The Triumph of American Business

The Washington Post reports:

Newspapers bring us the dark stories about American business. The Enron trial serves up tales of lies and looting. The General Motors restructuring dramatizes the death of traditional U.S. manufacturing. Commentators from left and right agree that a growing swath of the economy, from accounting services to non-emergency health care, may one day move offshore. And yet something is going dramatically right inside American corporations. Despite all the nostalgia for the era when GM dominated the world's car industry, the heyday of American business may actually be now.

The dawn of this heyday came in 1995. In the two preceding decades, the productivity of American workers had grown more slowly than that of Japanese and European competitors. But in the decade since 1995, U.S. labor productivity growth has outstripped foreign rivals'. Meanwhile U.S. firms' return on equity -- that is, the efficiency with which they manage the capital entrusted to them -- has pulled away from that of Japan, France and Germany, according to data provided by Standard & Poor's Compustat.

Many economic comparisons are going to look good up against Europe.