June 13, 1988
Well, thank you very much. And thank you, General Goodpaster, Secretary Shultz, John Gray, General Seignious, Gene Bradley, James Shinn, and ladies and gentlemen. Just a week and a half ago, I had the honor to address the British people, the Atlantic community, and the world from the ancient and historic podium of Guildhall in London. After my report on the Moscow summit, Mrs. Thatcher graciously said that she believed that "There is now more hope between East and West than ever before in the lifetime of most of those'' there. And she spoke of the new confidence and optimism in the West, and she recalled the words of Sir Winston Churchill when he wrote: "Where we are able to stand together and work together for righteous causes, we shall always be thankful, and the world will always be free.'' Well, this message of unity and optimism and hope and strength is the message that I bring to you today.
You've been talking here today about "rebuilding the consensus on East-West relations.'' And I would admit that at times in recent years a free world consensus in this area seemed particularly elusive, rather like the story that Franklin Roosevelt liked to tell about the marine who was ordered home from Guadalcanal. The marine was very unhappy because he hadn't shot a single enemy soldier, so his sergeant just told him, "Just go up on that hill over there and shout, `To the devil with Tojo.''' Well, the marine did as he was told, and sure enough, out of the jungle ran a Japanese soldier shouting, "To the devil with Roosevelt.'' "And of course,'' said the marine afterward, "how could I shoot a fellow Republican?'' [Laughter]
But our consensus is built not only on what we're against but on what we're for. And we are against totalitarianism. We're for freedom and democracy -- for them without hesitation or apology, and virtually, I would venture, without division. This is the first great truth to keep in mind. There may be divisions within our countries as to methods, but there are none as to fundamental goals.
In the last decade and a half, we in the democracies have, in true democratic fashion, tested the various propositions about the methods for best approaching East-West affairs. Now that we have an INF treaty, the first agreement ever to eliminate an entire class of U.S. and Soviet nuclear missiles and with the most stringent verification procedures in arms control history; now that the Soviets have begun withdrawing from Afghanistan; now that we've begun to see internal changes within the Soviet Union -- can there be any doubt that we were right about a forward strategy for freedom, right about the importance of candor regarding the differences between our systems, and right to say that the road to peace is not through weakness, division, or preemptive concession, but through unity, confidence, and strength?
In just a few days I will attend another summit, the economic summit in Toronto, as the General has told you. And this is an excellent forum before which to talk about our hopes for that summit. I know that the Atlantic Council is examining how to best integrate economics and security. The International Management and Development Institute is meeting to discuss economic challenges facing us.
Over the years, the economic summits have been a cornerstone of cooperation among the major democratic economies. They're part of the superstructure of Western strength and East-West affairs. And here again, our democracies have, as democracies do, tested among ourselves various propositions about economic growth and vitality since the first of the summits that I attended in 1981.
Everywhere in the democratic world we're seeing the emergence of a new consensus: that growth and opportunity must go hand in hand. Consider taxes. In the past 3 years, Britain, Canada, Japan, and France, among others, have all let their top tax rates tumble. Why? Well, here's what Nigel Lawson, Britain's Chancellor of the Exchequer, said not long ago, in his words: "The reason for the worldwide trend toward lower top rates of tax is clear. Excessive rates of income tax destroy enterprise, encourage avoidance, and drive talent to more hospitable shores overseas. Far from raising additional revenue, over time they actually raise less.'' And he concluded, "By contrast, a reduction in the top rates of income tax can, over time, result in a higher, not lower, yield to the Exchequer.'' Well, it seems I've heard somebody else say that before, somewhere.
But this new consensus doesn't stop with taxation. Country after country has begun to sell off state-owned industries. Restrictive regulations have begun to fall. Paying for the excesses of government spending with high inflation has all but stopped. And at least in the United States, deficit spending by government is falling. The idea that connects all this is the market. The industrial world, the entire world, is turning away from state control of economies and returning to the marketplace. From India to Argentina, from Africa to China, and even in the Soviet Union, the shackles of state economic domination are beginning to loosen. And you know something's happening when there's talk of lower taxes in the Soviet Union.
