And this seems to have fed anxiety, among firms and their employees, about the challenges in coping with these forces. These changes have taken place in the context of a longer-term increase in income inequality in the United States. Incomes have grown more rapidly for the richer and better educated than for those at lower points of the income scale. BIS Review 84/2007  1  These changes have, in turn, contributed to some erosion in the strength of the political center in the United States on a range of economic policy issues. Surveys suggest diminished support for global trade. And there is more divisiveness on a range of issues such as tax policy and the appropriate role for government in the regulation of economic activity. Over the last half century and more, the U.S. economy has enjoyed some substantial and important relative advantages. Among the most important of these are the quality of our best universities; our openness to change; the incentives provided for innovation; the strength of property rights; the depth and liquidity of our world-class financial markets; and a record of stability in macroeconomic policy. These relative strengths of the U.S. economy remain significant and substantial. But the rest of the world is getting better at establishing the important conditions for dynamism and innovation. These improvements are not a reflection of U.S. weakness, nor are they themselves a threat to U.S. competitiveness.
To complete this list of policy challenges that are important to U.S. competitiveness, let me conclude with a few brief points on the broader imperatives of macroeconomic policy. The United States faces very substantial gaps between our fiscal resources and our expenditure commitments. The size of these gaps, these deficits, have been masked in recent years by a substantial, unanticipated and probably transitory surge in revenues, and by an unusually long period of unusually low long-term interest rates, in part the consequence of foreign official capital flows. But these gaps remain substantial and the U.S. fiscal position is unsustainable. Time does not help. We are going to have to begin to develop a political consensus on the mix of policy changes that can bring our commitment and resources more into balance, if we are to preserve confidence in our market and our long-term economic prospects. One of the most important roles for public policy is the maintenance of a stable macroeconomic framework that enables firms to make long-term investment decisions. In this sense, the fiscal policy choices ahead for this country will be critically important to the overall environment in which U.S. enterprises operate. The business community will play an important role in shaping the policy response to these longer-term economic challenges. These reforms will have a long fuse. The benefits will be shared broadly, rather than captured specifically by particular sectors of the economy.