Remarks at the White House Conference on Productivity

Well, good morning, and I'm delighted to welcome all of you, even though I'm a bit of a visitor here myself. Before I begin, let me thank Bill Simon and Bill Seidman¹ for their strong leadership in shepherding this idea forward. I know so many of you have given your time and talents during the preparations preceding this conference. We're impressed with the broad diversity of your group—leaders from management, labor, academia, and government at all levels. Another important point that I think will help us down the road in body and spirit: Your group is bipartisan. We're pleased that the conference steering committee included both Senator Bill Roth and Congressman John LaFalce.

¹ Chairman and vice chairman, respectively, of the White House Conference on Productivity.

We come together today in shared appreciation of a basic truth: The challenge of greater productivity growth is of supreme importance to America's future. When we arrived in Washington almost 3 years ago, we faced a situation unprecedented in postwar history. From 1948 to 1968, productivity in the private economy had risen at an average rate of about 3 percent a year, providing the American people with one of the highest standards of living in the world. But after 1968, that rate began dropping. By 1979 and 1980, it had actually turned negative, as inflation and interest rates reached new thresholds of pain.

We know the productivity problem was a paramount concern. We also know what productivity is and why it's so important. think correspondent Lloyd Dobbins stated it simply and clearly in a documentary he did for NBC in 1980. "Productivity," he said, "is not some esoteric economic subject. It is how much we produce and how much it takes to produce it. The object is to make more for less; if you do, everyone benefits."

Well, as Bill Simon points out, "Only through productivity gains can real living standards be improved." And certainly there are plenty of areas in our economy where this is still happening. We think of the American farmer who a century ago toiled all year to feed himself, his family, and a few others. Today a farmer feeds himself and 77 other people. Being the breadbasket for the world—that's productivity. And we think of those first computers which could cost up to a million dollars and were so big they filled a room, a big room. Today a computer chip that performs the same functions can fit in the palm of your hand and costs under $10. That's productivity, too.

There's no denying that greater productivity growth is the cornerstone of price stability and sustained economic growth. It's vital to regaining our competitive position in world markets and creating job opportunities for an expanding American labor force.

If we can agree on what productivity is and why it's so important, we can also identify certain principles that are present in productive societies. For example, productive societies reward saving, investing, building, and creating, rather than consuming. Productive societies do not selfishly tax and spend the product of today's labor without a thought toward tomorrow's needs. Thomas Jefferson, a man of the people in his day, understood this well when he said, "A wise and frugal government... shall not take from the mouth of labor the bread it has earned."

Productive societies also nourish the spirit of adventure, innovation, and entrepreneurship. And productive societies share common objectives, and their leading institutions work together. Business, government, labor, and academia view each other as partners, not adversaries. The late Samuel Gompers, founder of the American Federation of Labor, spoke often for a partnership between labor and management, viewing them as trustees for the preservation of the American free enterprise system.

From this, we should agree that there is no single, all-encompassing solution for increased productivity. I realize that among some a perception exists that we need only to work harder and the problem will disappear. And I don't deny there are some sluffers out there. You remember that comment that Pope John allegedly made when he was asked how many people work in the Vatican? And his answer was, "About half." [Laughter] Well, there's nothing wrong with admonishing people to have a positive and dedicated attitude toward their jobs. But it's just as important to give them the tools, the training, and the proper economic environment to work better and more productively.

We need to move on many fronts. We must spur capital formation by encouraging savings, investment, and modernization. We must stimulate adequate research, development, and technological innovation by appropriate incentives. We must improve our work force by providing training for solid jobs and encouraging greater cooperation between labor and management. We must sharpen the skills of tomorrow's leaders by improving America's educational system. And, yes, we must prevent government from suffocating initiative, innovation, and risk-taking through overregulation.

In sum, we must free enterprise. And make no mistake, I believe we can. America is no second-best nation. Our people come from sturdy stock. Their energies have always carried them past their highest dreams. And that's why immediately upon arriving in Washington, we moved to unlock the power and drive of our people. We identified four areas where broad-based reforms were necessary.

First, we cut by nearly 40 percent the rate of growth of Federal spending. It had been rising at a 17-percent annual rate in 1980.

Second, we passed sweeping incentives for individuals and businesses by cutting personal tax rates 25 percent across the board, by providing new incentives for IRA and Keogh plans, and by accelerating depreciation schedules for businesses, large and small.

Third, under the able leadership of Vice President Bush, we curbed the growth of Federal regulations and red tape. The number of proposed new regulations has been reduced by one-third in the past 2 years. By the end of 1983, the time our citizens spend filling out Federal forms and reports will have been cut by over 300 million man-hours annually.

