Remarks at the Business Roundtable Annual Dinner
June 22, 1988
Well, thank you, Roger, and thank you all. By the way, Roger, the Presidential limousine is running just fine. [Laughter] But I have to tell you, I think you fellows went a little overboard when I said I wanted the car to be absolutely worry-free. The other day my Secret Service driver pulled into a gas station, and I leaned forward and said, "But the gas gauge still shows `full.''' And the agent said, "Yes, that doesn't matter. Mr. Smith painted it that way.'' [Laughter] And one other thing, Roger. Does everybody who buys that kind of a car get a warranty that reads, 'Good until whichever comes first: 60,000 miles or 2 terms''? [Laughter]
Roger, ladies and gentlemen, it's an honor to be able to speak to you this evening. I've come here at a time when the creative energies of the American people have carried our economy into the midst of the longest peacetime expansion -- as Roger told you -- in our nation's history, at a time when world trade is strong and growing, when we see all around us technological breakthroughs that promise to carry us forward into a dazzling new era. Yet even today there is still work to do, a great deal of work, to make the economy of our nation and the world all that we would like them to be.
Some of that work our administration can do in the coming months. And let me interject here that one item of unfinished business that I know you're particularly concerned about is product liability law reform. Outlandish court awards have placed tremendous burdens on U.S. companies as they try to compete in an international marketplace. If Congress is serious about enhancing the competitiveness of American firms, it should pass meaningful product liability law reform this year -- reform that protects legitimate claims by consumers, but limits the level of awards to reasonable losses. But as I was saying, we must leave whatever part of our agenda is unfinished to those who will follow us, trusting that they'll benefit from the lessons that we've learned. And so, this evening I'd like to speak to you about both practical policy -- reporting to you in particular on the economic summit that just took place in Toronto -- and about the enduring lessons that have emerged from the experience of these 8 years.
First, if I may, I'd like to establish the scope of the topic under discussion. For when we speak about the economy, we're dealing with more than mere numbers, more than statistics about productivity and employment. We're dealing instead with one of the most basic aspects of human existence: We're dealing with the way the great majority of men and women spend most of their hours, most days, throughout the most productive years of their lives.
The historian William McNeill described the rise of social organization in the ancient Middle East this way: ``Only on irrigated land could rich crops be harvested year after year from the same fields, and only where irrigation was needed did large numbers of men find it necessary to cooperate in digging and diking. An agricultural surplus that could support specialists, together with habits of social organization embracing large numbers of men, this could and did emerge in the flood plains of the principal Middle Eastern rivers, and, until much later, not elsewhere.'' In other words, there was a surplus of goods to be traded, and that is economy. There, and only there, did civilization arise.
Now, it's not my intention to give a history lesson. But I believe it's important to remind ourselves that in dealing with the economy we're dealing with human creativity. This insight has represented the underpinning of our economic expansion. We cut tax rates, reduced government regulation, and restrained Federal spending; and we unleashed the creativity of individuals and businesses. We gave them freedom to create; to keep the rewards of their own risktaking and hard work; and to reach for new, bold ideas.
As I noted a moment ago, today we're in the midst of our nation's longest peacetime expansion. Real family income is up. Twice as many new jobs have been created here in the United States as in the other six industrialized nations combined. Unemployment has fallen to its lowest level in 14 years. And during this economic expansion, the number of Americans living below the poverty line has fallen, reversing its upward trend.
The lesson that we've learned about releasing the creative energies of private firms and individuals is one that's being taken up around the world. From the early days in 1981 of skepticism to today, nation after nation has moved toward a free enterprise economy. Using high inflation to pay for expanding government spending has halted. And most of the industrialized democracies have either cut their top tax rates or are now in the process of doing so. And why has this happened? Well, I quote: ``The reason for the worldwide trend toward lower top rates of tax is clear. Excessive rates of income tax destroy enterprise. By contrast, a reduction in the top rates of income tax can, over time, result in a higher, not lower, revenue yield.'' Those were the words of Britain's Chancellor to the Exchequer, Nigel Lawson. I've been making that argument for 8 years now, but it's not really authoritative until you hear it in a British accent. [Laughter]
But in India and Argentina, in Botswana, in China, and, yes, even in the Soviet Union, state control of the economy is loosening in favor of freer markets. And the lesson is clear: If you want economic growth, work for economic and individual freedom. Another way of putting this is what I said before and during the Toronto summit. The future belongs to the flexible. It belongs to those countries that don't straitjacket the initiative of their people; to those who give reign to the creative, enterprising spirit that is in all people; to those who see the limit of government's understanding and its ability to respond to a world that is changing before our eyes.
