polity's useand allocation of an unduly high proportion of the GNP and in exces- sive regulation of private decisions but also in the revolution of entitlements, in attempts to deal with all social and many personal needsvia the polity rather than the market.
The remedy that follows is to reduce the scopeand intensity of the polity as much as possible, by releasing resourcesto the private sector, deregulating, and letting the market do its wondrous things. The most radical of the lot, such as Professor Arthur Laffer, Congressman Jack Kemp, and SenatorWilliam Roth, hold that the revenue lost via monumental tax cuts will be restored by the higher tax yield of a more productive economy. Other laissez-faire conservatives, say Milton Friedman, are satisfied to cut back government expenditures and taxation drastically, without assuming a proportionate gain in the economy and tax reve- nues.
In terms of the second defining issue, where the levers for change are, this approach is wholly nontargeted. It seesno needto direct aim, or guide the public resources released to the private sector in any particular way. Indeed, freeing them to go wherever the market will take them is the kernel of the approach. The Reagan administration has largely pursued the nontargeted approach, as shown by its recent tax revision.
At the other end of the spectrum is the notion that, far from being reduced,the polity's role should be intensified. Here the diagnosis is that, compared to other highly successful economies, especially West Germany and above all Japan, American institutions provide insufficient guidance and support for the private economy. The market, it is implied or openly stated, has shown its inability to invest enough in new plant and equipment, in innovative and competitive capac- ity. Executives have grown risk-shy and dividend-happy. Steel mills, auto plants, the textile and rubber industries are crumbling. Computers face a government-orchestrated attack from Japan, while the response of American computer firms is anemic and divided against itself.
A c c o r d i n g t o t h i s v i e w , c o r r e c t i v e s a r e t o b e f o u n d i n e m u l a t i o n o f " J a p a n , (Ministry of International Trade and Industry). The Inc.," above all its MITI
solution lies in government-guided collaborative efforts, in which business and
of analysis, tax incentives, capital, and informal if not outright control. Attempts by the Carter administration, on its last legs, to turn around the U.S. auto and steelindustries according to the suggestionsof tripartite committees were viewed as early-bird American industrial policy.
Beyond this, advocatesof this highly targeted approachseethe Departmentof Commerce transformed into a Department of Trade and Development (or some new agency, the Americanization of MITI) with a deskand a committee for each