current policies which have raised thencost of capital to business, increasedntaxes on industry, and promoted laborintensivengrowth with stagnant productivity.nIt is ironic that American competitivenessnhas declined under ansupposedly pro-business administration.nYet, the “supply-side” failure to live upnto its billing stemmed from too narrow anfocus on individual tax rates, a factornwith weak and indirect links to savingsnand business investment.nThe unprecedented string of largentrade deficits that has plagued the U.S.neconomy since 1982 must end. Thesendeficits have slowed economic growthnand converted the U.S. into the world’snlargest debtor. Neither cheap labor norncheap dollars will end the deficits.nTrade policy must be part of industrialnpolicy as it is among our rivals, whon”accept that industrial promotion andnthe direct support of private interests is anlegitimate function of government.”nWhile the U.S. talks of “free” or “fair”ntrade rules, leaving the market to determinenresults, foreign governments “arenincreasingly negotiating directly aboutntrade outcomes,” seeking control ofnproduction and markets. The U.S.nmust realize what is at stake and developnstrategies to protect its national economicninterests.nThe U.S. must become what Cohennand Zysman call a “developmentalnstate” aiming at “the upgrading of thennation’s position in the internationalneconomic hierarchy.” Policies “to shapenthe national production structure andnthe pattern of comparative advantage tonassist the evolution of wages and production”nare well-known and have beennused successfully for centuries. Japanndid not invent mercantilism, only appliednit, while we slept in a liberal dreamnworld. Cohen and Zysman do not goninto the details of specific policies. Eachnstrategic sector will require its ownnpolicy mix. Their purpose is not to urgena particular strategy but to prod economicnpolicymakers into starting tonthink in strategic terms. It’s a messagenthat deserves wide attention.nThe authors do not deal much withnthe issue of “protectionism.” But theyndo repeatedly cite the advantages Japanesenand European industries havengained by having secure domestic marketsnthat serve as a base for achievingneconomies of scale and reducing thenrisk of new investment. And it is hardnto imagine a way to end the tradendeficits without curtailing imports.nHistorically, such a policy approachnhas been favored by conservative/nnationalist regimes, including Americannadministrations until quite recently. Nonnation can remain a Great Power if itsneconomic core is controlled by foreignersnor if its powers of production lagnbehind its rivals’. The loss of America’sneconomic independence and industrialnsupremacy is a change for the worse.nFocully. students, administrators, busines and governmental leadersnare cordially invited to become members of thienCENTER FOR THE STUDY OF THE PRESIDENCY,na non-profit educational corporation chiarterednby ttie Board of Regents of ttie State of New Yorl<.njomcEmiiiroRTiiEnSIUDY OrillE PRESlDmCYnTtie first national public policy researcti center witti itsnprimary focus on ttie American Presidency. Witti tiistoricainand analytical perspective, ttie Center examines bottindomestic and foreign policy, decision-malting, relationshipsnwith the Congress and organization.nMembership includes: Invitations to Annual LeadershipnConference, Annual Student Symposium, and LincolnnCenter Lecture Series, Regional Conferences, and the followingnpublications:nPresidential Studies Quarterly.nDistinguished board of editors includingnHarry A. Bailey, Jr., Kenneth E. Davison,nHedley W. Donovan, Henry Graff, Fred I.nGreenstein, Stephen Hess, Dorothy B.nJames, Barbara Kellerman, Richard S.nKirl