Remarks to the International Forum of the Chamber of Commerce of the United States

April 23, 1986

I appreciate this opportunity to be here with you today. One of America's greatest assets is the skill and professionalism of its men and women of commerce and industry -- the peppery, can-do spirit of our business community is in stark contrast to the inefficiency and poor performance often associated with other economic systems. Of course mistakes do happen. There is the story of the fellow who ordered a bouquet of flowers to be sent to the opening of his friend's new branch office. When he got there he was shocked to see flowers with the inscription: ``Rest in Peace.'' [Laughter] He was so outraged that on the way home he stopped at the florist to complain. ``Don't get so upset,'' the florist said. ``Just think of it this way: Today someone in this city was buried beneath a flower arrangement with the inscription: `Good luck in your new location.''' [Laughter]

I understand we've got some students with us today. One of the joys of my Presidency has been getting to meet and know the young men and women who, in the not-too-distant future, will be America's champions of freedom and enterprise. And I don't have to tell you this new crop of young people filling the ranks of our businesses and corporations are as talented and diligent as any we've ever had. Today's young Americans will come into their own with freedom, know-how, and resources far beyond anything the world has ever known. Henry David Thoreau once wrote of free people: ``This world is but canvas to our imaginations.'' Those words were never more true than they are now. We've got every reason to look to the future with unbounding optimism. Today a refreshing breeze can be felt across the face of mankind. Winds of freedom are blowing, clearing the air, opening the view of a new and wondrous horizon.

In a few days, Nancy and I, as you've been told, will be heading west, embarking on a journey which will culminate in Tokyo with a summit of the major democracies. And as we liftoff aboard Air Force One, circling half the globe, the winds of freedom will be propelling my mission. Those winds are blowing in Latin America where, in recent years, we've witnessed one of the greatest expansions of democracy in history. Today 90 percent of the population of this hemisphere lives in democratic countries or countries in transition to democracy. In Europe the new, vigorous democracies in Spain and Portugal and the revitalized democratic process in Turkey have proven the pessimists wrong. The democratic workers' movement in Poland -- Solidarity -- those suffering repression still persists. In Nicaragua, Angola, Afghanistan, and Cambodia freedom fighters struggling for liberty and independence inspire the West with their courage in the face of a powerful enemy. As I fly westward over our majestic land, I go knowing that we're witnessing an awakening to those self-evident truths to which our forefathers pledged their lives, their fortunes, and their sacred honor.

In future years, I think we may look back on the period we're going through as the vernal equinox of the human spirit -- that moment in history when the light finally exceeded the darkness. In the 1970's, the Western democracies suffered economic and political reversals which sapped their confidence and gutted the resilience of their social systems. The maladies to which I'm referring were the logical result of wrong ideas and flawed policies. The innovators, entrepreneurs, and profit-seeking risk-takers, who had always been on the cutting edge of change, were gradually being pushed out or phased out. The resources and decisionmaking of the West were being channeled into the hands of central planners, government officials, and bureaucratic managers.

In our country, government spending tripled in the 1970's and the Federal tax take doubled between 1976 and 1981. By 1980 we suffered double-digit inflation, economic stagnation, sky-high interest rates, and unprecedented national uncertainty. Nothing could be done, we were told, to escape this quagmire. Our citizens would have to lower their expectations. The American people never believed that guff, and I didn't either. Looking out over the United States today, I'm confident that our country's best days lie ahead. The winds of freedom are indeed blowing and, if America puts its mind to it, there's nothing we can't accomplish.

By bringing the growth of government under control, by easing the regulatory burden, by reducing the tax rates, giving people incentives and rewards to work, invest, and build, we've set America on a new upward course. Astounding the so-called experts, our economic engines have powered us forward with 40 straight months of growth. A record 669,000 businesses were incorporated last year alone. Interest rates are down; inflation has remained low. Over the last 3 months it has been minus 1.9 percent, the lowest in more than 30 years; and for the last 12 months it has been 2.3 percent. Almost 10 million new jobs have been created here in the last 3 years, while Europe has seen a net loss of jobs in the last decade.

Today the world, especially the developing world, is leaving behind the dismal failures of statism and redistribution. Central planning and government authority did not, as promised, usher in a new era of plenty. Instead, Marxist-Leninist models of development have left a path of poverty and deprivation whenever they've been tried. The late John Dos Passos put it well. ``Marxism,'' he said, ``has not only failed to promote human freedom -- it has failed to produce food.''