Now, I don't need to tell you that the United States has led the way or that the remarkable performance of our economy since our expansion began has been the driving force behind this new consensus. I don't need to recite all we've done -- the longest peacetime expansion on record; more than twice as many jobs created as the other six summit countries combined -- and they have 50 percent more employment-age population than we do; the family income is up sharply after riding a falling roller coaster through the previous decade; a larger percentage of the work force employed than ever before; exports the highest in our history. I don't need to tell you all this, but you might guess that I'm a little proud of it. And I have to watch myself when I talk about it. I don't want people to get the impression that I think of politics the way Will Rogers thought of the movies. He said, "The only business where you can sit out front and applaud yourself.'' [Laughter]
This new consensus has not only brought the economies of America, Britain, Canada, and so many other countries roaring back, it has also opened the way for a coordination of economic policy among the summit countries that would have been unthinkable just a few years ago. Whether it's through what's known as the G - 7 [the economic summit participants] or in managing the debt crisis in so many Third World countries or responding to the tremors in the world financial markets last October, we work together. Today we use a common set of books to tell how our policies are doing, and we're working in common for balance in trade and capital flows and government budgets and for surefootedness in the world's financial markets. Starting with the United States, the summit countries have had nearly 6 years of uninterrupted growth. I'd like to make it 60 and more.
But it can't happen if we try to live as if we're the only economy on Earth. The summit nations are working together as never before because our economies are tied together as never before. To give an example of this, someone pointed out to me recently, while the New York Stock Exchange does $8 billion of business on a good day, the foreign exchange markets do over 25 times as much business every day. In this global marketplace, industries around the world rise and fall together. The decline in the worldwide demand for steel was felt in the Rhine Basin of Europe in just the same way it was felt in our Lehigh Valley. Thousands of jobs disappeared in both places, and not just to foreign competition. Here in America, high-tech minimills melted down the business of many old, integrated producers.
But there's one difference in the way we in America dealt with the decline. We lost the same kind of jobs other countries lost, but unlike those European nations that lag behind in cutting taxes, regulations, and government ownership, we created new jobs in place of the old ones. Allentown in Lehigh Valley was once a home of heavy industry. Then the steel mill and the truck factory shut down. Many people wrote off Allentown -- too soon. In place of a few big, old companies, dozens of new companies started up. Small companies that were already open grew. Entrepreneurs created what David Birch, MIT's authority on job creation, calls a hidden economy. He adds that all across America "the small companies, not the big ones that get so much attention, are building a new economy that is providing jobs and making the country competitive again.'' And that's why today Allentown has an unemployment rate of only 5.4 percent.
Throughout what used to be called the Rust Belt, the story is the same. One midwesterner recently told the New York Times, as he said, "I go through the newspapers from county-seat-size towns, and I'm finding dozens of announcements of new plants and plans for new plants and expansion projects.'' And new or expanding entrepreneurial companies and bigger, older, but now streamlined manufacturers are leading an export boom that some say has stretched our production capacity to the limit. Not long ago, for example, Business Week reported that America's steelmakers had become among the world's most productive and announced in its headline: "Cancel the Funeral, Steel is on the Mend.''
Yes, America is leading the world, both as consumer and producer, into the global marketplace of the next century. For all of us, what's happening in Japan or Germany, Britain, France, Italy, or Canada is as momentous as what's happening in California, Florida, New York, or Illinois. There's a lesson in all this -- in the story of Allentown and one of the so-called Rust Belt, as well as the globalization of trade and finance -- and the lesson is that the future belongs to the flexible. It belongs to those who look at the problem and see an opportunity, to those who look at the unknown and see an adventure, to those who look at the untried and see a challenge, to those who have shed the weight of structural rigidities and protective subsidies and face the future with energy and excitement.
