We must put those programs on a firm foundation for the future and ensure that the government budget continues to add to, not subtract from, the pool of saving the nation needs to grow fast enough to keep both worker and retiree standards of living rising in the future. The success of our political system in balancing the budget has not solved the long run budget problem, but it has considerably reduced the magnitude of the task remaining. It should also enhance our confidence that problems like reforming social security and Medicare are not beyond the capacity of our political process, messy as it is, to resolve. The other area in which the U.S. political process gets some points for good behavior is deregulation. If the U.S. economy is more competitive and less inflation prone than it used to be, some of the credit goes to the continued effort over a couple of decades to reduce regulatory interference with competition in airlines, railroads, trucking, telecommunications, and energy.
Deregulation is difficult and some people always suffer in the short run.
The reduction in geographic barriers to banking competition, and the rapid blurring of regulatory and legislative lines walling off different types of financial services from each other, have thrown the financial services industry into turmoil, but the result, when the dust settles, is likely to be a far more competitive and efficient financial services industry than we had before. The private sector has also surprised the pundits with its vitality and flexibility of late. Global competition and the punishing high dollar of the mid-1980s made many of America's most prestigious companies fear for their lives. But painful decisions were made, often at great human and resource cost, that enabled U.S. industry not only to stay in the game, but to get back into the global leadership position that seemed for a time to be slipping away. A generation of business leaders restructured and downsized and tried new management ideas.