The greatest historymakers in our time are not politicians and statesmen, but inventors, entrepreneurs, and others who are transforming the technological base of civilization and whose search for new markets is leading us into a more global economy. These people are making the world anew and knitting all of our nations together in ways more diverse and wonderful than we can fully comprehend. So, by flexibility, I mean, in a greater sense, humility -- humility of governments before the vastly diverse creativity of their peoples. At the Toronto summit our goal was to apply that lesson of flexibility to discussions on world finance and trade, including, of course, the troublesome question of agriculture.
On world trade, there are some substantial inequities, but the answer is not to close American markets: The answer is to open foreign ones. And that's why we leaders used this summit to encourage the international trade negotiations, what is called the Uruguay round, now going on in Geneva. Those negotiations are approaching their midway point. We hope by year's end to see agreement on specific goals for the final 2 years in such major areas as agriculture, services, intellectual property, and investment, along with a roadmap and timetable to the finish line.
Opening, not closing, markets is why a new trade bill at home must encourage free and fair trade and not establish barriers that will lead to retaliation. Our goal, the goal of both the executive and legislative branches, should be sound, coherent, consistent trade policy, a trade bill that does not seek short-term political gains but long-term economic prosperity for all Americans in a market-driven world economy. What Thomas Jefferson said long ago still applies: "Our interest will be to throw open the door of commerce and to knock off all its shackles, giving perfect freedom to all persons for the vent of whatever they may choose to bring into our ports, and asking the same of theirs.'' Clear back then -- Thomas Jefferson. And by the way, that a 20th century President can quote Jefferson on trade says a great deal about America's abiding interest in free markets, even from our earliest days. I told Tom that when he said it. [Laughter]
In Toronto, the other leaders and I confirmed once more that free markets must be our goal. Now, that doesn't mean that areas of disagreement don't remain. Take agriculture, for example: We agreed to keep looking for an agreement. There's a simple rule that's as true of agriculture as it is of any other endeavor: When you subsidize something, you get more of it. This year the world's industrialized nations are subsidizing agriculture to the tune of $200 billion a year. There are world surpluses of agricultural products, and the result is that many markets for agricultural goods have become distorted. We in the United States want to eliminate all agricultural subsidies that distort trade. A tall order, perhaps, but we've filled tall orders before. In fact, the European press has given our position on agricultural subsidies a nickname that sort of appeals to me. They're calling it a second zero-option.
In Toronto we talked about many issues. We agreed to direct our agriculture negotiators in Geneva to reach decisions that will reduce subsidies that directly or indirectly affect trade. We stated our belief that we should make agriculture more responsive to market signals. We further agreed on a general framework for dealing with Third World debt, particularly the debt of the poorest nations. And we discussed how to help debt-ridden countries that are making the transition to democracy -- for example, the Philippines.
We also talked about how we coordinate our economic policies. I know many people question the summit process. What do the summits do? Are they just so much sound and fury? Well, not on your life! Today, all year round, the summit countries are working more closely together than ever before, and the summits are a key reason why. One payoff is that last October, when the world markets began to shake, the international economy stayed steady. Working together, we guided the world ship through the storm.
Finally, we talked about East-West relations, terrorism, regional political issues, and something I know every American family will cheer, the Bush initiative to stop drug-money laundering. Thanks to Vice President Bush, the major industrial democracies have committed themselves to hanging up "Gone Out of Business'' signs in drug-money laundries all over the world.
Now, I've spoken of economic freedom and of the practical way to put that lesson into effect. Permit me to close now with one other practical matter, one that will put the great lesson of free markets into effect in an especially dramatic and historic way: the U.S.-Canada free trade agreement. Prime Minister Mulroney and I entered into this agreement in January of this year. It presently awaits enactment of implementing legislation by our Congress and the Canadian Parliament.