In no field do we all have more weeding to do than agriculture, where subsidies cost the consumers and taxpayers of Europe, North America, and Japan $200 billion a year. Agriculture is "planted'' on the agenda of the Uruguay round of trade talks -- as are the issues of establishing rules for trade in intellectual property, investment, services, and the lowering of tariff and nontariff trade barriers. Those talks were scheduled to go for 4 years. They are now nearing the halfway point. It's time to narrow down and lay out specific goals, a roadmap, and a timetable to the finish line. In Toronto, we, the heads of the major industrial states, can push our ministers to have that job completed by the end of the year -- no excuses. You know, sometimes when I hear people say why we can't do this or that in the trade talks, it reminds me of how Chico Marx, one of the Marx Brothers, used to try to walk off the Hollywood sets in the middle of the afternoon. As he explained, "But it's after quitting time in New York.'' [Laughter]
Well, it's time that we in the summit nations forget about quitting time and join in a great venture to progress -- a joint venture that opens the international marketplace and that also strengthens the weak links in the international economy. Let's join together to help restore the economies of two countries: one, the Philippines, an heroic democracy ravaged by Communist-led insurrection; the other, Afghanistan, a victim of brutal aggression. Let's join together to bring the newly industrialized countries into the full and mature place in the world trading system that they have earned. Let's join together in helping the countries of sub-Saharan Africa work out their debt problems. We'll take up their problems, as we have those of other debtor nations, on a case-by-case basis, working to help develop economic policies that promote growth and opportunity. The United States has already indicated its willingness to consider new ways of rescheduling the debt of the poorest countries, ways that can produce substantial new relief. And let us join together to attack the lifeblood of one trade that should never be part of international trade: the international narcotics trade. At this summit, we should join in a common offensive against money laundering and the flow of drug profits through the world's financial institutions.
Pushing forward the trade negotiations, a joint venture for progress, strengthening the system of policy coordination -- this is the agenda of the Toronto summit. We'll be building on a decade of progress, on the new economic consensus in our countries. We'll be looking to continue the building of the global marketplace. I know there are some who want to turn back, who want to return to the more insular and isolationist days of old. I vetoed the trade bill last week because I don't believe we can or should turn back. Critics of our policies complain that, on one hand, America is, as they say, "exporting jobs,'' which is to say our companies invest overseas, and on the other hand, that America is "selling itself to foreigners,'' which is to say that foreign companies are investing here. Put it together, and what they're really saying is "turn back.'' The isolationism of their foreign policy walks hand in hand with the isolationism of their economic policy, and both will lead us to disaster.
We're in a new age of invention and exploration, a time when the vast capacity of the human imagination is opening new universes for exploration. "To see the universe in a grain of sand'' is no longer a poetic metaphor, but the daily reality of the silicon chip. F. Scott Fitzgerald wrote that when the early explorers just looked on this land, they must have held their breath. They had, for the last time in history, come face to face with something commensurate to man's infinite capacity for wonder. Yet it was not for the last time. We, too, stand on the shores of something as vast: of an economic and technological future immense with promise.
If we seize it, if we don't turn away from it, that future will transform the democratic world and, I am confident after my visit to Moscow, the countries of the Soviet bloc as well. I believe that the house of democracy's current consensus for strength and growth will usher in a new age of which we can only dream. But if we have the courage and the resolve, I believe that age will give us a world of peace and freedom, of opportunity and hope for generations to come. And I believe that even more after the summit that we've just been to and what I saw on the faces of the rank and file, the people of the Soviet Union.
And I can't resist now -- I brought back a story that was being told there -- I didn't bring it back, one of our Secret Service agents did and told it to me. The story has it -- this is what they tell among themselves -- that General Secretary Gorbachev and I were in the limousine with the head of our Secret Service unit, Ray, and he had a security man with him. And we were sightseeing. And they pulled up before a magnificent big fall, a waterfall, and we got out to look at it. And Gorbachev said to Ray, "Go ahead, jump over.'' And Ray said, "I've got a wife and three kids.'' And Gorbachev turned to his man and said to jump over, and he did. And Ray, with great humanity, went down around the waterfall, scrambling over the rocks to the bottom, and found the man wringing out his clothes. And he said, "When he told you to jump, why did you jump?'' The man says, "I've got a wife and three kids.'' [Laughter]
Note: The President spoke at 2:06 p.m. in Loy Henderson Auditorium at the Department of State. In his opening remarks, he referred to Gen. Andrew J. Goodpaster, USA, Ret., council chairman; Secretary of State George P. Shultz; Lt. Gen. George M. Seignious, USA, Ret., council president; John E. Gray and Gene E. Bradley, council directors; and James W. Shinn, director of the council's NATO information office.