8. Creative Destruction⁷

With a large land mass, natural resources, a stable government, and a relativelywell-educated workforce, the U.S. economy has some competitive advantages in the world marketplace. Importantly, it also has a willingness to endure, even embrace, change.

The U.S. economic system reflects what 20th-century Austrian economist Joseph Schumpeter described as free-market capitalism’s “creative destruction”. Jobs, companies, entire industries come and go.

Even cities and regions expand and, if they cannot adjust to change, contract—some old industrialized cities in the “Rust Belt” of the Northeast and Midwest and some agricultural states in the Great Plains have lost lots of people to other cities and regions over decades.

In a free market, decisions about what to produce and what prices to charge for products are made through the give and take of independent buyers and sellers—sometimes a few, sometimes millions—not by government or powerful private interests. Prices set this way best reflect the value of goods and services and best guide production of what is most needed.

Americans also view free markets as a way of promoting individual freedom and political pluralism and opposing concentrations of power. The U.S. federal government renewed its commitment to market forces from the 1970s on by dismantling regulations that had sheltered some industries—such as trucking, airlines, and telecommunications—from market competition for decades.

Vigorous competition and a regulatory system that embraces technological change have made the U.S. economy productive and provided American households with relatively high incomes. U.S. productivity went up briskly in the 1990s, with a peak 4.1 percent gain in 2002. This widened a lead over the European Union and Japan, mostly by more effective application of information technology. Since then, productivity gains have fallen off, only 1.6 percent in 2006.

A dynamic economy implies the freedom to fail. In the United States, business failure does not carry the social stigma it does in some countries. Failure, in fact, is often viewed as a valuable learning experience for the entrepreneur, who may succeed the next time.

In 2005 the U.S. government recorded the creation of about 671 800 businesses and the demise of about 544 800 others. Many small, little-known businesses start up each year; some succeed, some fail. Tens of thousands of businesses enter bankruptcy each year, and some of them shut down permanently. In 2005 more than 39 000 businesses filed for bankruptcy.

In the United States even well-known big businesses fail. Trans World Airlines, United Air Lines, Delta Air Lines, Northwest Airlines, US Airways, Continental Airlines, Eastern Airlines, and Pan Am are just some of the major commercial airlines that have filed forbankruptcy since air travel deregulation in 1979 led to more vigorous competition. Some have re-emerged; others have disappeared forever, their assets scavenged by surviving competitors.

Notes

1. public goods公共物品，这是与私人物品相对应的一个概念，消费具有非竞争性和非排他性特征，一般不能或不能有效通过市场机制由企业和个人来提供，主要由政府来提供。

2. private goods私人物品，与公共物品的相对，它是指一种物品同时具有消费的竞争性和排他性。消费的竞争性使得私人物品不能被两个或更多的消费者同时占有或使用,而消费的排他性使其从技术上或代价上很容易将其他消费者排除出去。典型的私人物品如衣服、食品等。

3. external costs外部成本，是指产品的购买者以外的他人所承担的成本。

4. external benefit外部效益，即某个经济主体的活动所产生的影响不仅表现在他自身的成本和收益上，而是会给其他的经济主体带来好处。

5. Sherman Antitrust Act《谢尔曼反托拉斯法》，美国联邦国会于1890年制定的第一个反托拉斯法，也是美国历史上第一个授权联邦政府控制、干预经济的法案，因由参议员约翰·谢尔曼提出而得名。

6. fiscal policy财政政策, 与货币政策（monetary policy）相对, 指政府变动税收和支出以便影响总需求进而影响就业和国民收入的政策。

7. creative destruction创造性破坏，该词由美籍奥地利经济学家约瑟夫·熊彼特在《资本主义、社会主义与民主》一书中提出。根据熊彼特的“创新理论”，改变社会面貌的经济创新是长期的、痛苦的“创造性破坏过程”，它摧毁旧的产业，让新的产业有崛起的空间。

Exercises

I. Fill in the blanks according to the text.

1. Today, the U.S. economy is in the midst of its second radical economic transformation: a 20th-century shift ________________ in the first decade of the 21st century.

2. In 2008 the four largest U.S. industries —________________, ________________,________________, and ________________ — accounted for 44 percent of U.S. factoryoutput.

3. A persistent problem for the U.S. economy and some of its workers is unemployment—not being able to find a job despite actively looking for work for at least 30 consecutive days. There are three major kinds of unemployment: ________________, ________________, and structural.

4. ________________ occur when not all of the costs involved in the production or consumption of a product are paid by the producers and consumers of that product. Instead, some of the costs shift to others.

5. Since 1890, when ________________ was passed, the federal government has attempted to prevent firms from acquiring monopoly power or from working together to set prices and limit competition in other ways.

II. Define the following terms.

1. economic system

2. frictional unemployment

3. public goods

4. external benefit

III. Questions for discussion.

1. Why is income inequality growing in the United States?

2. What functions does the U.S. government perform?

3. What is creative destruction? Is it important to the development of U.S. economy?