The developing world has been told that it's necessary to give up freedom in order to achieve progress. Nothing could be further from the truth. Freedom and economic advance go hand in hand; they are two sides of the same coin. The mainspring of human progress is found not in controlling and harnessing human energy but in setting it free. The most valuable resource is not oil or precious metals or even territory; it's the infinite richness of human potential. The creative genius and diligence unleashed when people are free and working to improve their lot and that of their families is the greatest force for good on this planet.

The winds of freedom are nowhere more evident than on the Pacific rim, which of course includes my home State of California. Seriously though, after the Second World War, Japan was in ruins and devastation was heavy throughout the region. It is becoming difficult to think of the Pacific as being undeveloped, but only a generation ago that was a fair characterization. Pacific nations with almost no territory and few natural resources have become dynamic centers of commerce and production almost beyond imagination. Over the last 15 years, annual growth in the region has averaged about 6 percent. This was accomplished despite rising oil prices and at a time when some countries short on land to begin with were forced to absorb influxes of refugees.

The energy and enterprise on the Pacific rim is changing the economic center of gravity. The United States and our northern neighbor, Canada, now exchange more goods with Asia and the Pacific than with Europe. Almost one-third of total U.S. trade now flows west. Our trade enriches the quality of life on both sides of the Pacific, and while much attention has been focused on our imports from the region, we must not overlook our exports. Today we export $54 billion worth of American products annually to east Asia and the Pacific compared to $20 billion just 10 years ago. Again, the relationship between freedom and prosperity, between democratic government and economic progress, is clear.

We recently witnessed an upheaval in the Philippines. A major cause for discontent in the Philippines was that much of the country's business and trade was not open to all citizens. As a result, the Philippines lagged behind its Pacific neighbors. Today the Philippine people have new opportunities, economic and political. As their friends, we wish them the very best and will help where we can.

Of course, those countries forced to endure centralized Communist planning face the prospects of continued stagnation -- this while much of the Pacific marches into an exciting new age of enterprise and commerce. Vietnam, isolated from the dynamism of its Pacific neighbors by its continued occupation of Cambodia, is perhaps the best example of what I'm talking about.

On my upcoming trip, I'll stop in Indonesia, and there I will be discussing Cambodia, as well as other economic and security issues, with President Soeharto and with representatives of six nations which make up ASEAN, the Association of South East Asian Nations. Most important, through my trip I'll be reconfirming that the United States considers itself a Pacific rim country, and we will continue to be an important part of the economic and political forces that shape the future of this vital area of the world. If the next century is the Pacific century, as some have suggested, America will be leading the way.

From Indonesia, I will head to Japan, the site of the 12th economic summit. That this meeting is in Tokyo reminds us again of an emerging Japan. Over these last few decades, this former enemy has become a trusted friend, a major political and economic partner, and a strategic ally -- the pillar of our Pacific policy. Prime Minister Nakasone of Japan is moving his country toward a new and expanded international role. Together our countries exercise enormous political and economic influence on the world. I think that all our peoples can be proud that we're using our power for benevolent ends: to secure democracy, to foster economic progress, and to maintain peace in a dangerous world.

Japan's is a dramatic story of democracy's success. That it has been built into the world's second largest market economy and is now taking on greater international responsibilities bodes well for the future. The winds of freedom blow both east and west. Man's desire to improve his lot, his longing for freedom, and his yearning to live in dignity and peace are never limited by geography. These universals tie all free peoples, and those who would be free, together.

Our annual economic summit stands in glorious defiance of the totalitarian theory that sovereign, democratic societies are too independent, too bogged down by shortsighted self-interest to be able to cooperate on matters of significance, especially matters concerning money and finances. Well, the issues may vary, but if there are two watchwords of our economic summits, those words are ``freedom'' and ``cooperation.'' Each year's gathering is an opportunity to renew acquaintances, to take stock of economic prospects, and to discuss frankly and openly issues of common interest. And this year there is much to discuss.

