October 9, 1987
Thank you all very much. And Director Wick and ladies and gentlemen, good afternoon. And since I had just discovered that 3 days with pears -- [laughter] -- I was all set for a joke about what should be for dessert and now, Charlie, you've already communicated. [Laughter]
You dropped a name here of Margaret Thatcher, so maybe I can substitute something that's even better. In our economic summits, where we all meet around a table, seven trading partner nations, and so forth -- sometime back when the summit was in England, which meant that Margaret Thatcher was presiding, one of the seven at the table got a little out of line, I thought, and attacked her that she wasn't being properly democratic in conducting the meeting and so forth. And I'm not going to name which country's representative it was. I don't want to embarrass him, but he really sounded off. And when the meeting was over, I fell in step beside her, going down the corridor. And I said, ``Margaret, he had no right to talk to you like that. He was really out of line.'' Brace yourself, fellas. She said, ``Oh, women know when men are being childish.'' [Laughter]
Well, Nancy and I welcome you to the White House. Now that we've finished our luncheon, I'd like to make a few remarks -- but don't worry, I'll keep it short. I've been trying to follow a joke that I've known for years. It's a story about ancient Rome and how one day, on a weekend afternoon when the little group of prisoners were huddled down in the sand in the Colosseum and the hungry lions were turned loose on them and came charging, roaring at them in front of the crowd, one of them stood up, faced the lions and said a few quiet words. And the lions just laid down. Well, the crowd was infuriated, and Caesar sent for the man; said, ``What did you say to them that made them act like that?'' He said, ``I just told them that after they ate, there'd be speeches.'' [Laughter]
Well, I want to thank all of you -- Charlie Wick, and the United States Information Agency -- for initiating this international council. I want to thank each of you for coming here and giving members of our administration the opportunity to speak to you directly. And if I may, I'd like to devote my own time to a brief discussion of economics.
This month, October 1987, the American economic expansion that began in the fourth quarter of 1982 enters its 59th consecutive month. Fifty-nine months -- that makes this the longest peacetime expansion in the postwar era. We've seen the creation of more than 13\1/2\ million new jobs. Inflation and interest rates are down. Productivity is up. Investment is up. Indeed, from the fourth quarter of 1982 through the end of 1986, U.S. gross private domestic investment rose more than 54 percent in real terms. New business incorporations have increased by about one-third. And all around us we see a riot of new technology. The poverty and unemployment rates are down. Virtually all groups of Americans have benefited from the expansion, but black Americans have made especially striking gains, as black employment has gone up twice as fast as that of whites. Indeed, economics columnist Warren Brookes has written that this expansion has represented, and I quote: "the best 5 economic years in black history.''
Well, now, in a moment I'd like to turn to the connection between this American expansion and the global economy. But first, it's important to understand the causes of America's success. Indeed, it's important to understand what have not been the causes of our success. For example, some have alleged that this expansion has been fueled exclusively by some sort of binge of consumer spending. Well, that's untrue. From the fourth quarter of 1982 through the end of 1986, total outlays on personal consumption in the United States rose only about 19 percent -- far less than the rise in investment that I just quoted.
Perhaps the most widespread misconception holds that American growth has been impelled primarily by the Federal budget deficits. Yes, the deficits are large, and our administration has been working to reduce them. And it now appears that the Federal deficits are on a downward path. The deficit for the fiscal year just ended, as of October 1st, will be 30-percent less than it was in 1986, the previous year. But throughout this expansion -- indeed, throughout much of the eighties -- government debt and deficit ratios in the United States have been lower than or equal to the Organization for Economic Cooperation and Development average. Permit me to repeat that: Government debt and deficit ratios have been, and remain, lower than the OECD average.
No, the underlying reason for our expansion, the true reason, is simply this: The United States has become a better place to do business. Our administration cut regulations, supported a sound monetary policy, held back the growth of government spending, and, perhaps most important of all, cut tax rates. And as we did so, the return on investment went up. And overall, the American marketplace became freer, more energetic, more open to innovation and to the future itself.
Now, for me personally, I suppose the most gratifying aspect of all of this is the effect on our young people. In the words of author George Gilder: "Opportunities summon initiatives.'' He said: "Initiatives develop character and a sense of responsibility, a feeling of optimism. The future looks more open and promising to young people than it did before, for the simple reason that it is more open and promising.''
