I. Introduction

Since World War II, the U.S. economy grew relatively more slow¬ ly than that of Japan, Europe, and the more recently developing countries. As a result the U.S. has gone from being the dominant in¬ dustrial country in the world to being one of several more-or-less equal competitors. This was only to be expected, but institutions were build at the end of World War II that did not anticipate it. As a re¬ sult, the dollar became seriously over-valued in the 1960s, precipi¬ tating the crisis of 1971 and the breakdown of the Bretton Woods system by 1973.
A major economic event in the 1970s was the slowdown in the growth rate of productivity across the industrial world. It has been particularly serious in the U.S. This seems to me to be the major economic problem facing the U.S. During the period from 1950-73, the population learned to expect real product and income per capita to grow by nearly 3 percent per year. Until expectations ad¬ just to the new reality, continued inflationary pressure will result.
During the 1970s, the dollar depreciated relative to major com¬ petitors' currencies. This greatly improved U.S. competitiveness and stabilized the U.S. share of world exports of manufactures. By 1980, the U.S. was running a large surplus in its trade in agriculture and manufactured goods, offsetting a large part of its deficit in petroleum trade. Thus the adjustment mechanism works well, if slowly, and the U.S. competitive position has been re-established.
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Critical Issues & Decisions
The outline of the paper is as follows. Section II reviews changes in the U.S. position in the world economy since 1950. The U.S. has moved from a position of dominance to a competitive position, as one of a number of industrial centers. This is viewed as a normal evolution after the disruption of the 1930s and World War 1 1 .