dose of productivity" (Cooper, and Madigan, 1990, 27). When the Reagan Administra tion first publicly acknowledged, back in 1985, that the Ameri can trade deficit was, indeed, a problem, the decision was made to reduce the value of the dollar in international currency exchange. The country was assured by politicians, government economists, and private economists alike that the trade deficit would soon be reversed. As it happened, the value of the dol lar declined significantly for more than two years, while, at the same time, the American trade deficit continued to trend upward.
In mid 1988, with the international currency exchange value of the dollar at historically low levels, with respect to many other major currencies, the American trade deficit, at last, began to decline. Many economists and politicians hailedthis change as a sign that the monetary policy of lowering the exchange value of the dollar was working (Cooper, and Madigan, 1988). To be sure, other actions had also been taken. Many American manufacturers had become more competitive through cost reduction efforts. Only a few, however, had become more competitive through improving product quality and service (Pen nar, 1988).
Some economists and business leaders were beginning to realize that the then current improvement in the American trade deficit might prove to be ephemeral (Deutsch, 1988). If the improvement were to prove to be ephemeral, as is appearing every more probable in 1990 (Cooper, and madigan, 1990), it would likely be because it was built upon a foundation of sand. Cost reductions can go just so far. Many actions could be taken, and many events could occur, which, in turn, could cause the value of the dollar to rebound to higher levels, which, of course, it did. America's competitors were and are not standing still; therefore, a resurging American trade deficit remain quite possible in 1988, and, in 1990, is once again frightening the no tax ...