Today, as we await this final approval, the United States and Canada already generate the world's highest volume of trade. We are the two greatest trading partners in the world. The United States has a larger volume of trade with the Province of Ontario than with most other nations. United States citizens are by far the principal foreign investors in Canada, and on a per capita basis, Canadians are even greater investors in our country. This two-way traffic in trade and investment has created countless thousands of jobs and added immeasurably to the prosperity of both our nations. And now, with the free trade agreement, our two nations can do still more.
Upon enactment of the implementing legislation, the agreement will make Canada and the United States the largest free trade area in the world. For the United States, this agreement will remove all Canadian tariffs; secure improved access to the Canadian market for our manufacturing, agriculture, high technology, and financial sectors; and give us important additional access to Canadian energy supplies. For Canada, this agreement will make available the enormous United States market. Canadian producers of every kind of good and service will be able to benefit from enormous economies of scale. But beyond the benefits this free trade agreement will bestow upon our two nations, there is the immeasurable importance of the example it will present to all the world. To those who would engage in all the bitterness, all the destructiveness, of round upon round of trade battles, Canada and the United States will show the better way.
I'm confident that final approval of this free trade agreement will be completed during my own term in office. But I'd hope that those who'd follow me will not view it as an item of finished business, but rather as only a beginning. In Toronto, when we gave a push to the Uruguay round, we moved the world a step closer to free and fair trade for all nations. I would hope that in the years to come, America's leaders will fix upon the vision of a day when the free flow of trade, from the southern tip of South America to the northern outposts of the Arctic Circle, unites the people of the Western Hemisphere in a bond of mutually beneficial exchange. I would hope that America's leaders will fix upon the vision of a day when all borders become what the U.S.-Canadian border so long has been: a meeting place, rather than a dividing line. I would hope that America's leaders will fix upon that vision and work tirelessly to make it come true.
That's the thought that I would most like to leave you with: that even in economics -- the subject we're so often tempted to think of merely in terms of numbers and techniques -- even there, men and women are moved by the power of vision, by the power of dreams. Just a few decades ago, who would have thought that sand, mere sand, possessed the power to change the world? And yet today silicon, the stuff of sand, goes into the microchips that are ushering in the profoundest economic changes since the Industrial Revolution. Vision at the high technology firms like those so many of you represent -- vision has made it so.
We've done much during these 8 years to act upon the vision of economic freedom. Well, I'm convinced that today we stand on the verge of an economic and technological future of vast promise. We've embarked on an economic course that has led to new jobs, lower taxes, steady growth. And the challenge now is to recognize those voices that would construct barriers on this road to economic prosperity. These are the decisions that will be made over the next several months: individual opportunity and incentive or renewed government restriction and burden.
Already, we've seen new prosperity throughout the democratic world. And after my visit to Moscow, it's my belief that human creativity, expressed in economic freedom, can transform even the nations of the Soviet bloc. If we have the resolve, the patience, the willingness to work, and, yes, the vision, we can lead the world into a new age of prosperity and freedom.
And I can't leave you and resist exposing my latest hobby, which has become discovering stories that are told between the citizens of the Soviet Union, among themselves, which show a great sense of humor and also a little cynicism about certain things that are going on. This one happens to be with the life of someone that's no longer with us. This was when Chernenko died as General Secretary, and he met St. Peter. And St. Peter said, "Well, I can't let you in here -- an atheist like you.'' Well, he said, "You'll have to go down to hell.'' But he said, "You have two choices: There is a Communist hell and a Capitalist hell.'' And Chernenko said, "Well, I choose the Communist hell, of course.'' St. Peter said, "I think I ought to tell you, the Capitalist hell is a little more comfortable.'' And Chernenko said, "Yes, but the Communist hell is the only one where I can be sure that the heating system will fail.'' [Laughter]
Thank you, God bless you.
Note: The President spoke at 6:30 p.m. in the Capitol Ballroom at the J.W. Marriott Hotel. He was introduced by Roger B. Smith, chairman of the Business Roundtable and General Motors Corp.