The continuing upward momentum of the American economy has been a major impetus to growth in the rest of the world, in both summit and nonsummit countries. Now, we urge others to join us in tackling those domestic policies and structural problems that inhibit growth and serve only as roadblocks to progress. High tax rates, overregulation, are like a ball and chain holding too many nations back. The substantial decline in world oil prices offers the industrial democracies, as well as the developing world, a dramatic opportunity. We hope our summit partners will translate the benefits of lower oil prices into stronger growth and higher employment. Now is the time to accelerate the pace of structural change and pave the way for higher sustained growth in future years. These economic summits, with the denouement of the shock waves that went through the world economy after the oil price hikes of the early 1970's -- an oil cartel artificially jacked the price of petroleum far beyond its true market value. Today's implosion of that cartel is evidence that, in the long run, the market works.

Those oil price increases remind me a bit of the businessman who every day would stop at a pretzel stand just outside his office, and every day he would put 25 cents on the plate, but he'd never take a pretzel. And this went on for quite some time. He'd stop, put the quarter on the plate, and walk on into the office, never taking one. Then one day, as he put a quarter on the plate, the woman running the stand grabbed him by the arm. And he said, ``You probably want to know why I've been putting 25 cents on your plate every day and never taking a pretzel.'' And she said, ``Well, no. Really, I just wanted you to know pretzels have gone up to 35 cents.'' [Laughter]

As the United States has demonstrated, strong, growing economies in the major industrial countries will do much to help those in the developing world. Succinctly put: Our policies toward the Third World should be aimed at establishing partners in trade, not recipients of aid. Our approach should be to keep open our markets, not to empty our Treasury.

Last October, Secretary [of the Treasury] Baker proposed, as I'm sure he will further explain in his remarks, a program for sustained growth intended as a declaration of independence for debtor nations. Its purpose is to move them toward self-sufficiency, to assist them in developing free market, progrowth policies and to help them climb out of the pit of indebtedness and up to the level plateau of competitive enterprise and productivity. Well, the debt initiative that's proposed by Secretary Baker, which we'll discuss in Tokyo, is focused not just on postponing a day of reckoning but on solving a problem. It has the strong support of the international community. Our legacy must not be to engender dependence among debtor countries, but provide the incentives, the tools, and the opportunity for them to work, produce, and grow their way to self-sufficiency.

We want all people in every country to live healthier, more productive, opportunity-filled lives. Free and unfettered trade between nations is a vital part of the formula for achieving this goal. We're ready and willing to work with those with whom we have commerce to maximize the benefits of a worldwide, open trading system. Keeping trade fair and open will be a major topic of discussion in Tokyo. Our summit partners have already helped start up the preparatory process for a new round of multilateral trade negotiations. And we hope they'll continue their efforts to ensure that those negotiations are launched this September.

As an economics major, I was taught the law of comparative advantage. And it ought to govern the exchange of goods and services across the national boundaries. If our farmers in California can grow larger and cheaper oranges than their counterparts in Japan, the housewife in Osaka ought to be able to buy those oranges without additional cost. At home, our citizens should have the same right. Protectionist moves basically profit special interests at the expense of the consumer and at the risk of retaliation -- costing Americans their jobs.

Now, admittedly, the strong dollar has been a legitimate concern of those of you trying to sell overseas. The value of the dollar is in the process of adjusting as the economies in other nations improve. And now is not the time to surrender to trade-killing protectionism. The trade imbalance should be solved through multilateral negotiation that open markets, not unilateral legislation that closes them. The right answer is not decreasing imports but increasing our exports. I'll resist any attempt to restrict or close our markets. It would cost Americans jobs. It's bad for the consumer, bad for business, and it's bad for America. I'm old enough to remember the Smoot-Hawley Tariff Act, which helped spread the Depression worldwide, and I'm not about to let that happen. And on the other hand, I can assure you I'm not about to let this good and great country be taken advantage of. Our trading partners have been sent the message, and I'll reinforce it in Tokyo, that the United States is moving forward aggressively and vigorously to keep the markets of the world open and to see to it that American interests are treated fairly.

In Tokyo we'll primarily be discussing issues of economic importance. Yet all of us meeting there are fully aware of how totally dependent economic progress is on maintaining a peaceful and stable world. Those who will gather in Tokyo represent countries which, by working together, have given the world 41 years of peace in Europe -- ushering in the greatest strides in science and industry in the history of mankind.