Fourth, we have urged the Federal Reserve Board to promote monetary policies that ensure the price stability needed for lasting economic growth.

How are we doing? Well, the one statistic that interests us most—productivity—is headed in the right direction again. Productivity has gone up the last four consecutive quarters. This week has been a messenger for very good economic news. The recovery is strong, broad-based, and maintaining its momentum without unleashing a deadly new wave of record inflation and interest rates. Housing starts in August were at their highest level since December of 1978. The demand for automobiles is outstripping supply. The stock market has set a new closing high. Unemployment is going down. And yesterday, we learned the gross national product rose 9.7 percent in the second quarter and is rising by 7 percent—in the first estimate—in the third quarter.

I'll be the first to say we have a long way to go. We face unacceptably large deficits. But let's make one thing very plain: We didn't get those deficits because Americans are undertaxed; we got those deficits because government has overspent. Bather than moan and weep about my stubborn refusal to raise taxes, I urge all those of good will to work with me. Together, let us summon the courage to roll up our sleeves and do the right and proper thing for our country by getting control of Federal spending once and for all. This would free more resources for the private sector to invest in productive capital projects.

America is moving forward. And we're supplementing our general recovery program with legislation to meet the needs of a more productive society. America needs her best minds to create new miracles of high technology, miracles both for innovation and for modernization of the major areas of our economy—in manufacturing, agriculture, and services.

We have enacted the first tax incentive program for research and development. We seek to improve the instruction of science and math in secondary schools. We want to encourage greater and more creative cooperation between university and industry scientists and engineers. And we're attempting to remove legal impediments that prevent inventors from reaping the rewards of their discoveries.

Partnership, training, incentives, responsibility—these are the building blocks for a stronger economy, renewed world leader. ship, and a better life for all Americans. Two landmark programs will help lead us there.

The Job Training Partnership Act, which is set to begin October 1st, will train more than a million Americans a year for productive, self-sustaining jobs in the private sector. Unlike the old CETA program which was run primarily by government officials and which often provided little training or trained people for a job that didn't exist, this program will be run primarily by business and labor people at the grassroots—those who know best what training is needed for existing jobs. They will be part of organizations called PIC's—Private Industry Councils—designed to provide training needed right there on Main Street America.

Another positive program that we've introduced is the National Innovation and Productivity Act of 1983. This bill would encourage companies to work together on complex and expensive research and development, stimulating new technologies, new products, more exports, and higher employment. Current antitrust laws often discourage joint research and development efforts. Well, we can't afford to sleepwalk into the 21st century, permitting our competitors to seize the advantage and overtake us. I am confident the Congress will work with us to pass this legislation.

We've also proposed to consolidate all U.S. trade functions in one department so we can help them sell their products abroad. Large projected trade deficits underscore the importance of enhancing our producers' ability to compete. American business, labor, and farmers deserve the strongest possible Federal representation on trade.

As we move in all these areas, we'll eagerly await your own recommendations. As you remember, I appointed the National Productivity Advisory Committee in 1981, assembling a cross section of distinguished American leaders. Of that committee's 46 recommendations, we have already adopted a significant number. This White House Conference on Productivity provides a window of opportunity to build on that first committee's work.

Many of you attended important preparatory conferences this summer, and we followed them with interest. You discussed how capital, human resources, government, and private sector initiatives all contribute to productivity. Well, we look to you now for new guidance.

I have every confidence that this great nation, built by pioneers with courage and vision to persevere in the face of great adversity, is ready to charge forward again. As one of your fellow citizens, Bill Mellberg, recently wrote, "Opportunities do exist for those who dream, who believe, who work hard, and who willingly take risks. The Constitution does not guarantee success. It guarantees the opportunity to succeed. As Will Rogers put it, America is a great country but you can't live in it for nothing.' Today's generation must remember that success demands commitment. Thank God we have the freedom to choose."

Well, we do, and together we'll choose hope and progress, passing the torch of freedom to our children and our children's children.

I just have to say, just as a reminder of harking back to our continued effort with regard to nonsensical regulations—I had once, back out on the mashed-potato circuit, a government example, true and confirmed, and I used it as an example of what needed to be done. I'll tell it to you. This was of a fellow here in government who sat at a desk, and documents came to his desk, and then he forwarded them on to the proper destination, initialed them, and passed them on. And one day a classified document came to his desk. But it came there, so he read it, decided where it should go, initialed it, and passed it on. And a day later it came back to him with an attached memo that said, "You weren't supposed to see this. Erase your initials and initial the erasure." [Laughter]

Thank you very much. God bless you all, and God bless America.