ABSTRACT
This chapter describes the evolution of the United States economy and discusses in detail how it arrived at its present structure. Tax cuts and defense spending brought higher interest rates and unfavorable exchange rates that made US industry less competitive internationally. The economic structure was stable in the sense that the exporting industries are generally capital equipment producing industries, and the importing industries are generally consumer goods industries; but the structure was unstable in the sense that both deficits and surpluses were growing fast. The shrinking low-tech industries are therefore releasing-labor resources that are not of the same skill mix as the demands for skills in the expanding hi-tech industries. Underlying the high rates of unemployment, the sluggish growth in the domestic economy, and the failure to successfully compete in the international market is the deindustrialization of America. By deindustrialization is meant a widespread, systematic disinvestment in the nation's basic productive capacity.