Well, moving from the United States to the global economy, we understand that every aspect of the American experience cannot be directly transferred to other nations and regions. Other geographies, other cultures, other patterns of thought -- all these must be respected. Indeed, all these contribute to a diversity in the world that we Americans believe should be cherished, not undermined. Yet we believe that certain fundamental elements of our experience are valid for the rest of the world -- the elements of democracy and economic freedom. Indeed, I believe that the world of the future can be just that -- a world of liberty, a world in which human rights are respected in the political and economic spheres alike. And I would submit that during these past 6\1/2\ years of our administration, this world of the future has already begun to take shape.
Economic growth along the Pacific rim has been little short of incredible. There's been a victory for democracy in the Philippines. And more recently, a second victory for democracy in South Korea, where a free-market economy is already established and flourishing. In Latin America, nation after nation has turned to democracy, nine nations in all becoming democracies since 1979. In the words of President Sarney of Brazil: ``Latin America's extraordinary effort to create a democratic order is the most stunning and moving political fact of recent years.'' Low-tax, high-growth policies have spread throughout the Third World, with countries from Botswana to Egypt to Thailand cutting their tax rates. Even China is experimenting with the granting of wider economic freedoms.
Here in North America, recent developments hold particular hope for the future. This week the Institutional Revolutionary Party in Mexico chose Carlos Salinas, a forward-looking economist, as its next candidate for President. And the United States and Canada took the first important steps toward an historic free trade agreement, an agreement that could make our two nations the largest free trade area in the world as an example for all the globe.
As I said, the global economy of increasing freedom and economic growth is already coming, it's already being built. The Communist nations know this as well as we do. They know, therefore, that they face a choice: They must either join the new world system or they will become obsolete. It's a decision they must make for themselves. For our part, we can only wait and hope.
In the meantime, we can keep on building -- building, here in the United States upon our historic, 59-month expansion; building, in each of your countries, upon much that you've already accomplished. And we can remain faithful to this truth: Freedom -- freedom, both political and economic, represents the fundamental condition for genuine peace and economic growth. Where there is oppression, there is stagnation -- economic stagnation -- and the underlying stagnation of the human heart and mind. But where there's freedom, there is vitality.
I know I've come to the end of the remarks that I wanted to give to you here, but you are epitomizing something that has long been a creed of mine. And that is that we're only in trouble when we're talking about each other, instead of talking to each other. And that has come together in this room. It doesn't happen too many places in the world, or too often. But all of those of you, Charlie, and all of you who've had a part in this, I think, can be very proud of this great accomplishment.
I just want to add two more things. When I spoke about us lifting regulations and so forth to help the economy and all -- I've always believed that there's nothing government can do as well, other than a certain few things like national security, as the private sector can do if government gets out of its way and sets it free to do it.
I remember one of my first experiences with government was as an adjutant for an Army Air Corps base in World War II. There was a warehouse filled with files, and the files containing documents and records and so forth -- but which upon going at them you recognized that they were of no historical value. And they were totally useless, their time had passed them by. So, we started a message in the usual military style of sending a message, endorsing it up to the next in command, asking permission to destroy those papers so we could make use of the files for current documents. And then the next echelon -- they endorsed it up and up and up, and finally to the top command. And then back down through the channel it came, and the answer was yes. We could destroy those papers providing we made copies of each and every one. [Laughter]
The other one is when I was mentioning taxes. I'm getting assailed right now. I should make this speech to the Congress -- [laughter] -- about some who just seem to be dying, they think that our deficit and everything is caused by our tax cuts. Just between you and me -- and I wish they'd find it out -- ever since we started cutting the taxes in our administration, the tax revenues for the government have gone steadily up. Once you gave people an incentive to earn more money by saying that you weren't going to take half or more of it away from them, they went out and earned more money. And, so, we're going to try to make them understand that, and that would be a help in cutting our deficit, too. So, I would welcome another tax cut any time.
Thank you all very much. God bless all of you.
Note: The President spoke at 1:20 p.m. in the East Room at the White House. In his opening remarks, he referred to a comment by Charles Z. Wick, Director of the United States Information Agency and Chairman of the Volunteer International Council. The Council was formed to examine overseas perceptions of U.S. leadership in world affairs and ways the United States could improve its image abroad.