America bashing.

• Author: Rock, Robert H.
• Position: Letter from the Chairman

Banner headlines trumpet the decline of U.S. economic power. According to these commentators, America is no longer competitive, as evidenced most starkly by our mountainous trade deficits, particularly with the Japanese. "The Cold War is over and Japan won" is the conclusion drawn by both Democratic and Republican presidential candidates and many of their followers. Consumer confidence has plummeted to depression levels.

Critics from both the left and the right bemoan the failure of our most vital economic and social systems, including education, health care, and trade. They cite America's collapsing infrastructure, decaying manufacturing base, withering technological might, and eroding competitive position.

Who's to blame? Many Americans are pointing a collective finger at American corporations in general and their top executives in particular. The latter are depicted as overpaid, underachieving paper shufflers who have sat idly by while our international competitors have eaten our lunch. Is this depiction fair?

Not if the stock market is the gauge of performance. When shareholders holders ask the question, "Are we better off today than we were four years ago?" the answer is a resounding eyes. The aggregate market value of the New York Stock Exchange ballooned by $1.5 trillion from year-end 1987 to year-end 1991, an increase of 68%. This growth in our nation's tangible wealth contrast with the 40% plunge in the Japanese stock market during this period.

Yet many dismiss the stock market boom as an anomaly - neither indicative nor predictive of our nation's competitive strength; consequently, they do not credit American corporations for creating this abundant shareholder value. Nevertheless, by one important measure, perhaps the most important, American managers have gotten results for their shareholders.

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