A new report argues that, while Americans
save less (15 percent of income as against 33 percent in Japan), they put
their savings to better use; capital productivity in Germany and Japan
is reckoned to be only two thirds the American level. So "we can spend
more of our current income on investment without jeopardizing future
living standards."^48 Similarly, although manufacturing performance in
- From 1960 to 1973, U.S. total factor productivity (that is, gains in productivity
after increases in capital and labor have been deducted) grew by 1.5 percent per year,
against 6.3 percent for Japan. The oil shock of 1973 hit Japan hard, reducing TFP
growth to 1.5 percent 1973-79, 2 percent 1979-88. But U.S. TFP actually turned
negative 1973-79, rising to less than 0.5 percent in 1979-88—Hart, "Comparative
Analysis," p. 207. - Nothing is riskier than building prognoses on the last year's (or last quarter's) per
formance. Japan seems to be doing better in 1996; but see the Wall St. J., 20 June
1996, p. A-13: "Despite a Spurt of Growth, Japan Isn't in Fast Lane Yet."