(2 of 4)
How does it all add up? Where have we been, and where are we going? Listen to some expert voices atop the Tower of Babel:
"The '80s have been a significantly good decade," says Malcolm Forbes, 70, the ebullient magazine publisher whose $2 million Moroccan birthday party for himself epitomized the decade's love of self-indulgence. "Critics point to the glitterful excesses and the greed, but, God, they miss the point," says Forbes. "This was the decade that saw the triumph of U.S.-led free enterprise. Rebuilding the economies of Eastern Europe now offers huge opportunities, and it will be done in the next decade."
"We have to do more in the 1990s than gloat over the demise of communism," says Felix Rohatyn, the Wall Street investment banker. "That demise may be due to our ideas, but the way we are now exploiting those ideas is not making us competitive with the Europeans and the Japanese. Our cities are really falling apart; our educational system is in great disarray; and in order to finance our budget and trade deficits, we're selling more and more of our businesses. Our Government is unable to govern because it has no money, or it is using the fact that it has no money as an excuse not to govern. Meanwhile, the Japanese and the Europeans are pulling together, accumulating capital and being very single-minded in their pursuit of a world in which military strength counts for less and less, and intellectual and economic strength counts for more and more. It is inevitable that the U.S. will be less of a major player."
"Why the devil should you be quoting Felix Rohatyn, who has an absolutely failed record of doomsday predictions?" asks Milton Friedman, Nobel- prizewinning economist at the Hoover Institution at Stanford. "The U.S. economy is fundamentally very healthy, and there's no reason why the '90s shouldn't be just as good as the '80s, or better. There's no reason why we shouldn't have a decade of rapid growth and relatively low inflation."
Maverick billionaire H. Ross Perot doesn't buy that. "The '80s is the decade that we gave away our industrial lead and acted totally irresponsibly in wrecking some of our big corporations through leveraged buyouts," he says. "We felt affluent because we were living off borrowed money. We've got to clean up education, clean up the deficit, clean up the drugs, clean up the justice system, clean up industry. But right now it's like Lawrence Welk music: it's just wonderful, wonderful, wonderful. And nobody will fix it before it breaks."
Despite these violent disagreements about the future, there is at least some agreement about the past decade. It began in a distinctly gloomy atmosphere known as stagflation: double-digit inflation combined with growth rates of 2% or less. Cigar-chomping Paul Volcker, then the Chairman of the Federal Reserve Board, is generally credited with breaking the inflation by reining in the money supply in 1980-81. That also touched off the worst recession of the postwar era, bringing unemployment rates of more than 10% (25% in some areas and industries). President Reagan helped end the downturn by cutting taxes in 1981, which created huge deficits but also launched a record boom that hasn't finished yet.