The United States, in pursuit of peace, is working in close consultation with its partners, seeking a more stable and constructive relationship with the Soviet Union. In Tokyo we'll discuss arms reduction and other initiatives connected with my meetings with General Secretary Gorbachev last November. During those meetings General Secretary Gorbachev and I talked together about the differences between our systems. I challenged him to compete with us -- not in the manufacture of bombs and weapons, but in the arena of ideas. We can and should have peaceful competition between our systems. We should let the world decide, based not on the size of our arsenals, but on the attractiveness of our ways of life. Let us be measured by our results, not our rhetoric; our deeds, not our words. Now, whether the General Secretary takes me up on my challenge remains to be determined. In the meantime, preserving peace is not just the business of the United States or of the United States and the Soviet Union. Our summit partners each share this responsibility.

One area of exemplary cooperation has been our mutual efforts to combat international drug trafficking, which undermines the respect for law and attacks the fundamental health of our nations. The threat is particularly grave to our youth. Nancy has taken on the war against drugs as a personal mission, and she's made me very proud. While I'm in Tokyo she will be carrying her message to Malaysia and Thailand, where she'll join in a comprehensive review of the antidrug efforts of those two important nations.

Coming to grips with threats posed by such evils as drugs will require all free people to work together. The democratic nations decided long ago they would stand shoulder to shoulder in such fights. Nowhere is this more imperative than in the battle against terrorism. These vicious, cowardly acts will, if we let them, erect a wall of fear around nations and neighborhoods. It will dampen the joy of travel, the flow of trade, the exchange of ideas. In short, terrorism undeterred will deflect the winds of freedom.

And let no one mistake this for a conflict between the Western democracies and the Arab world. Those who condone making war by cowardly attacks on unarmed third parties, including women and children, are but a tiny minority. Arab nations themselves have been forced to endure savage terrorist attacks from this minority. We hope and pray the Arab world will join with us to eliminate this scourge on civilization. I might add that Colonel Qadhafi's expectation of unquestioned support from the Islamic world strikes me as hypocritical. Nowhere is the slaughter of Moslem people greater than in Afghanistan, and yet Colonel Qadhafi allies himself with those perpetrating this crime on Islam and all of mankind.

Decent people can no longer tolerate cowardly terrorist attacks. Government-sponsored terrorism, in particular, cannot continue without gravely threatening the social fabric of all free societies. Unilateral response is not enough; it must be dealt with forcefully and collectively. And this, undoubtedly, will be a topic of discussion in Tokyo.

James Russell Lowell, in a poem entitled ``The Present Crisis,'' and later made into a familiar hymn, wrote: ``Once to every man and nation comes the moment to decide, in the strife of Truth with Falsehood, for the good or evil side.'' Well, over the past few months, we've had to make some tough decisions. But in the end, the decision was made for us, when a despot -- despite our political, economic, and diplomatic attempts to change his ways -- continued his murderous attacks on our fellow citizens. Well, America will never watch passively as our innocent citizens are murdered by those who would do our country harm. We're slow to wrath and hesitant to use the military power available to us. By nature we prefer to solve problems peacefully. But as we proved last week, no one can kill Americans and brag about it -- no one. We bear the people of Libya no ill will, but if their government continues its campaign of terror against Americans, we will act again.

There was a funeral a short time ago in Annapolis. A local family, the kind you can find in any neighborhood across our country, had suffered the horror of a terrorist attack. A young man, Warren Klug, buried his wife, his baby daughter, and his mother-in-law. All were innocent victims of the bombing of a TWA airliner. After the memorial service, his baby daughter lying in the coffin with her mother, Warren Klug told his fellow citizens and the world: ``To those responsible for this cowardly act, you've succeeded in devastating our family. But you will never destroy the heart and spirit of America.''

Well, all of us stand united, hand in hand, with the Klug family and the others who've suffered. We're all part of the same family. As your President, I promise you that we as a people will have the courage and the honor to do what is right. This is and will remain the land of the free and the home of the brave. The winds of freedom will be preserved, not just for our citizens but for all mankind.

And in Tokyo, I'll remind our allies of the truth of what Edmund Burke said long ago: ``When bad men combine, the good must associate; else they will fall, one by one.'' Well, together the free people of this world will ensure that liberty not only survives but triumphs and that our sons and daughters, too, will know the blessings of the winds of freedom.

Thank you. God bless you.

Note: The President spoke at 11:07 a.m. in the Hall of Flags at the United States Chamber of Commerce.